3SOF

As everybody else, I wouldn't mind joining the Chinese speculative party, if I don't see much risk in doing so and there's the real possibility of big profits coming to the Main Portfolio, which is near an all time high. I need all the help I can get before 2007 closes to reach or surpass the 30% profit mark for the year.

Yesterday night I saw something for the first time, which was StockLemon actually recommending a stock to buy, not just bashing stocks running high. I enjoy his research a lot and he's almost always right over the long term. I've confirmed all the facts mentioned in his recommendation and they're all true ... I think he's even being conservative, as I'll explain later.

The stock he recommended was China Medical Corporation (CHME.OB):

Citron covers China Medical Corporation (http://www.citronresearch.com/)

You can see from the following chart that CHME.OB is a recent IPO and yesterday was the first day of strong buying, with 2 million plus shares changing hands:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=40726;image)

Today we also have www.**********.net joining the party in CHME.OB ... but I'm not going to walk way from this potential rocket just because "competition" had the same idea.

Fundamentally we're talking about a $40 M market cap company, with $23 M in revenues in 2006. In 2007, revenues are growing 105%, so we're looking at about $47 M in revenue in 2007. Net profit margin in Q2 2007 was an impressive 20.4%, which if maintained, will translate into about $9.6 M in net income for 2007. Apply a 20 times earnings multiple to this and get a $192 M market cap company, almost 5 times more than what it actually is now. :o

Read the full earnings report here:

• China Medicine Announces Second Quarter 2007 Results (http://biz.yahoo.com/prnews/070814/cntu031.html?.v=1)
PR Newswire (Tue, Aug 14)

On this spectacular earnings news day, nobody was watching ... the stock traded just 37,700 shares on that day and price declined 3.2%. On the next day it traded just 1,000 shares.

But now, after a 2 million shares day, everybody will see how deeply undervalued this stock is ... I see it climbing 100% very fast and more later.

Trading Plan:

Buy CHME.OB, 5% of capital.

Strange, I got a message from IB that: "This contract can only be closed".  :'(

I have this problem too

Quote from: realcoolhead on October 04, 2007, 09:13:08 AM
Strange, I got a message from IB that: "This contract can only be closed".  :'(

Quote from: babouk on October 04, 2007, 09:23:59 AM
I have this problem too

What? What's the problem with IB? Please call them ... they're known for not letting people trade OTCBB shares.

Others with other brokers, any problem? Thanks.

TD Ameritrade OK.

I was able to buy it at $3.88 ... bad fill :-X

Anyway, I hope you guys catch it on this dip (which I guess is happening because most China related stocks are down today, a short term thing).

My broker is IB...And I'm beginning to think seriously in changing as I also can't buy this one.

No problem Scottrade

Quote from: Dracull on October 04, 2007, 10:34:51 AM
My broker is IB...And I'm beginning to think seriously in changing as I also can't buy this one.

If this thing goes up 50% today or tomorrow you'll sure want to put some money in another broker too Draccul. IB's problem is that it is a professional trader's broker, not very well suited for investors.

It's good for those who day trade stocks or futures, but to buy and hold stocks for the long term ... there are better alternatives. This issue with OTCBB stocks is a pain in the ass.

QuoteIf this thing goes up 50% today or tomorrow ...

CHME.OB didn't go up 50% yesterday. Here's why, in my view:

«... were issued two series of warrants to purchase up to 3,694,738 shares of the Company's Common Stock at $1.75 per share ("Warrant A") and 3,694,738 shares of Common Stock at $2.50 per share ("Warrant B"), subject to adjustment set forth in the warrants issued to the initial investors dated February 8, 2006. Pursuant to a Waiver and Amendment  dated April 23, 2007 between the Company and the Initial Investors, the exercise price for Warrant A was reduced to $1.70 and for Warrant B to $2.43. As of the date of this report, the Company has 378,948 shares of Warrant A outstanding. As of the date of this report, no Warrant B has been exercised and the Company has 3,694,738 shares of Warrant B outstanding.»

At the date of this report, the $1.70 warrants were almost all converted, but we already had the 3,694,738 warrants at $2.5 to be converted. These investors have been holding these warrants since February 2006, that is, 20 months, so probably they were looking to convert and sell at least some of them, regardless of the fundamentals of the company, as they would probably want to diversify their investments.

Now it's fashion to make IPO's this way, the same thing happened with ASTI, I sold because of the warrants, and then had to buy the stock back 100% higher. I'm not going to make the same mistake twice.

CHME.OB has a very seasonal business, and this explains the big rise in inventories in Q2 2007.

Check here the historical quarterly revenue numbers:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=40763;image)

And the quarterly EPS numbers:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=40764;image)

Look at this incredible seasonality. The company had full year EPS of $0.63 in 2006, of which $0.55 were in the second half. In the first half of 2007 CHME already made $0.16 EPS, but it promises a lot more in the 2nd half, say, at least $0.7, even with the # of shares outstanding growing? This gives me about $0.86 EPS in 2007, which means the stock is trading at about 4 times earnings.

I believe this is possible because this is a recent IPO stock which had phenomenal growth, but investors didn't pay attention. Not until now.

I see several bags of profit in CHME.OB and I'm not going to be shaken out by any short term volatility coming from the exercise of warrants. The holders of warrants certainly know how undervalued the company is and they won't let go of all their shares at current market prices, just some to satisfy their short term needs.

Will CHME.OB rise 50% today? It should, it should ...

I'll keep holding CHME.OB.

Quote from: David Randolph on October 05, 2007, 08:12:12 AM

QuoteIf this thing goes up 50% today or tomorrow ...

I see several bags of profit in CHME.OB and I'm not going to be shaken out by any short term volatility coming from the exercise of warrants. The holders of warrants certainly know how undervalued the company is and they won't let go of all their shares at current market prices, just some to satisfy their short term needs.
Will CHME.OB rise 50% today? It should, it should ...
I'll keep holding CHME.OB.

It could be David  :)

I put a limit order to buy this stock at $3.40 from the first day you recommanded it and it Filled a few minutes ago  ;D

The chart says something will happen soon , probably will be the 50% rise  ::)
Anyway , it's a good pick david

QuoteI put a limit order to buy this stock at $3.40 from the first day you recommanded it and it Filled a few minutes ago ;D

The chart says something will happen soon , probably will be the 50% rise  Roll Eyes
Anyway , it's a good pick david

Thanks Garoh, congrats on the excellent fill :)

I made some estimates for my valuation model but I don't have time to explain them now, I'll do it over the next update:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=40803;image)

Let's just say I expect CHME.OB to be a multi-bagger and my hands are as strong as they can be on this one.

Considering this:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=40845;image)

... and this:

«"The second half of our calendar year is generally the strongest as customers build inventory to meet rising demand as we enter the winter season and approach the Chinese New Year," continued Mr. Yang. "With our broadened product portfolio we are well positioned to capitalize on this trend and anticipate that revenues and net income will show meaningful increases during the second half of this year compared to the first."»

... and the $0.63 EPS CHME.OB earned in 2006, I would say we're looking at least at $0.8 EPS in 2007 (because the # of shares outstanding increased due to warrants conversion, but that is almost over now - or else EPS would be $1 plus).

So CHME.OB is enjoying phenomenal revenue and profit growth, and it appears to be trading at about $3.4/$0.8 = 4.25 times earnings. Where's the flaw? I don't see it, I think this happened because the company's revenue growth and profit expansion was too fast, and since the stock was too illiquid, nobody was looking while the fundamental improvement was happening.

I attribute the current weakness to some selling of shares from converted warrants at $2.5, but I expect this selling pressure to dry soon. CHME.OB has all in its favor to make a very rapid 100% jump, if we make a new white candle and a new high above $3.90, you can bet on it with safety in my opinion.

I'll keep holding CHME.OB for the long term.

HELLO 3STOCKSONFIRE`S SPACESHIP CONTROL CENTER

CHME SPACESHIP CALLING
We have a liftoff
All of us on board so far so goooood

Hope calling you again from the moon

Good work David

For anyone who follows STEPS/G-Spot from EliteG/AussieTrader, today marked the reversal candle you would like to see to make a position entry expecting a Gspot breakout above the original level.  I am doubling my position at the open tomorrow.

Quote from: Garoh on October 05, 2007, 10:20:32 AM

Quote from: David Randolph on October 05, 2007, 08:12:12 AM

QuoteIf this thing goes up 50% today or tomorrow ...

I see several bags of profit in CHME.OB and I'm not going to be shaken out by any short term volatility coming from the exercise of warrants. The holders of warrants certainly know how undervalued the company is and they won't let go of all their shares at current market prices, just some to satisfy their short term needs.
Will CHME.OB rise 50% today? It should, it should ...
I'll keep holding CHME.OB.

It could be David  :)

I put a limit order to buy this stock at $3.40 from the first day you recommanded it and it Filled a few minutes ago  ;D

The chart says something will happen soon , probably will be the 50% rise   ::)
Anyway , it's a good pick david

Hi tokyopua

The chart looked excellent 2 days ago with possible of new high  :)

Quote from: Rmagos on October 09, 2007, 02:54:51 PM
HELLO 3STOCKSONFIRE`S SPACESHIP CONTROL CENTER

CHME SPACESHIP CALLING
We have a liftoff
All of us on board so far so goooood

Hope calling you again from the moon

Good work David

Lol Rmagos, I hope CHME.OB travels to the moon at the speed of light.

Quote from: tokyopua on October 10, 2007, 03:58:42 AM
For anyone who follows STEPS/G-Spot from EliteG/AussieTrader, today marked the reversal candle you would like to see to make a position entry expecting a Gspot breakout above the original level.  I am doubling my position at the open tomorrow.

Yeah, we need a close above $3.9 for a G-Spot pattern. I believe it will happen and CHME.OB will make a double from then on, towards $8 a share. At $8 it would still be cheap, trading at 10 times this year's earnings ;)

Anyway, even if we don't get the type of momentum buying we're expecting, there's no doubt the 2nd half will bring very good news (mainly because of seasonality, but that's not priced in) and this time investors will be watching, because CHME.OB got some volume and definitely entered some people's radar.

I'll keep holding CHME.OB.

Stock looks terrific!

Breakout from Cup and Handle should be Outstanding!

Stage 2 Boosters ready to fire!

Great job David!

Bourbon  ;D

Put in my order for $3.90. 

Quote from: buddjas1 on October 11, 2007, 11:28:05 AM
Put in my order for $3.90. 

Nice fill buddjas1 :)

People are putting all Chinese stocks in the same bag, and trading them with momentum. I don't care about that, the next couple of days or weeks don't tell me anything about CHME's future share price. I'm pretty sure that almost nobody knows this company made $0.63 EPS in 2006 and that the 2nd half is much, much stronger than the 1st, because in 2006 the company wasn't public. But I have the data in my fundamental data service from www.alphatrade.com.

When people see, what, something like $0.8 - $1 EPS for CHME.OB in 2007 they will undoubtedly put the stock in the $10 - $15 range. Less than six months to go for the full year 2007 results, so ... nobody has anything to worry about this stock.

I'll continue holding CHME.OB with strong hands, ignoring short term volatility, focusing on the share price six months from now.

I Jumped in today, bought on the pullback... ;D

Quote from: Terliso on October 12, 2007, 10:51:26 AM
I Jumped in today, bought on the pullback... ;D

Cool, always nice to have you on board Terliso :)

CHME.OB had $0.63 EPS in 2006, you can confirm that at the following for 10-KSB:

FORM 10-KSB (http://www.sec.gov/Archives/edgar/data/1328790/000114420407017122/v070347_10k.htm)

Now, the current # of shares outstanding is much higher, at 13,306,738 shares on August 10, 2007, mainly as a result of the company entering the public market in November 2006, but also because of warrants being converted into common shares at $1.25 and $2.5. I think this conversion is over or almost over after the volume we've had over the last couple of weeks.

