China-Biotics, Inc. (CHBT)

[BigOnChina]

I'd like to see the company release some information on it's stock buyback or perhaps even incresae the buyback based on the continued decline in stock price.

That would certainly send some shorts headed for the hills

[bradford86]

When there aren't anymore shares to short, you can get analysts to downgrade the stock... right? Ironic because this was the firm that took them public.

http://messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_C/threadview?m=tm&bn=75878&tid=4712&mid=4712&tof=2&frt=2

September 28, 2009
ROTH Capital Partners ROTH Capital Partners Completes $79.3 Million Common Stock Offering for China-Biotics, Inc. (CHBT)

http://webcache.googleusercontent.com/search?q=cache:4t6JcjLzGF0J:www.roth.com/main/Page.aspx%3FPageID%3D2040+china+biotics+roth+capital&cd=4&hl=en&ct=clnk&gl=us

[Rayhuh]

Post from yahoo:
http://messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_C/threadview?m=tm&bn=75878&tid=4697&mid=4697&tof=1&frt=1

Interpretation of the evidence
21-Sep-10 01:57 am The company disclosed three pieces of very critical evidence during the Investor Day. I would like to interpret it as following.

1) Two sample bank statements showing the balances as reported to the SEC on June 30, 2010.

It's a formal bank statement, with official chop of a major state owned bank of China. It showed the beginning of the quarter-end balance, transactions during this quarter (three months), and month end balance. At the end, there was signature of the bank officials certified the statement.

Along with the bank statement, there were hundreds of transactions with tracking numbers to the accounting journals and invoices. These journals and invoices will link to the detailed sales made and sales contracts and pricing.

As an auditor myself, I think such evidence is powerful enough to show the company has real cash sitting in the bank.

Also, I looked into these transactions. It's all very small amount of money (a couple of thousand RMB) from hundreds of very different resources, each having a unique merchant code as it is in U.S.A. These merchants "might" lie for you from time to time, but there is absolutely no way for hundreds of merchants lied for you for the same time.

I hired my private investigator to back track the company's statement in Mar 2010. There number was also correct.

2) Proof of Tax Paid, which is certified by Shanghai State Tax Bureau and Local Tax Bureau. This is actually the single most definitive document showing that the business is legitimate. There are two form of tax authorities in China: State Level (Federal Tax) and Local Level (State tax).

Again, you will pay a penalty of maximum RMB 20,000 (USD 3000) for filing a wrong SAIC filings. But if you dare to forge this document, and show it to the public, the Chinese government will have your head chopped off.

3) Quarterly Tax Payment Documents with a) Official Quarterly Tax Deduction Statement certified by Agriculture Bank of China-->"Payment made"; b) Payment Receipt by the State and Local Tax authorities recognizing that "Taxes Received"; c)bank statement from Agricultural Bank of China showing the quarterly end payment made-->"Amount Deduced from CHBT's bank account".

The consecutive four quarterly tax paid is the same as it is report to SEC of U.S.A.

Any businesses in China will make the tax payment to state and local tax bureaus THROUGH Agriculture Bank of China, another major state-owned bank.

Again, you can have one person lied for you at certain time. But how could you have all the people coordinately lied for you at the same time and for all times, especially these are very powerful authorities.

It is equivalent to have Citibank, Federal Tax, and NY State Tax to lie for you at the same time for consecutively four quarters.

I also have my private investigator to check the past tax information. It's correct too.

4) Lease Contract, Rental paid, for outlets...Honestly, I just skipped these documents. I don't care nothing whether this company is selling through "outlets" or "stores". It made no difference to me. As long as the company could sell and sell well, who cares?

My conclusion is that:

It's impossible that a company could have major state-owned bank, tax bureaus, customers, distributors, and suppliers to lie for it at the same time for all time in a coordinated manner!

[viking86]

JNevaders's Investor Conference notes re. Bulk customers comments:

http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_C/threadview?m=tm&bn=75878&tid=4540&mid=4545&tof=1&rt=1&frt=2&off=1

[viking86]

Investor Day PR:

http://finance.yahoo.com/news/ChinaBiotics-Hosted-its-First-prnews-2334476072.html?x=0&.v=101

[bradford86]

http://www.globalspeculation.com/archives/557

i'm not worried about the auditors.

