Catalyst popped up: CR medical (1515 HK) – significant positive policy just released, based on SINA (Buy)
- The Chinese communist party commission in State-Owned Assets Supervision & Administration Commission has just passed the supporting policy for state-owned enterprise (SOE) hospitals like increase funding, based on SINA
- As a SOE hospitals operator, CR medical (1515 HK)’s share price will benefit from this news
- Trading at 0.7x price to book, there is plenty of upside. Re-iterate Buy, TP HK$9.4
- DBS will have a group call with CR medical’s top management today (23 Jun) at 1100. Can contact us if you want to learn more about the industry and the company
What’s new ?
According to SINA, the Chinese communist party commission in State-Owned Assets Supervision & Administration Commission has just passed the supporting policy for state-owned enterprise (SOE) hospitals like increase funding, increase R&D projects there which is key to attract talent (to upgrade professional ranking, a doctor needs to participate in R&D projects and issue publications). The commission will discuss with related government departments for formal approval and implementation of the policy.
Our view: positive to share price
As expected in our reports in Jan, Mar and Apr this year, the favourable policy is released.
We believe this is positive to CR medical’s share price in short run because :
- It mentioned increase of funding and R&D project which is crucial to attract talent. Those are favourable to SOE hospitals, as CR medical generates over half of its earnings from SOE hospitals , it will benefit. Relative to govt hospitals, for years, the govt funding and number of R&D projects for SOE hospital has been smaller;
- A crucial procedure for a policy to implement is the blessing of Chinese communist party commission. The blessing is here now. A step closer to implementation.
Trading at 0.7x price to book, there is plenty of upside. reiterate BUY.
DBS will have a group call with CR medical’s top management today (23 Jun) at 1100. Can contact us if you want to learn more about the industry and the company.