China Growth Stocks

[GorillaGorilla]

SKBI Valuation

Lets keep it easy, umm, ish....

Were using 7,025,343 shares - allowing for the upcoming 2 : 1 split. All earnings will be rebased for this - the current share price would be $11.1 - using this number.

Revenue growth for year to date is 22.8M / 17.2 M = 32%.

Net Inome for year to date: 6,688,331
EPS for year to date: $0.95

Assuming 32% growth for Q4 we will be left:
Net Income FY09E = 9.7 M
EPS FY09E = 1.44
P/E 09E = 7.7

The growth in 2010 will come from the basic business that grew at 32%. Lets say this business grows at 16% next year.

Growth of basic business at 16%

Net Income FY10E = 11.1 M
EPS FY10E = 1.59 = 7


Growth of the Vaccine and Microbe business [1]

SKBI have given guidance on Revenues and growths. We also know what their net margins are currently - I've played around with these numbers in a previous post but taking the low end of the guidance we end up with $8,350,000 net income from vaccines - very high margin business!

So, If we add on this net income to the 16% basic business growth

Net Income FY10E = 19.4 M
EPS FY10E = 2.77
PPS P/E 10 = $27

So, our $11 share should do $2.77 on low balled earnings.
Clearly there is a) Upside to these numbers b) A heafty margin of safety at these levels. To lose money the basic business and the vaccine facility must both have signficiant failings.

rich


[1] http://finance.yahoo.com/news/Skystar-BioPharmaceutical-iw-1017866592.html?x=0&.v=2