Wefe has been able to retrieve most of the article but not all. Note that Eric Jackson is the same guy that did a video interview on Wallstreet Media (?) that i linked to recently here. From Wefe's blog site:
CHBT article
Dr. Eric Jackson of Ironfire Capital has a new article on CHBT over at TheStreet.com: Looking Long Into China-Biotics. Through some persistent googling effort I was able to retrieve a large part of the article. If I hadn't reached the limit of my patience I probably could have retrieved the whole thing but this should give you the gist of the article:
Although its price has come down since the spring (along with many other Chinese names), China-Biotics (CHBT - commentary - Trade Now) continues to be a favorite long position of mine. It is still performing well and it is worth owning.
The company is one of the leading probiotics producers in China, serving both the retail market as well as the bulk markets for the dairy (e.g., yogurt) and animal-feed industries. Asia's growing probiotics industry is expected to hit $9 billion by 2014.
Within China, China-Biotics is one of only a few large suppliers of probiotics. As a result, China is forces to be a net importer of probiotics. Large European companies are still key sellers into the Chinese probiotics market. However, players like China-Biotics are growing.
The company's revenue and earnings keep improving. China-Biotics' trailing-12-month revenue figure stands at more than $90 million, and it has a 61% quarterly growth rate. Its net income for the last year is $29 million, up 226% from the previous year.
Investors who know nothing about probiotics are usually struck by China-Biotics' operating margins (over 44%) and its large amount of cash on hand ($160 million). The company's cash represents over half of its market capitalization.
Some investors look at these results and immediately see a huge value opportunity. Others, however, see these numbers as a red flag -- a sign that must be something wrong. It's because of this second camp of investors that there has been such a high short interest in China-Biotics as of July 15 (it was almost 23% of the company's public float).
If 23% sounds like an enormous short position to you, that's because it is. When I have discussed a short position I currently have in Tesla Motors (TSLA - commentary - Trade Now), potential investors have expressed concern about that company's short interest of 13%. (But with a market capitalization of more than $1.7 billion vs. China-Biotics' $321 million, Tesla's greater liquidity makes it easier on short traders when the time comes for them to cover their positions).
One of the reasons that China-Biotics' short interest is so high is that the company's public float is relatively low. This is because the company's Chairman and CEO, Jinan Song, owns 23% of the stock and hasn't sold any shares since the company went public. Indeed, more than 50% of China Biotics' 22 million outstanding shares are held by Mr. Song, two long-time individual investors and Pope Asset Management (also incented to remain a long-term holder). With about 5 million China-Biotics shares held short, it will take four weeks -- at average trading volume -- to entirely cover. What's more, back in July, management announced that they would commence a $20-million stock buyback once the company reported its earnings in the beginning of August. That would represent about 1.4 million shares at the stock's current price. Any way you slice it, there will be some pressure on the shorts when they do start covering.
China-Biotics' bulk sales increased 170% on a year-over-year basis. The gross margins in the company's bulk business (over 70%) can be much higher than in its traditional retail business. China-Biotics now has 38 bulk customers, the vast majority of which are in the dairy sector (as opposed to the animal-feed sector). The gross margins in the company's bulk business (over 70%) can be much higher than in its traditional retail business. Indeed, it is precisely because of the growth in China-Biotics' bulk business that the ... margins went up to 47.6% in the most recent quarter from 44.6% a year ago. ... China-Biotics' new, Qingpu-based bulk-manufacturing facility is expected to reach a production rate of almost 300 metric tons of probiotics per year. ... That the new facility produced 15 metric tons of product in the most recent quarter, according to the company's most recent earnings call. The plant is now running at an annualized production rate of 60 metric tons. This capacity will continue to increase over the next two years, at which point the plant is expected to reach a production rate of almost 300 metric tons per year. If China-Biotics is able to strike a large partnership with a dairy company or animal-feed provider in the next year, it will have the capacity to produce very large quantities of the product at very high margins.
... With the drop in many Chinese stocks over the last few months, this is understandable. Although institutional buying has increased in recent months, it hasn't been enough to cause large-scale short-covering. ... We can't control the broader market, but we can take comfort that this stock comes at a very attractive price. The fact is that this stock has never been really prone to large breakouts or huge drops over the last couple of years. One cannot be certain about what news might spark either an upward move in the stock or short covering to begin, but it's likely that something will happen in the next three to six months. Now is a good entry point to own China-Biotics. ... that postings such as this one can have an effect on their stock prices. ...
News 
Market Data 
Discover 
