China Medicine Investors Pleased with 2008 Numbers

China Medicine Corporation (CHME.OB) announced that 2008 revenues increased 27% to $53.6 million, while net income actually outpaced the growth in revenues, rising 33% to $9.1 million. That is equivalent to 60 cents per share, fully diluted. The improved results build on a 75% increase in revenues in 2007.

These results beat the company’s guidance, even though China Medicine warned in October 2008 it would not meet its forecast. At the time, China Medicine did not issue a lower set of numbers.

Almost half of the company’s revenues were booked in Q4, which recorded sales of $24.4 million. China Medicine said that an early New Year’s holiday pushed some sales forward from early 2009 into late 2008.

The company is continuing to work on its recombinant Aflatoxin Detoxifizyme (rADTZ) product, which has the potential to detoxify aflatoxin (AFT), a cancer causing agent, in food and feed. All initial rADTZ experiments and testing have been completed successfully, and the Department of Agriculture in China is reviewing the product. China Medicine has applied for a production permit for rADTZ, which it expects to receive in Q2 of 2009.

China Medicine said its major products in Q4 of 2008 were Hongjin Xiaojie Capsules, a cough treatment (5.7% of revenue); Xueshuantong injection, which is used to improve blood circulation, remove vascular stasis and dilate blood vessels (5.4% of revenues); Cinepazide maleate injection, a treatment for vascular sclerosis (4.1% of revenue).

During Q4, prescription products accounted for 79% of total net revenues, and over-the-counter medicines generated another 18%. Dietary supplements, medical equipment and others were responsible for the rest. Sales of medical formula products have dwindled to almost nothing because of stricter SFDA regulations for these products.

The major negative in China Medicine’s report was a substantial increase in accounts receivable over the year. This item grew 41% in 2008 to $19.2 million.

Investors were pleasantly surprised by the news. They sent China Medicine higher by 21 cents to $.95, a 28% increase. In the past 12 months, the company’s shares have traded between $.57 and $3.05.

Disclosure: none.

Comments

[Tom Santamaria:]

This is like many Chinese micro-caps very undervalued when one considers that along with $.60 fully diluted eps investors also get a company with very little debt & a current accounts ratio that shows Assets far outstrip liabilities.

But enough about current information, What about the future? That future is ADTZ & plain & simple the potential of ADTZ far outstrips anything CHME has done in the past.

Mar 27 09:58 AM

[Joenatural:]

CHME - going to make alot of people alot of money. At $1.15, CHME carries a trailing P/E of 1.6 with 2008 earnings (fully diluted) just reported of .60 a share. Revenue growth of 51% in the 4th quarter year over year. Next month, rADZT is expected to be approved and then the earnings will get even sicker. CHME was taken to the woodshed by relentless forced selling by hedge funds last year.

Think about it ...... at $10.00 a share, the trailing P/E would be 16 and with a growth rate of 51% and a booming new product on the way that carries a 60% margin, $10.00 a share is still dirt cheap. Downside risk ? If you find one, please let me know.

The China Healthcare initiative over the next three years is also expected to create a further boom for CHME. This stock has numerous catalysts to send it into orbit from current levels. I'm probably going to look back in 6 months and kick myself for not absolutely betting the farm on CHME. That said, I bought at .97 on Thursday and again at $1.08 yesterday and after much research, I'm going in for more Monday morning.

Let me finish by saying that this company is traveling to the USA on a several city tour to attract more attention. You want a 10-bagger the easy way ? CHME

Mar 28 05:28 PM