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Maxim Group reiterates Buy and $24 price target
http://messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_C/threadview?m=tm&bn=75878&tid=1557&mid=1557&tof=1&frt=2
yes, short interest still very high. But days to cover have increased to almost 15 days from 9, meaning it is getting much more difficult to cover at a gain compared to a month or 2 ago.
Seems to me the "sell-the-news" on E/R will die down very soon and the stock is getting good support near 14 (probably from buyback?). So I am expecting the short squeeze to intensify now, the more shorts the more fuel we have for the runup.
http://www.nasdaq.com/aspxcontent/shortinterests.aspx?symbol=CHBT
No change in short interest.Still very high. 3,335,900
http://shortsqueeze.com/?symbol=CHBT&submit=Short+Quote%99
Great close........WEEEEEEEEEEE!
Added. 13.4 :)
Looks like there was some buyback blocks AH yesterday at $14.50. Here is an interesting post from Yahoo board (from ChinaFact) to your question:
Good catch!
Here are the rules for stock repurchases:
www.dorsey.com/Resources/Detail.a...
According to this article, it states "A separate broker is permitted to effect after-hours trades." Also says "Bids and purchases by or for an issuer in after-hours trading are permitted provided the issuer does not enter the opening bid in such trading and the purchase price does not exceed the lower of the closing price in the principal market for the security and any lower bids or sale prices subsequently reported in other markets."
Looks like they met the test and started buying back after hours today. Considering that CHBT raised money at $14.50 (after commissions) last Fall, they probably instructed their broker to buy any shares that are available at $14.50 or lower. So, it seems like we have a floor at $14.50. I loaded up on more shares at $14.08 today given this will be the last time I see shares under $14.50 again.
I need to correct myself wrt non GAAP eps of Q1 FY2010 (last yr Apr-June q). The PR stated incorrectly 0.34 (vs. 0.39 this year).
It should be 0.308, for a yoy increase of 28.3%. I originally had it at 0.27 for a yoy increase of 44%, which is incorrect.
So the eps for the past q is 0.84 GAAP and 0.39 non-GAAP as shown in the PR tables. For last year the correct eps is 0.34 GAAP and 0.308 non-GAAP. Thanks to abh3vt for pointing this out.
Would love to know the strategy for the share buyback plan...is there a support price they will sit at? What date will they start and how much are they going to buy....how will it effect the eps next quarter....10% 20% buyback?
i think that was just a typo in the press release. happens all the time with chinese companies. i was asked to proofread one at the last minute one time, so many mistakes.
Agreed. Finally I had time to dig in the 10Q and the PR and find out where the worm was. Here is what I posted in reply to Ratoblanco's inquiry in this regard. Hope that settles the matter.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=53141115
It shows it correctly on the 10Q.. The PR was incorrect, but numbers that get updated on financial services will use the info from the 10Q..
not sure, I thought that's what I heard them say in the Q&A but the audio was not very clear and my hearing is not the best, sorry. I would wait for the transcript on this. The original guidance was indeed 100mt by Mar'11.
Concerning the GAAP eps = non GAAP eps= 0.39, I am waiting to hear more from experienced ppl on the CGS board I have PM'ed to on the matter. On the Yahoo board there is a debate going on b/w Jason Nevader (who defends the Company's #) and other ppl thinking it is impossible for GAAP=non GAAP eps considering there is a 9MM gain from derivative conversion that should be added to GAAP eps. I was also expecting GAAP eps to come in at least 30c more than non-GAAP. I dunno who is right.
Anyone know why the PR'd GAAP EPS as the same as non-GAAP EPS? Should have been more than double according to the 10Q..
so have they changed their expectations for the phase I ramp-up downwards? or are they just trying to keep our expectations too low so they can buy back cheap?
$665/kg (wow)
I have one comment - maybe I am not correct but I doubt I am completely out of picture - do not forget they are fighting with European competitors.
If you remember EURO was very low last months and dollar was benefiting from that. Chinese curency is tighten to dollar.
Now the dollar is weaker again so if they charge significant amount in Euros, the selling price as well as margin should be highjer in this quarter.
But that is only my speculation, not fact. I have no idea if they invoice in Euro at all. And if yes, what portion of their customers are requiring the invoices in Euro...
But unless somebody declares they charge only in USD, this note should be considered if average bulk prices are discussed
going back to their previous plan of buying a foreign brand... if it enabled them to charge normal prices for their product, it would be well worth the money.
Post #100 ! Congrats, our board is getting there.
