Mindray Beats in 4Q, Profit Up - Analyst Blog
February 26 2013 - 3:30AM
Zacks
Chinese medical devices major
Mindray Medical International Limited’s (MR)
fourth-quarter 2012 adjusted (excluding one-time expenses other
than stock-based compensation expense) earnings per share of 49
cents narrowly beating the Zacks Consensus Estimate of 48 cents.
For 2012, adjusted earnings per share of $1.65 missed the Zacks
Consensus Estimate of $1.67. Reported net income rose 19.3% year
over year to $55.8 million (or 47 cents per share) in the
quarter.
Revenues
Revenues were up sharply 19.7% year
over year to $316.1 million, in the fourth quarter, beating the
Zacks Consensus Estimate of $304 million. For 2012, sales were up
20.4% to $1060.1 million higher than the Zacks Consensus Estimate
of $1056 million.
During the reported quarter,
Mindray recorded ex-China sales of $168 million, up 14.7% year over
year. Revenues in China increased 25.9% year over year to $148.1
million in the reported quarter. The company performed well in
emerging markets.
Segment-wise
Revenues
Patient Monitoring & Life
Support Products (42.7% of total sales) revenues grew 13% year over
year in the reported quarter to $135 million. In-Vitro Diagnostic
Products (26.2% of total revenue) revenues were $82.9 million, up
29.8%. Revenues from reagents contributed 36.9% of In-Vitro
Diagnostic segment sales during the quarter.
Medical Imaging Systems (23.8% of
total sales) sales rose to $75.4 million, a growth of 15.8%. Other
revenues (7.3% of total revenue) were up 45.3% to $22.8
million.
Margins
Adjusted gross profit amounted to
$184.8 million in the quarter, higher 27.9% year over year.
Adjusted gross margin was 58.5%, higher than 54.7% in the year-ago
period.
Adjusted selling expenses were
$51.2 million, or 16.2% of total net sales, compared with 19% a
year ago. Adjusted general and administrative expenses were $36
million, or 11.4% of sales, versus 6.3% a year ago. Adjusted
research and development expenses were $31.9 million, or 10.1% of
sales, compared with 9.3% in the prior-year quarter.
Adjusted operating income stood at
$65.8 million in the quarter, a year-over-year growth of 24.2%.
Adjusted operating margin was 20.8%, higher than the 20.1% in the
year-ago quarter.
Balance Sheet and Cash
Flow
As of December 31, 2012, Mindray
had $862.9 million in cash and liquid investments, up about 42.9%
from a year ago. Long-term bank loan stood at $50 million, up 42.8%
from a year ago. Net cash generated from operating activities was
$144.9 million in the quarter (up 50.2% year over year) while
capital expenditure amounted to $18.4 million.
Outlook
Mindray provides guidance on a full
year basis. The company forecasts revenue growth of 17% or more for
2013. It also expects adjusted net income for the year to increase
by a minimum of 15% year over year. The guidance does not take into
account any tax advantage on account of software business status
during 2011 and 2012, which might be received in 2013. The guidance
incorporates an income tax rate of 15% for the Shenzhen subsidiary.
The forecast for capital expenditure for 2013 is about $130
million.
Mindray is a bellwether in the
Chinese MedTech industry with a solid international presence. A key
distinction with domestic competitors is that the majority of
Mindray’s products have CE Mark and/or Food and Drug Administration
(FDA) clearance.
Mindray maintains a decent product
pipeline and brings out several new products each year. New
products contribute in a major way to Mindray’s revenues. In 2012,
the company launched 10 new products and acquired four
companies.
The company has entered the premium
segment globally, where its competitive advantage is still unclear.
Also, on the negative side, health care reforms in China and the
U.S. may reduce demand for Mindray’s products. Competition is
fierce and leads to price erosion over time.
Cyberonics Inc.
(CYBX), Given Imaging Ltd. (GIVN) and
Novadaq Technologies Inc. (NVDQ) carry a Zacks
Rank #1 (Strong Buy ) and are expected to do well.
CYBERONICS INC (CYBX): Free Stock Analysis Report
GIVEN IMAGING (GIVN): Free Stock Analysis Report
MINDRAY MEDICAL (MR): Free Stock Analysis Report
NOVADAQ TEC INC (NVDQ): Free Stock Analysis Report
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