Medtecs Intl    Last:0.123    -0.001

The next journey

 

OF COURSE, TO HOSPITALS ALL ARE fda APPROVED n95 MASKS.

albeniz      ( Date: 27-Jan-2021 16:33) Posted: Does Medtecs produce N95 masks?  New variants are starting to appear and we may need N95 on top of the usual surgical masks.

 

Does Medtecs produce N95 masks?  New variants are starting to appear and we may need N95 on top of the usual surgical masks.

 

 

Initial studies show a significant drop in infections and hospitalizations after just one dose, and very few cases after two. Experts caution that the results are preliminary.

https://www.nytimes.com/2021/01/25/world/middleeast/israels-vaccine-data.html


 

 

 

 

15:47:57

Medtecs Intl

Sell down

1.08

491.9

http://www.shareinvestor.com/sg/home.pl

 

From The Next Insight

Medtecs International is the only Singapore-listed producer of personal protective equipment (PPE), a business that has been critical in the fight against Covid-19.

As its factories in China, Cambodia and the Philippines ramp up production of PPE for global markets including Europe and the US, profits and cashflow have turned into an unprecedentedly large incoming tide for Medtecs.

Based on its guidance in 3Q results announcement, Medtecs will record at least US$130 million in net profit for FY20. In comparison, it was just US$1.2 million in FY2019. 

Medtecs net profit (USD)

1Q20 (actual)

2Q20 (actual)

3Q20
(actual)

4Q20 (inferred)*

FY20 (inferred)*

US$3.7 m

US$35 m

US$45.7 m

US$45.7 m
minimum

US$130 m (minimum)

* Inferred from Medtecs? guidance 13 Oct 2020

Given the fast-evolving business environment in 2020, Medtecs gave guidance on 5 May 2020: The company said it ?expects revenue and profit growth in the second quarter to exceed that of 1Q 2020?.

It proved to be an incredible understatement. 2Q20 profit turned out to be US$38.9 million, far exceeding the $3.7 million recorded in 1Q20.

DBS Group, which is the only house covering Medtecs currently, has opted to be conservative about its 2020 forecast.

In its initiation coverage on 8 Dec 2020, DBS forecasted US$130 million -- in other words, exactly the minimum based on Medtecs' 13 Oct 2020 guidance.

This opens the door wide open for DBS to upgrade its target prices after the actual higher profits are announced.

Consider also the arguably low valuation of Medtecs. Based on US$130 million profit, which is 31.6 Singapore cents EPS, the stock's PE ratio is 3.5X on a recent stock price of $1.12.

Is the market overly worried about the sustainability of the exceptional business environment in 2020 for Medtecs? 

It doesn't help that DBS is the only one providing coverage, so Medtecs needs time to gain more significant traction among Singapore investors.

Being the only listed PPE producer in Singapore has added to that challenge as has the fact that Medtecs has been virtually non-existent on the radar of Singapore investors pre-Covid. 

Its 4Q2020 results, likely to be announced in weeks to come, could lend a sparkle to the market's view.  

Greater positivity could materialise if Medtecs will once again provide guidance on its revenue and profit for the near term.

More critically, Medtecs will need to highlight that its business fundamentals have been strengthened for good by Covid-19. 

DBS' 21-page initiation report did delve into that, as the following excerpts show:

1. Steady customer relationships a bedrock for Manufacturing segment.

 MED has been a long-time supplier for customers such as Premier Inc. and the governments of Taiwan and Singapore. We believe this relationship bodes well for the Group, enabling MED to remain a choice supplier even after COVID-19. The Group had sacrificed higher sales of Medtecs branded products to meet the needs of these customers during COVID-19.

47% of 9M20 manufacturing revenue was attributed to previous customers, translating to an estimated c.150% rise in sales generated from these groups of customers. Additionally, we believe there is a level of stickiness in the relationship between MED and its larger customers who may be resistant to seeking alternative PPE producers given the need for quality assessments.

