CHME.OB – China’s Dirt Cheap Drug Retailer
Oct 3, 2007 Small Cap Stock Picks
About China Medicine Corporation
China Medicine is a distributor of medical products, traditional pharmaceutical medicines, traditional Chinese medicines, Chinese herbs and dietary supplements to over 28 provinces and 2,500 customers within China. The Company sells more than 1,500 products and is actively building a pipeline of proprietary traditional and Chinese herbal remedy products targeting oncology, high blood pressure and the removal of Aflatoxins from food and animal feed. For more information visit the Company’s website at http://www.chinamedicinecorp.com .
Yet again we find dirt cheap stocks in China with bullish stock charts backed by strong fundamentals and growth to back it. CHME went public late 2006 and hasn’t formed any real trend yet since its IPO on the OTCBB market. Today the stock made a very bullish breakout (+23.67%) with the companies record volume which could signify the beginning of a trend in the making, especially with its strong growth, as well as being a Chinese stock.
Currently CHME is trading at an estimated 7.57x earnings compared to the Drug Retail industry average of 20x earnings making this stock look dirt cheap looking at its past earnings and current share price. CHME would be more fairly valued near $9/share compared to the American drug retailers. Looking forward, we should expect growth in CHME giving it even a higher fair value in the market place.
recently CHME reported strong growth in the second quarter as follows:
China Medicine Announces Second Quarter 2007 Results
Tuesday August 14, 9:09 am ET
GUANGZHOU, China, Aug. 14 /Xinhua-PRNewswire-FirstCall/ –
Second Quarter Highlights:
– Revenue increased 105% to $8.3 million
– Operating income increased 313% to $1.4 million
– Net Income increased 328% to $1.1 million or $0.08 per diluted share
– First six months revenue increased 70.2% to $13.4 million with EPS of
$0.15
– Net income increased 47% over Q1
“We continue to make strides as it relates to expanding our proprietary product offering, specifically our Yutain Capsule which is a Traditional Chinese Medicine used to treat lung cancer,” continued Mr. Yang. “We expect to apply for a clinical trial with the SFDA in the near term and our team is very encouraged by the initial results and potential market size.”
Mr. Yang concluded, “The acquisition environment in China remains robust as there are many under capitalized companies that possess significant assets both from a proprietary product standpoint and manufacturing presence. We will continue to evaluate potential acquisitions as we look to add these key components to our business which we believe over time will strengthen our competitive positioning while enhancing our overall profitability.”
Growth looks strong for CHME and dirt cheap at these current prices and looks like a healthy company with a huge current ratio of 40.23. Sitting in the middle of an emerging market along with a bullish chart. This looks like a recipe for big profits in the making. Technically price just broke through resistance near 3.16 on the companies record volume of 2.1m shares suggesting the beginning of a new bullish trend. Optimal entry for this stock would be near the midpoint of the breakout candle near 3.50 or so. Given some time i think its very possible for CHME to breakout to all time highs above 4.43.
Buying CHME 
