Sinovac: Chinese biotech bet

"One Chinese sector being relatively ignored by Wall Street is the biotech industry," notes Keith Fitz-Gerald. In The New China Trader, he looks to a biotech speculation -- Sinovac (ASE:SVA).

The government knows that the wheels could fall off the bike rather quickly if average Chinese citizens begin to see a dramatic reversal in their health and happiness.

"As a result the Chinese Central Government's is participating in a large-scale effort to improve public health.

"That leads us to our recommendation for Sinovac, a fully integrated, profitable China-based biopharmaceutical company that focuses on the research, development, manufacturing and commercialization of vaccines that protect against human infectious diseases.

"Their portfolio of regulatory-approved products consists of vaccines against the hepatitis A, hepatitis B and influenza viruses.

"In 2002, they launched their first product, Healive, which was the first inactivated hepatitis A vaccine developed, produced and marketed in China.

"In 2005, they received regulatory approvals in China for the production of Bilive, a combination hepatitis A and B vaccine, and Anflu, a split virus influenza vaccine.

"In April 2008, they received regulatory approvals in China for the production of their whole viron pandemic influenza vaccine.

"SVA is not a shot-in-the-dark biotech company that hasn't earned any money yet. The firm's recent filings indicate annual increase in sales on 38.62% which is in line with the type of increase that history suggests precede a very solid price gains.

"Looking at additional numbers reflects solid management as well, as is evidenced by a very healthy operating margin 33.51% and ROE of 20.1%.

"A quick glance at the amount of shares outstanding reflects that 14.02% . . .

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