China Biologic Products (CBPO)
From Cabot Wealth Advisory 2/4/16 Sign up for Cabot Wealth Advisory—it’s free!
My stock pick this week is a Chinese biotech company. The company is called China Biologic (CBPO), and I think it’s a good example of the kind of stock story you can still find in China and the other emerging markets.
This analysis on the stock is from a January issue of Cabot Top Ten Trader, a weekly advisory that identifies and analyzes the 10 strongest stocks of the previous week.
As you read, you’ll note that the Technical Analysis ends with the admonition, “A dip below 125 would be bearish.” And if you look at a daily chart of CBPO, you’ll see that the stock took a quick dive in early January and has been flopping around between 115 and 130 for a few weeks.
It’s still a stock I like, and I have it on my watch list. When it gets going again, it will have huge potential.
Why the Strength
China Biologic Products’ business is based on medical products made from plasma, which it collects in 12 donations centers. China Biologic processes the plasma into albumin, immunoglobulin and clotting factor products. Albumin is used to treat shock caused by blood loss or burns; immunoglobulin can prevent measles and hepatitis, treat rabies and aid in recovery from surgery. Clotting factors are used to treat both congenital and acquired clotting disorders. There is a much wider range of products and conditions, but that’s the core of the business. This base has been strong enough to power China Biologic to eight years of double-digit revenue growth and 11 quarters of positive earnings growth. After-tax profit margins have also topped 30% for the three most-recent quarters. The company has built a niche business using a vertically integrated model—it controls raw material collection, processing, production, marketing and distribution—in a growing market. There is no mass market to address, but the prospects for steady growth are excellent. Earnings for Q4 and 2015 will likely come out in early February.
CBPO has made a good recovery from its August–September correction from 128 to 81. The stock rebounded to 127 in November, then consolidated for a few weeks before powering out to new highs in mid-December. After reaching 142 last week, CBPO was down at today’s open because of the general weakness in Chinese stocks, but remains well above its rising 25-day moving average, now around 128. CBPO looks like a good buy anywhere under 140. A dip below 125 would be bearish.
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A Chinese Stock That's Besting the Market
Most of the hottest Chinese companies in recent months have been fighting it out online, either in e-commerce or in online gaming or education, but my stock pick for today is a company that’s providing human plasma products for Chinese medical patients.
The company is China Biologic Products (CBPO), and it’s a Beijing-based producer of plasma and related products. In addition to human albumin, which is used to treat shock in trauma or burn victims, the company refines and sells hepatitis B immunoglobulin for the prevention of measles and contagious hepatitis. China Biologic also sells other blood products for the prevention and treatment of rabies, tetanus, clotting difficulties and other conditions.
The company operates its own string of blood donation centers and quality control is a primary concern. Annual revenue percentage growth has been in double digits for five years and earnings are forecast to increase 15% this year and 23% in 2016. Results from the company’s latest quarterly report featured a 25% jump in revenue and 29% earnings growth, with a strong 35.5% after tax profit margin.
CBPO is a thinly traded issue, but the stock has been in an uptrend since 2012 when it was trading at 10 on virtually flat volume. More and more institutional investors are signing on, although with a float of just 12 million shares and a market cap of just over $3 billion, the stock doesn’t have the capacity to absorb a lot of interest from the whales. I like that the stock has been stable during the recent over-the-falls action in the U.S. and China.Paul Goodwin, Chief Analyst, Cabot China & Emerging Markets Report
From Cabot Wealth Advisory, 5/20/10
When markets are dealing out losses left and right, as they are now, it's a good idea to pull in your horns and keep lots of cash in your account. But that doesn't mean you can just put your feet up and enjoy a refreshing beverage.
The construction of a Watch List of likely stocks is, itself, a dividend-paying investment.
My candidate for further observation is a small (market cap of $328 million), thinly traded (130,000 shares per day, on average) Chinese biopharmaceutical company called China Biologic Products (CBPO). The stock uplisted to the Nasdaq exchange just last November, and it has been performing well despite a challenging market environment.
The company's lead product is human albumin, a blood protein that accounted for half of 2009 revenues, and various forms of immunoglobulin. Albumin is vital during medical emergencies and immunoglobulin can prevent and treat many diseases.
The company's 2009 sales were up 155% over 2008, and Q1 results showed a 27% gain in earnings on a 28% jump in revenues, with a 27.1% after-tax profit margin. Expansion is coming via both M&A activity and construction of new plasma collection stations.
This is a great stock for your watch list, and when the market turns up again it may provide your portfolio with a real shot in the arm.
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Emerging Markets Specialist, Analyst and Editor of Cabot China & Emerging Markets Report
A researcher and writer for over 30 years, Paul Goodwin has been a member of the Cabot investment team and editor of Cabot China & Emerging Markets Report since 2005. Under Paul’s stewardship, Hulbert Financial Digest rated Cabot China & Emerging Markets Report the number-one-rated newsletter of 2006 with a 78.6% gain for the year, the number-one-rated newsletter of 2007 with a 74.1% return, and the top-performing investment adivsory for five years with a 17.9% annual return.
|China Biologic Products (CBPO)
No 14 East Hushan Road
Taian City, 271000 China
86 53 8620 2306
|Index Membership: N/A |
Full Time Employees: 1,324
6/30/15 A Chinese stock that's besting the market
5/20/10 China Biologic Products (CBPO): Chinese biopharmaceutical company