Leading Medical Supplier Coming Back Strong!

There are certain industries that are blessed with steady demand. Even during a worldwide economic slowdown like this one. Healthcare is one of those industries.

Injuries are inevitable regardless of the economic climate. So are surgeries and other medical procedures. That’s why this next company still has a healthy bottom line quarter after quarter.

QUICK FACTS

Ticker                                     WWIN

Industry                                   Medical Instruments & Supplies

Recent Price                            $3.74

Market Cap                              $90.3 m

Shares Outstanding                  24.1 m

Average Volume                      17,338

Dividend Yield                          N/A

Website                                   http://www.winnermedical.com/


COMPANY DESCRIPTION

Winner Medical is a China based company providing cotton-based medical dressings.  You probably know it as gauze.

But their extended product lines are a bit more diverse. They manufacture and design gowns, face masks, sterilization pouches, and various fluff balls and swabs. Demand for these products never really drops, it only grows.

Especially in China where we’re seeing improving and more widely available health care.

They’ve also expanded far beyond their domestic stomping grounds. Of their $41 million in revenue, $16 million is from Europe, $8.5 million from the U.S. and $6 million from Japan.

FINANCIALS

This quarter is generally a slow one for Winner. That being said they still destroyed the previous year’s numbers. Year over year sales revenue was up 34%!

Assets are up 21% compared to the end of last year’s accounting period.

Gross Margin has gone down just a smidge year over year. Their net income isn’t in optimal condition this quarter. But that’s a result of short term commodity pricing issues.

Another good sign for the future for this company is their sales growth. Domestic sales in China increased by 52%. Sales to Brazil increased a whopping 268%. Sales to Europe increased 30% this quarter as well.

That’s reflective of the product they are selling. As long as Winner continues to make high quality products at lower prices they will continue to grow their market share.

KEY METRICS ANALYSIS

Trailing P/E                                       7.5x

Price / Sales                                     0.7x

Return on Assets                               7.8%

Insider ownership                               76.1%

Short Ratio                                        5.7x

Current Ratio                                      3.4x

Total Debt To Equity                             4.7

RECENT EVENTS

So there’s a lot of good news for this company.  But we have to address the elephant in the room… commodity prices are rising.

Cotton prices hit all-time highs this spring. WWIN primarily manufactures cotton-based products. So it was safe to assume this was going to be a brutal quarter for Winner. Despite the increase in costs, their production and sales were robust enough to remain profitable.

In March cotton peaked at about $2.30 a pound. Since then it’s plunged to about $1.03 a pound. That means we’ll be seeing expenses normalizing in the near future.

But that hasn’t stopped a lot of investors from fleeing like rats from a sinking ship. Panic and speculation often equals gains for cooler heads.

MANAGEMENT TEAM

Jianquan Li – President and CEO

Xiuyuan Fang – VP and CFO

Nianfu Huo – Senior VP

STOCK ANALYSIS


 

 

 

 

 

 

Chart courtesy of stockcharts.com

 

I’m not surprised this stock nosedived in August. The market has been quite volatile over the last few weeks.  WWIN is trading well below both the 200 and 50-day averages.

They just made a new 52-week low a couple days ago.  We’re already up 30 cents from the low.

WWIN’s 52-week low was $3.50 and the 52-week high was $6.32.  Right now the stock is trading at $3.74.  The 50-day moving average is near $4.48 a share and the 200-day moving average is at $4.76.  The company has a market cap of $90.3 million and 24.1 million shares outstanding.

 

Click HERE to read our report on China Shen Zhou (SHZ)

Click HERE to read more about Tianyin Pharmaceutical (TPI)