Monday, April 25, 2011

ShareHope considers M&A as expanding strategy. Revenue expected to increase 20-30%.

Based on market forecast, the after-tax earnings per share of the newly listed company ShareHope (8403) is expected to be 2.4 dollar, and its annual revenue growth rate is projected to be 20-30%. ShareHope is considering domestic mergers and acquisitions to expand its medication and supply logistics, and clinic operation businesses. With regard to development in China, it is hoping to establish a strategic partnership with companies that share complementary goals.

Group purchasing of medication and health supply logistics accounted for over 80% of

ShareHope’s revenues last year. The rest of its revenues came from health checkup business (11-12%) and medical specialty service (6-7%). Earnings after tax for the first 3 quarters were 80.32 million dollars, or 1.9 dollars per share.
ShareHopes’ revenue in January reached a historic record of 130 million dollars due to a spike in customers’ orders before the Chinese New Year. Medication and health supply logistics generated revenues significantly higher than their average the previous year. Earlier this month, ShareHope signed a contract with the Ten-Chen Healthcare Network, a Taoyuan based healthcare supplier, adding another customer to its group purchasing platform.

Ten-Chen Healthcare Network, which is viewed as a typical healthcare provider in the Taoyuan area, operates two hospitals and will be an important contributor to ShareHope’s revenues in the future. Meanwhile, the Department of Health latest policy to recommend patients refill prescriptions for chronic medication from local pharmacies rather than from hospitals provides an incentive for local pharmacies to join the group purchasing platform offered by ShareHope. As indicated by ShareHope, the company is considering more M&A to broaden its channels among pharmacies and clinics.

ShareHope also hopes for a boost to its health checkup business from an expected influx of tourists and patients from the Chinese mainland. However the degree by which this will impact on ShareHope’s business is highly dependent on a loosening of the policies that still restrict the travel of Chinese nationals in Taiwan. Health checkup services provided by ShareHope now account for 30% of all health check up services in the Taoyuan, Hsin-Chu, and Miao-Li areas.

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