China-Biotics Reports Higher Revenues, Looks To Expand Production Capacity

China-Biotics (CHBT) released its fourth quarter and full-year financial report. For the 2007 fiscal year, the company made a profit of $10.9 million on revenues of $30.6 million. Revenues were up 40% while the net income figure represents an increase of 31%. Earnings were a solid 36% of revenues.

In China, China-Biotics operates through its wholly-owned subsidiary, Shanghai Shining Biotechnology Co., Ltd.

China-Biotics makes and distributes probiotic dietary supplements containing live microbial nutritional supplements under the brand “Shining.” The company contends that proper levels of bacteria in the digestive system aid digestion and health, staving off illness and the eventual need for anti-biotics.

The products from China-Biotics are distributed to pharmacies and supermarkets in Shanghai, Jiangsu, and Zhejiang, and sold OTC. In the next two years, China-Biotics plans to launch 300 Shining brand stores in major Chinese cities. Nine stores have been opened thus far. “Shining Essence" is the lead product for the company.

China-Biotics is looking to expand its production capacity and to become a major supplier of probiotics as a bulk additive to foods such as yogurt, baby formula and dry milk formulations. At present, those additives are imported into China. In the first half of fiscal year 2008, China-Biotics will begin building a 150-ton manufacturing facility to build its capacity.

As of March 31, 2007, China-Biotics had a cash level of $27.0 million. It generated $10.0 million in cash flow in 2007 from its operations. At the end of fiscal 2007, the company had no debt and shareholders' equity of $23.9 million.

The current form of China-Biotics came into being on March 31, 2006, when Sinosmart Group Inc., a BVI corporation that was the parent of Shanghai Shining Biotechnology Co., completed a reverse merger with China-Biotics, Inc. China-Biotics issued 15,980,000 shares of stock to Sinosmart owners. After the reverse merger, there were 17,080,000 shares of China-Biotics outstanding.

Immediately prior to the reverse merger, Chinamerica Fund, LP completed a private placement of $5,067,700 into Sinosmart. Chinamerica Fund invests in profitable Chinese companies, which it expects to enter a reverse merger that will allow them to trade on a U.S. stock exchange.

Over the past year, China-Biotics has traded in a range from $5.25 to $14.50. In mid-session Thursday, it had moved up 45 cents higher to $7.95, an increase of 6% on the day.

Disclosure: none.