China Stocks: China Sky One Medical, Inc.
Although it only relatively recently caught on in the West, Traditional Chinese Medicine (TCM), is not new age; it’s old age. This time-tested medical science has been practiced for some 5,000 years in China. Indeed, in that country it’s a highly trusted form of conventional medicine, not an alternative feel-good science. For evidence of how seriously this form of folk medicine is taken, one only need look toward the growing number of Chinese drugmakers and biotech companies that are merging ancient herbal remedies with modern Western science to create drugs to treat everything from arthritis to impotence to cancer.
China Sky One Medical, Inc. (AMEX:CSY) specializes in Chinese medicine products and is gearing up to tap a growing share of China's multi-billion dollar drug market, about 20% of which is TCM pharmaceuticals. The Chinese pharmaceutical market has grown at an average rate of 15% annually over the past several years, and is projected to maintain double-digit growth over the next few years, making China the sixth-largest drug market by 2011, according to Research and Markets' China Pharmaceutical Logistics Industry Report, 2008.
Operating exclusively in China, through its subsidiaries Harbin Tian Di Ren Medical Science and Technology Company (TDR) and TDR’s subsidiaries, China sky develops, manufactures, markets and sells branded, over-the-counter plant- and herb-based pharmaceutical and medicinal products and nutritional supplements. The company’s primary products are external-use remedies based on traditional Chinese herbal medicine including creams, ointments, sprays, powders, skin patches and herbs. It also engages in tissue and stem cell research through TDR's wholly owned subsidiary, Harbin Tian Qing Biotech Application Company. In all, China Sky manufactures about 40 branded products and markets eight products manufactured by other companies.
In April, the company completed its acquisition of Heilongjiang Tianlong Pharmaceutical, Inc., a firm engaged in the manufacture of external-use specialty drugs. And last month it announced the development of a nasal spray for the prevention and treatment of rheumatic disease, which it plans to begin selling in the fourth quarter (the company expects the new product to contribute $500,000 in quarterly revenues).
China Sky's second-quarter revenues soared 62% to $23.7 million from $14.6 million in the prior-year quarter. Net income was $8.1 million, or $0.50 per share, a 92% leap from $4.2 million, or $0.34 per share, in the same period last year. For the first half of the year, revenues rose 82% year over year to $36.2 million, while net income came in at $12 million, or $0.78 per share, up 107.1% from $5.8 million, or $0.46 per share, last year.
Looking ahead, the company issued fiscal 2008 guidance, anticipating net income to be in the range of $25.9 million to $26.6 million and earnings between $1.68 and $1.73 per share. China Sky expects full-year gross revenues, fueled by acquisitions, in the $81 million to $83 million range.
Jodie Wehner of Global Hunter Securities maintains a "buy" rating on China Sky stock, with a $24 price target, citing China Sky's diverse portfolio of traditional Chinese medicines, newly developed products and established sales and marketing network. The analyst contends the company is well positioned to benefit from a favorable market and industry dynamics.
Shares, which closed at $12.86 on Wednesday, have a 52-week trading range of $9 to $17.10.
China Sky will cease trading on the American Stock Exchange on Friday, and will begin trading on the Nasdaq on Monday under the symbol CSKI.
China Sky One Medical, Inc. (AMEX:CSY) specializes in Chinese medicine products and is gearing up to tap a growing share of China's multi-billion dollar drug market, about 20% of which is TCM pharmaceuticals. The Chinese pharmaceutical market has grown at an average rate of 15% annually over the past several years, and is projected to maintain double-digit growth over the next few years, making China the sixth-largest drug market by 2011, according to Research and Markets' China Pharmaceutical Logistics Industry Report, 2008.
Operating exclusively in China, through its subsidiaries Harbin Tian Di Ren Medical Science and Technology Company (TDR) and TDR’s subsidiaries, China sky develops, manufactures, markets and sells branded, over-the-counter plant- and herb-based pharmaceutical and medicinal products and nutritional supplements. The company’s primary products are external-use remedies based on traditional Chinese herbal medicine including creams, ointments, sprays, powders, skin patches and herbs. It also engages in tissue and stem cell research through TDR's wholly owned subsidiary, Harbin Tian Qing Biotech Application Company. In all, China Sky manufactures about 40 branded products and markets eight products manufactured by other companies.
In April, the company completed its acquisition of Heilongjiang Tianlong Pharmaceutical, Inc., a firm engaged in the manufacture of external-use specialty drugs. And last month it announced the development of a nasal spray for the prevention and treatment of rheumatic disease, which it plans to begin selling in the fourth quarter (the company expects the new product to contribute $500,000 in quarterly revenues).
China Sky's second-quarter revenues soared 62% to $23.7 million from $14.6 million in the prior-year quarter. Net income was $8.1 million, or $0.50 per share, a 92% leap from $4.2 million, or $0.34 per share, in the same period last year. For the first half of the year, revenues rose 82% year over year to $36.2 million, while net income came in at $12 million, or $0.78 per share, up 107.1% from $5.8 million, or $0.46 per share, last year.
Looking ahead, the company issued fiscal 2008 guidance, anticipating net income to be in the range of $25.9 million to $26.6 million and earnings between $1.68 and $1.73 per share. China Sky expects full-year gross revenues, fueled by acquisitions, in the $81 million to $83 million range.
Jodie Wehner of Global Hunter Securities maintains a "buy" rating on China Sky stock, with a $24 price target, citing China Sky's diverse portfolio of traditional Chinese medicines, newly developed products and established sales and marketing network. The analyst contends the company is well positioned to benefit from a favorable market and industry dynamics.
Shares, which closed at $12.86 on Wednesday, have a 52-week trading range of $9 to $17.10.
China Sky will cease trading on the American Stock Exchange on Friday, and will begin trading on the Nasdaq on Monday under the symbol CSKI.
About the Author
Shannon Roxborough previously worked as a global risk analyst, and lived in China for nearly two years.
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