2. Post-pandemic strategy ? A curated approach.

MED has been careful not to layout large sums on capital expenditure as the Group is aware of the unsustainable nature of current demand. Most of MED?s output has been met by increasing round-the-clock shift workers, converting idle plants into additional production bases and boosting efficiency.

Going forward, we believe MED will study the viability of establishing new manufacturing bases with a possible focus on Europe. Some countries may turn inward to domestic producers for important medical supplies and MED may expand accordingly to meet these needs.

In addition, MED is looking to further develop its self-branded (CoverU) line of PPE through brand franchising which we think has been well received given the high proportion of 9M20 self-brand sales of 68%.

3. Transition away from ODM model to raise ASPs.

MED?s transition away from an original design manufacturing (ODM) business model is expected to be a key driving factor behind MED?s larger earnings post-COVID. We estimate that ASPs generated from the sales of own branded products could be over double that of sales of non-branded products.

As such, while PPE product ASPs in the market are expected to normalise in future, ASPs recorded by MED?s, while lower than in FY20, are estimated to still remain c.90% higher compared to the preCOVID period.

4. Main earnings driver: MED?s future earnings to be sustained by post-pandemic PPE stockpiling.

Our base case estimates put post-COVID demand for gowns and masks at c.25% and c.5% of demand during pandemic levels, driven by international stockpiling of PPE. We believe that COVID-19 has heightened the awareness and importance of PPE stockpiling and expect most countries that MED serves to stockpile a reasonable 90 days of PPE, creating medium-term demand for gowns and masks after COVID-19.

Notably, MED?s customers are largely from high income nations such as the UK, Germany and the US which we think possess the capability to stockpile. In the longer-term, expiring PPE products may give a permanent boost to PPE demand as governments replenish their stockpiles of PPE.

We observe that PPE shelf lives have a range of between 2 ? 5 years and think that countries are likely to spread their replenishment needs evenly over the years.

 

I think TopGlove is pulling down the glove and medical stocks

 

Extracted from Business Times

After a stellar year capitalising on the Covid-19 pandemic and making more of its self-branded personal protective equipment (PPE) products, 2021 will be an important year for this Catalist-listed firm.
Medtecs, led by Taiwan& rsquo s Yang family, saw explosive sales numbers in 2020. An analyst reckons that the average selling prices and sales volumes of its masks, gowns and coveralls could remain at 90 and 60 per cent, respectively, above pre-Covid levels even as the pandemic situation is expected to improve in 2021.
Medtecs has a reliable network of suppliers in the bag, a 17-year track record of helping Singapore and Taiwan to stockpile that strengthens its pitch to other governments, a formidable e-commerce presence, and a foot in the giant US market. It also has a growing cash pile and is enroute to the mainboard.

 

Extracted from DBS Research

Valuation
Share price of S$1.30 based on FY21/22F blended P/E of 9.5x. We took a conservative multiple of 9.5x based on MED& rsquo s lowest pre-COVID forward P/E between November 2016 and December 2018. In valuing MED, we utilised 3 scenarios with different assumptions for demand for PPE and gross margins.

Base case (TP: S$1.30)
Our base case assumes that PPE demand for FY21F will begin tapering down in August with FY21F gross margins at c.38% as ASPs normalise. For FY22F, we assume gross margins of c.33% with factory utilisation at 53.4%. As illustrated in our study of post-COVID PPE demand, we assume that international governments will undertake PPE stockpiling worth 3 months of supplies. Based on such a situation, MED is likely to record FY21F and FY22F earnings of US$77.9m and US$33.2m respectively.

Bear case (TP: S$0.80)
We assume PPE demand for FY21F to decline from May with FY21F gross margins at c.33% due to steeper ASP decline. In FY22F, gross margins of c.22% were assumed with post-COVID factory utilisation at 46.6% based on global PPE stockpiling efforts worth 2 months of supplies. We estimate that MED could record FY21F and FY22F earnings of US$53.9m and US$14.8m in a bear case.

