This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Small-Cap China Pharma Stock Could Double

BOSTON ( TheStreet) -- TheStreet's stock model boosted China Pharma Holdings' (CPHI - Get Report) rating to "buy" yesterday. The shares have dropped 19% this year, creating an opportunity to invest in a thriving company in one of the fastest-growing economies in the world.

China Pharma makes medications, health products and chemicals for hospitals in China, whose gross domestic product rose 10.7% in the fourth quarter. Last year, the company's profit increased 13% and revenue climbed 21%.

Two other analysts cover China Pharma, both rating its shares "buy." Rodman & Renshaw (RODM) expects the stock to soar 94% to $6. Roth Capital Partners expects the stock to hit $5.50, a potential 77% gain. TheStreet's model predicts the stock to rise to $4.08. This is a small-cap that deserves a closer look.

The stock, which has a beta of 2.5 and a market value of $135 million, has fallen 2% since it started trading on the NYSE AMEX on Sept. 30. The S&P Pharmaceuticals Index has jumped 23% during that time.

Fourth-quarter profit declined 4.7% to $5.1 million, but stalled at 12 cents on a per-share basis. Revenue grew 27%. Its gross margin narrowed from 50% to 39% and its operating margin shrank from 40% to 29%. Profit suffered as it sold more low-margin drugs. Still, a net margin of 26% exceeds the industry average and that of industry giant Pfizer (PFE - Get Report).

China Pharma's quarterly return on equity of 22% and return on assets of 20% are impressive. The company boasts outstanding liquidity, with $3.6 million of cash, equating to a quick ratio of 5.2. It has $3.8 million of debt and a debt-to-equity ratio of 0.1. Digestive products, whose sales doubled in 2009, is a promising growth category.

Clinical trials of Candesartan, an anti-hypertension drug, were completed on Jan. 21. The Chinese government plans to provide health care to 90% of its citizens by year-end. Candesartan will be listed in China's National Medical Insurance Catalog, so patients will be reimbursed through China's revamped coverage system, boosting sales. Health care reform could also signal a wave of industry consolidation.

"We believe the changes may cause attractive acquisition opportunities to appear," Chief Executive Zhilin Li said in the company's latest quarterly release. "To that end, we are monitoring the market for strategic opportunities to take advantage of the current fragmented nature of the industry."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CPHI $0.19 0.00%
PFE $32.79 0.00%
AAPL $117.81 0.00%
FB $105.45 0.00%
GOOG $750.26 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs