Research and Trading Portal for US-listed China Stocks · March 29, 2017
China Tracker - Details for Biostar Pharmaceuticals (BSPM)
The Company is reiterating its fiscal 2011 full year net sales guidance of 20-25% growth and aims to further penetrate in rural area by establishing 3,000 additional rural sales outlets and take total number of rural sales outlets to 13,000 from 10,000 last year.
We are optimistic about 2011 and the ability to sell through all of our products through a robust distribution channel and rural sales network. We are confident in meeting our target for the year of 20-25% growth in revenues year-over-year.
"We implemented a broader marketing strategy for our flagship Xin Aoxing Capsule, complemented by our expansion into more retail locations in rural areas. This enabled us to achieve record sales and earnings for the year. We expect to have 13,000 rural locations by the end of 2011, up from approximately 10,000 at the end of 2010, and believe this sales channel will further drive incremental growth for the year."
Biostar launched 5 new products during 2010, including health products such as Tangning Capsule, Yizi Capsule, Shengjing Capsule and Aoxing Ointment. Total revenue from new products was approximately $6.7 million during 2010, a 30% increase and further increases are anticipated during 2011. The Company expects to receive final SFDA approval to produce Zushima Analgesic spray, a pain reliever product intended for use by military personnel during the first half of 2011. Management expects total sales from new products to represent 10% of its forecast for 2011.
Biostar's preliminary estimates of its combined revenues for October and November 2010 shows that the revenues for the period increased 68% to approximately $18.3 million, compared to $10.9 million for the same period of 2009. Sales of Xin Aoxing Capsules, Biostar's flagship product, increased by 67% to $12.4 million or 68% of total unaudited revenue for the first two months of the fourth quarter 2010. Similarly, the Company estimates its unaudited revenues for the first 11 months of 2010 to be $70.2 million, approximately 88% of the Company's full year revenue guidance of $80 million, an increase of 49% compared to the same period of last year. Xin Aoxing's sales were $47.2 million, growing 47% during the first 11 months of 2010. The Company continued its expansion into rural communities in China with products now being sold at over 9,500 locations as of November 30, 2010, up approximately 12% from the end of the third quarter ending September 30, 2010.
"Historically for our Company, the fourth quarter is the strongest sales quarter and December is the strongest sales month. Strong reorders for Xin Aoxing in new markets, driven by a successful advertising program, and supported by sales growth in several other products gives us confidence we will meet our 2010 guidance. We are also on track to meet our 10,000 location target for the rural expansion program and believe this sales channel will drive incremental growth during 2011. We will continue to maintain stringent credit terms with our customers to enhance working capital. At the same time, we are working on expanding Xin Aoxing's delivery format to include an injectable form, which we expect to be more effective when applied to patients diagnosed with acute or severe Hepatitis B."
Biostar sees significant opportunities created by the state-implemented New Rural Cooperative Medical System to expand its rural distribution network. As of September 30, 2010, 10 of the Company's products were available for sale in approximately 8,500 rural retail locations across 22 provinces. Based on current internal projections, management expects the Company's rural retail distribution to double over the next few years. Sales to rural markets grew 66% in the first half of 2010 to $4.8 million, representing approximately 15% of total sales.
"We continue to expand our rural distribution network aggressively. With the PRC government allocating nearly $5.6 billion to expand basic medical services to all 900 million rural farmers by 2010, Biostar is well positioned to capitalize on this secular growth opportunity. We see many more years of healthy growth as more Chinese consumers have access to our products and our brand awareness continues to grow. Expanded rural distribution, coupled with strong growth in existing markets, makes us confident in reaching our 2010 sales and net income guidance of $80 million and $18 million, respectively."
We are making progress on all aspects of our business. We expect to receive the final approval to produce Zushima Analgesic Spray in October. With $30 million in anticipated capacity, we expect to generate $3 million in revenue for fiscal 2011 and to grow at least 50% for the coming years. We will remain focused on expanding our sales footprint, branding our leading products, while introducing higher margin products, which we believe will collectively drive further growth and increased profitability.
We are pleased to report another quarter of strong revenue growth, as Biostar gains further brand recognition and awareness for our Xin Aoxing Capsules. With momentum in several key markets, we are confident that this flagship product is becoming known as one of the major medical treatments for Hepatitis B in China. We are optimistic that with our continued expansion into new markets, supported by comprehensive marketing and distribution strategies, including direct sales, we are in position to leverage our product portfolio for optimal growth.
Management provided guidance for fiscal 2010 for revenues of $80.0 to $82.0 million with net income of $18 to $20 million. The company had working capital of $24.1 million on December 31, 2009 and generated cash flow from operations of $5.7 million during fiscal 2009. Management believes its current balance sheet is sufficient to meet its guidance for 2010.
Management is raising its 2010 guidance and now expects to report revenues of $80.0 to $82.0 million with net income of $18 million to $20 million. This represents between 50.1% to 53.8% revenue growth and between 71.4% to 90.5% net income growth year over year. The improved outlook is based on new market development of Biostar's flagship Xin Aoxing Capsule, including the launch in four new markets including Jiangxi, Jiangsu, Hebei and Guangxi provinces planned for early April 2010. Management anticipates approximately $9.3 million in incremental revenues during 2010 from these new markets, and for Xin Aoxing to comprise approximately 66% to 70% of total 2010 revenues. In addition, the addition of Meipude will open up a medical equipment distribution opportunity for Biostar and is expected to contribute approximately $3 million in incremental revenue during 2010.
Biostar forecasts revenues of $69.0 to $71.0 million with net income of $16.2 million to $17 million, excluding any non-cash charges. Management anticipates sales of its flagship product, Xin Aoxing, will represent approximately 68% to 70% of revenues during 2010. The growth strategy for 2010 is supported by the following initiatives: (1) the introduction of Xin Aoxing into three new markets including Chongqing, Jiangxi and Jiangsu, which, including the Company's previously announced launch in Tianjin, Beijing and Shanghai in January 2010, will bring the total number of markets served by the Company's direct sales offices to 21. (2) to continue increasing the Company's presence in rural markets with a goal of reaching 10,000 sales outlets by the end of 2010. and (3) further product diversification through research and development and new product launches upon successful clinical trials and permitting procedures.