CHME.OB will probably average about 15 million shares outstanding in the 2nd half of 2007. With the share count doubling, net income needs to at least double for EPS to stay the same, and I think that's what will happen:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=41027;image)

I'm looking at about $0.6 - $0.8 EPS in 2007. With the stock trading at $3.8, it is being valued at about 5.4 times earnings, which is incomprehensibly cheap. It should trade at least at 20 times earnings, that is, about $14 a share.

I'll continue holding CHME.OB. 

Quote from: David Randolph on October 04, 2007, 11:13:15 AM

Quote from: Dracull on October 04, 2007, 10:34:51 AM
My broker is IB...And I'm beginning to think seriously in changing as I also can't buy this one.

If this thing goes up 50% today or tomorrow you'll sure want to put some money in another broker too Draccul. IB's problem is that it is a professional trader's broker, not very well suited for investors.

It's good for those who day trade stocks or futures, but to buy and hold stocks for the long term ... there are better alternatives. This issue with OTCBB stocks is a pain in the ass.

Just got a reply from my cumplaint at IB:
"Response to your Trouble ticket #462770 created on 2007/10/12 15:57 EST. 
Subject: I want to buy CHME.OB but IB doesn't allow
Initial Description:
Response from lackey at 2007/10/15 12:34 EST:
Upon further inquiry with the clearing department CHME's clearing status has been changed. You should be able to place opening transactions by tomorrow 10-16-07"

Who said that cumplaining doesn't pay? >:D>:D

QuoteJust got a reply from my cumplaint at IB:
"Response to your Trouble ticket #462770 created on 2007/10/12 15:57 EST.
Subject: I want to buy CHME.OB but IB doesn't allow
Initial Description:
Response from lackey at 2007/10/15 12:34 EST:
Upon further inquiry with the clearing department CHME's clearing status has been changed. You should be able to place opening transactions by tomorrow 10-16-07"

Who said that cumplaining doesn't pay?  >:D  ;D

And you'll be buying lower than myself, you can thank IB for that :)

CHME.OB is trading at about 5-7 times earnings while it grows revenues by 105% from the year ago levels on a weak part of the year in seasonal terms, and this undervaluation won't be here for long. When the company reports 3rd quarter earnings I expect it to shoot 100% higher at the very least.

I'm totally confident on CHME.OB and I'll keep on holding the stock for the long term.

when's 3rd quarter earnings out? (and where do you typically find these?)

 BUYINS.NET: CHNR, MNKD, CHME, CMNN, NWGN, BGTH Have Been Added To Naked Short List Today
Tuesday , October 16, 2007 09:25ET

Oct 16, 2007 (M2 PRESSWIRE via COMTEX) -- BUYINS.NET, www.buyins.net, announced today that these select companies have been added to the NASDAQ, AMEX and NYSE naked short threshold list: China Natural Resources Inc. (NASDAQ: CHNR), MannKind Corp. (NASDAQ: MNKD), China Medicine Corp. (OTCBB: CHME), Communicate.com Inc. (OTCBB: CMNN), NewGen Technologies, Inc. (OTCBB: NWGN), Bridgetech Holdings International Inc. (OTC: BGTH). For a complete list of companies on the naked short list please visit our web site. To find the SqueezeTrigger Price before a short squeeze starts in any stock, go to www.buyins.net.
......
China Medicine Corp. (OTCBB: CHME) through its subsidiary, Guangzhou Konzern Medicine Co., Ltd. distributes pharmaceutical products in the People's Republic of China. It sells and distributes approximately 1,500 pharmaceutical products that include prescription and over the counter pharmaceutical products, traditional Chinese medicines, dietary supplements, and medical instruments. The company also engages in the sale of medical formula and development of new products. It purchases its products from drug manufacturers and sells those products to wholesale pharmaceutical product companies, hospitals, and retail drug stores. China Medicine Corporation's distribution network reaches approximately 300 hospitals, 500 pharmaceutical companies, and 1700 drug stores throughout China. The company is based in Princeton, New Jersey. With 13.31 million shares outstanding and 8,000 shares declared short as of September 2007, there is a failure to deliver in shares of CHME.

Quote from: la-onda on October 16, 2007, 09:12:55 PM
BUYINS.NET: CHNR, MNKD, CHME, CMNN, NWGN, BGTH Have Been Added To Naked Short List Today
Tuesday , October 16, 2007 09:25ET

Hmmm.... I am wondering if 8000 shares is enough to create a short squeeze but I like the fundamentals so I am trying to buy a few shares at 3.58.

That should be enough to make David and Terliso green of envy if I succeed  ;)

Quote from: Michael on October 17, 2007, 12:16:30 PM

Quote from: la-onda on October 16, 2007, 09:12:55 PM
BUYINS.NET: CHNR, MNKD, CHME, CMNN, NWGN, BGTH Have Been Added To Naked Short List Today
Tuesday , October 16, 2007 09:25ET

Hmmm.... I am wondering if 8000 shares is enough to create a short squeeze but I like the fundamentals so I am trying to buy a few shares at 3.58.

That should be enough to make David and Terliso green of envy if I succeed  ;)

It feels great to have you on CHME's board Michael, the stock is so cheap I was starting to wonder if it were too good to be true.

And you're not the only one joining the CHME's crusade, there was an SEC form filed yesterday, just before the close, saying Capital Ventures International, which seems to be an hedge fund, recently bought 1.1 million CHME's shares, or 8.3% of the company:

Form SC-13 (http://www.sec.gov/Archives/edgar/data/1011712/000110465907075297/a07-26838_1sc13g.htm)

If 1.1 million shares is 8.3%, it means there are 13.25 million shares outstanding, so the market cap is $48.6 M, in line with what I've been thinking. No surprises here.

This isn't the only institution holding CHME's shares, we also have First Willshire Securities Management, holding 1,071,500 shares:

Form 13 (http://www.sec.gov/Archives/edgar/data/732847/000073284707000020/chinamed.txt)

Nice to have two institutions on our side holding significant stakes.

I'll keep holding CHME.OB for the long term.

The only explanation I have to why CHME.OB trades at 5 times earnings is that the Chinese holding warrants don't know how to value a company.

But, when the company reports 3Q earnings and investors see what I see, I believe they'll push CHME.OB shares 200% higher.

I'll patiently continue holding CHME.OB.

Alright guys, now in on this one with you.  Only 1k shares at 3.40, it's a start

:) Funny, hey Dave these were the profits from INSM, still looking for more from them as well.

QuoteAlright guys, now in on this one with you.  Only 1k shares at 3.40, it's a start

Nice price sctrben :)

Quote:) Funny, hey Dave these were the profits from INSM, still looking for more from them as well.

Yep, that's funny and unexpected (by me, at least, since I'm bearish on INSM), congrats sctrben :)

I tried to find a copy or audio replay of the following conference ...

• China Medicine Corp. to Present at 5th Annual Roth New York Conference on September 6 at 9:00 a.m. (http://biz.yahoo.com/prnews/070827/cnm016.html?.v=27)
PR Newswire (Mon, Aug 27)

... but I couldn't. I wonder if Michael or any of you guys has this? If not I'll write the company asking for this.

Nothing changed on CHME.OB, I'll continue holding for the long term.

Tough day for CHME.  All BB's seem to act the same, no matter how "undervalued" they are.  No action, spike, retrace.  Does anyone know a BB that actually worked out over the long term?

Quote from: buddjas1 on October 22, 2007, 10:18:48 AM
Tough day for CHME.  All BB's seem to act the same, no matter how "undervalued" they are.  No action, spike, retrace.  Does anyone know a BB that actually worked out over the long term?

I think AOB was a chinese BB stock when David picked it a little over 2 years ago, then it was around $1 or $2, so its been about a 5 or 10 bagger since then depending where you sold and what David first bought it at.  I could be wrong, that was 2 years ago lol.  David? 

AOB sounds right.  I have in mind CHID and CPNE as representing the typical BB. 

Quote from: buddjas1 on October 22, 2007, 10:25:29 AM
AOB sounds right.  I have in mind CHID and CPNE as representing the typical BB. 

I just checked.  AOB was entered at 1.8 by David, but it wasnt BB then, though I think it was just a few months before he got it, and it was aroudn 1.0 then.  I seem to remember when it got an Amex listing. 

Quote from: buddjas1 on October 22, 2007, 10:18:48 AM
Tough day for CHME.  All BB's seem to act the same, no matter how "undervalued" they are.  No action, spike, retrace.  Does anyone know a BB that actually worked out over the long term?

AOB, GSB and FRPT were OTCBB traded stocks, for example, and they worked out over the long term.

I think each business is unique and one can't make generalizations, even though the majority of OB's fails over the long term, due to weak balance sheets and dilution.

QuoteI think AOB was a chinese BB stock when David picked it a little over 2 years ago, then it was around $1 or $2, so its been about a 5 or 10 bagger since then depending where you sold and what David first bought it at.  I could be wrong, that was 2 years ago lol.  David?

Yes, AOB used to be AOBO.OB.

I wouldnt be surprised if some of the selling Friday and today was due to warrant holders getting spooked by the general market big down moves.

Yah, you're right to judge each stock on its own.  It just seems like I have seen this pattern so many times.  Maybe someday the spike will be a blip on the chart.

I will hold for the long term.

Quote from: tokyopua on October 22, 2007, 10:44:00 AM
I wouldnt be surprised if some of the selling Friday and today was due to warrant holders getting spooked by the general market big down moves.

Yes, it can be that. Or else people selling are momentum traders who got disappointed after the October 10th rally. They don't know what they're doing, so their faith only exists while the stock goes up. If it doesn't go up, if it goes down, they bail out with a loss and move on to next fast moving horse. This tactic leads to losses over the long term, but they still need to learn that, and there's always a new crowd of momentum traders showing up in the market.

Quote from: buddjas1 on October 22, 2007, 10:48:33 AM
Yah, you're right to judge each stock on its own.  It just seems like I have seen this pattern so many times.  Maybe someday the spike will be a blip on the chart.

I will hold for the long term.

Yes, most of the times OTCBB traded stocks do that. A big spike up and then the stock goes back down, below the previous levels and it just dies for several months or even years, until it is ready for a new spike.

I think that won't be the case with CHME.OB because of the very attractive fundamentals. The company had $0.63 EPS last year and it appears that 2007 number will be even higher, say, $0.7? It will be just about $0.7, even though revenues and profits in Q2 more than doubled ...

• China Medicine Announces Second Quarter 2007 Results (http://biz.yahoo.com/prnews/070814/cntu031.html?.v=1)
PR Newswire (Tue, Aug 14)

... because the # of shares outstanding also doubled.

QuoteI wonder if Michael or any of you guys has this? If not I'll write the company asking for this.

I talked to Michael and he hasn't, so I've just wrote the company, we'll see if I get a reply. Perhaps this Roth conference is the reason why Capital Ventures International recently bought 1.1 million shares.

I'll keep holding CHME.OB for the long term.

QuoteI talked to Michael and he hasn't, so I've just wrote the company, we'll see if I get a reply.

I got the following reply:

«David,

We are not representing CHME at this time but I have cc'd Ms. Lin Li who can assist you.

Regards,

Matthew Hayden

Hayden Communications, Inc.
Office (760) 994-0034
Cell (760) 613-3695
[email protected]
www.haydenir.com»

Now, who's Lin Li?

She's the Vice-President & Secretary of China Medicine Corporation (http://www.chinamedicinecorp.com/about2.html).

