May 09, 2008 (Zacks Investment Research via COMTEX) -- American Oriental
Bioengineering Inc. (AOB) is a China-based specialty pharmaceutical company
which develops, manufactures and commercializes both plant-based pharmaceutical
(PBP) and plant-based nutraceutical (PBN) products. First quarter financials
were strong and were in line with our expectations. We expect the company to
continue to deliver strong performance for the remainder of the year due to a
relatively high growth in traditional Chinese medicine market in China. AOB
targets two rather large markets in China: the TCM pharmaceutical market and
nutraceutical market. We view AOB as a China play stock and growth story. In the
past few years from 2003 and 2007, the company achieved more than impressive top
line CAGR of 66.6%. EPS grew from $0.15 in 2003 to $0.60 in 2007, a CAGR of
42.7%. Both top line and bottom line continued to grow in the first quarter of
2008. We believe AOB will ride the wave of Chinese economic growth and increased
healthcare spending in the next few years. We believe the company will continue
manage its growth through both organically and through acquisition. Although
growth in the PBN sector may level off in the next few years, we believe the
company will achieve high growth in the PBP sector going forward. Specifically,
we model top-line growth (CAGR) of 32.5% from 2008 to 2011 EPS growth will reach
29.7% CAGR. We maintain our Buy rating on AOB shares and maintain our price
target of $16. The price target corresponds to a P/E ratio of 17.4 x, 11.9x and
11x of our estimated EPS of $0.92, $1.35, and $1.46 for 2009, 2010, and 2011
respectively. Read the full analyst report on AOB.
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Grant Zeng, CFA
Copyright (C) 2008, Zacks Investment Research.
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As of Monday, 05-05-2008 23:59, the latest Comtex SmarTrend® Alert,
an automated pattern recognition system, indicated an UPTREND on
04-22-2008 for AOB @ $8.71.
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