Skepticism is good when evaluating...
But can you go beyond that and say why you are a skeptic?
This is what I see:
Positives:
China's largest manufacturer of IV dextrose solutions, with 40% market share.
Only 2 other companies besides SGTI are licensed to provide IV dextrose monohydrate + high cost of entry for any new competitor = moat.
Margins should improve with corn starch costs down (as discussed in the most recent filing)
Health care stimulus spending by government- especially in more rural areas.
Large sales network with contacts in all provinces (excluding Tibet).
DSO under 30 days/no collections issues that plague many other China pharmas
Large expansion completed and currently ramping up production as demand increases
No history of dilution
P/S ratio of 0.2
Previous "cash cow" made .62/share in 2007
Positive statements by CEO in statements he made in March:(see link in I-box)
Negatives
Decline in revenue/income due to reduction in sales during recession and lower margins due mostly from higher cost of corn starch.
Highly leveraged with short term bank loans. Current ratio 0.5
Any others? (please let me know what I may be missing!)
“The 19th century belonged to England, the 20th century belonged to the U.S., and the 21st century belongs to China. Invest accordingly.”
Warren Buffett
