Dear Community,
having invested in $DHR (+0,89%) and these are mainly active in the States, partly in Europe, I was specifically looking for an alternative in the Asian area...
While screening (investing.com) I came across the Japanese company SYSMEX Corp $6869 (+2,83%) which is currently being massively punished (P/E ratio historically low), but has one of the best moats in the world.
1. what does Sysmex do?
Sysmex is the undisputed world world market leader in haematology (blood cell analysis) as well as being strong in urinalysis and blood coagulation. Roughly speaking, when a large blood count is taken in hospital or at the GP's, the tube is extremely likely to end up in a Sysmex machine.
2. the moat (the business model)
The company is a prime example of the "razor-and-blade" model:
- They put the big, expensive analyzers in the labs.
- But the real money is made from the reagents (the test chemicals) and maintenance.
- The highlight: Over 70% of sales are recurring revenue. Hospitals almost never replace these machines (extremely high replacement costs due to IT integration and staff training).
3 Sysmex vs. Danaher (What's the difference?)
Both sell the "scoops" for the healthcare sector, but the approach is different:
- Danaher is a gigantic, US-dominated conglomerate (life sciences, diagnostics, biotech) that is growing massively through M&A and the "Danaher Business System".
- Sysmex is a purist specialist. They are extremely sharply focused on blood/urine, are growing primarily organically and have a much stronger geographical presence in Asia (Japan, China, emerging markets). Sysmex is the scalpel, so to speak, while Danaher is the Swiss army knife.
4 Why is the current valuation so favorable?
Sysmex used to be a high-flyer (P/E ratio > 40). The share is currently being extremely punished. The reasons are primarily macroeconomic:
- China crisis: The Chinese government is running a tough anti-corruption campaign in the healthcare sector. Hospitals have completely stopped buying new machines for fear of audits. This is putting pressure on forecasts.
- Currency: The weak yen and currency fluctuations are distorting balance sheets.
- Post-COVID: The special boom from the pandemic is finally over.
5. the potential (the turnaround case)
Is the business model broken? No. The existing machines continue to run and consume high-margin reagents. As soon as the investment backlog in China (and other emerging markets) breaks up, growth will return. The megatrend (ageing world population = more blood tests) is absolutely intact. If you have the time, you can get an absolute quality world market leader at a valuation that has not been seen for years.
What is your opinion? Value trap or opportunity of the century for long-term investors?
@Tenbagger2024 you must have already looked into this company! 😬
