Temasek Foundation is giving every Singapore household, a free oximeter!
You can collect it from 5 July to 5 Aug 2021 by bringing the Stay Prepared leaflet to any participating supermarkets and pharmacies. (I hope you didn’t throw the leaflet away ><)
There will be three oximeter models being distributed:
- Lepu PC-60FW
- Lepu OXY-11
- Yuwell YX301
They are said to perform the same key function of measuring blood oxygen levels and pulse rates, and all residents need not be concerned about which one they are given.
Where to collect oximeter?
You can collect your oximeter at participating supermarkets like Fairprice, Sheng Shiong, Cold Storage, Giant, or pharmacies like Watsons, Unity and Guardian.
Oximeter Stocks Analysis – Got chance to invest?
Dr Wealth is no medical doctor.
But working here means I get to attend courses.
Since I just completed Yaonan’s China Stocks and Options course last week, I decided to put what I learnt to practice by analysing the companies behind these oximeters.
Here’s my comparison from the investor’s point of view.
Lepu Medical Technology (SZSE:300003)
What do they do?
Lepu Medical Technology is the manufacturer of the Lepu PC-60FW and OXY-11 oximeters that Temasek Foundation is sponsoring.
Lepu Medical Technology (SZSE:300003) researches, develops, produces, and sells medical equipment and accessories. They specialise in cardiology products, anaesthetic products and general medical care products including the oximeter you may be receiving.
On their website, they are also offering SARS-CoV-2 Antigen Rapid Test Kits, I wonder if Singapore will become one of their clients in the future.
Is Lepu Medical making money?
Yes.
However, their revenue growth in 2020 is lower compared to previous years. They have since obtained certification on their Covid Antigen Rapid Kit, rolled out a Covid antibody test kit and found a new market for their oximeter.
They might see better revenue growth in 2021. Based on their quarterly reports, it does look somewhat promising:
But beware, Yaonan warns that quarterly results can be subjected to ‘seasonal’ effects. So, don’t take their quarterly results too seriously!
Now that we’ve established that Lepu Medical’s revenue looks good. Are they actually pulling in a profit?
Good news, their gross profit had been increasing since 2017, but dipped slightly in 2020:
Does Lepu Medical pay dividends?
Why, yes.
And their DPS has been increasing year on year too.
Sounds great, but…
O$P$ – How is Lepu’s debt levels?
Debt is like leverage, if used efficiently and in moderation, the company can generate income which is great for us shareholders.
However, as common shareholders, we are last in the hierarchy of claims if a company goes bust. So, high debt is bad.
Lepu Medical’s current ratio is around 1.43, this means they have $1.40 of current asset for every $1 of current liability. Hence, they can pay off all of their short term debt if SHTF.
The current ratio gives us an idea of their short-term debt levels. To understand their total debt situation, we look at Debt-to-Equity. Lepu Medical’s Debt to Equity is at 51%. Given their highly specialised business niche with a wide variety of products from cardiology to Covid test kits, this might be acceptable.
Especially if we look at:
Lepu Medical’s Potential Growth
Point-of-care testing (POCT) refers to diagnostic tests done near the patient, in real-time, without the need for a laboratory. The POCT market is projected to reach USD50.6B by 2025, growing at a CAGR of 11.4%.
Lepu Medical recognises the potential of the POCT industry and has developed medical equipment and test kits that will serve the needs of this industry. This move could allow them to serve a wider range of clients, providing future growth if executed well.
How’s the current sentiment around Lepu Medical?
Apart from looking at valuations, Yaonan also uses the RSI levels to gauge investors sentiments. In a nutshell, high RSI means a stock is hot and overbought, low RSI means a stock is not and oversold. He tends to buy when a stock is oversold.
Moving on…
Yuyue Medical Equipment & Supply (SZSE:002223)
What do they do?
Yuyue Medical Equipment & Supply (SZSE:002223) is the manufacturer of the Yuwell YX301 oximeter that Temasek Foundations is sponsoring.
They are involved in the research, development, manufacture and sales of medical devices within China and internationally. They specialise in respiratory products and homecare products which include the Yuwell YX301 oximeter.
They have several brands under their umbrella, serving different niches within the healthcare industry.
Yuwell focuses on “brings professional health management concept and advanced product solution into daily life.”
