Huifeng Bio-pharmaceutical Technology (fka HFGB)

[pappy]

Todays volume was still above average at 48,347 shares but the stock finished down at $0.635 -$0.0138 or 2.13%.

I believe the stock is still consolidating its recent rise off the yearly lows & will probably find a bottom & hold in the upper $0.50's or low $0.60's as the expected strong 3rd qtr numbers are not that far away.

IMO with the stock well below current B.V. of $0.77 & a p/e ratio of under 3 presently a strong yearend rally seems a logical expectation.

HFGB has already visited $1.40 in the TTM period when eps came in @ $0.15 for 2009 & now with TTM eps @$0.23 the pps is much lower.

I think for a couple of reasons.

1] The stock has had trouble digesting the 25% increase in shares outstanding in 2010 since Chinese stocks have all had a inbalance of buyers to accomadate the stocks.
This seems to be changing with the increase in volume lately.

2] The company plans to triple revenue by becoming a full service RX & to seek exchange listing.
Buyer preceive this as meaning more share dilution at a time when exchange listing hasn't added to company values.
HFGB has a strong & growing backlog & really has no need to be in a hurry to grow thru added share count as cashflow is enough to fund current growth.
At some point HFGB will be forced to raise cash for their ambitous future growth plans but I believe 30% revenue growth can be attained using only present cashflow.