Investors Unimpressed with Tianyin’s Q2 Report

Tianyin Pharma (VSCO.OB) announced that it made a profit of $3.2 million on $14.9 million in revenue during the first six months of its fiscal 2008. Revenues were up 70% during the period, while net income increased 65%.

The company said its growth was due to new distribution partners and a larger sales force. Although the numbers were up substantially year over year, 1st quarter and 2nd quarter figures were almost identical, making it seem as though the growth has stalled and Tianyin will need new initiatives to keep the company’s financials on an upward path.

Tianyin is a recent addition to the list of US-listed companies involved in mainly-China pharmaceutical businesses. It effected a reverse merger with Viscorp in January, and shortly thereafter, the company completed a $15.2 million private placement. Tianyin says the new capital will go to expand its production capacity over the next six to twelve months.

Tianyin sells modern forms of traditional Chinese medicines. Its portfolio currently contains 34 products, 22 of them listed in National Medicine Catalog. Another 51 products are awaiting approval, which may give the company the boost to sales and earnings it needs. The company manufactures its products in two GMP facilities. Presumably, the new facilities being built are for the company’s soon-to-be expanded product line.

Assuming that Tianyin can continue to sell its products at the same rate for the remainder of its fiscal year, it will have revenues of $30 million and a profit of $6.4 million. That gives the company a price-earnings ratio of 7, given the number of shares presently outstanding, though it drops to a PE of 12 when the shares covered by warrants from the private placement are added in.

Investors were not impressed with Tianyin’s Q2 financial report. The stock sold off by 16% in Friday’s session after the announcement, dropping 55 cents to $3.00.

Disclosure: none.