2019.12.27 CoStone Capital Views:
In 2016, Mindray (300760.SZ) delisted from the US and completed capital increase and share enlargement. At that time, its P/E was over 30 times, deterring many institutions. When Mindray’s founder Xu Hang decided to quit the US exchange market, he asked CoStone Capital Chairman Zhang Wei, “What is the expected rate of return on this investment in Mindray?” Zhang Wei replied that doubling in three years was a sure thing, who invested hundreds of millions of yuan in Mindray without hesitation.
CoStone Capital Gaining 3X Returns on Mindray in Just 3 Years
In 2016, Mindray (300760.SZ) delisted from the US and completed capital increase and share enlargement. At that time, its P/E was over 30 times, deterring many institutions. When Mindray’s founder Xu Hang decided to quit the US exchange market, he asked CoStone Capital Chairman Zhang Wei, “What is the expected rate of return on this investment in Mindray?” Zhang Wei replied that doubling in three years was a sure thing, who invested hundreds of millions of yuan in Mindray without hesitation.
Zhang Wei explained the reasons for investing in Mindray as follows.
First, Mindray was the largest medical device company in China. Meanwhile, as a company that had been listed on the New York Stock Exchange for many years and had successfully delisted from the US, Mindray had no problems with standardization, which ensured Mindray’s listing on A-share market. Second, Mindray would maintain such high growth for a long time.
These two reasons guaranteed a high margin of safety for investing Mindray. As an experienced investor, Zhang Wei dares to invest heavily in companies with good margin of safety, who understands that with a sound margin of safety, there is a high probability of high returns.
“From the perspective of investment, how much returns one can get is decided by whether his understanding of this issue is vague or firm and sharp,” Zhang Wei said. CoStone Capital had intended to invest in Mindray before it started delisting from the US, which was eventually missed because of the founder’s plan to leave the US stock market. Nevertheless, CoStone Capital got an opportunity to re-examine Mindray and finally confirm the investment in it when Mindray prepared capital increase and share enlargement before returning to the A-share market. Zhang Wei believed that Mindray would maintain its advantages despite the delisting from the US. In addition, Mindray had always surpassed most domestic device companies in terms of continuous high proportion of R&D investment; and there appeared the trend of domestic medical devices replacing foreign brands. All this ensured that Mindray would still enjoy great development space.
Although Mindray gained the favor of institutional investors before the re-listing and saw continued increase in its stock price after the listing, it still encountered many doubts from the market. For example, some people doubted that whether there was enough development room in the medical device market and whether Mindray’s current valuation overdrew its future growth.
Zhang Wei said frankly that Mindray’s performance after returning to the A-share market exceeded his expectations. The current pursuit of leading companies and blue chips in the secondary market is based on companies’ good performance. Therefore, Mindray’s continuous growth meets the requirements of investors, especially institutional investors. In the short term, the policy dividends of the medical industry including hierarchical diagnosis and treatment will also give enterprises enough growth room. In the long term, domestic products replacing imported ones is the general trend and is speeding up, which guarantees broad market space.
Zhang Wei once said that there are two standard answers to corporate success. First, there must be a clear strategy and sufficient patience and determination to establish an organizational system and R&D system; second, entrepreneurship is essential to high returns.
Over the past 20 years, Mindray’s growth has been well explained by these two answers. From the beginning of its establishment, the company has never deviated from its main business of medical equipment. The founder has spent nearly 30 years focusing on how to make better domestic medical devices.
Rewritten by: Yang Yang, Edited by: Du Zhixin, Li Yunzhen
Over the past year, the bull market returned, with technology leading the way.
As I said back in October 2024, the rally that began on September 24 was not merely a rebound, but a reversal. Since then, China's capital markets have undergone a broad revaluation, moving from undervaluation toward fair value.
The Shanghai Composite Index reached its highest level in a decade. The "Yi-Zhong-Tian" trio—Eoptolink, Zhongji Innolight and TFC Communication, three prominent Chinese optical communications stocks—saw their share prices multiply severalfold in a single year. Cambricon's market capitalization briefly exceeded RMB 600 billion. Elsewhere in the technology sector, triple-digit price-to-earnings ratios and valuations exceeding RMB 10 billion became commonplace.
Some investors were greedy; others, fearful. Still others asked me: Are technology stocks in a valuation bubble?
My answer is that what we are witnessing is the hunger and anxiety of an era, reflected in the capital markets. Once you understand this, the current fervor for technology investing is no longer difficult to explain.
Investment has nothing to do with macroeconomics, but everything to do with geopolitics.
China-US relations will shape the investment landscape for decades to come. Geopolitics has played a major role in shaping the hunger and anxiety of our times, fundamentally reshaping the way we invest.
What, then, lies at the heart of China's hunger and anxiety?
The Fourth Industrial Revolution is already underway, yet China has not fully overcome the technological shortcomings left by the Third. There is no time to lose.
This is why some people wonder: Why do Chinese computing chip companies command such high valuations when their technologies still lag so far behind NVIDIA's? Why does NVIDIA trade at just 50 times earnings, while a company hailed as "China's answer to NVIDIA" commands a multiple of 300?
To me, this gets the logic exactly backward.
It is precisely because these companies cannot catch up with NVIDIA in the near term that they command a higher strategic premium. The wider the technological gap, the greater the strategic value.
The further something lies beyond our reach, the stronger our hunger. The harder it is to catch up, the deeper our anxiety. If China were to achieve a complete breakthrough in computing chips one day, valuations might actually come down.
Where can one find China's most spectacular natural landscapes?
Much of the answer, I believe, lies in and around the Hengduan Mountains: the Meili Snow Mountains, Jade Dragon Snow Mountain, Mount Gongga, Mount Siguniang, Jiuzhaigou, and many others. Vast differences in elevation and deep fault lines have given rise to landscapes of extraordinary grandeur.
Hard-tech investing follows a similar logic.
Technological gaps, discontinuities in capabilities, and missing links in industrial systems: a leap in difficulty brings a leap in valuation, and a successful breakthrough can, in turn, bring a leap in returns.
This logic extends well beyond computing chips. It is equally evident in memory semiconductors, commercial spaceflight, and other sectors where China still faces substantial technological gaps with other countries.
It was precisely this conviction that led CoStone Capital, starting in 2016, to decisively focus its investments on three areas: hard tech, emerging industries, and life sciences and healthcare. In this context, "hard tech" refers specifically to important industries in which China faces a technological gap with the United States.
Thanks to this forward-looking strategy, CoStone Capital established an early presence across the full value chains of key sectors, including semiconductors, artificial intelligence, and robotics.
Looking ahead, the frontiers of technological progress and industrial upgrading are boundless. Nor can the gaps in hard technology be closed overnight. The twin windows of opportunity presented by technological innovation and the development of homegrown alternatives to foreign technologies have only just begun to open.
The road ahead is long, but the future holds immense promise.
As an investment firm, CoStone Capital will continue to invest where the hunger and anxiety of each era run deepest, move forward with the tensions that shape our times, and extend our reach toward the most challenging—and most important—frontiers.
Spring 2026