ONE of the biggest companies listed on the tech-heavy board of the Shenzhen Stock Exchange is a fast-growing Chinese medical device maker that is grabbing market share from the likes of General Electric Co. and Siemens AG.

Shenzhen Mindray Bio-Medical Electronics, which was added to the MSCI index at the end of May, has soared 44 percent this year to become one of the top performing stocks listed on the ChiNext board. With a total market value of US$28 billion, Mindray is vying with Wens Foodstuffs Group to be the largest ChiNext counter.

Backed by government policy to support indigenous medical appliance manufacturers and with growing health care spending amid a rapidly-aging population, Mindray’s earnings outlook seems bright. The firm is expected to grow its revenue by about 20 percent and net income by about 21 percent annually between this year and 2021.

The optimism is reflected in the stock’s valuation. Mindray is trading at a forward price/earnings ratio of 39 times, nearly double the average for the entire ChiNext market that is designed for small, growth enterprises. The analyst consensus one-year price target for the company is 158.90 yuan (US$23.07), indicating a potential upside of more than 1 percent from the current price.

Mindray is “looking expensive,” but is not pricey when compared with some “white-horse stocks,” said Xiong Qi, Beijing-based deputy head of research for Windsor Capital Management Co., referring to certain high-flying companies such as Chinese soy sauce maker Foshan Haitian Flavoring & Food Co.

The company found favor among institutional investors after listing itself in Shenzhen last year. Founded in 1991, Mindray makes in-vitro diagnostics (IVD) equipment, life monitoring systems and medical imaging gears such as color ultrasound devices.

Mindray’s spending on research and development rose 25.5 percent year on year to 1.42 billion yuan in 2018, accounting for 10 percent of its revenue, according to its annual report.

Institutional investors have piled into the stock, but others are wary. Fidelity Management, China Asset Management and Bosera Asset Management are among investors that bought into Mindray in recent months. As of July 8, foreign investors held 13.13 million Mindray shares, up 80 percent since the announcement of its MSCI inclusion. (SD-Agencies)