China Tracker - Details for China-Biotics (CHBT)

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 Business Outlook

BDO informed the Company that its resignation is based on (i) its determination that certain irregularities likely constitute illegal acts that could have a material effect on the financial statements of the Company for the purposes of Section 10A of the Securities Exchange Act of 1934, as amended; and (ii) its conclusion that the Company's Board of Directors and Audit Committee have not taken timely and appropriate remedial actions in respect of the alleged illegal acts. The Resignation Letter further states that, as a result of such failure to take appropriate remedial actions, it is impossible for BDO to gather evidence to assess whether the Company's accounting records have been falsified and whether there are other issues that could have a material effect on the financial statements of the Company.

The irregularities identified by BDO in the June 10 Letter consisted of the following: In a Company sales contract, the purchaser's chop (i.e., the official signature or seal) affixed on the signature page of the sales contract belongs to a different company than the one named in the sales contract. In connection with BDO's review of the Company's bank account through the Company's e-banking system using the Company's computer, BDO was directed by the Company to access a suspected fake website for the bank. A bank advice dated March 21, 2011 documenting a portion of the Company's interest income contained mathematical errors that the Company's management dismissed as clerical mistakes made by the bank; the Company later replaced it with a "corrected" advice from the bank; and the aforementioned bank advice dated March 21, 2011 used a deposit interest rate to calculate the interest income earned by the Company, which differed from the interest rate announced by the People's Bank of China for the relevant deposit period as referred to in an undated deposit agreement that was presented to BDO to corroborate the Company's interest income.

(Source: 8-K Filing, 2011-06-23)

On June 10, 2011, the Company's auditor, BDO Limited, notified the Company and the Company's Audit Committee that it had identified certain serious issues as part of its ongoing audit work and would need the Company to take certain actions and provide additional information. The Company's Audit Committee is investigating the issues raised in BDO's June 10 letter, as well as other matters. The Company has been discussing these issues with BDO and is working to take all of the actions and to provide the requested information to BDO as promptly as reasonably practicable. The Company cannot predict at this time when it will be in a position to take all of the actions and provide all of the information requested by BDO. The Company intends to file the Form 10-K as soon as reasonably practicable.

Until the review of the issues identified with respect to the pending audit of the Company's financial statements is completed, the Company is unable to determine whether the earnings statements to be included in the Form 10-K will reflect any significant change in the Company's results of operations from the corresponding period for the last fiscal year.

(Source: NT 10-K Filing, 2011-06-15)

Our current stock price does not reflect our long-term value and premium product quality in a large addressable market capable of sustaining rapid growth. Management will continue to focus on optimizing business operations and market expansion. We remain confident that, in the long run, our strategic position and ability to create value will be recognized by the US investment community.

(Source: PR Newswire, 2011-03-17)

For fiscal year 2011, management maintains the expectation for net sales to achieve at least 50% year-over-year growth. This target is based on the Company's current views on the operating and market conditions, which are subject to change. "Entering into the fiscal fourth quarter of 2011, we are making greater efforts to ramp up the production of bulk products to meet the rising demand from the domestic dairy and animal feed markets. With the ongoing holiday seasons, we also expect strong retail products sales for the quarter. We continue to expand the presence of our retail probiotic products into other key regions in China. We believe that, with the right distributors and sales channels, the market potential for our retail products is much larger in China. With our efforts and market prospects, we are confident to achieve our full year sales target."

(Source: PR Newswire, 2011-02-09)

For fiscal year 2011, the management maintains the expectation that net sales will achieve at least 50% year-over-year growth. This target is based on the Company's current views on operating and market conditions, which are subject to change. "We remain confident with our full-year outlook. Entering into the third quarter of fiscal year 2011, we expect that our retail product sales will accelerate as the months from October through March typically generate high demand for nutritional product sales. With our new retail operation model mainly focusing on sales through large trusted distributors, we are now rapidly expanding the points of sales of our branded Shining products and also dramatically reducing selling expenses by closing retail outlets, as retail outlets are carrying substantially higher maintenance costs due to a nationwide increase in wages and higher commercial rent in major cities. Our transition to the bulk business will continue and accelerate in the second half of our fiscal year as well. As more diary companies benefit from the stability and vitality of our probiotics cultures, our bulk products are gaining traction with these diary companies' increased yogurt production. Our plan is to increase penetration into other diary producers. With the completion of our retail operation changes and expected utilization expansion in our bulk business, we look forward to a strong operating margin in the coming quarters."

(Source: PR Newswire, 2010-11-09)

For fiscal year 2011, the management maintains the expectation that net sales to be at least 50% year-over-year growth. "We remain bullish on the outlook of fiscal year 2011. We will continue to invest in R&D in probiotics studies and applications, strengthen our product portfolio. The Qingpu facility's strong utilization rate growth demonstrated not only the depth of the probiotics demand in China, but our competitiveness of our products in the marketplace as well. As Chinese government is stepping up on the food safety measures and Chinese consumers are increasing their healthcare expenditures, we expect that more and more dairy and animal feed companies will embrace and increase the use of our probiotics products."

(Source: PR Newswire, 2010-08-09)

China-Biotics today announced that China-Biotics' Board of Directors approved a new share repurchase program of up to US$ 20 million of worth of its issued and outstanding common shares from time to time over the next 12 months. The repurchases will be made on the open market at prevailing market prices or in block trades and subject to restrictions relating to volume, price and timing. China-Biotics plans to fund repurchases from its available cash balance.

"Given our proven track records of business expansion and strong balance sheet, we believe that our stock is deeply undervalued. This share repurchase demonstrates our long-term commitment to sustainable growth and enhancing shareholder value. Recognizing our future growth opportunities in such a favorable macro environment for probiotics market, we think now is a great time for us to use our strong financial position to invest in China-Biotics."

(Source: PR Newswire, 2010-07-07)

"We expect the application of bulk additive probiotics in dairy and animal feed products to grow robustly in the future. The Chinese yogurt market is quickly embracing probiotics and the market potential is large. We remain confident that the addition of the bulk franchise will become the engine to drive our growth from both near-term and long-term perspectives. We look forward to becoming the dominant provider of bulk probiotics products in China and creating our long-term shareholder value." For fiscal year 2011, the management is expecting net sales to be at least 50% year-over-year growth.

(Source: PR Newswire, 2010-06-11)

The Company is reiterating its fiscal year 2010 revenue growth guidance of at least 50% and expects overall gross margin to remain approximately 70%. "We will continue to seek a balance between current production capacity and sales to new customers until our new facility begins commercial production. We look forward to the continued expansion of our retail distribution network and outlets. Once the Qingpu facility comes online, we will have the capacity to accommodate new orders as scheduled, which will begin contributing to our financial results in the fourth quarter of fiscal 2010."

(Source: PR Newswire, 2010-02-10)
Healthcare & Drugs
READ: Score Cards Explained
DETAILS: Safety/Risk Model for CHBT
Current Price:  n/a
F10k Day (2006-04-17): -100.00%$7.00
2009 Close: -100.00%$15.47
2010 Close: -100.00%$14.70
2011 Close: -100.00%$0.70
High (2012-09-18): -100.00%$4.49
Low (2012-05-09): -100.00%$0.68
Market Capitalization: n/a
Total Shares: 23.71 mill
Float: n/a
Avg Volume: n/a
Last Quarter: 2010-12-31
Revenue (MRQ): 32.38 mill
Net Income (MRQ): 10.42 mill
Op. Cash Flow (MRQ): 1.61 mill
all financial data provided without warranty