Why Dehaier Medical wins three-year supply contract sucks: myth vs. reality

Dehaier Medical Systems Limited (Dehaier) designs, develops and markets its branded products in China. The Company imports the majority of the products and medical components it sells to its customers. The Company designs and develops some of the medical components that are part of the branded products to be distributed. Some of these medical components are manufactured by contractors in China because it does not have a manufacturing facility. Most of its branded products require light assembly. The Company focuses on the development and distribution of medical devices. In addition to Dehaier’s branded products, it also serves as a distributor of products designed and manufactured by other companies. The Company broadens product portfolio through distribution agreements with international manufacturers. In May 2012, the Company announced that it established a wholly owned United States subsidiary, BreathCare, LLC.  Dehaier Medical S (NCM:DHRM) is very active today and traded between $1.75 - 2.99 with total traded volume of 1129394 shares. At a current price of 2.45, DHRM is +0.91 - +59.09% from the previous close of $1.54. Moreover, At Current Market Price, DHRM is in distance of +40.62% from its 50-day Moving Average price of $1.7423 and +18.72% from its 200-day Moving Average price of $2.0636.]

Dehaier Medical Systems Ltd said a medical equipment manufacturer in Ukraine signed a three-year contract to buy its air compressors and customized trolleys.Dehaier shares nearly doubled in value to a four-month high of $2.99.The products covered by the deal are used in intensive care units, emergency rooms, operation rooms, respiratory departments and anesthesiology departments. The purchaser plans to distribute Dehaier's products in other European markets too, the company said. Dehaier, based in Beijing, develops and assembles its own branded medical devices and homecare medical products using third-party components.

Can DHRM recover After the Recent fall? Find Out Here

What may excite investors most about DHRM is the fact the company has yet to truly tap into the massive markets that exist. DHRM is already showing strong gross profit figures as indicated by the $4.0 million earned for the six month period ended June 30, 2012. That $4.0 million came off of revenue of $10.3 million and while that was a slight dip from the $10.7 million in revenue from the prior-year period the gross profit was greater in the most recent period, jumping from 36% to 39%. The gross profit should only continue to improve as DHRM develops and manufactures more of their own products and if they can gain greater name recognition in European markets then they could be on the path to serious growth.