$4.06
-0.08 (-1.93%)
AMERICAN ORIENTL BIO (AOB)
CAPS Rating:
The Company, together with its wholly owned subsidiaries, is a pharmaceutical and Traditional Chinese Medicine company which develops, manufactures and commercializes both plant-based pharmaceutical and plant-based nutraceutical products.
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People (talking-heads) have been pitching the "powerhouse of China", but in all the hoop-la a few things have been missed. China is still a communist country with heavy government control and regulation, that can often change on a whim. Also, they are just as much a part of the global economy that the United States and the EU are. Right now we are in the middle of a pretty rough global economic downturn. Couple that in with the inability for a communist regime to respond as quickly and as efficiently as the capitalistic markets and you spell problems. China also has a lot of internal problems too, from rampant corruption to massive pollution. This WILL need to be addressed sooner rather than later, and it will cost the government (and the people) of China a great deal - more than just in monetary figures.
Looking specifically at this market segment - alternative medicine - that "fad" has faded. Sure there are still many people that swear by it, but with all of the problems that other companies in China have had with poisonous substances being found in their products; lead in toys, melamine in baby formula, etc; I don't think the global public is going to be jumping to ingest products from China.
Do a bit more research on the company and you will discover that the vast majority of AOB's products are sold in China, so Western opinion of alternative medicine does not matter very much. Also you will find that approximately 25% of their revenues are from prescription drugs, 50% from OTC drugs, and only 25% from alternative medicine, nutraceuticals and health food.Yes China has problems, but they are in better shape economically than most of the Western world right now. Considering their ongoing GDP growth, strong balance sheet and trade surplus, I would rather be holding renminbi than dollars over the next 20 years. There are plenty of negative, autocratic aspects of the Chinese economy, but you have to look at the big picture.
Interesting...CAST is also a Chinese company but on your list...
I'd also argue that China is not a Communist Country. Totalitarian yes, but they have long ago given up on Central Planning for the growth of the free market system.
Political risk is there like in most emerging markets. However, China is a rising giant, I would'nt bet against it. The one party rule it has helps the stability as opposed to India where the democracy it has adds to the instability . The Market for China in the future is not the US, it is China itself. Nations like China and India have their own giant market.