Ok, I've requested her the Roth conference material, let's see if I get any reply.

CHME.OB has been doing a bit better, after those weak hands sold down to $3, but the real move should come when the company reports 3rd quarter earnings, which I believe will be a very positive surprise for investors.

I'll continue holding CHME.OB for the long term.

QuoteOk, I've requested her the Roth conference material, let's see if I get any reply.

No reply, at least not yet.

100 new drugs did the following:

«Product Sales increased 95.2 percent during the quarter to $7.8 million with the year over year increase primarily related to the Company securing exclusive distribution rights to over 100 new drugs within the Guangdong Province in the first quarter of 2007.»

Then what to think of this:

«"The over 700 drugs we gained exclusive rights to distribute back in April contributed nearly $3 million in revenue during the quarter and reinforce our ability to gain access to the most sought after drugs in the market while delivering adequate sell through to our expansive customer base."»

And, from a seasonal standpoint:

«"The second half of our calendar year is generally the strongest as customers build inventory to meet rising demand as we enter the winter season and approach the Chinese New Year," continued Mr. Yang. "With our broadened product portfolio we are well positioned to capitalize on this trend and anticipate that revenues and net income will show meaningful increases during the second half of this year compared to the first."»

It's all here (http://biz.yahoo.com/prnews/070814/cntu031.html?.v=1) for investors to see. But not many are paying attention ... this is why I expect the 2nd half to be a very positive surprise and to bring a huge gain to the share price over the next 6 months.

I'll keep on holding CHME.OB for the long term.

Well, I don't have any new information or comments to make on CHME.OB today, just leaving the updated chart and say that I'll continue holding the stock for the long term.

I'm a bit anxious for CHME's 3rd quarter earnings release, because I know they will positively surprise investors. I'll patiently keep holding CHME.OB for the long term.

Nothing new on CHME.OB, I'll keep holding for the long term.

I expect CHME.OB to post $0.30 EPS in the 3rd quarter 2007, and that should be enough to make it fly 100% plus on that single news day.

I'll keep holding CHME.OB for the long term.

Hello Dave, damn what happened to snap this little dip...  I have tried to take advantage of it by adding 800 shares to my trading acct and started 800 shares with my IRA acct. Purch price $3.27

Quote from: sctrben on November 05, 2007, 04:28:02 PM
Hello Dave, damn what happened to snap this little dip...  I have tried to take advantage of it by adding 800 shares to my trading acct and started 800 shares with my IRA acct. Purch price $3.27

I guess what happened to CHME.OB yesterday was that the Hang Seng dipped 5% on the session (like it had anything to do with it - but for people trading the "China story", it does).

CHME.OB is just days away from posting what I think it will be about $0.3 EPS in one quarter. This is the cheapest stock in the entire market. I expect CHME.OB to at least double on this earnings news. If this doesn't happen it will be very odd.

I'll keep holding CHME.OB for the long term.

Can you remind us when the earnings statement will be please?  Thanks.

Quote from: spiritgate on November 06, 2007, 09:23:19 AM
Can you remind us when the earnings statement will be please?  Thanks.

The company didn't pre-announce a date for the earnings release, but it has to be on or before November 15, or else it needs to file an NT form with the SEC specifying the reason for the delay.

Over the latest two quarters CHME.OB filed on schedule, the Q1 report on May 15th and the Q2 report on August 14th.

I'll keep holding CHME.OB.

CHME.OB touched the 50 days SMA support for the second time, and again, it bounced. Earnings will be out next week and I expect $0.30 EPS for the quarter and this time there will be people interested. When they see the $0.3 I believe they'll push the stock up 100%. If this doesn't happen it will be odd ... I'll keep holding and waiting for the earnings news.

I think INSIDERS HOLDINGS should be part of the 3SoF model. This will be gauge of credibility and confidence of management in the business entity. For if the insiders can't appreciate the valuation or growth then who else can?

e.g. I see SDTH has good 42% insider share, compared to 8% for CHME, as per yahoo. Showing SDTH management as 5 times confident in the entity as compared to CHME. It may not be a fundamental analysis but insider holdings and insider purchases are great way to see management interests aligned with the investors interests. Now take the case of 3SoF holdings for whom I could get info from yahoo:

SYX  70%
GSB  63%
SDTH 42%
ASTI 38%
TBSI 37%
GIGM 10%
CHME  8%
IMMR  4%
JAKK  2%
PFSW  2%

However, an important improvement would be to also gauge interms of $. But still % is in itself is a vital indicator.

Quote from: stocky on November 11, 2007, 10:22:43 AM
I think INSIDERS HOLDINGS should be part of the 3SoF model. This will be gauge of credibility and confidence of management in the business entity. For if the insiders can't appreciate the valuation or growth then who else can?

e.g. I see SDTH has good 42% insider share, compared to 8% for CHME, as per yahoo. Showing SDTH management as 5 times confident in the entity as compared to CHME. It may not be a fundamental analysis but insider holdings and insider purchases are great way to see management interests aligned with the investors interests. Now take the case of 3SoF holdings for whom I could get info from yahoo:

SYX  70%
GSB  63%
SDTH 42%
ASTI 38%
TBSI 37%
GIGM 10%
CHME  8%
IMMR  4%
JAKK  2%
PFSW  2%

However, an important improvement would be to also gauge interms of $. But still % is in itself is a vital indicator.

This is an interesting idea stocky. I'm not sure if Yahoo Finance is accurate in those numbers, I'll have to check it one by one. Philosophically I would say that it doesn't matter all that much who owns the shares, but how much are they worth ... for example, what is the percentage of GE owned by insiders? I guess less than 2%. The bigger the company, the more difficult it is for insiders to own a big share.

CHME's earnings can be released any moment now. I expect the company to post $0.30 EPS for the quarter and that to be a huge positive surprise for investors.

I'll keep holding CHME.OB. 

results are in!!!!

GUANGZHOU, China, Nov 12, 2007 /Xinhua-PRNewswire-FirstCall via COMTEX/ -- China Medicine Corporation (CHME, Trade ), a leading distributor of medical products, traditional pharmaceutical and Chinese medicines, herbs and dietary supplements, today announced financial results for the quarter ended September 30, 2007.

Revenue for the third quarter of 2007 increased 65.72% to $12.6 million compared to $7.6 million for the third quarter of 2006. Revenue from product sales for the third quarter 2007 was $11,904,525, an increase of $5,537,906, or 87%, from revenue of $6,366,619 for the third quarter of 2006. The company obtained exclusive regional distribution rights in China's Guangdong Province for 160 new products during the first nine months of 2007.

Medical formula sales were $684,413 and $1,229,912 for the three months ended September 30, 2007 and 2006, respectively. These amounts represent proceeds from the sale of certain technology and know-how relating to the production of medicines. We initially acquire the technology in an undeveloped state from other companies, undertake research and development to make improvements, and sell the improved technology to other drug manufacturers. The primary reason for the decrease in medical formula sales is that fewer new customers have signed contracts for medical formula sales in 2007. We believe this is due to action by the State Food and Drug Administration ("SFDA"), which must approve every transfer of ownership of a medical formula in China, and which recently enhanced its approval procedures by setting higher application criteria which require more time for review.

Gross profit for the third quarter of 2007 was $3,823,461, an increase of $716,985, or 23%, from $3,106,476 for the third quarter of 2006. Gross margin for the third quarter of 2007 was 30.37%, as compared with 40.89% for the third quarter of 2006. The decrease in gross margin was due primarily to increased sales of over-the-counter products in the third quarter of 2007, which have lower margins than the prescription drugs and other products we sold in the third quarter of 2006; and decreased medical formula sales in the third quarter of 2007, which have much higher margins than the regular products sales.

Research and development expenses were $336,794 for the third quarter of 2007 compared with $31,361 for the third quarter of 2006. In both periods, these expenses were used primarily for the pre-clinical study of the Yutian capsule, a traditional Chinese medicine designed for use in the treatment of lung cancer.

Selling, general and administrative expenses were $830,518 for the third quarter of 2007, an increase of $645,001 from $185,517 for the third quarter of 2006. The increase was mainly caused by the increased expenses in payroll and sales bonuses to sales representatives, marketing expenses, office rent and furnishings, transportation and trade shows.

Net income for the three months ended September 30, 2007 was $2,205,914, a decrease of $71,465 from $2,277,379 for the comparable period in 2006. The decrease was due primarily to increases in selling, general and administrative expenses and research and development expenses.

As of September 30, 2007, China Medicine had working capital of $23,574,193, an increase of $13,715,998, or 139%, from $9,858,195 as of September 30, 2006. The company received $5.7 million proceeds through the exercise of warrants during the first nine months of 2007, which increased the company's working capital. The company used cash of $1,844,778 in operations for the nine months ended September 30, 2007, an increase of $1,148,801 from the cash used for the comparable period of 2006. The increase in net cash used in operating activities was largely due to the increase of advances to suppliers and inventories related to our increased quantity of sales.

"Our third quarter results were consistent with our internal expectations," explained Mr. Senshan Yang, CEO of China Medicine. "We sold more OTC drugs during this quarter, which lowered our profit margin. But this is just a temporary result. We expect our profit margins to improve through our efforts to increase the sales of high-margin products, proprietary products and medical formulas in accordance with our long-term sales strategy. Our administrative expenses were relatively high in the third quarter because we obtained exclusive distribution rights in Guangdong Province for over 160 products from the beginning of this year. Greater expenditures are typically needed for the marketing of such new products, and these expenses will be decreased once the sales network is set up." Mr. Yang added, "we are undertaking a search for a bi-lingual CFO and a qualified investor relations firm, so that we may better communicate with investors, integrate our financial system and enhance our internal control system. We are confident of having a great year in 2007 and we expect continuing success in 2008."

Yes basanlas, thanks for the news :)

Well, unfortunately CHME.OB represents another disappointment in the .OB world, but this is a different case from ETLT.OB.

But let's get the numbers first.

Revenue:

«Revenue for the third quarter of 2007 increased 65.72% to $12.6 million compared to $7.6 million for the third quarter of 2006.»

Net Income and EPS:

«Net income for the three months ended September 30, 2007 was $2,205,914, a decrease of $71,465 from $2,277,379 for the comparable period in 2006.»

EPS on a fully diluted basis was $0.14 on 15,586,809 shares outstanding, compared to 7,749,000 shares outstanding in Q3 2006.

So, instead of the $0.30 I expected in terms of EPS, we got $0.14, due to two primary reasons:

1) The share count doubled, but I already knew that. In the future dilution will probably be a lot less ... the share count increase over the past year had to do with the way CHME's IPO was made;

2) Revenue growth wasn't 100%, but just 65.72%;

Also, management blames a temporary rise in costs for the 3% fall in net income:

«"Our third quarter results were consistent with our internal expectations," explained Mr. Senshan Yang, CEO of China Medicine. "We sold more OTC drugs during this quarter, which lowered our profit margin. But this is just a temporary result. We expect our profit margins to improve through our efforts to increase the sales of high-margin products, proprietary products and medical formulas in accordance with our long-term sales strategy. Our administrative expenses were relatively high in the third quarter because we obtained exclusive distribution rights in Guangdong Province for over 160 products from the beginning of this year. Greater expenditures are typically needed for the marketing of such new products, and these expenses will be decreased once the sales network is set up." Mr. Yang added, "we are undertaking a search for a bi-lingual CFO and a qualified investor relations firm, so that we may better communicate with investors, integrate our financial system and enhance our internal control system. We are confident of having a great year in 2007 and we expect continuing success in 2008."»

Surely we won't have a 100% upside day today and I'm sorry for inflating expectations on this one. I was overly optimistic.