[viking86]

Mindboggling growth ahead: Jason Nevader's article "CHBT The Next Billion Dollar Food-Ingredient Company"

Excerpt re. the new Shanxi animla feed plant:

The articles states that the project should have annual sales income of 3.13 billion yuan (US $465 million based on the current exchange rate of 6.738 RMB/ US $1), employ 300 people and will cost $58 million. The plant will cover 55,365 square meters, take 12 months to complete, and will be able to produce 180,000 metric tons broken down into 100,000 tons of fermented animal feed, 50,000 tons of Bacillus powder, 20,000 tons of formulations, 10,000 tons of yeast, and 1,000 tons of lactic acid bacteria powder. The plant will become the first large-scale integrated microbial feed additives business in China

http://seekingalpha.com/instablog/691175-jason-nevader/93680-china-biotics-the-next-billion-dollar-food-ingredients-company

[thedivot]

I was in a couple of Walmarts looking for Skippy peanut butter. Both stores were out of it. You know what? I don't think Unilever actually exists because I couldn't find their Skippy in Walmart. And Unilever is a foreign company so that makes them very suspect. Maybe I'll short Unilever stock now that I'm sure it's a fraud......

[viking86]

Citron.com second salvo: "Sue Citron- We dare you"

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=54380085

[bUrRpPPP!]

CHBT..If you click on each location it is intentional the way each result is worded when seeking product verification.

Our investigator visited the Minhang location at No. 535 Hongzhong Road. At that location was a Trust Mart. The investigator went into the store and asked if there was a China-Biotics store. The store did not exist. The investigator asked if the store carreid any of the company's 6 products. The products were not available.

ur investigator visited the Baoshan location at No.88 Baode Road. At that location was a Lotus Supermarket. We took pictures of the outside of the store and address. We went inside the store and asked where we could find a China-Biotics store within the supermarket. The China-Biotics store did not exist. We asked where we could find the 6 products that China-Biotics produces. We were not able to find these products. {what the hell does that mean?}


So in this case it was not available, does that mean out of stock? Funny how they never mention who they even asked? Did they ask the manager if Shinning products were carried....did they ask another customer?

And you have to love this disclaimer.....


Legal Disclaimer

By using this website you agree to the terms of this disclaimer.

You agree that the use of this website is at your own risk. In no event should the creators of this website be liable for any direct or indirect trading losses caused by any information available on this site.

The materials on the site are not an offer to sell or a solicitation of an offer to buy any security, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

The creators of this website make no representations, and specifically disclaim all warranties, express, implied, or statutory, regarding the accuracy, timeliness, or completeness of any material contained in this site. You should seek the advice of a security professional regarding your stock transactions.

The creators of this website do not guarantee in any way that they are providing all of the information that may be available. We recommend that you do your own due diligence before buying or selling any security.

The creators of this website hold short positions in CHBT. They will not report when a position is initiated or covered. Each investor must make that decision based on his/her judgment of the market.

[viking86]

SA article to CHBT's defense: Ten Catalysts to A Higher Stock Price

http://seekingalpha.com/instablog/671911-sean-wright/92503-china-biotics-ten-catalysts-to-a-higher-stock-price

[bUrRpPPP!]

WEFE blog updated with nice info...

http://wefe5433.blogspot.com/search/label/chbt

[viking86]

Good idea. I also just sent him an email with the idea of a special dividend (cash or stock dividend as discussed recently on the CGS and CCME board). The stock dividend can be done in conjunction with the stock buyback. Cash dividends is an effective way to fight shorts since they have to pay a divi for each share they borrow from the broker. Here is a post by Ratobranco discussing the concept:

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=53327544&txt2find=cash|dividend

[bUrRpPPP!]

Jumped back in today $10.74 avg... always buy in pieces to assure a good price...first buy was $11.20 ...2nd $10.62...3rd $10.31...

[Rayhuh]

I sent an email to Travis Cai, suggesting that CHBT publishes daily or weekly share buyback notices.

In my point of view, this would greatly benefit CHBT, to show that they are actually buying back shares at these levels.

Fingers crossed..

[viking86]

Yahoo post with eps projections:

http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_C/threadview?m=tm&bn=75878&tid=2691&mid=2691&tof=3&frt=2

http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_C/threadview?m=tm&bn=75878&tid=2692&mid=2692&tof=2&frt=2

[viking86]

Great question. Maybe you should ask IR ?

