China Sky One Tries to Drum up Some Well-Deserved Attention

China Sky One Medical (CSY), with its near-constant barrage of press releases, sometimes seems like an overactive child who always demands attention. On the other hand, the company’s insistent press release schedule is understandable because the company is growing rapidly, its finances are in good order, but investors don’t seem to be paying attention.

Wednesday, the company announced that its Heilongjiang Tianlong Pharmaceutical subsidiary has completed its R&D on 26 new drugs and submitted the drugs to the SFDA for approval. Like much of China Sky One’s portfolio, the new drugs are mainly external use products. China Sky One said the products would increase its revenues by 30% next year if they are all approved by the end of 2008. Given that China Sky One paid just $8.3 million to acquire Tianlong earlier this year, it seems as though the money was well spent.

China Sky One has predicted it will book revenues of $82 million this year. The single analyst who follows the company expects its 2009 top line to equal $131 million in 2009, a 60% jump year-over-year. The company’s net income typically runs slightly above 25%, proving that it isn’t chasing market share at the expense of the bottom line. It had $42.5 million in cash at the end of Q2, and its return on equity is an astonishing 46%. These are admirable numbers.

But investors don’t seem to be paying attention. After hitting a high of $17.10 early in the summer, China Sky One’s shares have slipped down to $12.61. That gives the company a P/E ratio of 8.6 for the past 12 months, and a forward P/E number of 5 for 2009, if the company hits its expected targets. No wonder the company is trying to drum up a little attention through a press release blitz.

Looking back through the ChinaBioToday archives, there are a welter of articles on China Sky One’s acquisitions, its product pipeline and new product approvals. If a company is on the move (and China Sky One seems to be), it might as well tell the world about it, and perhaps investors will eventually catch on.

For the record, here is the new list of products from Tianlong that currently await SFDA approval:

• Four vaginitis drugs, including cleaning suppositories, Tinidazole suppositories, Policresulen vaginal suppositories, and Aciclover gel;
• Three gargled toothache drugs, including Chlorhexidine Gluconate, Cetylpyridinium Chloride and Compound Chlorhexidine;
• Three pain relief drugs, including Diclofenac Sodium Suppositories, Paediatric Ibuprofen suppositories and Musky cream;
• Three anti-infective drugs, including Hydroxybenzene gel, Podophyllotoxin Tincture and Nitrofurantoin suppositories;
• Two rhinopathy drugs, including Collunarium and Compound Naphazoline Spray;
• Two cardiovascular drugs, including Sulfasalazine suppositories and Sodium ferulate;
• Methionine Vitamin B1 injection for improving liver function;
• Doxofylline injection for the treatment of asthma;
• Pantoprazole sodium injection for the treatment of canker sores;
• Calcium Folinate injection for folic acid deficiency;
• Hydrastis suppositories for the treatment of colds; and
• Four externally used drugs, including hemorrhoids gel, hemorrhoids liquids, chilblain cream and expectorant.

Disclosure: none.