Anyway, this company made $0.30 EPS in the nine months so far into 2007 and I expect $0.45 EPS in the full year of 2007, so the stock is trading at 7.1 times 2007 earnings, which is very cheap (but not below 5 times earnings like in ETLT's case, which would be too cheap to be true).

I'm disappointed because my expectations were very high, not because the company did badly. It is still deeply undervalued in my view.

I'll keep holding CHME.OB.

David, I am gonna make an "emotional" appeal to you: stay away from the combination of .OB and China.  ::)

My younger brother used to be a big trader in China back in 99-01 Chinese bull market, he made some fortune at a time, yet still got washed away in the end. He told me numerous stories about how they manipulated the stocks over there and how disrespectful they have towards security laws (very immature any way).

The point is, Chinese stock market is very like the US market 100 years ago, too many inside plays and too many frauds. You can not have much trust on whatever they say on paper. Of course there are honest companies, if they choose to be listed on NASDAQ or NYSE, I assume they are much better. Yet if they are .OB, I really don't have much faith in them holding long-term. Lots of these .OB stocks are actually manipulated by people who came from China ... I know this for a fact because I have been to Chinese stock forums and lots of pump and dump actions over there.

In summary, your current strategy relies on company fundamental information. If you can not trust them? How can your strategy work?

QuoteDavid, I am gonna make an "emotional" appeal to you: stay away from the combination of .OB and China. ::)

Thanks for the advice realcoolhead. I'll do that from now on. But I'm still not ready to sell CHME.OB or UTVG.OB.

QuoteMy younger brother used to be a big trader in China back in 99-01 Chinese bull market, he made some fortune at a time, yet still got washed away in the end. He told me numerous stories about how they manipulated the stocks over there and how disrespectful they have towards security laws (very immature any way).

The point is, Chinese stock market is very like the US market 100 years ago, too many inside plays and too many frauds. You can not have much trust on whatever they say on paper.

I agree.

QuoteOf course there are honest companies, if they choose to be listed on NASDAQ or NYSE, I assume they are much better.

SDTH trades on the Nasdaq and you're right, its business looks more transparent.

QuoteYet if they are .OB, I really don't have much faith in them holding long-term. Lots of these .OB stocks are actually manipulated by people who came from China ... I know this for a fact because I have been to Chinese stock forums and lots of pump and dump actions over there.

Yeah, sure, but I don't go after pumps and don't sell on dumps.

QuoteIn summary, your current strategy relies on company fundamental information. If you can not trust them? How can your strategy work?

Well, currently I have just 10.3% of the Main's capital allocated to "suspicious" OTCBB stocks. But I agree with you, can't trust their financial information. The upside potential doesn't compensate the risk.

I'll think about this for some more hours (I never change the trading plan while the market is open), but I'm still inclined to keep holding CHME.OB and UTVG.OB.

Just one more thought: If CHME's management was cooking the books why would they report a 3% decline in net income while revenue grew 66%?

They could have easily posted a better net income number ...

Got to go now, see you later.

David, since we follow 3SoF main with real money and the main has aim to get atleast 30% return with low risk over a year time, it would be prudent to reduce risk by excluding .OB from the portfolio. I hope that there will be atleast 15 stocks with attractive enough fundamentals that they donot warrant taking risk that is manifested by .PK and .OB. I hope you will consider the suggestion. CHME and UTVG could become multi-beggars, but I hope that before they do that they may like to move to bigger exchanges and then they can become part of the main.

These stocks are falling at 500 mph and guess what's going up,etlt. Go figure. Just a lousy day all around.

Quote from: soxguy on November 12, 2007, 02:25:29 PM
These stocks are falling at 500 mph and guess what's going up,etlt. Go figure. Just a lousy day all around.

You have to remember were in a down market/correction ...whatever you want to call it.  Usually the high flying stocks of a few weeks ago take a hard beating as profit selling :) begets fear selling  ???begets shorting >:D begets lack of buying :'(. 

When the downside subsides in the next week or two...these stocks will begin to ascend quickly again and by the end of the year we'll all forget about this past week.  One bad week isn't a market make. ;)

Wow, this is the first time ever my portfolio fell 7% on a day! I see a bunch of -20% and only a few +1%.  :)

Just need to shut the streamer, the damn thing is equally distractive, on a bad day and the good day.

My portfolio went down 10%...

i'm right there with you. still stunned,but I know the sun will come up in the morning

Just a quick question on companies being undervalued in China.  Do we have any access to what the average valuation of Chinese stocks is relative to their peers for given industries, andd do we know that they can grow to be valued similarly to US stocks?  AOB might be an example to compare to.

With this stock we have both a chinese stock and an OB stock, so those could be two counts against it valuation wise for the present, though the OB part can of course change with a move to one of the exchanges.  Do you maybe forsee that for CHME David?

CHME.OB was a big disappointment. I think investors got spooked by the almost doubling of the number of shares outstanding:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=41853;image)

Even though on a superficial analysis this is bad, it isn't unexpected at all. Anyone following this company since its reverse merger knew that there were warrants outstanding that would be converted if the stock were above $2.5. Near $2.5 there's no more incentive to keep converting and selling these warrants.

On September 30th there were just 4,073,686 warrants outstanding:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=41855;image)

The Weighted-Average Exercise Price is $2.46, so I don't think the stock goes below this level, at least, not for long. Moreover, with the volume the stock had since September 30th, I guess a lot more of these warrants were already converted and possibly sold.

This means I expect a lot less dilution going forward.

I was hopeful that revenue growth and net income growth would be enough to offset the rise in the number of shares outstanding, but due to a lower gross margin that didn't happen, net income fell 3%. But management says the rise in costs is temporary ...

Wait, I know what you're thinking ... "How come this fellow comes here with financial statements and management talk, doesn't he know that the Chinese and OTCBB are not to be trusted?"

Well, I've been learning and won't risk any more money to new OTCBB or Chinese stocks. But, in respect to CHME.OB, I'll believe what I read in the financial statements until there's evidence that they can't be trusted. The alternative would be to believe in the chart or other market participant's reaction and I refuse to do that, because they don't know more than I do about this stock. They know less and trade on impulses.

I didn't sell CHME.OB when I was winning 30% and I won't sell it now that I'm losing 30%. The Main currently has 3.6% of capital allocated to this penny stock and I'll keep holding it.

Good spirit, David! I agree with the other posters that OB stocks are spooky, and there are plenty of "normal" companies to invest into. But CHME is here in our portfolio and you've studied the story so far and it is not that bad. 3.6% of capital is not that much but potential to at least get the money back is pretty good - that's why it is diversification. Keep it up! ;)

Quote from: berloga on November 13, 2007, 12:25:08 PM
Good spirit, David! I agree with the other posters that OB stocks are spooky, and there are plenty of "normal" companies to invest into. But CHME is here in our portfolio and you've studied the story so far and it is not that bad. 3.6% of capital is not that much but potential to at least get the money back is pretty good - that's why it is diversification. Keep it up! ;)

Thanks berloga :)

As expected CHME.OB didn't stay below $2.5 for long. There's no incentive at all to sell below that level ... not just because at $2.5 CHME.OB is trading at about 5 times 2007 EPS of $0.45 (this is my expectation, CHME.OB already made $0.30 in the first nine months of 2007), but because the warrants outstanding have an average conversion price of $2.46 as we've seen.

I believe the floor for this stock is $2.5. And is there any upside? I believe so, because there's strong revenue growth and 3rd quarter EPS was impacted by one time costs:

«"Our third quarter results were consistent with our internal expectations," explained Mr. Senshan Yang, CEO of China Medicine. "We sold more OTC drugs during this quarter, which lowered our profit margin. But this is just a temporary result. We expect our profit margins to improve through our efforts to increase the sales of high-margin products, proprietary products and medical formulas in accordance with our long-term sales strategy. Our administrative expenses were relatively high in the third quarter because we obtained exclusive distribution rights in Guangdong Province for over 160 products from the beginning of this year. Greater expenditures are typically needed for the marketing of such new products, and these expenses will be decreased once the sales network is set up." Mr. Yang added, "we are undertaking a search for a bi-lingual CFO and a qualified investor relations firm, so that we may better communicate with investors, integrate our financial system and enhance our internal control system. We are confident of having a great year in 2007 and we expect continuing success in 2008."»

Of course, this can be a bunch of lies ... and I'm losing 27.6% in this penny stock, so probably I was wrong about the long term potential. It seems too cheap to be true.

But, because I see risk as limited, derived from my current 3.6% capital allocation to the stock and the $2.5 floor (I'll be very disappointed if CHME.OB stays more than a week below this level), I'll keep holding CHME.OB.

CHME.OB was a complete flop, a very disappointing story here at the Main. I thought "100% gain" and now have a 35% loss :-X

Anyway, I attribute this to a general sense that Chinese stocks, especially OTCBB traded stocks are not to be trusted and a barrage of warrants outstanding still from the company's reverse merger. However, as we've seen, there aren't many more warrants outstanding and the stock trades at 5 times earnings (if one believes financial statements).

But today I want to focus on something else, a few weeks ago the company issued the following press release:

• China Medicine's ADTZ Project Has Been Selected as One of Six Patent Commercialization Projects in Guangdong Province (http://biz.yahoo.com/prnews/071012/cnf008.html?.v=19)
PR Newswire (Fri, Oct 12)

«Mr. Shenshan Yang, CEO of China Medicine stated, "Our ADTZ project has made tremendous progress and we believe that the financial and political support of the government will expedite commercialization of the product. We look forward to working closely with the government and a successful product launch."»

We know how government support is needed to get things moving in China. Now, I don't know anything about this ADTZ, but Citron Research wrote some comments about it:

Citron Covers China Medical Corporation (http://www.stocklemon.com/index.php?s=china+medicine+corporation&submit=Search)

A drug for corn ... doesn't look all that exciting, but I don't know much about this.

Basically I own CHME.OB because it is very cheap from an earnings multiple standpoint and so I don't see it falling below the $2.5 mark and stay down there more than a week. If it does I'll have to review my stance again.

I'll continue holding CHME.OB.

QuoteBasically I own CHME.OB because it is very cheap from an earnings multiple standpoint and so I don't see it falling below the $2.5 mark and stay down there more than a week.

As expected, CHME.OB stayed no more than a couple of days below $2.5. There are no sellers below that level, besides very weak hands from disappointed momentum and technical traders.

But, where's CHME.OB going now? The way I see it, the company will earn $0.45 per share this year (I expect $0.15 EPS in Q4 2007), so it is trading at 6 times earnings. This happens because it is an OTCBB plus Chinese combination ... moreover there was heavy dilution over the past few quarters, still coming from the way the company made its reverse merger, with a lot of warrants outstanding and waiting to be converted at $2.5 and $3.5 per share. But, as we've seen, there aren't much more warrants outstanding, so hopefully dilution will slow dramatically going forward (according to the financial statements, the company has $4.12 M in cash and no debt).

I believe it won't be easy to see CHME.OB trading at, say, 18 times earnings in early 2008, but 12 times I believe it's possible. That should put the stock at $5.4 in the 1st half of 2008. But we'll see as things go from now on from a fundamental standpoint ... $2.5 is the floor, I'll continue holding CHME.OB.

CHME.OB appears to be building an inverted head and shoulders bottom. Trading at 5.7 times earnings and growing nicely (not like ETLT, which had shrinking revenues). The problem that has been keeping it down is heavy dilution, but that was to be expected, since it is all written in the company's reverse merger forms and forms 10 filed with the SEC.

In 2008 and 2009, if everything goes as expected and the company is legit as I believe it is, dilution will stop and EPS will rise. With a growing EPS CHME.OB won't be trading at 6 times earnings. The multiple should expand to 12 or more.