[throwerw]

I'm looking for more information about the terms of Pope's investment. CCME allows Starr to audit the company and gives them access to tax records. There may be a similar provision here. any help would be appreciated.

[Florinda]

Viking,

Thanks a lot for your detailed comments on that article I quoted from. (I'd never heard of the guy.) I thought your arguments were compelling, and I appreciate the time you took to spell them out. Hopefully a lot of people will read them.

Steve

[viking86]

Florinda: I laughed hard when I read that POS article. Here is what Robert Hsu wrote on the subject:

As for the company's financials, its CFO said company had not really paid much attention to SAIC before. They simply filled out a form and sent to SAIC. The companies registered at SAIC is usually not the same as the U.S.-listed company entity, because in China a company needs to register different entities to get various licenses. However, if you go to U.S. capital markets, you submit consolidated financial reports between the various entities for audit. Accounting rules are very different. So originally, China-Biotics thought the different numbers would not be a big issue. However, since Travis joined the firm, there has been an effort to reconcile the reports with SAIC and the SEC and I expect that this will continue. Overall, I am pleased with the report from Jay and remain positive on the long-term growth story in China-Biotics.

CMFO's CFO (and some other CFO's as well) told Zack Buckley pretty much the same thing when asked about the SAIC/SEC disparities. My general understanding of the issue based on these interviews and other investigations of the subject is: 1)there is a large difference in the function of SAIC, SAT vs. SEC, esp. wrt multi-entity companies like CHBT, 2) SAIC/SAT doesnt seem to reinforce much the accuracy of financials reported to them even if that those reports are audited for tax purposes in the case the company is a FIE. If it's a VIE, the SAIC report is not audited. If they are caught with underreporting revenues, the penalty is supposed to be very nominal, so many Chinese companies prefer to pay those fines vs. having competitors know their exact revenues and ad agencies or job seekers bombard them with solicitations.

Why should a company like CHBT that does business in different segments and geographies through diffrent subsidiaries report all its revenues to a provincial jurisdiction like the Shanghai AIC whose main function is consumer protection and issuance of business licenses for businesses in Shanghai? Even if we just consider CHBT's retail business, revenue comes from 27 distribution channels plus 111 retail outlets spread over many cities and provinces of China. I dont think it has to report all of that to the Shanghai AIC. Nor it has to report in the future revenues from its new bulk plant in Shanxi to Shanghai. On the other hand, CHBT as a NASDAQ company must report ALL revenues as a consolidated company to the SEC, no doubt about that. So to claim that revenues reported to the Shanghai AIC are more credible than revenues reported to SEC by the consolidated company is just pure bogus.

But there's something else which makes me trust SEC numbers more than anything reported to chinese local agencies: does any one seriously believe that they can fool their own auditor and all the institutional US investors for so many years with non-existing revenues and cash flow ? Can so many different US professional money managers not see a scam company from a real one? Many institutional investors have scrutinized their books and toured their facilities before investing in this company. Let's see : in 2007 Pope invested 25m as a convertible bond, in 2009 several PP investors invested 75m in a secondary, 26 mutual funds (including large funds like Fidelity and Wellington) currently own shares, not to mention smaller groups like Robert Hsu and Eric Jackson (Ironfire Capital) who all have done in-depth DD here and written various reports about this company. Whom do we trust, a short like CCA aka Waldo Mushman or these professional investors ? Frankly, I would be more inclined to believe in some form of tax evasion wrt Chinese authorities rather than fraud wrt the SEC.

[Florinda]

More allegations against CHBT's legitimacy. The article is called: "China-Biotics vs. Spreadtrum Communications: "Why AIC Filings Matter"

The author, "Chinese Company Analyst", tries to make his case by comparing CHBT's AIC filings with another Chinese company's AIC filings (SPRD's). His purpose for using SPRD is that he thinks it is a legitimate company and it submits its AIC filings to the same local government as does CHBT. His basic premise is that SPRD generates a significant amount of income and its AIC filings give assurance to investors that their SEC filings are accurate since they pretty much mirror one another, whereas CHBT's AIC filings show a huge discrepancy with their SEC filings and indicate fruad. His rationale is that if AIC filings don't matter--as some have claimed--it makes no sense for SPRD to report such a high income and incur a heftier tax liability thereby if CHBT can get away with reporting to the same officials 10 times less the income they are reporting with SEC filings. In short, he argues that CHBT management is deeply concerned with giving its local government officials accurate information because such officials have the power to severely punish them whereas foreign governments and investors don't have that kind of power so lying to them doesn't pose a real threat.

