Comment on Mindray's building new facility

**balaoko** Fri Dec 29, 2006 2:20 am

Comment on Mindray's building new facility
It is reported that Mindray (MR) is planing to build a new research and development and manufacturing facility at Nanjing Jiangning Development Zone. The facility will expand Mindray's presence in China's Yangtze Delta region around Shanghai in eastern China and help the company attract and keep research and development talent in the region. Mindray anticipates a total investment of up to $150 million over three and a half year. The first-year investment should be no more than $30 million.

I think it is a good news to mindray because the company has a lot of cash and the industry of medical equipment manufacture in China is expanding very fast. If considering the company's development from a business man's point of view, keep investing in such an environment is a good idea. So where to put the investment? Mindray is based in Shenzhen and has and is building new facilities, so there is no reason to put more cash in Shenzhen. It has a R&D department in Beijing too. A possible place is in prosperous Yangtze Delta, say, shanghai or nanjing. There are already pretty much foreign enterprises in Shanghai, and the real estate market is still at high price level. Investing in Shanghai means more challenge in attracting talents and more investment in facilities. On the contrary, Nanjing has many famous universities so it has plenty R&D resources, also the real estate costs is lower than Shanghai. Although I don't know how many foreign companies invested in nanjing, I assume the number is much lower than that in Shanghai, thus the lower competity in attracting talents. As the report implied, the govenment seems to have good relationship with mindray, which is also an important factor in investment in china. Since it is in the Development zone, I am expecting low tax rate after it is put into operations. As a result, Nanjing is an ideal place to choose.

Mindray is a "BaiMa" so its price may not be low from value point of view. But it is a growth company. After reading its SEC files, I believe it is a stock with high quality. It is a good stock for me.