"You Shouldn't Be Buying Stock in Neogen on the Basis of What's Going on in China" (NEOG)

Neogen (ticker: NEOG) develops, manufactures, and sells various products for food safety testing and animal health applications. The company reported its fiscal Q2 2006 earnings today and conducted a conference call to discuss the results. CEO Lon Bohannon had this to say about operations in China:

We kind of characterize it from the standpoint that we are importing low-tech kinds of product into the U.S. from China. And we are exporting high-tech products in the form of our diagnostic kits on the Food Safety side as that country starts to develop its infrastructure in terms of the whole food safety market area.

In terms of our sales over there, they are still relatively small.

We're probably focusing a lot of our efforts right now on finding the right distributors in the right areas…..

We are not making large investments in assets over there.

It has been a very good supplier to Neogen, particularly for products on the Animal Safety side. And now we're starting to see some benefit of finding some products over there for some of the things we are doing on Food Safety.

….we are also actively pursuing some very nice dehydrated culture media opportunities over there with the partner with whom we collaborate.

We've always said you shouldn't be buying stock in Neogen on the basis of what's going on in China. We think the opportunities are good going forward. But it's going to take some time to realize those.

(Quotes are from the CCBN StreetEvents transcript.)

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