AMERICAN ORIENTL BIO (AOB)

Sorry, but I've had enough of AOB's management playing share dilution games. I sat through the one last year, but I'm not doing it again. I had serious criticisms of last year's unjustified dilution and the announced $75M buyback, and this new $125M dilution is the last straw.

As was the case with last year's follow-on offering, this company has more cash than it needs right now, and the $125M follow-on offering is pure dilution with no clear benefit to stockholders. Especially combined with yesterday's announcement of a $75M buyback, this simply makes no sense, whatsoever (other than as a vehicle to line management's pockets at shareholder expense, perhaps).

I will NOT invest in a company whose management I cannot trust, and AOB's management has lost my trust. Goodbye, AOB!

For all my fellow americans, have you ever been to a chinatown in a local city? Their product is going to sell, here, their, everywhere. About the building... who cares about the building. great lottery ticket stock.

According to Jubak, the Chinese government is making a substantial push to expand the country's healthcare sector. American Oriental Biology ought to benefit from this initiative. The price is right at 1.04 times book value and 6 times estimated earnings in 2010 (i.e. $0.77 per share). The balance sheet is good and historical sales growth is phenomenal. Stockscouter rating is 7.

American Oriental Bioengineering engages in plant-based pharmaceuticals and nutraceuticals based on traditional Chinese medicinal products. Its pharmaceutical products include prescription and over-the-counter herbal and vitamin beverages, pills, and powders to treat a variety of ailments, from bedwetting to angina.

Plant Based Pharmaceutical products, which contribute 73% to the overall revenues, grew at an alarming rate of 131% during the third quarter of 2006. This phenomenal growth was led by increased sales of Shuanghuanglian Injection Powder, Cease Enuresis Soft Gel and UrinStopper Patch.

The company is very much in its growth phase and is focused on expanding its future activities by means of favorable acquisitions. Its recent acquisition of Guangxi Lingfeng Pharmaceutical contributed increase of 70% as compared to the sales recorded in last quarter. This acquisition has helped the company increase its presence in south China. Acquisition of HQPL has strengthened company’s sales force as it operates through its 100,000 distribution nodes and numerous pharmacy retail stores.

Recently, the company announced the launch of a new product called Jinji Yi Mu Cau in China. It is a dissolving powder pill designed to regulate the menstrual cycle and alleviate pre-menstrual cycle pain, which impacts over 250 million women in China. This product is expected to be available across its distribution network by early 2007. The company’s strategy of acquisition is adding synergy and organic growth of its existing products will drive the company in 2007.

Chinese traditional medicine is making inroads in the AMA. It's not just for "New Agers" anymore. Bet on these products being marketed to a captive audience in the West very soon. The achy aging boomers.

China's growing middle class will gobble up remedies for what ails them just as fast as we do in the US.

Could well become China's J&J and P&G.

Don't pay attention to the short sighted seller and myopic Asensio. Didn't his show get cancelled over ten years ago? Why does he still think he's important?

As for Asensio opinion's, so what if the CEO holds more than one passport. So what if board members sit on other boards.

If I had the dough I'd get a Dominican passport too. That country has fantastic resorts and beach villas. The treatment is much better when you are "one of them". (When in Rome, as the saying goes)

Look for AOB to expand to the Dominican Republic, just like US Pharma has in Puerto Rico. The Dominican Government is pulling out all the stops and opening the doors. It is becoming the safe haven, the Switzerland of the Caribbean.

Asensio hs his head you know where on this one, and judging by his smirk on his website, he enjoys the view.

Short selling was sooo last year and a losers game now.

In spite of decreased earnings MRQ v. YOY, profitability is excellent. Taking on debt to .33 is not appealing but interest coverage is > 15 and was taken on for capital expenditures and acquisition. Market should continue strong even in weak economic conditions for herbal pharmas.Recent price drop entry point. Bulldung, advice as good as my name.

AOB, which focuses on plant-based medicine in China, is very strong financially, has been steadily expanding cash flow and earnings for years, and has a wide range of pharmaceutical products, OTC drugs and nutraceuticals to market to China. AOB ought to grow in tandem with China's economy once a proper economic recovery takes place. I am confident of this because AOB remains fundamentally unchanged by the crisis, still has over 60 products to market to the burgeoning Chinese population, and has a good relationship with the Chinese government (the State Food and Drug Administration has approved all 60+ of their products). AOB is a bargain at this price methinks!

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.

Financial statements look great. Company only selling at 6 times its earnings. Current and long term liabilities are under control and assets are sitting pretty. Both long and short term. Also bullish on China's growth potential over next 5 years.

