C&O Pharm   

C&O Pharm writeup

Agree with kuyo regarding apple orange comparison.

 

At 0.54, c&O is trading at 20x FY06 whereas Asiapharm is at 15x FY06 at 0.75. So, which is cheaper?

 

It would be like comparing apple and orange when compare the companies directly on the dollar value of a share price. If C&O really reaches $0.70, the market cap will be 1.28 times bigger than AP :P 

 

Can I say that this share should at $0.7 level as compared with AP ? AP closing price is $0.74 !!!!!

 

C&O's market cap already overtake AP. 

 

DMG targets &0.68 today!!!!!!!!!!CHEONG AH!!!!!!!!!!

Potential M&A play

C&O provides an exposure to the biggest pharmaceutical group in China -antibiotics ? with an M&A angle because of its big cash hoard and strong operational cash flow. The macroeconomic environment for pharmaceutical companies in China remains favourable. Regulatory improvements in recent years are favourable to pharmaceutical companies with in-house R&D capabilities, Good-Manufacturing Practices (GMP) certified production facilities and extensive distribution channels. We initiate coverage of C&O Pharmaceutical with a BUY recommendation for a 12-month price target of S$0.68, based on 14x FY09 forward earnings.

 

Any idea what this share rising up today ? Any good news coming out !

 

personally, C&O is nowhere compared to Asiapharm. I believe its recent rise most likely due to revaluation on AP....

by the way, i am vested on AP

 

C&O Pharmaceutical Tech
Jan 16 close: $0.345
PHILLIP SECURITIES RESEARCH, Jan 16

Outstanding management team: C&O's management team has extensive experience in the pharmaceutical industry. Mr Li Zhan is overseeing R&D for Nanjing Chang Ao Pharmaceutical; Mr Song Ming is overseeing the whole PRC operations for Chang Ao; and Mr Wu Su Min is the general manager of production in Chang Ao.

All of them were academic staff of China Pharmaceutical University, which is the biggest and best multi-specialty university with the most complete pharmaceutical curriculum in China. Each member of the management team has more than 10 years' experience and has extensive knowledge of the industry, especially in their areas of expertise.

Mr Gao Bin is responsible for overall strategic planning and business development of the group, and he has more than 20 years of experience in sales and marketing of pharmaceutical products in China.

We met the above-mentioned directors in person. We like this management team, and we feel they are trustworthy and have strong knowledge and experience to help the company grow significantly. We also like the structure of the board, as it partially reduces the risk of one person possessing too much control over the company.

'Strong buy': C&O is a growth company and its stock is a growth stock. The current price is at 8.1 times FY08 PE and 7.5 times FY09 PE (FY07 is not a good base as the inventory issue is one-off in nature, and it affects 1H07 net profit only).

Our estimated fair value at this time is 55 cents, which is 13 times FY08 PE. Our estimation for FY08's net profit is still relatively conservative, representing an increase of 9.3 per cent compared to FY06's net profit. The one-off inventory issue provides a very good opportunity to enter the market. There is 62 per cent upside for the stock.
BUY

 

recommended in bt, any idea abt this stock look cheap?

 

mini recovery, now @ 0.28.



just a minor rebound? or does the price take off from here?  

 

CIMB-GK has cut its target price yet again to $0.14 from $0.26 previously after the China-based drug maker posted disappointing first quarter to September results.



Yesterday, C&O Pharmaceutical said its first quarter net profit fell 86% yoy to HK$1.75 mln as margin pressures offset increased sales. CIMB-GK estimates that C&O's EBITDA margins fell to 2.9% from 33.3% a year ago due largely to inventory adjustments.



"While the earnings weakness from inventory adjustments could be one-off, another bombshell was the sharp increase in operating expenses relating to the Liancheng integration," CIMB-GK said.



In the absence of positive contributions from the Shenzhen Liancheng acquisition at this stage, CIMB-GK said it has cut its net profit estimate for the current year to June 2007 by 30% and its years to June 2008 and 2009 net profit estimates by 31-33%.

 

As I predited in May......it is overvalued.............

 

CIMB-GK has downgraded its call to "underperform" from "outperform" and slashed its target price to $0.26 from $0.60 after the company issued a profit and sales warning for its its first quarter performance ending Sept 30.



"The sales and profits of C&O would be adversely affected by the inventory adjustments and Liancheng's restrictions to sell other non-C&O products, at least in first half 2007, which typically form 35-40% of full-year earnings," CIMB-GK said in a note to clients.



The brokerage has slashed its earnings forecasts for the company for the year to June 2007 by 51% to HK$71.3m, for the following year by 33% to HK$120.2m, and for the year after that by 29% to HK$164.5m.



"While the earnings weakness from the inventory adjustment could be short term, we are disappointed that the group did not articulate the potential execution risk relating to the acquisition much earlier," CIMB-GK said.



"As it pans out, we do not see any earnings accretion from the Liancheng acquisition, which was management's rationale for the acquisition," it added.

 

The company said it will reduce inventory at Shenzhen Liancheng, a distributor of C&O Pharmaceutical's products, to one month from three months currently to better utilize its working capital.



"Given that prior sales to Liancheng has been recorded as revenue of C&O before the acquisition, only incremental margin from subsequent sales to third parties during the inventory adjustment will be contributed to the group,' C&O Pharmaceutical said.



"As a result of this, group revenue and net profit for the first quarter (to September) will be lower after consolidating the distribution, administrative and tax expenses of Liancheng," it said.



The impact of Shenzhen Liancheng's inventory adjustments is expected to be largely confined to the September quarter but some spillover effects are likely in the three months to December (2Q FY07), it said.



"Notwithstanding this short term disruption to the steady growth of the group's revenue and net profit, the long term business prospects of the group remain bright," the company said.

 

Warned that net profit and sales for 1Q07 will fall yoy due to short-term adjustments relating to a recent acquisition of Shenzhen Liancheng Medicine Company (Liancheng), which was a distributor of C&O branded pharmaceuticals.

 

WOW... what gives?! steep fall & on heavy volume!!!

 

As I said. It is OVERVALUED.

 

As I said. It is OVERVALUED.

 

I think C&O should only be valued as a company doing distribution only. R&D still weak at the moment and may drain huge amount of cash.  Share price will weaken further, so no hurry to buy!

 

Extracted from my blog http://kelongstocks.blogspot.com Please "support" my blog if you find the writeup informative, thanks [B]Technical Analysis[/B] C&O still in uptrend channel although today's candlestick is a bearish dark cloud cover. Need to see if any bearish confirmation tomorrow. Meantime prices hit the red resistance line before retreating. Immediate support is 49 cents (previous resistance and also recent low on 18 Apr 2006). Supports: 49 cents (uptrend channel support), 48 cents (previous resistance turned support) Resistances: 53/53.5 cents (red resistance line projected upwards and also resistance these 2 days), 57 cents (projected uptrend channel resistance) ..............continued at my blog