China Biologic Products (CBPO), the Chinese plasma company, remains an attractive value stock with a forward P/E of just 7.2.
It also is still a Zacks #1 Rank (strong buy) stock despite missing on earnings for the first quarter by a penny.
Revenue Jumped 28.1% in the First Quarter
On May 17, China Biologic, which produces and manufactures plasma products for hospitals and other medical facilities, announced first quarter results which saw revenue climb to $27.1 million from $21.1 million in the first quarter of 2009.
The revenue growth came from general price increases ranging from 3.1% to 118.3% across the company’s products.
Plasma continues to be in short supply in China so the company has pricing power. However, the price increases are not expected to continue at the same pace. China Biologic anticipates modest price increases on a few select products but is not factoring those into its guidance.
Outlook for 2010
China Biologic is optimistic about 2010 due to tight supply in China’s plasma industry and continued expansion of its operations through acquisitions. It recently got approval to build two new plasma stations in Shandong.
2010 revenue is expected in the range of $142 million to $149 million which is about 25% higher than 2009’s revenue of $119 million. The first quarter is historically the weakest quarter of the year for the company due to the Chinese New Year.
Zacks Consensus Estimates Rise
China Biologic is scheduled to report first quarter results on Aug 16. The Zacks Consensus has risen to 44 cents from 39 cents in the last 60 days. There are only 2 estimates on the company.
The full year has jumped by 30 cents to $1.68 in the last 2 months.
Earnings per share are expected to grow 21%.
China Biologic is still cheap. It is trading at 7.2x forward earnings which is cheaper than last April when it traded at 7.8x.
The company has a price-to-sales ratio of 2.3 which is below the industry average of 4.5.
It also has a stellar 1-year return on equity (ROE) of 39.6% whereas the industry is just at 7.1%.
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