The CAPS community seems to like this stock (5 stars currently), and I can see why. With a PEG ratio of only 0.31 and a Market Cap of just under $0.5B, this small cap stock seems poised to do well over the next few years, particularly if a federal focus on health care materializes, in one form or another. From the quarter that closed 30-Sep-08, Profit & Operating Margins are at 24.4% and 31.6%, respectively, while RoA=11% and RoE=18%. All of these are good numbers, and hopefully they'll hold up for the current quarter which will close in less than 2 weeks. Meanwhile, the revenue/share ($2.94) is almost half of the share price ($6, currently), which is a good high number. Indeed, last quarter's Revenue and Earnings Growth figures were 62.2% and 38%. Their EV/EBITDA ratio, which is a measure of how much this company would cost you for the earnings it generates, is a stunningly low 4.96. Generally, I consider any value under 10 good, with those in the 6-8 range as low. Further evidence of a compelling buy is the Book Value of $4.31, which is two-thirds that of the share price. For pharmaceutical companies, however, I give this less credence to that number for there's a lot of play in those "goodwill" numbers... The "Murder By Number" killers for this industry are usually the debt load, but AOB seems to have that under control too, as their Debt/Equity ratio is only 37.3%. Lastly, a lot of insiders own stock in their company, as 21% of the shares are designated as held by insiders. All in all, this stock has limited downside risk and seems poised for a good run, but while we could certainly see some more volatility in the market and further decline in AOB, this stock is screaming: Buy me! Buy me NOW!

[SOURCE: Yahoo! Finance]

Stock has been slammed recently due to some short-seller talking about potential unreported insider transactions regarding the co's acquisition of a building. I too was worried about this write-up, until I saw today that they changed auditors to E&Y (one of the "Big 4" accounting firms). I will tell you, from being a former Big 4 accountant, that people will be fired from E&Y if they did not perform enough due diligence to be comfortable with taking on this engagement. Therefore, I think this is one of those "fearful / greedy" moments... so I bought more shares in this today (I already had a small position).

American Oriental Bio is another one of those scary chinese companies that just sound too good to be true. They make magic potions that help you sleep better, relieve pain, or just about anything else you can imagine - hey, even dumbo could fly as long as he had the feather. With a PE of just 14 and a price/book of 2 the company is generating cash, lots of cash that will hopefully feed smart acquisitions and share holder value. We'll see...

Anyone have any ideas about this article on seeking alpha yesterday? It basically says that CEO is stealing from AOB.

http://seekingalpha.com/article/153837-american-oriental-bioengineering-undisclosed-related-party

If true this would be bad news!

What can I say - MDP and Global Gains have both put thier neck out on the line for this company so the FOOL must see something here. I put my money where my mouth was on this pick and picked up some shares today at 5.17.

AOB sells a combination of western and traditional Chinese medicines. As the middle class in China grows more people are going to be able to afford their products. With a standardized packaging and distribution system, people will respond well to being able to buy their traditional medicines in modern drug stores and supermarkets. Chinese stocks have had a pretty big pullback, but over the longer term I expect this stock to outperform the S&P.

My father-in-law runs a much smaller but quite successful business in the same niche, but exports mostly to S. Korea (herbal supplements and remedies, etc.). Fact is, Asians love buying anything that someone says is good for their health, whether it's true or not. And there's no way traditional Chinese medicine and herbal remedies are going to be replaced by western, evidence-based medicine in China or anywhere else in Asia. They will continue to coexist. I personally wouldn't buy any of the herbal remedies these folks are selling, but I think the company has rock solid fundamentals and are in the right market for their products.

I just ran the following screen for a mid-cap company with good numbers that might be getting unfairly blown out in the collective sneeze taking place...

5-star CAPS rating
3 yr EPS growth rate >10%
3 yr Revenue growth rate >25%
>15% insider ownership
PE <10
ROE >15%
<30% above 12-month low
13/26/52 month price change -75% to +20%
Current Ratio >1
LT D/E Ratio 0-1
Price:Sales Ratio 0.5 to 5

One stock in the universe showed up: AOB

Current Ration of almost 8, EPS growth >30%, Revenue growth >50%, ROE >15% and 21% insider ownership??!!

Make mine a double

Having lived in Korea, I'm familiar with the way Asians view their traditional medicine. With their increased wealth, the Chinese will ever be more health conscious, and they will start spending their money on traditional medicines that benefit their overall health even when there is no ailment. AOB is the biggest player in a very fragmented market. They will grow through acquisitions, and in time, I hope that their brand will be recognized in China. The Chinese will associate brand names with safety, and that should give AOB a great edge in the market.

Traditional remedies are increasingly becoming mainstream. China is risky for myriad reasons, but this stock seems heavily discounted. It's no secret that China is a massive market, and this company should be well positioned for growth.