As many of you know, we are very bullish on the long-term future of Chinese small cap and mid cap companies for two reasons:
1] The obvious reason – China is the fastest growing economy on the planet and nothing is going to slow down its ascent over the next 50 years and beyond. Investing in growth companies there just makes too much sense.
2] Great Results and Valuations – Many Small Cap Chinese Companies are listing in the US (OTCBB, NYSE Alternext and NASDAQ) with great financial results. Unlike many dubious US Small Cap Companies, Chinese Companies don’t seem to believe in losing money or failing to execute in a business plan. As such, 7-digit revenues and profits are very common.
From a valuation point of view, many Chinese companies became a victim of their own success in Q4 2008 and Q1 2009. Why? When the world needed to start liquidating, one of the first places they looked were China where most investors had significant gains to sell into. This resulted in the proverbial baby being thrown out with the bathwater and some great valuations.
TODAY’S FEATURED COMPANY
China Biotics, Inc (NASDAQ:CHBT)
China-Biotics, Inc. (“China-Biotics,” “the Company”), a leading manufacturer of biotechnology products and supplements, engages in the research, development, marketing and distribution of probiotics dietary supplements in China. Through its wholly owned subsidiary, Shanghai Shining Biotechnology Co., Ltd., the Company develops and produces its proprietary product portfolio including live microbial nutritional supplements under the “Shining” brand.
On June 11th, 2010, the company reported its financial results for the fourth quarter and the fiscal year ended March 31, 2010.
Check out the full details below!
HIGHLIGHTS
4Q10 Financial Highlights -- Revenues were a quarterly record $25.5 million for a 64.4% year-over-year increase; -- Gross margin was 69.4% versus 68.5% in 4Q09; -- Excluding the non-cash losses from change in fair value of convertible bonds, non-GAAP net income for Q4 was $8.8 million, or non-GAAP diluted EPS $0.36; -- GAAP net income was $2.9 million, or $0.13 per diluted share; -- Cash and cash equivalents were $155.6 million. Fiscal Year 2010 Highlights -- Annual net revenue increased 50% year-over-year to an annual record $81.4 million; -- Gross margin was 70.4%; -- Operating income rose 62% to $35.3 million from $21.8 million in 2009; -- Excluding the non-cash losses from changes in fair value of convertible bonds, non-GAAP net income for the fiscal year 2010 was $27.8 million, or non-GAAP diluted EPS $1.28; -- GAAP net income was $15.6 million, or $0.80 diluted per share. -- Free cash flow $14.4 million.YOUR RESEARCH STARTING POINTS FOR CHINESE SMALL CAP AND MID CAP COMPANIESWe’ve provided investors with two great starting points to research great Chinese small cap and mid cap companies.
1. ChinaSecurities.com – ChinaSecurities.com tracks 250 of the best small cap and mid cap companies trading on North American exchanges. It provides you with the best of the best in two ways. First, the front page lists the best news of the day coming out of the space. It does so by giving you a text view of the best press releases by industry and via Chinese Stocks TV, a 5-minute broadcast every morning just after the open. Chinese Stocks TV is archived, so you can catch up on shows you missed.
Second, if you want to research each of the 250 companies to find candidates for your portfolio, it has a very intuitive directory that lets you quickly review each company on the master list, or parse it out by industry and exchange if you have a particular sector of interest. Cool stuff.
2. Right here on AGORACOM, you can refer to our China category for other featured Chinese Small-Cap Companies. As always, we will disclose any IR relationship with any public company. Given the sheer number of great Chinese Small-Cap Companies out there, you can expect us NOT to have an IR relationship with most of these companies.
Regards,
George
