CPHI in with a decent quarter. They earned 0.10 fd vs 0.09, on a rev increase of 32% y/y. There were some factors to take into account that impacted the comps this quarter. Bad debt expense went from a credit of 87k in the y/y period to a charge of 612k in Q2 08. There were some warrant expense charges in Q2 (120k) plus some write-offs for drugs contributed to the Sichuan earthquake relief effort (about 80k). Also, the tax rate went up from zero to 6%.
Here's the full income statement:
CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(unaudited)
For the three months For the six months
ended June 30, ended June 30,
---------------------------- ----------------------------
2008 2007 2008 2007
------------ ------------ ------------ ------------
Revenue $ 11,278,803 $ 8,570,256 $ 22,995,848 $ 15,804,024
Cost of revenue 5,325,992 4,670,685 11,235,760 8,605,524
------------ ------------ ------------ ------------
Gross profit 5,952,811 3,899,571 11,760,088 7,198,500
------------ ------------ ------------ ------------
Operating expenses:
Selling expenses 456,630 326,147 794,422 474,030
General and administrative 451,096 290,596 799,489 575,079
Research and development 37,226 4,477 37,226 --
Bad debt expense, net of recoveries 612,413 (87,149) 1,079,813 934,058
------------ ------------ ------------ ------------
Total operating expenses 1,557,365 534,071 2,710,950 1,983,167
------------ ------------ ------------ ------------
Income from operations 4,395,446 3,365,500 9,049,138 5,215,333
------------ ------------ ------------ ------------
Non-operating income (expenses):
Interest income 5,035 11,633 5,035 25,408
Interest expense (50,440) (58,942) (95,713) (115,841)
Other (expense) income (77,450) 7,937 (77,450) 575,277
------------ ------------ ------------ ------------
Total non-operating income (expense) (122,855) (39,372) (168,128) 484,844
------------ ------------ ------------ ------------
Income before taxes 4,272,591 3,326,128 8,881,010 5,700,177
Income tax expense 235,292 -- 653,170 --
------------ ------------ ------------ ------------
Net income $ 4,037,299 $ 3,326,128 $ 8,227,840 $ 5,700,177
------------ ------------ ------------ ------------
Comprehensive income -
foreign currency translation adjustments 974,800 216,416 2,720,042 651,683
------------ ------------ ------------ ------------
Comprehensive income $ 5,012,099 $ 3,542,544 $ 10,947,882 $ 6,351,860
------------ ------------ ------------ ------------
Basic and Diluted Earnings Per Share $ 0.10 $ 0.09 $ 0.22 $ 0.15
------------ ------------ ------------ ------------
Basic and Diluted Weighted Average Shares Outstanding 38,982,235 37,228,938 38,130,586 36,785,909
------------ ------------ ------------ ------------
YTD, the company has earned 0.22 v 0.15 and appears to be on track to earning 0.40+ with 30% organic growth. The long lead times for A/R payments cripple the ability to grow the company without using debt or capital raises to fund expansion. I think a fair long-term forward PE is probably 8-10x, and the company trades at 5.6x.
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