Company Overview:
The Company derives its revenues from the sale of products in the biological products and agents market. All revenues generated are from sales to customers in China. The Company has two majority-owned subsidiaries in China. It has 80% interest in Hainan Lüshen Biology Technology Co., Ltd. (“Lüshen”) located in HaiKou, Hainan Province, China. Lüshen engages in developing, manufacturing and marketing artificial microorganisms (“AM”), high-efficiency microorganism (“HM”) based biological bacterium blends, and biological preservatives. The Company also has a 60% interest in Yangling Elemiss Foods Co., Ltd. (“Elemiss”) located in City of Yangling, Shaanxi Province, China. Elemiss engages in developing, manufacturing and marketing artificial microorganism (“AM”) based biological bacterium blends, and Bulgarian lactobacillus live stock feed additives. The Company had two joint ventures for real estate projects in China to develop commercial and residential real estate in China. The Company’s ownership interests in the two ventures are 17.5% and 16.5%, respectively. As a result, the Company accounts for these two ventures based on cost method of accounting.
The Company has been formally approved by the local tax bureau for the favorable tax benefit enjoyed by the foreign invested company, which allows two-year tax exemption of income tax from January 20, 2008 through January 19, 2010, and three-year 50% tax reduction from January 20, 2010 to January 19, 2013.
Overall, the Company is still enjoying remarkable market demand for its products in a relatively stable domestic market environment. Management’s focus has been on cost control to reduce expenses and thereby to boost profit margin.
The table below shows a breakdown of net sales by products as a percentage of total revenue for the first three quarters on both fiscal 2008 and fiscal 2009:
| | | Net Sales and Percentage on 2008 | | | Net Sales and Percentage on 2009 | |
| Product Line | | | | | | | | | | | | |
| AM/HM Crop Additives | $ | 6,658,568 | | | 58.30% | | $ | 9,115,576 | | | 56.70% | |
| AM/HM Livestock Additives | $ | 4,237,270 | | | 37.10% | | $ | 5,723,368 | | | 35.60% | |
| FGW Preservatives | $ | 525,377 | | | 4.60% | | $ | 1,237,918 | | | 7.70% | |
| Total | $ | 11,421,215 | | | 100% | | $ | 16,076,862 | | | 100% | |
Chairman & CEO: Jinjun Qi
Jinjun Qi is the Chairman of China Da Sheng Biotechnology Co., director of Gansu DS-Biology Engineering Research Institute and President of Gansu DS-Biology Science and Technology Stock Co. DS Group is based in New York City and its headquarters are in Gansu Province, China. Mr. Qi is a well respected economist and agronomist who has made significant contributions to revitalizing China’s agricultural industry through science and technology. Currently DS is working on a project in the U.S. to convert soil to fertilizer. Under Mr. Qi’s leadership DS Group has received numerous awards inside China. In 2008, he received a “Certificate of Appreciation” from the U.S. Department of Commerce.
Mr. Qi received a B.S. in from Gansu Agricultural University, a graduate degree from the Business Administration College of Lanzhou University, and graduate degree in economics from Gansu Provincial Committee Party School and M.B.A degrees from Tsinghua University and Australia National University.
Link to latest 10-Q: http://www.sec.gov/Archives/edgar/data/1393067/000120445909000874/dasheng10q.htm
Total revenue grew approximately 43% to $5.3 million in the third quarter of 2009, compared with $3.7 million in the prior year quarter; -- Gross margin improved by 50% to $2.6 million in the third quarter of 2009, compared with $1.8 million in the prior year quarter; -- Operating expenses, as a percentage of revenue, were reduced by over 900 basis points to 20.2% in the third quarter of 2009, compared to 29.9% in the prior year quarter; -- Income from operations increased by 140% to $1.6 million in the third quarter of 2009, compared to $0.7 million in the prior year quarter; -- Net income rose over 200% to $1.3 million in the third quarter of 2009, or $0.04 per diluted share, compared with $0.4 million, or $0.01 per share in the prior year quarter; -- $10.4 million of cash on the balance sheet as of the quarter end, March 31, 2009.
Company Website: http://www.chinadashengbio.com/ Alternate site: http://english.gsdsjt.com/index.html
Investor Relations: CSIR Group, LLC Website: http://csirgroup.com/ Contact: Christine Petraglia Phone: 646-354-8886 E-mail: christine@csirgroup.com
Current Valuation: at the current PPS of .34, the ttm P/E is 1.7 (updated daily)
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