I'll keep holding CHME.OB for the long term.

Perhaps CHME's 2nd shoulder is in. Now the stock just needs a bullish breakout above $2.9 to complete the bullish inversion pattern.

CHME.OB issued a press release yesterday, which is rare:

• China Medicine Retains CCG Elite for Investor Relations Campaign (http://biz.yahoo.com/prnews/071205/cnw037.html?.v=4)
PR Newswire (Wed 10:02am)

I think it's normal for a company valued by the stock market at just 6 times earnings to seek help to improve the share price. CCG Elite has many clients (http://www.ccgelite.com/clients3.asp?id=1&id1=2), some of them big and "respectable" Chinese companies, like TSL for example. I wonder why CHME.OB doesn't trade at 40 times EPS like TSL does ;D

I'll keep holding CHME.OB for the long term.

QuotePerhaps CHME's 2nd shoulder is in. Now the stock just needs a bullish breakout above $2.9 to complete the bullish inversion pattern.

We've had the bullish breakout above $2.90, so CHME.OB inverted its trend from bearish to bullish.

It appears there are bargain hunters pushing undervalued micro caps up.

Since the "weak results" in Q3 were, at least according to management, due to temporary effects, I expect a nice pick up in EPS in Q4:

«"Our third quarter results were consistent with our internal expectations," explained Mr. Senshan Yang, CEO of China Medicine. "We sold more OTC drugs during this quarter, which lowered our profit margin. But this is just a temporary result. We expect our profit margins to improve through our efforts to increase the sales of high-margin products, proprietary products and medical formulas in accordance with our long-term sales strategy. Our administrative expenses were relatively high in the third quarter because we obtained exclusive distribution rights in Guangdong Province for over 160 products from the beginning of this year. Greater expenditures are typically needed for the marketing of such new products, and these expenses will be decreased once the sales network is set up."»

This new CFO issue may also help investors to better understand CHME's story:

«Mr. Yang added, "we are undertaking a search for a bi-lingual CFO and a qualified investor relations firm, so that we may better communicate with investors, integrate our financial system and enhance our internal control system. We are confident of having a great year in 2007 and we expect continuing success in 2008."»

The company already announced the investor relations firm ...

• China Medicine Retains CCG Elite for Investor Relations Campaign (http://biz.yahoo.com/prnews/071205/cnw037.html?.v=4)
PR Newswire (Wed, Dec 5)

... now we're expecting the new CFO announcement.

I expect CHME.OB to earn $0.45 per share in 2007 (it earned $0.30 in the first nine months of the year, but Q4 is seasonally the strongest), which puts it trading at 6.9 times EPS.

I'll keep holding CHME.OB for the long term.

Retesting the neckline ... I'll keep holding.

Technically it is "important" for CHME.OB to keep holding $2.9 on close, which is the neckline of the inverted head & shoulders pattern.

Fundamentally I believe CHME.OB went down because of dilution that was already announced since the company's reverse merger in late 2005. I was aware this dilution would be coming and I'm aware that there won't be much more in the future (there aren't all that many warrants outstanding now). However, I was negatively surprised by weaker profit margins and sales growth in Q3 2007. Management said that was due to temporary effects and everything would go back to normal in Q4 2007, which is the company's strongest quarter from a seasonal standpoint.

I don't think CHME.OB will spend an entire week below $2.5 and believe the stock's intrinsic value is $9.5. I get to this value by multiplying the $0.45 EPS I expect for 2007 by the Drug Manufacturers Industry average P/E, which is 21.12 (http://finance.yahoo.com/q/co?s=MRK).

I'll keep holding CHME.OB for the long term.

CHME.OB is back above $2.9, but we know we can't give much credit to these short term fluctuations.

Today I took some time to again study CHME's latest 10-Q filed with the SEC (http://www.sec.gov/Archives/edgar/data/1328790/000114420407059982/v093320_10qsb.htm), check its products and website (http://www.chinamedicinecorp.com/) and finally compare it with a company doing a similar business: AOB.

On the 10-Q I've confirmed that CHME.OB has a very healthy balance sheet, with $4.13 M in cash and just $1.17 M in total liabilities. The company is also quite profitable (it earned $2.2 M in Q3 2007 alone) and it doesn't need to dilute shareholders value. The whole increase in the # of shares outstanding was planned and announced when the company become a public entity after a reverse merger with Lounsberry Holdings III, Inc.

The preferred shares and warrants outstanding constitute no surprise and come from two events:

1) The acquisition of Konzern from previous Konzern shareholders, which is the company's core business (this explains the warrants convertible at $1.75 and $2.5) and;
2) 3.2 million preferred shares which proceeds were used to fund a 70% subsidiary which was created for the purpose of development and application of aflatoxin-detoxifizyme ("ADTZ").

Most warrants and preferred shares were already converted into common shares. Given the strength of the balance sheet, the company's profitability and the almost complete conversion of the warrants and preferred shares outstanding, I don't expect significant dilution in 2008 and beyond.

As I took a look at CHME's website (http://www.chinamedicinecorp.com/) and compare it to AOB's website (http://www.bioaobo.com/index.htm), I would say both companies sell products in similar areas (even though of course AOB's product offering is more broad).

Now let's compare CHME.OB and AOB from a financial standpoint:

- If you're still very worried about CHME's appetite for printing shares, consider AOB's historical share count (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=aob&lstStatement=10YearSummary&stmtView=Ann). AOB's share count rose from about 10 million in 2001 to 75 million now.

- If you're worried because CHME.OB is an OTCBB traded stock, remember AOB used to be AOBO.OB when it was trading around $1 in late 2005. Over the next 18 month period AOB rose 14 fold :o

- If you're suspicious because CHME.OB is trading at just 6.6 times 2007 estimated EPS (the company already earned $0.30 per share in the first nine months of the year - I expect $0.45 EPS for the full year), then consider that in 2005, while AOB was at $1 - $1.10, it earned $0.31 per share. AOB's p/e ratio at the time was 3.4, so the company had to be a fraud, it had to be cooking its books, right? No! The company was incredibly cheap, and that's why it rose 14 fold and then got expensive, trading at 23 times forward earnings at its high of $14. I believe the same is true with CHME.OB, the company isn't a fraud, it is just very attractive.

- In 2007 AOB is estimated to earn 61 cents per share (http://finance.yahoo.com/q/ae?s=aob), and it closed today at $11.54. The current earnings multiple is 18.9. CHME.OB is estimated to earn $0.45 per share and if it were to trade at the same multiple as AOB, it would then be a $8.51 stock. Why not?

I continue to believe I have a multibagger in my hands here with CHME.OB and I'll continue holding the stock for the long term.

I have liked AOB much (still on my watchlist)

I have bought a bunch of CHME, imho this is an accumulation phase

nice summarization:
http://hcinternational.net/pdf/client_overviews/CHMEcorporateprofile.pdf

chart:

Quote from: la-onda on January 03, 2008, 07:34:50 PM
I have liked AOB much (still on my watchlist)

I have bought a bunch of CHME, imho this is an accumulation phase

nice summarization:
http://hcinternational.net/pdf/client_overviews/CHMEcorporateprofile.pdf

chart:

Very nice to have you on board of this one la-onda :)

That summarization looks fine, just one issue with it ... they're talking 19.5 million shares outstanding in the future. I wasn't counting on that many. It doesn't change the long term story though, I wish they make all the necessary conversions as soon as possible so we can get dilution out of the way. 

CHME.OB looks like the next AOB. Same country, same industry, same problems at the start, same growth strategy. If it works CHME.OB will be a 15 bagger. But I would be happy with less than that ... I'll just keep holding and studying CHME.OB.

David,
your comments please:

http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=5378600
&
http://www.3stocksonfire.org/trading/index.php?action=post;topic=10365.75;num_replies=76

QuoteDavid,
your comments please:

Yeah, sure la-onda :)

The information CHME.OB filed yesterday with the SEC (http://www.sec.gov/Archives/edgar/data/1328790/000114420408001258/v099204_posam.htm) is consistent with what I've been writing about dilution:

«(4) As of the date of this prospectus, a total of 7,137,563 shares of common stock have been sold in this offering, and 3,471,913 remain eligible for sale at the discretion of the selling stockholders.»

More than 2/3 of the warrants conversions and issuance of new shares are behind us. This dilution wasn't unexpected, it is related to the Konzern acquisition:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=43061;image)

Hmm, now I'm confused by what they say next:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=43062;image)

It can't be 24.76 million after the offering, since the 7,137,563 shares already sold had to be already included in the following:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=43063;image)

I'm going to contact investor relations right away.

Any feedback from IR David?

fyi:
AR discussion link:
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_C/threadview?m=te&bn=52169&tid=11&mid=11&tof=1&frt=2#11

QuoteAny feedback from IR David?

No ???

I wrote to CCG Elite and to the company using various means and didn't get any reply. This is quite frustrating, because I believe they posted erroneous information on that SEC form (damn, initially they even filed the wrong form).

Hmm, now I see that in the following press release they provide different contact information. I'm going to write to these contacts instead today:

• China Medicine Retains CCG Elite for Investor Relations Campaign (http://biz.yahoo.com/prnews/071205/cnw037.html?.v=4)
PR Newswire (Wed, Dec 5)

In the meantime I'll continue holding CHME.OB. 

please change  ;D

;)

Quote from: la-onda on January 11, 2008, 09:35:37 AM
please change  ;D

;)

I'm sorry for the wrong chart la-onda and others, I wasn't able to see your warning yesterday.

Here's the e-mail I wrote to CHME's CFO:

«My name is Cesar Borja and I own 5,500 CHME.OB shares. I'm also a portfolio manager for www.3stocksonfire.org and I recommended to our subscribers buying your stock.

I've studied the financial statements of your company thoroughly and I don't understand the information constant in page 7 of the form POS AM you filed with the SEC in January 9, 2008 (http://www.sec.gov/Archives/edgar/data/1328790/000114420408001258/v099204_posam.htm).

The numbers in point 2 ...

«(2) Does not include the 3,375,262 shares of common stock issuable upon (i) conversion of the 111,649 remaining outstanding shares our Series A preferred stock, (ii) exercise of our remaining outstanding Series A warrants to purchase a total of 378,948 shares of our common stock, or (iii) exercise of our remaining outstanding Series B warrants to purchase a total of 2,881,316 shares of our common stock held by the selling stockholders. If those shares of common stock, all of which are unissued as of January 7, 2008, are added to the total number of shares of our common stock outstanding, the resulting total number of shares is 18,196,903.»

and the numbers in point 6 ...

«(6) Assumes prior conversion into common stock of all of our outstanding Series A preferred stock and exercise of all of our outstanding warrants to purchase common stock» - 24,764,122 shares

... should match, shouldn't they?

My question is: after all the convertible shares and series A and series B warrants are fully converted, which will be the number of shares outstanding? 18,196,903 or 24,764,122?

I think the 24,764,122 number doesn't make any sense, since the preferred shares and warrants already converted and sold are/should be, already part of the «Common stock outstanding as of January 7, 2008 - 14,821,641 shares (2)», but you please tell me.

Thank you!
Cesar Borja
www.3stocksonfire.org»

I'm going to wait for Monday afternoon to get her reply ... if I don't get one I'll make phone calls to get the information. This is crucial because, if we're talking about 18 million shares in total that would be consistent with everything I've been writing and thinking about this company. If instead the number is 24.7 million, then there are additional sources of future dilution and I need to know why is this and what for.

There's no incentive, for convertible warrants holders, to sell shares below $2.43 (since this is their conversion price), so the stock price shouldn't stay below $2.5 for long - unless other shareholders just dump the stock.