It's a fairly long article. Here are some lengthy excerpts:

As I’ll discuss, Spreadtrum’s AIC report and financial statements provide evidence that SPRD is a legitimate Chinese company that generates substantial revenue and owns a significant amount of assets. Their filings give investors comfort that the company is accurately representing itself in its SEC financial statements.

CHBT’s AIC report and financial statements, on the other hand, indicate a company that is far smaller than its SEC filings indicate. Whereas SPRD’s AIC filings show a company generating more than $100m of revenue, CHBT’s filings show a company generating less than one-tenth of its SEC-reported revenue.

Both companies file with the same local AIC office. The reports are in the same format, and include similar sets of documents. Yet one shows a legitimate company, and the other shows a legal entity that has minimal business operations. Any long investor in CHBT, or critic of the legitimacy of AIC filings, has to ask himself the following question: Why would CHBT provide false information in its AIC filings when SPRD doesn’t?

The answer is that CHBT management is providing accurate information to the AIC. It seems to me that the fake information is in the SEC filings that they provide to public investors and the U.S. government, a government that does not have legal recourse to a Shanghai-based company....


Evidence for why AIC filings do matter

I don’t think any aspect of our AIC filings gives the impression that companies can outright lie in the financial statements they file with the AIC. Each company provides lengthy and accurate information on their registered capital, leases, shareholders, company bylaws, etc. It’s a tremendous leap of faith to believe that the AIC requires accurate reporting in these aspects, but is indifferent as to whether a $40m revenue company reports sales of only $1m in its financial statements.

Here are additional reasons why we should take CHBT’s AIC filings seriously.

1. CHBT management and insider shareholders live in China. The AIC filings are filed with the Chinese government, whereas the SEC filings are filed with the U.S. government. Management is concerned about violating Chinese law and providing false information to the Chinese government. But, as it appears to me, they are indifferent to defrauding the US government and breaking US law. A Chinese resident does not have to obey U.S. law any more than a U.S. resident is required to obey Chinese law. That’s why they report the accurate numbers to the Chinese government, and what I believe are fake numbers to the U.S. government. There are practically no repercussions to Chinese management teams that defraud foreign investors. Numerous U.S.-listed RTO companies, like CXTI, CYXI and CHFI, have seen their management teams vanish with the companies' assets, and suffer no legal repercussions. Defrauding U.S. investors is not a violation of Chinese law, whereas defrauding the Chinese government is.

2. The AIC financial statements are audited. The audit reports can be found on pages 56-57 and 73-74. Click here for English translations of these pages.

3. On page 70 (English translation is here), near the front of the 2008 Annual Inspection Report, we have a picture of Yan Yihong (the former CFO, and sister-in-law of the CEO), along with her detailed personal information and the following testament:

I hereby confirm and promise that all the contents contained in the annual inspection report do not contain anyfraudulent information and all the financial statements and other materials submitted are true and effective, and that I’m willing to bear any legal and related responsibilities caused due to the inaccuracy of such documents.


This is followed by the signature and personal seal of CEO Song Jin’an, as well as a seal of the company. I can’t fathom how the Chinese government would require such a testament in the Annual Inspection Report, but then allow a company to file false financial statements.

As I see it, it’s far more believable that CHBT is defrauding the US government and US investors, both of which have no legal recourse to the company’s management. The Chinese government certainly has legal recourse to Yan Yihong and Song Jin’an. The existence of this sort of testament at the front of the AIC Annual Inspection reports is a strong sign that AIC financial statements do matter....

Conclusion

Naturally, I have found that AIC filings are not the only signs that CHBT is falsifying its SEC financial statements. Citron Research raises excellent non-AIC-related issues with the company here. To me, the notion that probiotics nutritional supplements allowed CHBT to achieve revenue growth of 30%-50% annually over the past 4 years while achieving Microsoft-like EBITDA margins of 40%-45% is nothing short of absurd. The company raised $75m of cash in 2009 when it already supposedly had that much sitting in the bank, with no compelling reason for the new capital raise and dilution. Its reverse merger was organized by the same investors who’ve provided capital to renowned fraud Orient Paper, and its auditor is also the same as ONP’s (not to mention China Expert Technology’s). But we’ll get to these points in the future.

