Sinovac Biotech on a Corporate Upswing

Sinovac Biotech Ltd. (SVA), a Beijing based developer of vaccines, placed 2.5 million shares with a single accredited investor, raising $9.75 million in gross proceeds. Interestingly, the price was $3.90 per share, a slight increase over the closing price of Sinovac Tuesday of $3.76. Usually, private placements are priced at a small discount.

The premium might be explained by the fact that Sinovac, like many stocks on Tuesday, saw its price decline in the week’s opening session (US markets were closed on Monday). On the previous Friday, January 18, Sinovac closed at $3.95. The Tuesday selloff took Sinovac down 19 cents or almost 5% to $3.76.

Following the announcement of the capital infusion, Sinovac is trading at $3.71, lower by a further 5 cents. At this price, Sinovac has a trailing 12 months P/E ratio of 25 and a market capitalization of $149 million. Revenues for the first nine months of 2007 are increasing at a 160% rate over 2006, and the company made a profit of $5.7 million on $24.3 million of revenue, a margin of 23%. Because the company produced a loss in 2006, profit comparisons with 2006 are not meaningful.

Before the financing, the company reported a cash level of $9.7 million. All in all, the company seems on a corporate upswing with dramatic revenue/profit growth and very solid financials.

Disclosure: none.