To be honest, I wasnt expecting bulk prices that low, $665/kg (wow). Last Q they were at $1133/kg and much higher in previous q's (just look up Wefe's spreadsheet under ASP bulk). But I am not concerned much for 2 reasons:
1) I think they slashed bulk prices to wow new customers away from their competitors. Their old prices at >1000/kg were already 30% or so below the prices of their european comps. Just imagine what customers would feel about now paying half that much from a reputable Chinese company for a comparable quality and better customer service. Eventually bulk prices will go back up once enough customers have switched to them. Now I start to understand why they guided for such a low ASP 700-733/kg. Because of steep initial discounts. It's like a BOGO sales going on now (Buy a kg, get a kg free).
2) Look at net margin. It's now about 39% compared to 34% last q and last year at much higher bulk prices and a lower bulk/retail sales mix. Since retail sells for about 6 to 7x higher prices (ASP=7480/kg in FY2010)than bulk, a shift to more bulk would normally result in lower margins. But the NM went up 5 points! So that means lots of improvements in operations and cost cutting. Combine that with more bulk sales (say 300mt/yr in about 2 years vs. 60mt/yr currently) and higher sales prices (say $733/kg vs. 665/kg now), one can only expect the bottom line to go parabolic in the next few years.
No reason to jump ship. Just hang in for an easy 5-bagger to borrow Jason Nevaders' conservative words in his most recent article.
viking, you seem to be pretty on top of this company and I appreciate your comments and insight. Are you concerned about the average selling price going forward? Have we been expecting a little too much in future growth?
don't sweat it...just some games this morn...Im looking for a $15+ close no problem....
I just finished listening to the CC, was able only to join the Q&A section. Not sure if I got all the answers right but here are a few notes from the CC for now:
- Phase 1 is doing 60mt runrate for calendar year (Dec'10) and 75mt for FY (Mar'11), meaning by 4QFY we may be expecting 18.75mt vs. 15mt past q.
- Phase 2 is progressing smoothly, expected to be completed by Mar'11 and start producing in Q1 of FY'11 (ending June'11).
- Main difference b/w the 2 phases: Phase 1 has larger production lines (end products in larger containers), is dedicated more to larger quantities and simpler formula, mainly for large dairy customers. Phase 2 will have smaller production lines (smaller containers where more strains can be produced and mixed based on custom orders), more selectivity and smaller quantities (probably higher prices too from what it sounds).
- they didnot answer the question (or I couldnt understand the answer) about how many metric tons retail were sold in Q1 which would help to figure out the ASP for retail (maybe they dont want competitors to know exact prices?). But I think they said Pudong will be ramped up to 15mt/yr to serve retail orders, meaning 15/4=3.75mt/q vs. max. 3mt/q currently.
- Q1 we have 38 bulk customers, many potential customers are still testing/trying our products and hopefully will become regular customers soon. We also expect existing customers to increase their order size progressively. We are obviously taking market share from our european competitors.
Some quick comments on E/R:
- 40% sales from bulk means about 10MM bulk sales. Assuming 15 mtons, that translates into an Average Selling Price of only $665/kg. Wow, that's low. Last q the ASP was $1133, the q before ASP was $5900/kg. Looks like they are doing hefty discounts to bulk customers to jumpstart the bulk biz and woo customers away from competition. I had assumed $1133/mt, hence my eps estimate was too high.
- great to see more efficiency and higher margins although one would expect a shift toward more bulk (40/60 now vs. 28/72 just a q ago) would result in lower margins b/c bulk sells for much less than retail, approx. 1:6.
We did 61.8% more sales compared to Q1 last year but non GAAP eps jumped 44.4% in spite of a 27.6% increase of fd shares. Without that share increase (due to the 5.4MM shares issued last year to raise 75MM), the eps would have increased 44.4 + 27.6 = 72%, so a whole 10% more than top line increase if nothing else had changed. That laso in the face of heavy discounts of bulk prices. Excellent job in cutting costs and improving operations.
I'll be hangin with this stock for a few years! Have to say that I'm a little dissapointed with the initial market reaction. Hopefully management will step in and start buying today.
Hang in there..CHBT did the same thing last time....sold off a bit on earnings as flippers and traders jumped out and then it just went ballistic.....
$17.00 today would make me smile. And if we do in fact hit $17 today then I think we'll hit $18.50 by the end of the week as long as the general market holds up.
Generally I am conservative, and not a pumper. At least I try.
That having been said, we will hit $17 today.
Yes, they can buy back stock now and I expect them to start doing so immediately. They initiated the buyback because they knew the stock was undervalued so they're certainly not going to wait until the price climbs before they start buying back shares.
I'm expecting that squeeze to start today and last through Wednesday or Thursday. Maybe we'll see $17.00 this week?