I have doubts and need answers quickly. But I'll hold CHME.OB at least through Monday.

QuoteI'm going to wait for Monday afternoon to get her reply ... if I don't get one I'll make phone calls to get the information.

I still didn't get any reply to my e-mails and didn't phone call yet ... I'm sorry, I just hate talking on the phone, especially in English to a Chinese person :-[

But because it's hard and a new skill that I need to learn I'm going to have to make that phone call ... I can't delegate it to anyone because they wouldn't understand the issue. I'm not going to do it today because I need to go to the doctor and I don't know how long that's going to take, but tomorrow or the day after I'll have to do it.

Anyway, 18 million or 24 million shares doesn't change a lot to the company's fundamentals, considering the company is so cheap and AOB also had massive dilution at its start and it still was a 14 bagger, but I really need to know if the math in that SEC form is right or not.

I'll hold CHME.OB.

fyi:
http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=5395846
424B3 Amended filing - 19.7 FD shares; as expected, they amended the filing.

I get 19.7 mil max fully diluted  8)

Quote from: la-onda on January 21, 2008, 08:14:04 PM
fyi:
http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=5395846
424B3 Amended filing - 19.7 FD shares; as expected, they amended the filing.

I get 19.7 mil max fully diluted  8)

Indeed, this is great La-onda, look at their reply to my e-mail:

«Dear David:

Please refer to the revised filing (http://www.sec.gov/Archives/edgar/data/1328790/000114420408003028/v099954_424b3.htm), which correct the mistake we made.

Thank you for your reminding.

Huizhen Yu
Chief Financial Officer

China Medicine Corporation
Guangzhou Konzern Pharmaceutical Co., Ltd
Suite 702, Guangri Tower
Guangzhou, China 510600

Tel:   (8620)8739 1718，8737 8212»

Now they got their numbers right and consistent with everything I wrote on this thread:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=43216;image)

I'm glad that the mistake was corrected and have regained confidence in this holding, since there aren't any new shares coming from mysterious sources. All the existent dilution was already to be expected. Moreover, only 3.37 million shares remain for selling, and none will be sold under $2.5 (since the conversion price is $2.43).

I'll keep holding CHME.OB for the long term.

CHME.OB trades at 4.5 times 2007 EPS, it's ridiculous. But well, AOB also traded at 4 times earnings before rising 14 fold so ... nothing new here.

CHME.OB recovering some ground here ... only weak hands sell below $2.5, anybody with some knowledge of the company wouldn't do this. CHME.OB trades at 4.9 times its 2007 EPS now and I'm remain confident that this will be the next AOB ... in a couple of years time nobody will have a problem in paying 20 times plus the annual earnings of this company in my view.

CHME.OB continues to be asleep here. This is better than falling some more ::)

Anyway, I still feel like an investor who bought AOB in 2004 for about $4 and then saw it slide below $2:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=43498;image)

Two years later the buyer at $4 had a 200% plus gain, but before that he had been losing more than 50% ... of course, it would have been better to buy the stock now than 100% above, but perfect trades only exist in our minds and looking after the fact.

CHME.OB was attractive at $4 and it is two times more attractive at $2.

I'll continue holding this Chinese micro cap for the long term.

CHME's institutional investors have been adding on weakness.

On August 8, 2007, First Wilshire Securities filed a form 13 (http://www.sec.gov/Archives/edgar/data/732847/000073284707000020/chinamed.txt) with the SEC showing it held 1,071,500 CHME.OB shares. And yesterday they filed another form showing they now have 1,586,967 shares (http://www.sec.gov/Archives/edgar/data/732847/000073284708000009/chinamedicinecorp13g1207.htm).

The stock gave a technical bullish signal yesterday, closing back above $2.22.

I'll continue holding CHME.OB for the long term.

PAL looked good rising from the trench, so I had to sell CHME and IMMR to make a 6.6% for the shares of PAL. I still own SILC and got stuck with NGA for some reason which had a good earnings report yesterday. Don't have enough money to own more than 15 stocks! I'll perhaps lighten up on SILC and sell UTVG. The question is, what should I buy? Buy back CHME or IMMR or get in MALL? The 1st and the 3rd look more promising in the short run.

I also own MTL since $84 - finally got in. David, do you think we should consider the likes of PCU (copper) and MTL (steel) for the portfolio. These are commodities that keep on rising due to the global demand.

Thanks.
Berloga

QuotePAL looked good rising from the trench, so I had to sell CHME and IMMR to make a 6.6% for the shares of PAL. I still own SILC and got stuck with NGA for some reason which had a good earnings report yesterday. Don't have enough money to own more than 15 stocks! I'll perhaps lighten up on SILC and sell UTVG. The question is, what should I buy? Buy back CHME or IMMR or get in MALL? The 1st and the 3rd look more promising in the short run.

I'm sorry for saying this berloga, but your trading decisions don't seem to have any rationale behind them. You're not investing, you're trading on gut feelings.

You shouldn't buy anything before deciding if you want to be an investor or a short term trader. If you want to be a successful short term trader (which is nearly impossible over the long run), you need to have the right tools to do it.

These you won't find in the 3 Stocks Premium service, because I've directed the service solely for long term investment ideas.

To me, selling CHME.OB or IMMR at this point doesn't make any sense from a fundamental standpoint. Probably your reasoning was: "these are the ones I'm losing the most, therefore my (David's) biggest mistakes, so I'll let go of them". This could make perfect sense for the trader's mind, but for an investor armed with fundamental analysis tools, the market doesn't know what it's doing over the short term, so 50% up or down in a micro cap is meaningless.

If you decide to be a short term trader instead of a long term investor you need to learn a lot of issues first and understand that success will be preceded by several years of pain and hard work. And you can spend an entire life trying and never make it, because this is what happens to most people (well, most give up after a couple of years, but there's always a new crop showing up in the markets).

I don't like talking about it, but besides being a long term investor I'm also a very short term trader in the futures markets and if you want I can point you some directions.

But I assure you that if you're a long term investor who understands fundamental analysis you'll be a rich man by the time you retire.

Good luck :)

QuoteI also own MTL since $84 - finally got in. David, do you think we should consider the likes of PCU (copper) and MTL (steel) for the portfolio. These are commodities that keep on rising due to the global demand.

I prefer to invest in small caps with unique investment stories. I'm not a fan of going with macro trends or buying large caps like MTL ($15.2 B) or PCU ($30 B).

But hey, you're winning a good chunk on MTL, congrats :)

Thanks for the insights, David. No, I do not have the time for short-term investing. Most of the stocks I hold I'd like to keep for as long as their fundamentals keep pointing for the share price to go up. I have held all through the ups and downs and agree this to be the best strategy. I merely meant to say that I really felt that PAL was going to supercede IMMR in the short run, so I decided to get in the former one. It all basically comes down to how many stocks I can hold. I am 100% invested at this point, which I believe will pay off this year. At the same time, if I feel one stock will beat another in a short time hence the trader's mentality considering the short cash supply.

But I get your point, since there is no way of telling which stock will prevail in the short run, I might as well just pick one out of 3 and forget the rest.

thursday 1 pm webcast link (to be registered before):
http://www.wsw.com/webcast/roth16/chme/

Quote from: berloga on February 14, 2008, 03:29:43 PM
Thanks for the insights, David. No, I do not have the time for short-term investing. Most of the stocks I hold I'd like to keep for as long as their fundamentals keep pointing for the share price to go up. I have held all through the ups and downs and agree this to be the best strategy. I merely meant to say that I really felt that PAL was going to supercede IMMR in the short run, so I decided to get in the former one. It all basically comes down to how many stocks I can hold. I am 100% invested at this point, which I believe will pay off this year. At the same time, if I feel one stock will beat another in a short time hence the trader's mentality considering the short cash supply.

But I get your point, since there is no way of telling which stock will prevail in the short run, I might as well just pick one out of 3 and forget the rest.

You did well in switching for PAL, so I just better shut up and let you use this service in the way that best serves your purposes. Good luck :)

Quote from: la-onda on February 19, 2008, 01:39:14 AM
thursday 1 pm webcast link (to be registered before):
http://www.wsw.com/webcast/roth16/chme/

I'm eager for this La-onda, because CHME.OB trades at less than 5 times 2007 EPS (my estimate calls for $0.45 EPS in 07, the company already made $0.30 EPS in the first nine months of the year) and that can only be due to lack of information.

CHME.OB should at least double at any time. If not at this conference at least when the company reports full year 2007 results.

without listening to the conference call, just the most important slides

2nd part

Hi La-onda, thanks for posting the slides of yesterday's conference (http://www.wsw.com/webcast/roth16/chme/).

The slides gives us guidance for the 4th quarter of 2007, if we take out from their projections the numbers achieved in the first 9 months of the year.

In terms of net income, they say they expect $5,462,000 for full year 2007 and they had $4,096,769 in the first 9 months of the year, so in Q4 the number will be about $1,365,231.

This means about 8 cents EPS on a fully diluted basis and it is lower than the 15 cents I was expecting. Anyway, this way CHME's full year 2007 EPS will be $0.38 and the trailing earnings multiple is 5.6.

CHME.OB is starting to remind me of ETLT.OB a bit and I'm getting somewhat worried that I'm wrong in my long term outlook for this stock.

But I'll wait for the full year report and management's outlook for 2008 before jumping into conclusions.

I'll keep holding CHME.OB.

CHME.OB already had its individual bear market and fundamentally it trades at just 5 times 2007 earnings. In macroeconomic terms, the company should benefit from China's aging population and their growing demand for medicines.

I'm unsure of management's honesty (also considering realcoolhead's words on small Chinese companies), but for now I'll continue holding CHME.OB.

This is one party I wish I never joined lol.  Considering David's concern about management honestly, and now the technical breakdown of the descending triangle, I had to leave the party.  Hopefully it gets better for those still holding, maybe I got out at the bottom  ::)

Me too Tokyo....I'm out.  I caved on UTVG as well.  I knew when I bought these they were risky OTCs so I was prepared to take a loss.  Not again...

Quote from: JKN on March 11, 2008, 01:40:51 PM
Me too Tokyo....I'm out.  I caved on UTVG as well.  I knew when I bought these they were risky OTCs so I was prepared to take a loss.  Not again...

It put in a nice hammer there at the end, so hopefully for those still holding this was the worst, but I am back to following technicals more.  Maybe if it hits sub $1 or something then I will pick it up again, I suppose I am not done with OTC stocks as they have made me money in the past. 

But yeah, I still have UTVG and am sort of dazed to be down almost 50% on a stock that was down so much already when I bought it, maybe I will do like you and bail on it too.  Luckily I didnt put that much money into it as I did in CHME, it was a half position. 

The bummer is losing money on the biggest up day I have ever seen in the market  :(

expect some profit taking tomorrow though!!!
careful out there it's crazy out there!

Quote from: tokyopua on March 11, 2008, 06:17:03 PM

Quote from: JKN on March 11, 2008, 01:40:51 PM
Me too Tokyo....I'm out.  I caved on UTVG as well.  I knew when I bought these they were risky OTCs so I was prepared to take a loss.  Not again...

It put in a nice hammer there at the end, so hopefully for those still holding this was the worst, but I am back to following technicals more.  Maybe if it hits sub $1 or something then I will pick it up again, I suppose I am not done with OTC stocks as they have made me money in the past. 

But yeah, I still have UTVG and am sort of dazed to be down almost 50% on a stock that was down so much already when I bought it, maybe I will do like you and bail on it too.  Luckily I didnt put that much money into it as I did in CHME, it was a half position. 

