Company: Shandong Weigao , Ticker: 1066 HK, Market Capitalization: $31.3 bn (Large Cap)Exchange: Chinese Company, listed in Hong Kong, with main currency: CNY (Chinese Yuan)

Company:Products: The Weigao group is involved in the research, design, manufacture, and sales of single-use, disposable medical equipment, with a generalist approach in manufacturing devices and parts for many different applications for various fields in medicine.

Competition: Weigao group faces competition from foreign healthcare product manufacturing giants such as Siemens (SIE US) and Johnson & Johnson (JNJ US), as well as several local Chinese manufacturing companies.

Moats: One significant moat preventing price competition within the medical devices sector in China is new government regulation favoring domestic manufacturers over foreign producers by putting pressure on hospitals to make purchases through China-based companies. Additional moats include a network of over 170 sales and distribution offices spread mainly throughout China and an existing network of over 3,000 hospitals served.

Model: Weigao group is a vertically-integrated business that controls its channels and reaps profits as a result. The company has also built up a focus on single use and

disposable products, creating of necessity a high repurchase propensity in its customers, adding to the likelihood of customer stickiness through ease of ordering over repeated transactions. With these advantages in place, Weigao group enjoys a modestly stable recurring revenue base.

Growth: Weigao Group is looking to accumulate greater market share within the China region, where most of its moats are limited to. It would face significant headwinds with expansion outside of that area, particularly into the United States.

Competition:Industry: Medical devices are a largely commodity product, with little ability to differentiate design or functionality of its products. The size of the firm and the scale of production also significantly limit the company’s ability to innovate new products or create a differentiation point other than based on price alone.

Competitors: While the company enjoys political moats in the PRC, much bigger competitors abound overseas, and with any change in regulation, these companies could pose significant threats to Weigao Group.

Market Share: No exact figures have been found for the amount of market share held by the company in the PRC.

Challenges: The company faces slowing sales growth and net profit margin as other domestic competitors move into an attractive market with moats keeping foreign giants out.

Risks: The inability to differentiate poses a significant risk to all companies in this space. Also, changing regulation could significantly alter the competitive landscape.

Customers:Customers: The company provides disposable healthcare products to hospitals, often pursuing a direct sales route.

Sales Channels: The company has 25 sales offices, 38 customer liason centers, and 170 municipality representative offices spread throughout the PRC.

Perceptions: Weigao Group is mainly shielded from the public eye, as the hospitals the company supplies healthcare products to is the predominant face of the industry.

Analysts: Curt Payne, Global Financial Advisors, Spring 2015

Company: Shandong Weigao , Ticker: 1066 HK, Market Capitalization: $31.3 bn (Large Cap)Exchange: Chinese Company, listed in Hong Kong, with main currency: CNY (Chinese Yuan)

Fin415/GFA Single Company ToolCompany Ticker: 1066 HK GICS: 35101020 12/2014 Currency: CNY

Name: Shandong Weigao Gp Medical-H Sector: Health Care Major Index: SZCOMP

Country: China Last Report: 12/14 Industry Group: Health Care Equipment & Servic

Equity Fund Currency: China Renminbi Spot Industry: Health Care Equipment & Suppli

Currency: China Renminbi Spot Sub-Industry: Health Care Supplies

Name: Shandong Weigao Gp Medical-H in CNY currencySingle Company Tool Averages

FY End: 12/14 10 Year 5 Year 3 Year 1 Year T12 GraphsMultiplesPE * 23.46 19.86 31.78 20.88 23.08 PB * 4.42 3.52 2.98 2.28 2.54 EV/S * 6.73 6.63 5.62 3.84 3.84 EV/EBITDA * 23.15 23.23 20.49 14.38 - Dividend Yield 1.0% 0.9% 1.0% 1.3% 0.0%OFCF/Equity * 0.95 0.97 0.99 1.03 (0.63)

Growth and MarginsSales Growth 32.4% 28.4% 28.9% 14.4% 14.4%Gross Profit Margin 51.9% 57.1% 58.4% 58.8% 58.8%Operating Margin 25.5% 25.0% 23.4% 21.8% 21.8%Net Profit Margin 33.0% 39.5% 18.7% 20.6% 20.6%

DuPont AnalysisNI/S (Profitability) 33.0% 39.5% 18.7% 20.6% 20.6%S/TA (Efficiency) 45.8% 41.3% 39.9% 43.7% 43.7%TA/OE (Leverage) 1.41 1.21 1.21 1.22 1.22 ROE 19.4% 18.1% 8.8% 11.0% 11.0%Altman Z 12.76 14.82 10.77 8.21 8.92 ROIC ** 19.9% 17.6% 14.4% 12.8% 24.5%ROIC *** 14.0% 11.3% 9.0% 9.9% 9.6%ROA 13.2% 11.4% 9.7% 9.9% 9.5%

OtherMarket Capitalization 21,446 30,473 28,915 22,433 25,030

CapEx % of Net Income 92.2% 100.2% 139.6% 55.0% 55.0%Net-net (CA-TL)/MC 7.0% 10.7% 13.3% 20.5% 18.4%

Returns versus the SZCOMP Index1066 HK Avg. Ann. Returns 69.0% 6.1% 1.7% -37.9% 11.5%SZCOMP Avg. Ann. Returns 34.9% 7.1% 19.8% 35.2% 97.1%

Difference 34.2% -0.9% -18.1% -73.1% -85.6%* Harmonic mean calculations. ^ Period calculations only (not averages)

** ROIC = EBIT/(Average of CA-CL+NPP&E) T12 = Trailing 12 Months

*** Bloomberg ROIC = Trailing 12M Earnings/(Average Total Invested Capital)

Analysts: Curt Payne, Global Financial Advisors, Spring 2015