China Tracker - Details for Biostar Pharmaceuticals (BSPM)

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 Biostar Pharmaceuticals
 Analyst Coverage
2011-05-16Rodman & RenshawReiterationOutperform$7.00
2011-03-25Rodman & RenshawReiterationOutperform$7.00

Biostar reported a top line of $80.2MM in 2010, representing a 50% growth over 2009, slightly higher than our estimates of $79.5MM. The company reported 2010 diluted EPS of $0.63, inline with our estimates. Cash decreased to $13.2MM in 4Q10 from $16.6MM in 3Q10, partly due to $7MM deposits paid for acquisitions. Sales of the flagship product Xin Aoxing were $53MM in 2010, representing a 46% growth YoY. Rural distribution network surpassed 10,000 clinics in 22 provinces in 2010.

The company plans to expand sales of Xin Aoxing from 22 to 26 provinces with an increased sales team in 2011. The company guided a 25-30% top line growth in 2011 primarily due to sales of Xin Aoxing. We reiterate our Market Outperform Rate with a 12-month target price of $7 per share.

2010-12-13Rodman & RenshawReiterationOutperform$7.00
2010-11-18Rodman & RenshawInitiationOutperform$7.00

We are initiating coverage of Biostar Pharmaceuticals with a Market Outperform / Speculative Risk rating and a 12-month target price of $7/share. Biostar has established strong historical revenue growth with its flagship product Xin Aoxing targeting the world's largest hepatitis B market. The company's future growth could be driven by increasing market penetration of Xin Aoxing in addition to a pipeline of smaller marketed products.

Biostar's flagship product Xin Aoxing targets the largest hepatitis B market in the world. One third of the world's hepatitis B patients reside in China. The market for hepatitis B drugs could potentially grow multiple fold from current $700MM in China. Xin Aoxing is one of the few SFDA approved OTC drugs for the treatment of hepatitis B. In addition, the OTC classification allows Biostar to conduct direct-to-consumer (DTC) advertisement campaigns and to build regional brand name. Sales of Xin Aoxing reached $35MM in 1-3Q10, contributing 67% of total revenue. In our opinion, Xin Aoxing could reach $50MM in sales in 2010 and $80MM in 2013.

Biostar has established an extensive marketing network with 21 distributors and over 280 sales people. Through DTC advertising, Biostar has established a regional brand name and has penetrated 22 provinces and over 8,500 rural clinics. Our survey on 16 out of 21 distributors suggests strong growth potential for the key product based on brand name recognition and customer loyalty. The company plans to increase market penetration by expanding its sales network to 10,000 rural clinics by YE10, and to 26 provinces by YE11.

China's economic growth is predicted to outpace the rest of the world in 2010 and 2011. Chinese pharmaceutical industry is a key contributor to overall growth. Based on the announced $124B healthcare budget for 2009-2011, we believe the potential demand for pharmaceutical products could increase by six-fold in 2010.

We derive our valuation for Biostar based on an analysis of P/E multiples of comparable companies. Companies with similar growth opportunities are currently trading at approximately a ~9X P/E multiple. By applying a 9X P/E multiple to our 2011 EPS estimates, the estimated value of Biostar would be $7/share.

2010-02-16EquityNet ResearchInitiationStrong Buy$9.13

Paid research. Full report (PDF) available as download

Healthcare & Drugs
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DETAILS: Safety/Risk Model for BSPM
Current Price:  n/a
F10k Day (2009-08-14): -100.00%$12.00
2009 Close: -100.00%$13.35
2010 Close: -100.00%$8.46
2011 Close: -100.00%$1.86
High (2012-04-23): -100.00%$2.11
Low (2012-04-03): -100.00%$0.56
Market Capitalization: n/a
Total Shares: 9.40 mill
Float: n/a
Avg Volume: 153.20 k
Short Interest: 47.90 k
Short Ratio: 0.08%0.3 d
Last Quarter: 2012-06-30
Revenue (MRQ): 8.16 mill
Net Income (MRQ): -1.58 mill
Op. Cash Flow (MRQ): -3.02 mill
all financial data provided without warranty