The bummer is losing money on the biggest up day I have ever seen in the market  :(

Yea, when I sold the market was retreating from its early day highs and I thought the party was over then, oh well, I let this one go past a 30% stop and was paying for it.  The past year has not been good for me, I have been killed by not taking partial profits on runups and not honoring a tight stop.  I hope I'm proved wrong for those still holding, but I think it will be a long and bumpy long ride to profits and my a$$ is already sore.  I've got to do a better job at protecting  my capital.

Quote from: tokyopua on March 11, 2008, 01:23:46 PM
This is one party I wish I never joined lol.  Considering David's concern about management honestly, and now the technical breakdown of the descending triangle, I had to leave the party.  Hopefully it gets better for those still holding, maybe I got out at the bottom  ::)

Hi Tokyo, it's a pity you left at such a low point (well, $3 also seemed like a low point, so :-X). My concern about CHME's management honesty derives exclusively from this being a Chinese micro-cap and nothing else.

Quote from: JKN on March 11, 2008, 01:40:51 PM
Me too Tokyo....I'm out.  I caved on UTVG as well.  I knew when I bought these they were risky OTCs so I was prepared to take a loss.  Not again...

Yes JKN, these were horrible trades and I'm sorry. I will also never buy an OTCBB stock again, not even for short term trading purposes.

QuoteThe bummer is losing money on the biggest up day I have ever seen in the market   :(

Yes, quite sad. The Main was up 3.2%, but there was a panic selling in CHME.OB.

QuoteYea, when I sold the market was retreating from its early day highs and I thought the party was over then, oh well, I let this one go past a 30% stop and was paying for it.  The past year has not been good for me, I have been killed by not taking partial profits on runups and not honoring a tight stop.  I hope I'm proved wrong for those still holding, but I think it will be a long and bumpy long ride to profits and my a$$ is already sore.  I've got to do a better job at protecting  my capital.

There would be a lot to write about this JKN ... I guess investing for the long term was a bad idea after all. Or it wasn't well done. I've been studying more about Buffet's methods (reading his annual letters to shareholders seems to be better than reading books about them) and I guess my flaw was that I invested for the long term in young companies, which are too risky, regardless of the fundamentals.

I'm preparing an article on these issues.

But worry not JKN, the lessons you've been learning are valuable. Good luck for you and we'll keep talking.

On CHME.OB, it was quite a panic yesterday. The stock is trading without any regard for the fundamentals, I mean, this stock is trading at just 5 times 2007 EPS. Will it trade at 2 or 3 times earnings? Well, I guess anything is possible ... AOB also traded at 3-4 times earnings in the past and later had a 20 times plus earnings multiple. It's impressive how the valuation contracts and stretches, probably making it the most important factor driving stocks over the short term (say 12 to 18 months).

So, for a stock's trader, it is more important to know if the multiples will expand/contract than to know how a specific company's earnings will change. This adds some new dimensions to investing in stocks (especially with small caps) like investor's sentiment and macroeconomics.

I've seen many declines in OTCBB stocks end with days like the one we've had yesterday, so maybe CHME's decline is near the end. I currently have 3.1% of capital into this micro-cap and since I'll never buy another OTCBB stock, I'll just keep holding it for some more time.

I was going to write "panic selling" on the chart below, but in respect to the people here who sold on that day, I wrote "no more hope selling".

I wonder if that was the low point for CHME.OB and the stock may trend higher from here ... the sector is a good one and the p/e of 5 is as low as it can get (well, it can always get cheaper, I've been learning this the hard way).

We'll see what the future holds for CHME.OB, I'll keep holding.

Press Release   Source: China Medicine Corporation

China Medicine Announces Conference Call to Discuss Fourth Quarter and Fiscal Year 2007 Results
Tuesday March 25, 3:20 pm ET

GUANGZHOU, China, March 25 /Xinhua-PRNewswire/ -- China Medicine Corporation (OTC Bulletin Board: CHME - News; "China Medicine" or "the Company"), a leading developer and distributor of prescription and over the counter pharmaceuticals, traditional Chinese medicines (TCM), nutritional and dietary supplements, medical devices, and medical formulations today announced that it will conduct a conference call at 9:00 a.m. Eastern Time on Thursday, March 27, 2008 to discuss the fourth quarter and fiscal year 2007 results.

ADVERTISEMENT
Joining Mr. Shensan Yang, Chairman and Chief Executive Officer of China Medicine, will be Ms. Huizhen Yu, Chief Financial Officer. The Company plans to make an earnings announcement prior to the call.

To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 888- 419-5570. International callers should dial 617-896-9871, Conference Passcode: 25022850.                                                                                                                           

   Source: China Medicine Corporation

China Medicine Announces Record Fourth Quarter and Fiscal Year 2007 Results
Thursday March 27, 7:30 am ET
-- FY 07 revenues grow 75% to $42.1 million
-- FY 07 earnings up 43% to $6.9 million or 50 cents per diluted share

GUANGZHOU, China, March 27 /Xinhua-PRNewswire/ -- China Medicine Corporation (OTC Bulletin Board: CHME - News; "China Medicine" or "the Company"), a leading distributor and developer of prescription and over the counter pharmaceuticals, traditional Chinese medicines (TCM), nutritional and dietary- supplements, medical devices, and medical formulations in the PRC, today reported record financial results for the fourth quarter and fiscal year ended December 31, 2007.

    Fourth Quarter 2007 Highlights
    -- Revenues increased 89% from Q4 of 2006, to $16.2 million
    -- Gross profit increased 30% from Q4 of 2006, to $4.5 million
    -- Operating income increased 15% from Q4 of 2006, to $3.4 million
    -- Net Income increased 15% from Q4 of 2006, to $2.8 million

    Full Year 2007 Highlights
    -- Total revenues increased 75% to $42.1 million
    -- Gross profit increased 38% to $12.4 million
    -- Operating income increased 36% to $8.4 million
    -- Net income increased 43% to $6.9 million, or $0.50 per diluted share
    -- Obtained regional distribution rights to 774 new products in
       Guangdong Province
    -- Received RMB 800,000 in grants for aflatoxin detoxifizyme ("ADTZ")
       project from Education Department of Guangdong Province

"This was a very successful year for China Medicine, both in terms of financial performance and the execution of our business strategy. Our very strong revenue growth was driven by an expanded number of pharmaceutical products provided by our suppliers, as well as increased sales of our self- developed medical formulations and other intellectual property relating to pharmaceutical product development," said Mr. Senshan Yang, China Medicine's Chairman and CEO.

"In 2007, we expanded our distribution network to cover both municipal and rural areas of Guangdong Province in China, to support the Chinese government's recent policy to promote healthcare coverage among the rural and low-income population. In the short term, our expansion to cover these new markets resulted in a reduction in our gross margins as we increased sales of lower-cost over-the-counter pharmaceutical and TCM products. However, as spending on rural healthcare continues to increase, we believe that the rural markets have tremendous potential as increasing funding and an aging population drive demand for more advanced pharmaceutical products."

Fourth Quarter 2007 Results

China Medicine's total revenues in the fourth quarter were $16.2 million, an increase of 89% over the fourth quarter of 2006. This was attributed to a 112% increase in product sales, primarily driven by the increase in over-the- counter product sales made through the company's newly expanded distribution network to municipal and rural areas of Guangdong Province. Product sales totaled $14.7 million and accounted for 91% of total net revenues. Sales of prescription products accounted for 59%, and over-the-counter medicines accounted for 31%, of total revenues during the quarter. Medical formula sales accounted for the remaining 9% of total revenues, totaling $1.5 million, down 10% from the same quarter of 2006. This decline was due to stricter regulation by the State Food and Drug Administration, which must approve every transfer of ownership of a medical formula in China, and which recently increased the complexity of its approval process.

Gross profit in the fourth quarter of 2007 was $4.5 million, an increase of 30% over the fourth quarter of 2006. Gross margin was 28% of total revenues, down from 40% of total revenues in the fourth quarter of 2006. The decline in gross margin was due to higher sales of over-the-counter products, which have lower profit margins than prescription products, and the costs of expansion of the Company's distribution network to rural areas of China in 2007.

Operating expenses in the fourth quarter of 2007 were $1.1 million, up 120% from $0.5 million in the fourth quarter of 2006. This increase was due to higher selling, general and administrative expenses caused by increased public company expenses, higher salaries and employee sales bonuses, as well as the amortization of non-cash expenses from incentive options, increased advertising, trade-show and marketing expenses, and the costs of setting up a distribution network to cover the rural areas of Guangdong Province. The Company does not expect significant increases in selling, general and administrative expenses over the next several quarters.

Operating expenses represented 7% of total revenues in the fourth quarter of 2007, up from 6% in the fourth quarter of 2006.

The Company recorded $214,541 in research and development expenses in the fourth quarter of 2007, compared to $23,378 in the fourth quarter of 2006. The significant increase was primarily due to the pre-clinical study of Yutian Capsule, a traditional Chinese medicine designed for use in the treatment of lung cancer.

Operating income was $3.4 million in the fourth quarter of 2007, up 15% from $2.9 million in fourth quarter of 2006. Operating margin was 21%, as compared to 34% a year ago.

Net income for the fourth quarter of 2007 was $2.8 million, or $0.17 per diluted share, compared to $2.4 million, or $0.31 per diluted share in the fourth quarter of 2006. Earnings per share reflect an additional 8.2 million diluted weighted average shares, primarily due to the exercise of warrants and options in 2007, which generated $7.8 million in gross proceeds to the Company.

Full Year 2007 Results

For the full year 2007, total revenues were $42.1 million, up 75% from $24.0 million in 2006. Approximately 93% of revenue came from product sales and 7% came from medical formula sales. Gross profit for the full year 2007 was $12.4 million, an increase of 38% from $9.0 million in 2006. Gross profit margin was 29% in 2007, a decrease from 37% in 2006. Operating income was $8.4 million, up 36% from $6.2 million in 2006. Operating margin was 20%, as compared to 26% in 2006. Net income for 2007 was $6.9 million or $0.50 per diluted share, compared to $4.8 million or $0.63 per diluted share in 2006. Earnings per share reflect an additional 6.0 million diluted weighted average shares, primarily due to the exercise of warrants and options in 2007.

Financial Condition

As of December 31, 2007, China Medicine had $5.8 million in cash and cash equivalents, and approximately $28.5 million in working capital, an increase of 140% from $11.9 million in 2006. For the year ended December 31, 2007, China Medicine used $2.3 million in cash from operations, due to the increase of advances to suppliers and inventories required to support higher sales. China Medicine also received $7.8 million in proceeds from the exercise of warrants and options. Stockholders' equity as of December 31, 2007 was $30.8 million, an increase of 132% over the $13.3 million recorded as of December 31, 2006.

2008 Outlook

"During 2008 we expect to see continued solid growth in sales, along with improving margins as we leverage our expanded distribution footprint, expand sales of higher margin exclusive products, and see a growing contribution from sales of our proprietary medical formulations," said Mr. Yang. "We are very encouraged by the contribution of our R&D partnerships to building a strong new product pipeline, and expect to report significant clinical milestones over the course of 2008. We are also focused on moving our novel ADTZ product into commercialization this year, and expect to obtain our production permit for the treatment of animal feed and begin trial sales in 2008. If we are successful, this would set us up to begin recognizing meaningful revenues from ADTZ in 2009 and could be an important driver for the Company's future growth. Finally, China Medicine continues to evaluate opportunities to acquire a pharmaceutical manufacturing facility to strengthen our competitive position and achieve vertical integration for our proprietary products, while enhancing our overall profitability," concluded Mr. Yang.

Based on China Medicine's expectations of continued strong demand in the pharmaceutical market, the company expects to achieve revenue growth in the range of approximately 25-35%, gross margins in the range of 30-35%, and approximately 20-22% growth in net income for the full year of 2008.

