A Look behind China Biologic's Strong Earnings
China Biologic Products, Inc. [[CBPO.OB]], a biopharmaceutical company based in China, saw its shares rise more than 10% earlier this week after announcing record earnings. The company’s net income jumped 242% to $6.9 million on revenues that increased 178% to $33.1 million and gross margins that improved from 69.4% to 72.3% versus the comparable quarter in 2008.
The improved performance can be attributed a new 90-day quarantine on plasma raw materials in China that constricted already low supplies. As a result, China Biologics increased by 2.1% to 46.1% the prices on its products and saw improved gross margins. Meanwhile, its first quarter acquisition of Dalin also contributed $14.1 million to the company’s revenues in Q2.
Cash flows from operations of $28.4 million and $14.1 million in financing cash flows led to a high $49.47 million, or $2.30 per share, cash position. Currently, this figure accounts for nearly half of the company’s share price! Meanwhile, the company’s balance sheet remains robust with a current ratio of 1.26 and a quick ratio of 1.97 with reasonable debt levels.
China Biologics primarily sells human albumin and human immunoglobin to hospitals and inoculation centers in China. While no customer accounts for more than 10% of its sales, the company does experience regular shifts in its customer base due to the nature of its products. However, the company’s recent acquisitions have made it a major player in the industry.
Looking forward, China Biologics management expects revenue growth to remain strong for the remainder of 2009. Supplies of plasma-related products are continued to remain tight in China, as well as in surrounding markets like India where the company is also exploring opportunities. Combined, these factors make CBPO a ticker to remember for OTC investors!
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