Replies to post #10023 on China Growth Stocks

[Traderfan]

Steven, BSPM-don't confuse 2 different things here. First the make good guidance is about OPERATING INCOME but you stated the NET INCOME these guys did in the first half.



Bogus interested in how you come up with q3 earnings of .14? and what your expectations are for q4? The way I see it is they almost have to do .20 for q3 and q4 to get the $15.9 Mil income for yearend that the CEO stated for this year. They have only done $5.8 Mil in the first half and will to an additional $10.1 Mil for the second half. What am I missing here unless you expect a complete blowout q4?

[viking86]

BSPM: the 15.9m make good target for 2009 is for Inc. From Operation, not Net Income. Assuming nothing else but tax=26% b/w those incomes, the NI make good target for 2009 would be= 15.9x0.74=11.8m, an easy hurdle.

My 3Q rev. estimate is assumed equal to 2Q rev of 13.2m plus some additional rev. due to the retail outlets during 3Q, which is estimated at 1m. This is based on the recent PR stating a total YTD of 7.4m for their 3512 retail outlets as of Oct 30. So my 3Q rev estimate is = 13.2+1= 14.2m . Assuming Net Margin= 25%, net income for 3Q= 3.55m. Based on O/S=26.1m shares including the newest financing shares, eps for 3Q= 0.136.

Using a similar conservative approach for 4Q, I get 4Q eps= 0.15 which basically discounts all additional income from new drugs and sales increases from existing drugs. The goal is to see whether the conservative Net Income estimate would clear the Make Good target stated above. For the year I get an estimate of Net Income = 13.1m (vs. the required 11.8m) and an eps of 0.53. This could prove to be too low but I'd rather err on the low side. Hope this helps.