For now, I aim to make the case that AIC filings matter. The documents provided in this article provide an indication of what information AIC filings provide, and why investors should pay attention to them. SPRD’s AIC filings show a legitimate business that manufactures and sells semiconductors. On the other hand, CHBT’s AIC filings, as I see it, show a virtually non-operational legal entity which its management has used to defraud public investors, as well as the SEC, and to raise $75m of cash from US investors.

The whole article is here:

http://seekingalpha.com/article/223068-china-biotics-vs-spreadtrum-communications-why-aic-filings-matter?source=email

There are something like 42 comments in response to this article (which I did not read).

Steve

[BigOnChina]

If they buy shares this morning, as they should, this would turn out to be a big positive for future EPS. The company gets to buy back shares at a 20% discount or so from yesterday's open so they can buy 20% more shares!

[bUrRpPPP!]

CHBT..Hope they buyback all the cheaps down here once the market opens...could be a huge pop....from what I understand backbacks are not allowed during pre market and after hours...

[bUrRpPPP!]

CHBT NEWS..Nice..great way to address any questions without having to get into a spitting contest with scumbag shorts....very clever imo.

China-Biotics to Host Investor Day in Shanghai to Discuss Corporate Development StrategyLast update: 8/31/2010 8:43:00 AMSHANGHAI, Aug 31, 2010 /PRNewswire via COMTEX/ -- China-Biotics, Inc. ("China-Biotics," the "Company") (CHBT), a leading developer, manufacturer and distributor of probiotics products in China, today announced that the Company will host an Investor Day on Monday, September 20, 2010, in Shanghai.

Members of China-Biotics' management team will present the Company's strategic goals, product developments, and key milestones. A Question & Answer session will follow the presentation. Participating China-Biotics executives include Mr. Jinan Song, Chairman and Chief Executive Officer, Ms. Eva Yan, Chief Administration Officer, Mr. Travis Cai, Chief Financial Officer, and Mr. Raymond Li, Vice President of Finance. Some of China-Biotics' key customers and distributors will also attend the event.

Following the conclusion of the presentation, management will organize a facility tour to the Company's bulk additives facility in the Qingpu Industrial Zone as well as a tour visiting China-Biotics' retail stores in the Shanghai area. For details regarding the Company's retail operations, please visit the Company's website at .

Mr. Jinan Song, Chairman and Chief Executive Officer of China-Biotics, commented, "With the strong growth momentum, we are attracting more and more valuable long-term investors. We feel the needs to make our investors better understand our business model and development strategy. As we are shifting our focus to highly scalable bulk business by increasing institutional customers in dairy and animal feed markets, we also continue to streamline our store operations and improve retail sales efficiency by signing larger distributors and increasing on-line sales.

We look forward to the Investor Day to showcase our full operation." Participation in the Investor Day is by reservation only. All interested parties please RVSP with Shiwei Yin at [phone] or [e-mail].

[viking86]

Excellent new SA article by Wefe: "10 reasons to own China Biotics now"

http://seekingalpha.com/article/222693-10-reasons-to-own-china-biotics-now?source=yahoo

[viking86]

I may be wrong but I think the PR that came out this morning about CHBT making the Top 100 Fortune list may be just what it takes to lift this stock above $15 for good. If this happens, IBD is the next list we are on!

If you connect the dots: insanely high short interest (3.5m+ shorts), insanely small non-institutional float (about 3.9m shares), strong institutional interest (16 new positions plus 27 increased positions as of last reporting period) that may get even much stronger with the excellent Q2 report, news about another bulk plant being planned and now the Fortune list which of course gets lots of institutional attention, you can imagine the Mother of all Squeezes that shorts will be in very soon (Burp has a nice acronym for that that I forgot).

http://finance.yahoo.com/news/ChinaBiotics-Ranked-Number-62-prnews-4104786231.html?x=0&.v=101

[bUrRpPPP!]

CHBT..Appears ready for leap to higher trading range...