7.15$ cash per share on hand. From what I understand they can start buy back now because earnings are out of the way. Should be nice squeeze today breaking the 200 MA.
0.39 EPS looks solid to me. Net Sales up 61.8% year-over-year, significant improvement in operating margin, over $7.00 a share in cash on the balance sheet, and a buyback that can take out 6% of the outstanding shares coming.
I'm in!
Video interview: if you want to know some more about CHBT, here's an interesting Video by WSM (Wallstreet Media) showing Eric Jackson, Iron Fire Capital's CEO, who talked about his recent visit to CHBT's headquarter in Shanghai and his thoughts of the company and its prospects (link from Wefe's blog):
http://wsmco.com/show.aspx?1629_A_Promising_China_Stock
Wefe's preview of Q1 earnings: the $0.30 expected increase of GAAP eps due to non-cash adjustments is impressive and should at least help "wow" program traders LOL.
http://seekingalpha.com/user/628941-wefe5433/instablog
I was hoping to see this stay strong to the end of the day.. I had a sell order for a few shares in at $14.89..pretty disappointed it didn't get hit before pulling back.. Oh well..I put that in a last night with a GTC order..never expected to get that close this fast anyways..
New short interest should be out Aug 14th. End of next week. Viking, I cannot PM because I am a free member :(
Also, some just bought 100 Nov 12.5 calls at 2.65$. :)
14's here. Feels like squeeze is possible for earnings if we get more volume. Easily 2+ mil shorts still in this.
Hey folks: here is some more background info of interest on probiotics and how this affetcs CHBT's unique opportunity in China:
1) Premier's Wen Jianbao dream (courtesy Value1008):
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=52622052&txt2find=chbt
Note: Robert Hsu's newsletter recommended CHBT for a possible double within 12 months back in March when the stock was trading at $18.
2) Lactose intolerance:
http://www.webmd.com/digestive-disorders/tc/lactose-intolerance-topic-overview
http://www.webmd.com/digestive-disorders/tc/lactose-intolerance-topic-overview
Note: 95% of China's population is lactose intolerant. Yoghurt and probiotics in infant formula will help overcome this condition.
3) Effective April1, 2007 probiotics to be added to all baby formula produced in China acc. to NDCNDRC, governmental regulations to follow soon:
from 10K FY2010:
Demand for dairy product additives is expected to increase significantly. The demand for functional foods and foods that use probiotic supplements is growing at a significant rate. According to AC Nielsen (article available at cn.en.acnielsen.com/news/20050916.shtml ), yogurt and yogurt drinks are the fastest growing products in the food products segment in China, with sales increasing by 38% in 2004 alone. Sales of infant formula grew 23% in the same year. Moreover, according to statements made by the Nutrition Development Centre of National Development and Reform Commission in China, effective April 1, 2007, probiotics will be added to baby milk powders produced in China. The relevant regulations are expected to be announced at a later date. These factors translate into significant growth in demands in China for live bacteria as food addictives.
Pics of the new plant:
http://wefe5433.blogspot.com/2010/07/chbt-new-facility-pictures.html
some interesting stats about good and bad bacteria: did you know there are ten times more bacteria in the intestinal tract as cells in the entire body (about 100 trillion bacteria cells total)?
Check this site out by Dannon-Activia from more info about probiotics:
http://www.activia.us.com/what.asp
assistants needed to clean up the ibox...why not me?...Because what would take anyone 30 mins would take me a day....yes I ride the short bus when it comes to making an IBOX....any help would be mucho appreciated!
Trading China CHBT info and rating link...
http://www.fixyou.co.uk/tracker_details.php?s=CHBT
Wefe's CHBT blog link for MEGA-INFO!
http://wefe5433.blogspot.com/2010/07/chbt-asp-analysis.html
nice explanation by Jason Nevader (author of SA article) about the share buyback:
China-Biotics (CHBT) has the Goods to be a 5-Bagger [View instapost] A Company can't announce a buyback and act on it while it is in possession of material, non-public information because they would have an unfair advantage over other investors. When they announced the buyback on July 7th, CHBT was aware of its fiscal 1st quarter financial results. After the results are announced on August 9th, the Company's blackout period will be over and they can start buying back shares. The good news is that the company can put in place a 105b-1 plan, whereby they can instruct their hired broker/dealer to buy a set amount of shares below any instructed price over the next 12 months without any blackout periods. Therefore, they won't have this problem again for the next several earnings releases.
Here is a link to a PDF that explains SEC RULE 10b5-1.
www.dorsey.com/files/P...
Therefore, you have the potential for an interesting couple of weeks of trading:
This week: The shorts will want to start covering because there are two catalysts next week, earnings on Monday and the Company buying back shares.