Bull case (TP: S$1.66)
PE demand for FY21F is assumed to only begin declining in October with FY21F gross margins at c.41%. FY22F post-COVID factory utilisation is forecast to sustain at 60.2% with gross margins at c.37%. Such a blue-sky scenario could reap MED FY21F and FY22F earnings of US$97.1m and US$45.0m respectively

 

https://researchwise.dbsvresearch.com/Researchmanager/DownloadResearch.aspx?E=fjacak-c

 

No reasons not to invest👍 👏

gregtan123      ( Date: 30-Nov-2020 09:30) Posted: Medtecs strategises to be more than a one-hit pandemic wonder   It is also working to expand its products beyond those serving medical purposes as Covid-19 vaccine rollout could slow PPE demand.   AS nations struggled to deal with the Covid-19 crisis earlier this year, Medtecs International Corp - a Singapore-listed maker of surgical masks, medical coveralls and isolation gowns - was turning away orders for its products. The Taiwan-headquartered firm, which counts ST Logistics as one of its biggest long-standing customers, was swamped by requests from existing OEM (original equipment manufacturer) customers to triple its supply. New customers, meanwhile, were asking for Medtecs' own branded products, which yield margins up to 10 times as high as OEM products. All this was unfolding as raw material prices were skyrocketing on a global shortage of personal protective equipment (PPE).   " It was really tough to decide which customers we were going to service. Do we abandon long-time customers for (new) high-margin customers?" said Medtecs executive director and chief executive William Yang in an interview with The Business Times.   " We had to decide fast and tried to entertain both ... We couldn' t make everyone happy."   In the end, the Catalist-listed company managed to raise its output by 20 to 30 per cent for existing customers while grabbing the chance to make its own brand products for both old and new buyers. " We actually gave up tens of millions of dollars in profits (to honour our commitment to existing customers)," said Mr Yang, who has been with the firm since 2005. In 2018, he succeeded his father Clement Yang - Medtecs' founder and current chairman - as CEO.   Medtecs cranked up output with round-the-clock shifts and increased automation. It also converted idle plants into production bases. The company is now churning out 80 million medical masks and 18 million gowns monthly, from production facilities in Cambodia, China and the Philippines. Singapore, Taiwan and the Philippines are among its biggest markets.   Mr Yang said Medtecs' " global source and sell" strategy also helped. Four years ago, the company began to grow its network of suppliers. " So, during pandemics, we don' t have to spend extra time and resources to validate new suppliers, because we already have a full list of trustworthy suppliers to meet the surging demand. When the order volume is big, we still manage to deliver on time." Medtecs-branded products, which made up a trifling 3 per cent of total output in 2019, accounted for 65 per cent of overall production in the nine months to September 2020. The three-decade-old OEM business has been overtaken by the OPM (Original Product Manufacturing) division.   The impact of this change in output on Medtecs' key metrics has been explosive. Net profit surged to US$85 million in the nine months ended September 2020, from US$426,000. Revenue increased to nearly US$290 million, from around US$50 million previously. The nine-month showing has significantly eclipsed 2019' s full year report card of a US$1.2 million net profit and US$69 million revenue.   PPE - Medtecs' core product - made up 73 per cent of revenue by product type during the nine-month period, up from 64 per cent last year. Disposable surgical masks accounted for 18 per cent of revenue, from 0.2 per cent last year.   Expanding its presence   Asia is Medtecs' largest market, accounting for 44 per cent of the group' s revenue by geography. Within Asia, the Singapore government is among the biggest revenue contributors this year.   About 35 per cent of group revenue came from Europe, followed by 15 per cent from North America.   Australia, a new market that is being driven by PPE demand from the local government, contributed 6 per cent to the company' s topline.   Medtecs managed to land additional orders after it stepped up its e-commerce game. It has a presence across multiple platforms including Alibaba, Amazon and Lazada. Distribution centres spanning Japan, the United States, Canada and Europe help fulfil orders.   " We receive hundreds and thousands of enquires every month from customers from different parts of the world because we are doing e-commerce," said Mr Yang. " We are the number one vendor on Alibaba B2B platform for having the most transactions done."   Medtecs wants to expand its footprint in the US, which is seeing rising infections and higher rates of hospitalisations across the country.   Over a month ago, it incorporated a wholly-owned subsidiary - Medtecs USA Corp - in Delaware. According to Mr Yang, Medtecs is working with a US partner in North Carolina to produce and distribute its Medtecs-branded products across the country by end-year. The venture, if it pans out, will expand the group' s global stockpiling network and support its goal of becoming a one-stop procurement platform.   The firm is also working on expanding its products beyond those serving medical purposes. These include " flight suits" and antiviral products and applications. " We' ll have lots of new antiviral products because after Covid, we need more than just PPE. We can design or help to set up a (safe) environment or workspace," he said.   Beyond Covid-19   Indeed, for the likes of Medtecs, it is imperative to strategise beyond the current pandemic. The imminent Covid-19 vaccine rollout could slow demand for PPE as the outbreak comes under control.   Medtecs also supplies linen, laundry services and logistics support to over 200 hospitals in the Philippines and Taiwan, and so is not wholly dependent on the PPE business. But it has recently gained a wider investor following.   From its listing in 1999 to the end of last year, shares of Medtecs had attracted little interest and had generated a negative return of 87.8 per cent. This year, however, they hit an all-time high of S$1.85 in August. Last Friday, Medtecs shares closed at S$0.97. That puts the stock' s total return since listing at 221.6 per cent, or 5.7 per cent per annum.   The recent weakness could be attributable to investors wondering if Medtecs was limited to being a pandemic wonder.   Mr Yang thinks not. " Face mask wearing is the new norm," he said. That and heightened government awareness on the importance of preparedness for an outbreak could sustain growth in the PPE space for at least the next five years, he said.   Medtecs is also hoping to capitalise on policymakers' efforts to stockpile PPEs to ensure they don' t run out when needed. The company has put in place a rolling inventory management plan to replenish and replace PPE stockpiles. It has been doing this for Taiwan since 2011 and has been the national stockpiling partner for Singapore for 17 years.   " Doing stockpiling is not as simple as making and selling PPEs. You have to come up with a comprehensive turnkey solution to help the government maintain a good inventory level and maintain the shelf life at the same time," Mr Yang said. He has shown his confidence by scooping up his first holdings in Medtecs shares. This month he forked out some S$922,000 to acquire one million shares.   There are other catalysts ahead for Medtecs' stock. Mid-November, the company disclosed that it was applying for a transfer to the mainboard and will be included in the MSCI Singapore Small Cap Index effective Nov 30 after market close.   On the plans to transfer to the mainboard, Mr Yang said : " Before Covid, the trading activity was not that big. This year, the (trading) volumes are a lot as we are undergoing a major change. If shareholders can know us better and understand what we' re doing, I think it' s actually very beneficial - and more healthy."   https://www.businesstimes.com.sg/companies-markets/medtecs-strategises-to-be-more-than-a-one-hit-pandemic-wonder boyboy61      ( Date: 30-Nov-2020 08:49) Posted: https://www.businesstimes.com.sg/companies-markets/medtecs-strategises-to-be-more-than-a-one-hit-pandemic-wonder

 

https://sg.news.yahoo.com/pleas-masks-trump-rally-ignores-174552350.html

 

wil probably hover around the $1 mark

 

Start of a new journey tomorrow

 

boyboy61      ( Date: 30-Nov-2020 08:49) Posted: https://www.businesstimes.com.sg/companies-markets/medtecs-strategises-to-be-more-than-a-one-hit-pandemic-wonder

 

https://www.businesstimes.com.sg/companies-markets/medtecs-strategises-to-be-more-than-a-one-hit-pandemic-wonder

 

It' ll be explosive from the opening bell as it seeks the next milestone... entry into STI. STI companies, watch out, here comes the first medical bull and he is getting more bullish by the day

boyboy61      ( Date: 29-Nov-2020 17:08) Posted: Waiting for the next journey starting tomorrow day's end.....MSCI small cap

 

Waiting for the next journey starting tomorrow day's end.....MSCI small cap

 

https://m.malaysiakini.com/news/551034