Renhuang's Anti-Depressant Drug Keeps Growth on Target

| About: China Botanic (CBP)

Renhuang Pharmaceuticals (OTCPK: RHGP.OB) will launch Schisandra Tablets, a natural anti-depressant, in July. The company expects the new product to generate revenues of 3 million RMB ($440,000) in fiscal year 2010 and 10 million RMB ($1.5 million) in 2011.

Schisandra, also known as magnolia vine, is a TCM used to treat a variety of ailments, including neurasthenia. In TCM, neurasthenia denotes a complex of symptoms characterized by chronic fatigue and weakness, loss of memory, and generalized aches and pains.

Renhuang operates on an October 31 fiscal year. For the first half of 2010 (ended April 30), the company reported revenues of $29.2 million, a 30% increase from the year earlier. Net income rose to $10.8 million or 29 cents per share. The company attributed the improvement to two new TCM products. Renhuang ended the most recent quarter with $23.4 million in cash and no debt. Cash flow from operating activities was $19.3 million for the six-month period.

At the end of the second quarter, Renhuang reiterated its 2010 guidance for revenues of about $55 million and net income of $18.7 million. Both targets seem to be within easy reach, given the company’s performance in the first six months.