It’s not a tuuummor! Not after China Medical (NASDAQ:CMED) is done with it, that is!

Beijing-based China Medical Technologies (中国医疗技术公司) is the premier medical device company in China. Their business generates the most money from their ultrasound tumor therapy system and their in-vitro diagnostic business, though they have a wide variety of product lines.

The Valuation

All data are from Google Finance, figures are in millions of RMB

That’s some pretty torrid growth. While international investors have been throwing money around in China like a bunch of drunken sailors on shore leave this past couple of years, CMED seems to have missed the action. It’s now trading at a P/E of 27, and its FP/E is in the same ball-park as larger US-based medical device stocks, such as Baxter (NYSE: BAX) and Stryker (NYSE: SYK). I don’t think many would disagree it’s got a lot of room to run at a market cap of about a billion, in the most populous, fastest growing country in the world.

The Risks

I think my biggest risk by far is that I don’t know the medical industry the way I know video games or the way I know food. It’s not a co-incidence that my performance in bio-tech stocks has been abysmal to date. Hopefully, I’ve learned my lessons and done a bit better research this time, but the possibility of failure due to something I don’t understand is very, very real.

Other thoughts

Barring anything really unforeseen, I think this is one of my safer investments, and yet it has the chance of becoming a monstrous win. There are two bonuses that this stock provides, apart from everything written above.

1) It pays a dividend!

2) The RMB is seriously undervalued right now. Even if CMED doesn’t turn out to be a big success, the stock may still be a win after the effects of currency rates.

10/10/2007 09:30:34 Bought 75 CMED @ 39.85

Next Targets

I’ve got Chinese solar power company Suntech Power, and Taiwanese fabless semiconductor company Silicon Motion Technology Corp. on my watch list.

Legal Disclaimer: All of the information in this article is accurate to the best of my knowledge. However, I make no guarantee about the accuracy of anything written above. I’m not responsible for any mis-typings, or any other errors in the information. If you purchase any stock solely because I did, you do so at your own risk.

This entry was posted on Thursday, October 11th, 2007 at 3:41 am and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.