June 11, 2010 (Chinavestor) Everything goes against China-Biotics Inc. (NASDAQ:CHBT), a Chinese health supplement products maker and distributor, this morning. The company missed quarterly revenue and earnings targets, and guided lower. Additionally, index futures fell on surprisingly low retail sales numbers.
The company reported results for the first three months of 2010 as follows. Net revenues reached $25.5 million, an increase of 64.4% YoY but short of expectations of $26.12 million. Net income for the three months period amounted to $2.9 million or $.13 per share vs. consensus estimates of $.36, according to Yahoo Finance and well below net income of $6.59 million or $.39 a year ago.
The company provided yearly figures as well - this current quarter was its fourth quarterly results for 2010. Full year 2010 revenues increased to $81.36 million from $54.19 million in 2009 but net income fell to $15.647 million from $19.966 million in 2009.
These numbers are not only disappointing on their own but are a big shocker for the investor community based on historical performance. The company beat analysts estimates for most of the time
Source: Reuters.com
Despite a disappointing 2010 operations, the company piled up $155.5 million cash and cash equivalents by the end of March 2010, more than double what it had a year ago. The increase is due to a successful offering of 4.6 million common stocks plus an additional 690K over allotment option. The net proceeds of the share issuance were $75.3 million. Roth Capital Partners LLC acted as sole underwriter.
The big question is what the company is going to do with that much capital. Remember, the company reported net profits of only $15.6 million for the last twelve months. Acquisitions are certainly an option - but investors will have to look beyond the expected initial jump following the announcement. China-Biotics' (NASDAQ:CHBT) operations are far from smooth. Investors shouldn't take it granted that CHBT will find a better target company than herself.
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