[viking86]

Wefe has been able to retrieve most of the article but not all. Note that Eric Jackson is the same guy that did a video interview on Wallstreet Media (?) that i linked to recently here. From Wefe's blog site:


CHBT article
Dr. Eric Jackson of Ironfire Capital has a new article on CHBT over at TheStreet.com: Looking Long Into China-Biotics. Through some persistent googling effort I was able to retrieve a large part of the article. If I hadn't reached the limit of my patience I probably could have retrieved the whole thing but this should give you the gist of the article:



Although its price has come down since the spring (along with many other Chinese names), China-Biotics (CHBT - commentary - Trade Now) continues to be a favorite long position of mine. It is still performing well and it is worth owning.

The company is one of the leading probiotics producers in China, serving both the retail market as well as the bulk markets for the dairy (e.g., yogurt) and animal-feed industries. Asia's growing probiotics industry is expected to hit $9 billion by 2014.

Within China, China-Biotics is one of only a few large suppliers of probiotics. As a result, China is forces to be a net importer of probiotics. Large European companies are still key sellers into the Chinese probiotics market. However, players like China-Biotics are growing.

The company's revenue and earnings keep improving. China-Biotics' trailing-12-month revenue figure stands at more than $90 million, and it has a 61% quarterly growth rate. Its net income for the last year is $29 million, up 226% from the previous year.

Investors who know nothing about probiotics are usually struck by China-Biotics' operating margins (over 44%) and its large amount of cash on hand ($160 million). The company's cash represents over half of its market capitalization.

Some investors look at these results and immediately see a huge value opportunity. Others, however, see these numbers as a red flag -- a sign that must be something wrong. It's because of this second camp of investors that there has been such a high short interest in China-Biotics as of July 15 (it was almost 23% of the company's public float).

If 23% sounds like an enormous short position to you, that's because it is. When I have discussed a short position I currently have in Tesla Motors (TSLA - commentary - Trade Now), potential investors have expressed concern about that company's short interest of 13%. (But with a market capitalization of more than $1.7 billion vs. China-Biotics' $321 million, Tesla's greater liquidity makes it easier on short traders when the time comes for them to cover their positions).

One of the reasons that China-Biotics' short interest is so high is that the company's public float is relatively low. This is because the company's Chairman and CEO, Jinan Song, owns 23% of the stock and hasn't sold any shares since the company went public. Indeed, more than 50% of China Biotics' 22 million outstanding shares are held by Mr. Song, two long-time individual investors and Pope Asset Management (also incented to remain a long-term holder). With about 5 million China-Biotics shares held short, it will take four weeks -- at average trading volume -- to entirely cover. What's more, back in July, management announced that they would commence a $20-million stock buyback once the company reported its earnings in the beginning of August. That would represent about 1.4 million shares at the stock's current price. Any way you slice it, there will be some pressure on the shorts when they do start covering.

China-Biotics' bulk sales increased 170% on a year-over-year basis. The gross margins in the company's bulk business (over 70%) can be much higher than in its traditional retail business. China-Biotics now has 38 bulk customers, the vast majority of which are in the dairy sector (as opposed to the animal-feed sector). The gross margins in the company's bulk business (over 70%) can be much higher than in its traditional retail business. Indeed, it is precisely because of the growth in China-Biotics' bulk business that the ... margins went up to 47.6% in the most recent quarter from 44.6% a year ago. ... China-Biotics' new, Qingpu-based bulk-manufacturing facility is expected to reach a production rate of almost 300 metric tons of probiotics per year. ... That the new facility produced 15 metric tons of product in the most recent quarter, according to the company's most recent earnings call. The plant is now running at an annualized production rate of 60 metric tons. This capacity will continue to increase over the next two years, at which point the plant is expected to reach a production rate of almost 300 metric tons per year. If China-Biotics is able to strike a large partnership with a dairy company or animal-feed provider in the next year, it will have the capacity to produce very large quantities of the product at very high margins.

... With the drop in many Chinese stocks over the last few months, this is understandable. Although institutional buying has increased in recent months, it hasn't been enough to cause large-scale short-covering. ... We can't control the broader market, but we can take comfort that this stock comes at a very attractive price. The fact is that this stock has never been really prone to large breakouts or huge drops over the last couple of years. One cannot be certain about what news might spark either an upward move in the stock or short covering to begin, but it's likely that something will happen in the next three to six months. Now is a good entry point to own China-Biotics. ... that postings such as this one can have an effect on their stock prices. ...

