Today, we are adding American Oriental Bioengineering Inc. to our China “One’s to Watch” list. Together with its subsidiaries, the company engages in the development, manufacture, and commercialization of a range of pharmaceutical and healthcare products. Based in Shenzhen, China, the company has a market capitalization of approximately $400 million.
The company provides more than 30 over-the-counter type drugs, and conducts its own research, development, production, and distribution of more than 40 pharmaceutical products. Currently all of their products are approved by the Chinese State Food and Drug Administration (SFDA). In the pipeline, American Oriental has over 400 SFDA approved products that have yet to be commercially launched.
American Oriental is well positioned with $144.47 million in cash and only $10.78 million in debt. Historical sales have grown over 70% annually while earnings per share sustain a 40%+ growth rate. Analysts have shown strong support as four rate the stock a “Strong Buy” and one calls it a “Buy”. Insiders have also shown their positive outlook for the company by holding 21% of the outstanding shares.
With the current economic turbulence, it is unlikely the company will be able to maintain its tremendous growth rate in the near term, but investors have already discounted this fact by valuing the company at a Forward P/E of just 5.49. In view of the major discount, excellent cash position, and historical growth performance, American Oriental is now a “One to Watch” at QualityStocks.
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