Is Yuyue Medical making money?
Yes.
Yuyue Medical reported a spike in revenue, net income and operating cash flow in 2020.
However, this could be a one-off event (which I can’t seem to find a reason for). Their quarterly results do not suggest similar growth in 2021:
Yuyue Medical’s gross profit had been increasing since 2017, with a similar spike in 2020. They had reported a higher gross profit in the quarter of Jun 2020 which contributes strongly to this spike.
Does Yuyue Medical pay dividends?
Yes:
Compared to Lepu Medical, Yuyue Medical’s DPS over the past 5 years is less stable, but they announced a higher DPS in years 2019 and 2020.
Sounds great, but…
How is Yuyue’s debt levels?
Yuyue medical’s current ratio is around 3.16, which is higher than Lepu Medical’s 1.43. This means that they have a greater buffer of assets to debt.
In general, the higher the current ratio, the safer we should feel as investors.
Yuyue’s Debt to Equity looks pretty healthy at 9.81%, compared to Lepu Medical’s 51%.
In summary, Yuyue’s debt levels look healthy.
How’s the current sentiment around Yuyue Medical?
Yuyue Medical’s stock price has been going up since June. Their RSI levels is hovering near its historical high, which suggests that it is overbought at the moment.
Lepu Medical Tech vs Yuyue Medical Equipment
At the point of writing, both Lepu Medical and Yuyue Medical are trading at pretty similar prices.
However, neither of them is the largest players in China’s medical equipment & supplies industry:
Fun fact, the largest player is Mindray Bio-medicals which belongs to Li Xiting who made it into Forbes’ list of richest individuals in Singapore, in 2020.
Okay, enough of gossip.
Let’s see how Lepu Medical and Yuyue Medical stack up against Mindray Bio-Medical, the market leader. I’ve picked some key ratios for comparison.
| Lepu Medical (SESZ:300003) | Yuyue Medical (SESZ:002223) | Mindray Bio-medical (SESZ:300760) | |
|---|---|---|---|
| Market Cap | 54.39B | 38.07B | 522.32B |
| Price to Book (PB) | 5.22 | 4.86 | 21.93 |
| Price to Earnings (PE) | 25.71 | 20.21 | 77.68 |
| Return on Assets (ROA) | 9.95% | 13% | 19.78% |
| Return on Equity (ROE) | 19.08% | 16.36% | 27.85% |
| Debt to Equity | 51.16% | 9.82% | 0.71% |
In a nutshell, Lepu Medical is a bigger company compared to Yuyue Medical, however it is trading at a more expensive price, at the point of writing. But both are small-time players, compared to Mindray.
Both Lepu Medical and Yuyue Medical’s ROA and ROE are below the market leader’s, suggesting that Mindray has an advantage in being the biggest player. From the ROA, Yuyue is able to generate more returns from their assets. However, Lepu’s management is more efficient as suggested by their higher ROE.
We should take note that although Lepu Medical’s debt levels are comparatively higher, it’s still within acceptable levels due to its business niche.
Large potential market size
The above was a peek into the two companies that supply us with oximeters. After researching this piece, I feel that the greater growth potential lies in their domestic market. Here’s why:
China has a huge population and is reported by the World Health Organisation (WHO) to be “one of the fastest growing major healthcare markets in the world with a five-year compound annual growth rate of 11%.”
Comparatively, here’s the potential growth rate of China versus the 4 other largest markets:
China’s healthcare expenditure is also expected to grow by a Compound Annual Growth Rate of 9.8% by 2023.
Both Lepu Medical and Yuyue Medical are seating on a huge potential market size that they can tap into, simply by serving their own domestic markets.
That said, I am not sure if they can put up a fight against Mindray or other bigger healthcare companies and grow their market share in the long run. I’ll probably take my time to shop around for other opportunities in China’s healthcare sector.
Don’t say, I never say
I’m an investing noob, so this was a brief look into oximeter stocks. None of this is investing advice.
In his course, Yaonan teaches an in-depth strategy that includes both qualitative and quantitative with sentiment analysis, how to objectively judge if a management is ‘good’, how to determine when to buy and when to sell (this was really interesting as he combines both financials and technical to find a good price) and so much more.
To learn directly from the real practitioner, you can join Yaonan at his next live webinar while I go collect my oximeter.