[panzerepsilon]

China-Biotics makes Fortune's 100 Fastest Growing Companies list for
2010. CHBT checks in at #62. It is appearing in Fortune's Sept 6th 2010 issue and can also be viewed online.

http://money.cnn.com/magazines/fortune/fortunefastestgrowing/2010/full_list/

A little more detail at wefe's blog on the criteria used to compile the list:

http://wefe5433.blogspot.com/

I posted this from the Yahoo Message Board... thought you guys would love to read about it!

[panzerepsilon]

Looking Long Into China-Biotics

Can someone post the text from this article?

http://secure2.thestreet.com/cap/login/rm_mbp_yho_nflow.jsp?flowid=56a5314b05&url=http://www.thestreet.com/p/_search/rmoney/investing/10842333.html

[bUrRpPPP!]

Grabbed some Sept $12.50 calls here @ 2.00...eom oh and I also got filled some shares @ 14.067 woot!

[viking86]

once the WIZARD has spoken, there's nothing to add to... hehe

[tootalljones]

NEVER EVER. EVER! ODDS are, and these are strictly the odds, that this baby closes the gap around 13.60 sometime next week. Gaps are trading imbalances. They are ALWAYS SUSPECT. I wager they close about 80% of the time, and 95% of the time when the gap is a result of an article like Jason's....fwiw. I am going to buy at 13.65.fwiw...see ya then.

[tootalljones]

never EVER EVER EVER EVER buy a stock based on company news or a news article. had I followed this rule, I would be a multi millionaire.....o well,

[bUrRpPPP!]

very nice...$14.36 was my best buy today.....WEEEEEEEEEEEEE!

[viking86]

just did a quick and dirty eps calc for the new plant (Plant 2). If it comes online at the beginning of FY2012 (April 2012) with a ramp like Phase 1 of Qingpu meaning 75mt total production for the FY at an average selling price of 600/kg, that's 45m additional rev.

At a net margin of 38%, additional NI = 17.1m or an eps of 17.1/23.3= 0.73 for FY 2012. This assumes Pope gets 2.08m shares in Dec'10 and about 1.3m shares will be retired from OS via buyback. In any event, an eps of min $5 by Mar 2013 seems like a done deal.

[bUrRpPPP!]

China-Biotics to Build New Facility to Produce Probiotics and Related Products for the Animal Feed Industry in Shanxi Province
China-Biotics (MM) (NASDAQ:CHBT)
Intraday Stock Chart

Today : Monday 16 August 2010
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China-Biotics, Inc. ("China-Biotics," the "Company") (Nasdaq: CHBT), a leading developer, manufacturer and distributor of probiotics products in China, today announced that the Company plans to build a new facility dedicated to the production and sale of probiotics and related biological products for the animal feed industry in Yangling Agricultural High-tech Industries Demonstration Zone in Shanxi Province.

The new facility will be located on 126 mu (1 mu = 0.0667 hectares) inside the Yangling Agricultural Hi-tech Industries Demonstration Zone in the Shanxi Province of China. The Company estimates that construction of the new facility will be completed within two years.

Once operational, the new facility will enjoy a favorable tax holiday for its first three years and half the standard tax rate in the following year. The Company is currently in discussions with leading domestic and multinational agricultural companies for potential partnership in this project.

Mr. Jinan Song, Chairman and Chief Executive Officer of China-Biotics, commented, "After nearly 3 years of thorough study and testing of probiotics strains for animal feed products and refining our proprietary fermentation technology, we have reached a new stage that allows us to commercialize our research achievements. The establishment of this animal feed probiotics facility, which can become the second engine to propel our long-term growth, will mark another milestone for China-Biotics as we confidently march into the vast Chinese animal feed market."

"Probiotics have been identified by the National Development Reform Commission as a major solution to address the overuse of antibiotics in livestock and fish farms. As China continues to face a scarcity of domestically supplied enzymes and fermented animal feed, our new animal feed probiotics production base with proprietary fermentation technologies will make a timely entrance into the marketplace," Mr. Song concluded.

