Medlive Technology (2192 HK): Top Pick in China’s Digital Healthcare Space

Medlive Technology is the largest player in China’s online professional physician platform, with a 21% market share. Shares are trading at their highest level since listing in July. Consistent revenue growth (60% CAGR during 2018–2020), scope of further margin expansion by leveraging on its scalable business model, zero-debt status, bluechip clientele (In 2020, 18 of the top 20 multi-national pharmaceutical companies in the world by revenue were Medlive’s customers), and favorable macro tailwind justify the premium valuation of the shares of the company. With its large and engaged physician user base, Medlife enables pharmaceutical and medical device companies to reach to ~60% of all licensed physicians in China, thereby making its platform even more attractive to the stakeholders in the healthcare industry. The company is a clear beneficiary of both the COVID-19 pandemic and China’s centralized volume-based purchasing policy. The former limits physical meeting for launching new drugs/products, thereby enhancing the scope of digital healthcare marketing services, while the later calls for cost effective marketing as the pharmaceutical companies are taking a huge price cut to the extent of 70–80% on the selling price. With strong fundamentals, coupled with market leadership positioning amid favorable industry tailwind, Medlive Technology remains our top pick in China’s digital healthcare boom.