Shandong Weigao (8199 HK): keep growing-HOLD(Unchanged)

to summarize…

-Revenue increased 34.9% YoY while the net profit was up 22.6% YoY for 4Q FY12/09A.

-The sales of consumable medical device increased 32.5% YoY for 4Q FY12/09A with expectation to have 30% YoY growth for FY12/10F.

-JWMS growth faces potential slowdown because of the price pressure.

-Blood purification kits are expected to have 100% YoY growth in FY12/10F.

-Medtronic JV is under internal restructuring for better position Weigao’s brand product and Medtronic’s brand product

-Maintain HOLD call with revised target price of HK$32.58.

Shandong Weigao: keep growing

Shandong Weigao(8199 HK): "We go" -HOLD (Unchanged)

Key points:

- 3Q FY12/09 revenue increased 13.1% YoY to RMB504.2m and net profit up 36.2% YoY to RMB186.6m

- The sale of blood purification kit increased 157.3% YoY to RMB21.2m.

- The DES contribution is strong with 114.4% YoY growth. But we still have a conservative outlook for long term contribution of DES for Weigao.

- We are optimistic for the long term outlook of orthopaedic product although work with Medtronic seems not easy.

- Consumable product growth slowed down due to the temporary credit control of Weigao.

- Got “WEGO” as the English brand name.

- Maintain HOLD call although our fair value evaluation for the counter is HK$19.96.

Shandong Weigao: " We go"

Shandong Weigao (8199HK): Development on the road-HOLD

Key points: - 2Q FY12/09 revenue increased 21.6% YoY to RMB479.8m and net profit up 33.0% YoY to RMB152.0m - Consumable product would still be key growth driver, which would be mainly driven by the improvement in product mix - Outlook of sale of blood purification kits is very positive and Weigao signed contract with Xinqiao hospital for RMB35m product sales a year

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Shandong Weigao (8199 HK, HK$16.7, HOLD) - 1Q results first take

1Q FY12/09A results. Revenue increased 30.1% YoY and 6.4% QoQ to RMB394.3m while net profit increased 38.2% YoY and decreased 31.7% QoQ to RMB105.6m. The gross margin widened 1.5 pcp YoY and dropped 11.1 pcp QoQ to 48.1% with the net profit up 1.6 pcp YoY and down 15.0 pcp QoQ to 26.8%. The revenue is in line with market consensus for full year 2009 but slightly lower than our expectation. The following is the conference takeaway.

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Shandong Weigao (8199 HK, HK$15.46, HOLD) - Switching to HOLD call

Switching to HOLD call.  The counter reached a high of HK$15.86 on 24 Apr before ending the session at HK$15.46.  We are switching our call for Shandong Weigao to HOLD (from BUY) as:  1) the counter has reached our target price of HK$15.00 and 2) we think that near term, there are unlikely any new catalysts to further drive the stock price.

Valuation.  Weigao is currently trading at 19.5x FY12/09F and 13.5x FY12/10F P/E.