I have been invested in this company for approx. 2years now. I thought at first the company would grow at its present rate with higher margin rates but there was a change. During this time the company or should I Say Wang decided to go from a regional drug distributer to a national drug distributer, going from a local retail to a national wholesale distributer came with some cost. In this case the costs were the margin rates and at the same time expanding the distribution network required additional expenses. All of these costs have now been realized and the expansion of sales and with possibility of some margin rate increasing from more profitable international drugs may now begin to be realized. Along with the fact of, very soon, having two consecutive years of audited financials does place FCPG in a positive position.
The financial road this company has been on for the last couple of years have remained the same it is just the speed in which the distances have been covered. It has been slower than I originally anticipated. With organic growth now at twenty three plus percent on the top line and the increasing of the gross margin rates makes this a very interesting investment opportunity
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With the appointment of Mr. McTevia last year Wang has set the foundation for the possibility of external financing or even a possible merger. There is also a chance of going private , I do not wish for a private buy out because in this sector they have not been very beneficial to the average stock holder This may come with the listing on the HK exchange , a loan from a financial group or just a bank loan. . In which case, not going private being one of them, will help speed up the top line growth rate and increase the profits of this company. So waiting a few extra days or weeks for the audited financials will be worth the wait.
At these low stock prices it makes for an very interesting entry point . Depending on which board you read the PE ratio is anywhere from 2.3 on the TD to11.35 on the Yahoo finance board. Either way these are based on last year’s three quarter earnings and do not take into account the final quarter or the present earnings growth. With an present organic growth of over twenty percent this is undervalued.
Just to sum it up this company has changed its earnings model over the last two years and all of the cost associated with these changes have now been realized. The audited financials will also make this for a very interesting investment at these stock prices.
Granted investing in this China sector has soured over the last 3 years but with the Chinese government agreeing to the external auditing for these Chinese companies. listed on U.S exchanges makes for a different investment environment. Again at $0.14 to $0.18 per share the rewards will far out way the risk with regards to this particular company.
This is one of those stocks that will see a large upturn in very short period of time. There will be some hyping and the traders will pump and dump it but when all the smoke clears. This will be a steel at these prices we could see in a very short time a price for this stock between $0.45 and $0.80.
Good luck to all and good investing.
AI
