China Medical System Holdingsen.cms.net.cn/ TICKER: CMSH EXCHANGE: DELISTED
CMS is a Chinese pharmaceutical service company. They are primarily marketing, promoting and selling western and Chinese prescriptions drugs to hospitals through their proprietary sales force. They are also handling product registration for newly imported drugs on behalf of foreign companies, renewal of expired or expiring imported drug registrations, custom clearance, inspection of imported drugs and bids in collective tender processes. The company has a proprietary product in clinical development for the treatment of primary liver cancer. Therapeutic areas covered include CNS disorders (Deanxit), hepatology (GanFuLe), gastroenterology (Solofalk, Ursofalk), infectious diseases (Bioflor), urology (Cystistat), ophthalmology (Stulln Mono), cardiovascular disease (nesiritide - XinHouSu), paediatric and oncology (GanFuLe, Jinerlun). CMS was listed on AIM on 2007 and in September 2010 moved to the Hong Kong Stock Exchange (867 HK).
Successful business model addressing Chinese market yields net profits + 72%; EPS + 59%; dividend +50%
Strong cash reserves and R&D progress
Despite good performance shares for 2009 E only on 7x PER, 7.1% yield
Fair value / share raised to 255p (versus current 176p)
Progress in period also saw: renewed agency agreements, two new products, reply from SFDA (regulators).
Forecasts remain broadly unchanged leaving both low PER and high yield on shares. We keep a 173 - 208p fair value target range (versus current 125p level)
Strong record of profitability, 2007 results show adj. net profit up 65%
Year end net cash of $18m
In-house R&D self funded
Exclusive sales and marketing of prescription drugs into Chinese market
Fair value / share seen over 173p (DCF and PER analysis) vs 103p currently