DHRM A breath of fresh air
I've been adding since the 3,90's / low 4's
Current Ratio: 3,09
Debt Equity Ratio: 38%
Cash: 6,54M
Book Value: 13,89M
Gross Margin: 39%
Net Margin: 24%
Outstnding Shares: 4,5M
Market Cap: 20M
Estimated EPS for 2010 of 0,80 | PER of 5,50
I like the fact that they start trading through an IPO (at the worst time possible) and not trough a Stock reverse merger due to the present atmosphere regarding reverse merger stocks.
The stock lost around 70% since their IPO in April and at the present levels is way undervalued IMO.
The health Industry in China seems like a good place to be invested in IMHO:
In April 2009, the Chinese government implemented large-scale healthcare reform. The State Council allocated $123 billion as part of its New Medical Reform Plan. The plan contemplates the development of a universal healthcare system that will cover 90% of China’s population by the end of 2010 and will provide health coverage for all Chinese by 2020.
Specifically, within three years, the Chinese government aims to improve the urban healthcare system by rebuilding and restructuring 3,700 existing urban community health centers and 11,000 community health clinics. The plan will also accommodate the development of 2,400 new urban health centers. In effect, the plan de-emphasizes the prevalence of large, magnet facilities in favor of smaller, more accessible clinics.
Dehaier Medical Systems is an emerging company in the development, assembly, marketing and sale of medical products in China, including respiratory and oxygen homecare products. The company develops and assembles its own branded products from third party components. The company also distributes products designed and manufactured by other companies including medical devices and respiratory and oxygen homecare products from IMD (Italy), Timesco (UK), ResMed (Australia), Welch Allyn (USA), HEYER (Germany), Penlon (U.K) and JMS (Japan).
Company Overview
DHRM offers a broad range of approximately 30 products used in surgeries, hospital rooms and at home. DHRM also provides technical services and support to manufacturers and distributors. In recent years, DHRM has placed significant emphasis on respiratory and oxygen homecare products. Through the integration of technology, customer input and employee creativity, DHRM seeks to provide innovative, high quality and affordable products that improve the lives of people with sleep and respiratory disorders.
The company sells the majority of its products through a network of over 2,000 independent distributors. DHRM also employs 70 direct sales and sales support personnel selling directly to end users such as hospitals, clinics, government health bureaus and individual customers.
Dehaier leverages its network of relationships with healthcare facilities and has broadened its market reach by introducing new and more advanced products and new product lines that address different end-user populations.
Industry
DHRM has 155 employees including 20 in R&D. The company’s technology is based on two patents, five pending patents and proprietary technology. DHRM maintains a 5,400 square foot research and development center in its facility in Beijing. In addition, the company is cooperating with research institutes at two top ranked Chinese universities: Beijing University of Aeronautics & Astronautics and Beijing University of Technology and Science.
In addition, the plan is designed to dramatically improve medical services available for the 800 million rural poor in China. Through the plan, the Chinese government contemplates the development of clinics in every village and a hospital in every county in China by the end of 2011. If successfully implemented, the plan would result in at least 2,000 new county-level hospitals and 29,000 township hospitals and the upgrading of another 5,000 more.
Differentiators
Branded and Distributed Medical Devices
DHRM derives revenues from the sale of C-arm X-ray systems, anesthesia machines, patient monitors and general hospital products. The medical device segment is the company's largest business line of products and has the most extensive market penetration of its three product lines. DHRM anticipates continued revenue growth in its medical device product line as it further penetrates the market through developing and introducing advanced new product offerings.
Respiratory and Oxygen Homecare Products
DHRM derives revenues from sales of oxygen concentrators, CPAP devices, portable sleep screening and diagnostic devices and thermotherapy products. DHRM anticipates continued revenue growth from respiratory and oxygen homecare as new and more advanced products in this line are introduced. DHRM expects to increase distribution in China’s respiratory and oxygen homecare market as well as growing sales in international markets through use of distributors as well as through its direct sales platform.
Branded Technical Services
DHRM derives revenues from sales of air compressors and ventilator trolleys. DHRM anticipates continued growth in revenues from technical service products as they further penetrate this market by increasing the number of their distributors and maintaining a competitive pricing model.
Competitive Strengths
Established brand and market position in China’s medical products and respiratory and oxygen homecare industries
Established distribution, sales and service network throughout China
Strong research and development capabilities
Established relationships with foreign medical device manufacturers
Established relationships with hospital customers
Dedicated customer support and service
Recent News
8/16/10-Dehaier Medical Systems Q2 Revenue Up 46% to $4.83 Million; Net Income Up 59% to $1.14 Million; EPS $0.278/12/10-Dehaier Medical Systems Schedules Second Quarter 2010 Earnings Release and Conference Call8/11/10-Dehaier Medical Systems To Exhibit in International Medical Products Tradeshow FIME 2010 in Miami, Florida7/13/10-Dehaier Medical Systems Acquires Emergency Ventilator Series to Extend Product Line7/06/10-Dehaier Medical Systems Reaffirms Earnings Estimate of $0.80 EPS for FY 2010
Risk Factors
Uncertain trading volume following IPO
China’s healthcare-related government policies
Acceptance level of DHRM products among hospitals and other healthcare facilities
Ability to attract and retain distributors, key customers and direct sales force
China’s competitive environment
The Outlook
DHRM is positioned to benefit from the surging growth of expenditures on medical products in China and the growing demand for domestic medical products. A recent article published by the Wharton School (Univ. of Pennsylvania) suggests that China’s medical products market will reach $28 billion by 2014. This market was valued at $12.14 billion in 2008, representing roughly one-eighth of China’s overall healthcare market.
China’s medical products market is projected to grow faster than the global medical market. China is already the third largest medical products market in the world behind the United States and Japan. Within five to seven years it is expected to surpass Japan to become the world’s second largest medical products market. Market growth rates for 2009 are projected at 11.2%.
DHRM’s strategy is to strengthen its position as one of China’s leaders in developing, assembling and marketing respiratory and oxygen homecare products and to develop a presence in select foreign markets including Europe and America.