Next week: If the Company has another fantastic quarter of year-over-year revenue and earnings growth, the stock should advance and shorts could drive the stock even higher on a short squeeze. However, if investors "sell the news", the Company will be in position to set a realistic floor to the stock price by starting their buyback, which will make shorts want to cover as well given the Company's ability to buy up to $20 million of stock.
you may be right although the new 2-week short data not out yet. The 1M+ short shares covered may explain some of the steep rise we saw over the last 2 weeks from the 11.3 low to 13+ today:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=52871597
3,307,500 short interest couple of weeks back. Being extremely conservative when I say 2mil+ shorts still in.
http://www.shortsqueeze.com/?symbol=chbt&submit=Short+Quote%99
50 MA break. probably still over 2mil shorts in. Should be nice run into earnings next monday.
Thanks Wefe for sharing your invaluable research ! Great work.
Here are a few points of most interest for me that lead to my revised estimate of Q1 earnings.
I know, E/R is just a week away but this estimate will give me a base for some longer term projections that will be updated as we get ongoing quarterly reports. Plus it will give us some more excitement as we watch things unfolding in the next 1-2 weeks, esp. how shorts react as the SQUEEZE intensifies from day to day IF even just 80% of the predictions comes true!! Remember: the currently very high short interest of 30% (over 3M shares short on a small float of 11.1M) plus the ongoing share buyback should provide plenty of fuel for shareprice apreciation. As Burpp pointed out, this stock is not CCME which is totally at the mercy of shorts b/c this Mgmt has a better handle on shorts with the buyback program.
Here are ASP and production data (ASP=Average Selling Price in $/kg, production in mt= metric ton) compiled by Wefe for 2010 that are the building blocks for earnings going forward:
FY2010 Q1.. Q2.. Q3.. Q4.. Q1/11 (my estimate)
bulk $ 3600 5500 5900 1133 1133= Q4 ASP
retail 5130 5086 6960 7480 6164= FY10-avg ASP
bulk.. 1... 1... 1... 6... 15
retail 2.30 2.30 2.50 2.50 3
(Q4/10 ends Mar 31, 2010, Q1/11 ends June 30, 2010)
NOte: there has been some discussions over the past few days about what ASP to use for bulk sales going forward considering the large variances b/w Company's initially suggested ASP of $733/kg and more recent quarterly data indicating bulk ASP up to $6,000/kg. For the sake of being conservative, I have decided to use a bulk ASP of 1,133/kg based on Q4 and a retail ASP of 6,164/kg based on the average ASP of FY 2010. The production estimate for Q1/11 is more straightforward as we got an update PR on July 7 on how Q1 fared.
Based on a fully diluted share count of 22.37M and the above estimates, I am seeing eps = 0.52E for Q1/11 and a trailing ttm eps = 1.52E non-GAAP. This compares to Wefe's estimates of 0.39 and 1.38 using a FD= 24.5MM.
I will leave it to you to figure out what SP to expect in the short term. fwiw
Some links:
http://finance.yahoo.com/news/ChinaBiotics-Provides-Further-prnews-2214908818.html?x=0&.v=95
http://seekingalpha.com/article/217093-china-biotics-an-exciting-transformation-has-arrived?source=yahoo
Important: Wefe5433's Sales Analysis blog:
http://wefe5433.blogspot.com/2010/07/chbt-asp-analysis.html
BigOnChina,
I think you meant to reply to me rather than to Yompkee as I get the impression the latter is fairly well loaded up here. But in any event, I'll take your advise whether you intended it for me or not. Hopefully Monday it won't skyrocket under my nose. Tuesday, bring it on!
Thanks,
Steve
I'd definitely move some funds in CHBT. This is the kind of China stock that everyone is going to want. Solid financials, tremendous growth, minimul debt, and a small float.
When it takes it, it's going to run hard and fast. Get in asap or you'll be left out.
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China-Biotics, Inc. ("China-Biotics," "the Company"), a leading manufacturer of biotechnology products and supplements, engages in the research, development, marketing and distribution of probiotics dietary supplements. Through its wholly owned subsidiary, Shanghai Shining Biotechnology Co., Ltd., the Company has operations in Shanghai. Its proprietary product portfolio contains live microbial nutritional supplements under the "Shining" brand. Currently, the products are sold OTC through large distributors to pharmacies and supermarkets in Shanghai, Jiangsu, and Zhejiang. China-Biotics plans to launch 300 Shining brand retail outlets in major cities in China. Currently, China-Biotics is strategically expanding its production capacity of probiotics to meet growing demand in the bulk additive market. For more information, please visit http://www.chn-biotics.com
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