About Yangling Agricultural High-tech Industries Demonstration Zone

Initiated by 20 central government ministries and commissions, as well as the Shanxi Provincial Government, the Yangling Agricultural High-tech Industries Demonstration Zone was approved by the State Council in July 1997 as the only state-level agricultural high-tech industries demonstration zone in China. Yangling serves as the hub for leading industries in plant and animal breeding, environment conservation, agricultural materials, green food and bio-pharmaceuticals. Among over 1000 companies that have already established facilities in Yangling High-tech Industries Demonstration Zone, there are Fortune Global 500 companies Amorim, Cargill and Mitsui as well as Chinese soft beverage giant Huiyuan. For more information, please visit en.yangling.gov.cn.

About China-Biotics

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 in China. Through its wholly owned subsidiary, Shanghai Shining Biotechnology Co., Ltd., the Company develops and produces its proprietary product portfolio, including 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 province. In February 2010, China-Biotics began its commercial production in China's largest probiotics production facility to meet growing demand in China. For more information, please visit http://www.chn-biotics.com .

Safe Harbor Statement

[viking86]

CHBT announced plan to build a new plant for animal feed additives in Shanxi:

The establishment of this animal feed probiotics facility, which can become the second engine to propel our long-term growth, will mark another milestone for China-Biotics as we confidently march into the vast Chinese animal feed market

http://finance.yahoo.com/news/ChinaBiotics-to-Build-New-prnews-138353840.html?x=0&.v=101

[viking86]

getting off to a good start today. Gapped up above MA50.

I think the new SA article by Nevader ("CHBT the next Baidu?") really helps ppl realize the tremendous potential of this stock. His numbers make me realize an eps of $4.5 to $5 in FY2012 (ending in 18 mo.) is a clinch, not just a maybe. The Baidu analogy is for real...

[BigOnChina]

now this is what i like to see. I don't know if it's the buy back driving the price this morning or some short covering but it's certainly the type of move I've been expecting all week.

[viking86]

no you can't really tell. My post said: looks like...

It was the only larger block (12k) though that went through right at 3:30PM the last minute of the allowed daily buyback time window on the first day they were allowed to trade. During the CC 2 days before, they had confirmed the buyback was ready to go. Just connecting the dots here. Would be very coincidental if it was not them...

The Yahoo post said sth about a 20K share buyback, so I checked that out and saw the 12K block. I think the poster corrected himself after that. Would make sense to me that they buy back now as aggressively as possible while the stock is still sub 15. Good thing that they have funds available in the US from the 75MM raise they did last year.

[RyanW439]

How can you tell that it is the company buying shares and not someone else? That doesn't make sense to me... Someone on Yahoo the other day was claiming that 20K in AH trades was the company buying shares back (I believe you reposted that here).. I just don't get how anyone can claim a certain trade was the company buying, and not possibly a retail or institutional investor, or just a market maker..

[viking86]

The Street's article (thanks for featuring CHBT, Glen!)

http://www.thestreet.com/_yahoo/story/10834921/1/china-growth-we-just-dont-care.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

[viking86]

Thanks for the links. Let's see, CHBT is currently trading near the bottom of this curve (Jan 2009). I am wondering where it would be in about 2 years? Nevader has the eps at a very conservative $3.73E for EFY'12, my estimate is a little north of $4. Your bet?

[panzerepsilon]

China-Biotics: The Next Baidu?

Great article is the lead article at Yahoo Finance:
http://finance.yahoo.com/q?s=chbt
http://finance.yahoo.com/q?s=bidu
http://finance.yahoo.com/q?s=edu
http://finance.yahoo.com/q?s=ctrp

[bUrRpPPP!]

Solid bounce today!.....

[bUrRpPPP!]

I would like to see CHBT become more "vocal" as they add new customers.

[viking86]

I like the Baidu comparison ! Except that Baidu' s market is mainly China. CHBT's market can be much bigger. Even it just delivers to the other Asian countries in a few years from now, the sky is the limit. Ha, just dreaming...

[panzerepsilon]

Excellent article. A lot of bloggers have noted EPS of around $2 this fiscal year, glad to see that Jason Nevader agrees. His analysis of Gulf Resources Q2 revenues of $46 million when analysts were at $37 million was spot on.

The best part of Jason's analysis is that even using conservative assumptions for next year, EPS should be $3.73 per share, which at today's price implies a PEG ratio of 0.04 and a P/E multiple of 3.5x!

Amazing! This is the buy of a lifetime. I am all in.

[viking86]

Jason Nevader's update "CHBT the next Baidu?":

http://seekingalpha.com/instablog/691175-jason-nevader/87127-china-biotics-the-next-baidu