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Tianyin Pharmaceutical Co. (NYSE Alternext: TPI) reported its revenues rose 48% during the company’s fiscal Q2 (December 31, 2009) to $14.9 million (Conference Call Transcript). Net income was up a smaller 25% at $2.6 million. When combined with a much larger number of shares outstanding, the company’s earnings per share actually slipped to 11 cps from 13 cps one year ago. Tianyin has traditionally been a TCM company, but it is branching into generic western drugs, with a special emphasis on macrolide antibiotics.

Tianyin seems on track to hit its target of a 45% increase in revenue and net income in 2010, which it predicts will total $64 million and $11.3 million respectively. The company is eagerly anticipating the financial contribution of a recently announced JV to produce macrolide antibiotics, which will be manifest in the 2011 fiscal year. Tianyin expects to report a further increase of 75% in that year, producing $113 million of revenue and $20 million of net income.

Analysts seemed unhappy with two features of the report. One was the huge increase in shares outstanding – they doubled to 30 million. The other concern was about Accounts Receivable. The total AR climbed over 50% over the first six months of the company’s fiscal year to $8.6 million, and the Days Outstanding rose to 58 days from 42 days at the end of its fiscal 2009.

Tianyin claims 40 new drug products are under review at the SFDA, though the company has filed for approval on only 17 of them. In its guidance, it did not include projections of income from these drugs, though the numbers do include significant income from its macrolide antibiotic JV.

Tianyin said the company began construction of the JV’s manufacturing facility in January of this year. It expects Phase I, which will produce APIs, to become operational in July 2010. Phase II will produce finished products and is expected to begin operations in the second half of 2010.

Despite the generally positive report, Tianyin’s shares were off by 19 cents in mid-session trading at $3.80. The company has a market capitalization of $96 million and a trailing-12-month price/earnings ratio of 11.6.

Disclosure: none

Source: Tianyin Pharma: Q2 Earnings on Target, Analysts Dissatisfied

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