Conference Call

China Medicine will hold its fourth quarter conference call for all interested persons at 9:00 a.m. Eastern Time on March 27, 2008 to discuss its results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 888- 419-5570. International callers should dial 617-896-9871. When prompted by the operator, mention conference passcode 25022850. If you are unable to participate in the call at its scheduled time, a replay will be available for seven days starting on Thursday, March 27 at 11:00 a.m. Eastern Time. To access the replay, dial 888-286-8010 (international callers dial 617-801-6888), and enter the passcode 92139283.

About China Medicine Corporation

China Medicine Corporation is a leading pharmaceutical company which discovers and develops medical formulations and distributes over 2,200 pharmaceutical products in China including prescription and over the counter ("OTC") drugs, traditional Chinese medicine products, herbs and dietary- supplements. The Company distributes the products to wholesale distributors in 28 provinces, more than 300 hospitals, 500 medicine companies, and 1,788 drug stores throughout China. The Company actively develops a number of proprietary products for many uses including oncology, high blood pressure and the removal of toxins from food and animal feeds. For more information visit the Company's website at http://www.chinamedicinecorp.com .

Cautionary Statement

Thanks for posting these splendid results soxguy:

China Medicine Announces Record Fourth Quarter and Fiscal Year 2007 Results (http://biz.yahoo.com/prnews/080327/cnth020.html?.v=27)
PR Newswire (Thu 7:30am)

EPS of $0.5 for 2007 was much better than even I expected. The stock is trading at 4 times earnings.

The problem investors have with this stock is the heavy dilution, but we've already studied that and concluded that it's all coming from the company's reverse merger and is about to end.

$0.17 EPS for the 4th quarter alone was more than double the $0.08 I expected.

And prospects are very rosy.

If CHME.OB weren't an OTCBB traded stock I would say it is a sure thing that it will rise several bags from the current share price.

I'll continue holding CHME.OB for the long term.

It's a pity that there isn't a web based replay of the latest conference call.

The 10-K was out yesterday:

Form 10-KSB filed with the SEC (http://www.sec.gov/Archives/edgar/data/1328790/000114420408019108/v108890_10ksb.htm)

I find it very informative and clean of any "issues" or problems often associated with OTCBB stocks.

I remain confident that CHME.OB is an excellent long term investment, since it is trading at just 4.5 times 2007 EPS and I expect this EPS to grow over time. CHME.OB is starting to resemble AOB even more ... but I think CHME.OB will suffer less dilution in the future than AOB did, so I believe its potential is even higher. But everything needs to go well in their research and own production efforts.

CHME.OB seems to be ready to make a bullish breakout above $2.5. The fundamentals are very attractive and the information seems reliable (unfortunately this isn't the case with UTVG.OB).

I remain confident that by year's end I'll have a profit to show on this pick.

I actually bought today.  Sure could use some volume here. 

from seeking alpha:
.....
In terms of growth, China Medicine Corporation (CHME.OB) reported its 2007 revenues were higher by a full 75%. Unfortunately, earnings were up by only 43%, coming in at $6.9 million, as margins were hurt by the company's move to cover more of the rural areas of its home base, Guangdong Province (see story). The initiative increased costs, and it also resulted in a greater emphasis on OTC and TCM drugs. In urban areas, prescription drugs are bigger sellers. The good news is that its all-Guangdong coverage means China Medicine could bid on distributing more products in the province and will add 774 products to its present portfolio of 2200 products. The company also develops medical products and would like to add manufacturing to solidify its vertical integration.

Quote from: buddjas1 on April 03, 2008, 08:40:14 PM
I actually bought today.  Sure could use some volume here. 

Seems like a good move.

Let's assume full conversion of preferred shares, warrants and stock options in 2008:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=44542;image)

Since the current number of shares issued and outstanding is 15,164,887, with full conversion the number would then be 19,870,373 shares.

Now focusing on the company's guidance:

«Based on China Medicine's expectations of continued strong demand in the pharmaceutical market, the company expects to achieve revenue growth in the range of approximately 25-35%, gross margins in the range of 30-35%, and approximately 20-22% growth in net income for the full year of 2008.»

21% growth in net income would mean 2008 full year net income of $8,086,694. This divided by the 19,870,373 shares gives me $0.41 EPS on a fully diluted basis, which is less than the $0.5 achieved in 2007.

Anyway, the stock is trading at just 6 times this estimate.

I tend to think that it is critical for CHME.OB not to make any more private placements or stuff like that. It doesn't need to, since it has a strong balance sheet, for a $34 M market cap company:

«As of December 31, 2007, China Medicine had $5.8 million in cash and cash equivalents, and approximately $28.5 million in working capital, an increase of 140% from $11.9 million in 2006.»

Probably 2009 will be the really strong upside year for CHME.OB, because then there won't be anymore dilution and net income growth will translate into EPS growth. When EPS starts rising again I see CHME.OB earnings multiple expanding several fold ... like it happened with AOB, it once traded at just 4 times earnings and later this multiple expanded to more than 20.

I'll keep holding CHME.OB for the long term.

Looking good.  CHME may fit your technimental portfolio, now, as well.  You may find QSC appealing, as well; I am interested in your thoughts on that stock. 

QuoteLooking good.

Indeed, nice bullish breakout of the $2.5 resistance level.

QuoteCHME may fit your technimental portfolio, now, as well.

Nah, because it's an OTCBB and only NYSE, Nasdaq and AMEX stocks are allowed for that Portfolio (well, for the Main too, from now on).

AussieTrader has some plans to start a penny stock portfolio but I told him it probably wasn't a good idea over the long term. But, of course, if he wants to go ahead with the project, I don't oppose at all, the more experiences, the better.

QuoteYou may find QSC appealing, as well; I am interested in your thoughts on that stock.

I don't see a thread for it on the Watch List, why don't you start one yourself? I'll put it on my "priority list" (well, I don't have such a list, maybe I should create one).

Just HOLD CHME.OB for the long term, I have this feeling/hope that the bags I'll receive from CHME's investment will more than compensate for UTVG's loss, even if I lose a full bag on this one.

These china otc stocks are like a pet lion. Just when you think they have been tamed,they rip you up.

roller coasting chart action  ::) ::)

Quote from: soxguy on April 15, 2008, 04:11:17 PM
These china otc stocks are like a pet lion. Just when you think they have been tamed,they rip you up.

Quote from: la-onda on April 16, 2008, 09:58:37 PM
roller coasting chart action  ::) ::)

I guess the sell off was due to the appearance of heavier than normal selling orders above $2.5. CHME.OB still has about 3 million warrants to be converted at $2.43, and perhaps those people want the cash as soon as possible (provided it's not at a loss).

I'm positive (as much as one can be these days - the more I know the more I see that I know nothing) that if CHME.OB closes, say, above $3, we'll see $10 over the next 6 - 12 months.

The floor seems to be protected by the attractive fundamentals (2007 EPS of $0.5) and strong balance sheet ($29 M in current assets and $0 debt, for $36 M market cap), whatever that's worth.

I'll keep holding CHME.OB for the long term.

no news, nice chart

Quote from: la-onda on April 29, 2008, 11:01:53 PM
no news, nice chart

Indeed la-onda, nice chart :)

I wrote the following in my latest update:

QuoteI'm positive (as much as one can be these days - the more I know the more I see that I know nothing) that if CHME.OB closes, say, above $3, we'll see $10 over the next 6 - 12 months.

I wrote this because, if CHME manages to close above $3, that tells me (and the market) that warrant holders (there are still warrants convertible into 3,348,686 shares at $2.43) aren't converting and selling shares for a small profit.

A close above $3 would then tell me two things:

1 - People in the know aren't selling, so probably there are good news ahead.

2 - CHME.OB is free to move up more closely to its intrinsic fundamental value, which is, considering the $0.5 EPS in 2007 and 2008 guidance of 21% growth in net income, say, 15 times EPS gives me $7.5 price per share.

Still not $10, but $7.5 would be awesome, considering that this could be just another "falling to zero" OTCBB stock. 

But CHME.OB still closed at just $2.76, so we'll have to wait to see if indeed it closes above $3 or not, before jumping into conclusions saying warrant holders aren't converting and selling around current prices.

I'll keep holding CHME.OB for the long term.

Market not acting well in response to these results.       

Press Release Source: China Medicine Corporation


China Medicine Announces Solid First Quarter 2008 Results
Monday May 12, 9:35 am ET


GUANGZHOU, China, May 12 /Xinhua-PRNewswire/ -- China Medicine Corporation (OTC Bulletin Board: CHME - News; "China Medicine" or "the Company"), a leading distributor and developer of prescription and over-the-counter pharmaceuticals, traditional Chinese medicines ("TCM"), nutritional and dietary-supplements, medical devices, and medical formulations in the People's Republic of China ("PRC"), today reported solid financial results for the first quarter ended March 31, 2008.

    First Quarter 2008 Highlights
    -- Revenues increased 38.6% from Q1 of 2007, to $7.1 million
    -- Gross profit increased 37.2% from Q1 of 2007, to $2.3 million
    -- Operating income increased 49.5% from Q1 of 2007, to $1.4 million
    -- Net income increased 54.0% from Q1 of 2007, to $1.2 million


"During the first quarter, we saw double digit growth in our pharmaceutical product sales compared to the same quarter last year," said Mr. Senshan Yang, Chairman and CEO of the Company. "We are very pleased with the healthy performance of our sales of prescription and over-the-counter medicines as well as our traditional Chinese medicines. This increase in revenues was attributed to the expansion of our distribution network to rural areas in Guangdong Province and the increase in provincial distribution rights through the online bidding system last quarter."

China Medicine usually experiences seasonality in its business such that sales are usually strongest during the last three months of each calendar year, as most pharmaceutical companies and hospitals place purchase orders to stock up their inventory prior to the Chinese New Year holidays. Therefore, sales in the first calendar quarter of each year are typically the lowest.

First Quarter 2008 Results

China Medicine's total revenues in the first quarter were $7.1 million, an increase of 38.6% over the first quarter of 2007. This was attributed to a 40.3% increase in product sales driven by an increase in sales of pharmaceutical products with exclusive distribution rights in Guangdong Province. Product sales totaled $6.9 million and accounted for 97% of total net revenues. Sales of prescription products and over-the-counter products accounted for 58% of total revenues, and TCM accounted for 38% of total revenues for the quarter. Medical formula sales accounted for the remaining 3% of total revenues, totaling $0.2 million. This represented a decrease of 0.1% from the same quarter of 2007.

Gross profit in the first quarter of 2008 was $2.3 million, an increase of 37% over the first quarter of 2007. Gross margin remained the same at 33% of total revenues for the quarters ended March 31, 2007 and 2008. Gross margin improved from 29.4% in the fourth quarter of 2007 due to a decrease in sales of lower margin over-the-counter products.

Operating expenses in the first quarter of 2008 were $0.9 million, up 21.1% from $0.7 million in the first quarter of 2007. This increase was due to higher selling, general and administrative expenses, in line with the increase in revenues in the first quarter of 2008.

Operating expenses represented 12.8% of total revenues in the first quarter of 2008, down from 14.6% in the first quarter of 2007.

Operating income was $1.4 million in the first quarter of 2008, up 50% from $0.94 million in first quarter of 2007. Operating margin was 20.0%, as compared to 19% during the same period a year ago.

Net income for the first quarter of 2008 was $1.2 million, or $0.08 per diluted share, up 54.0% from $0.8 million, or $0.06 per diluted share in the first quarter of 2007. Earnings per share reflect an increase of 2.5 million diluted average shares compared to the first quarter of 2007, primarily due to the exercise of warrants and options.

Financial Condition

As of March 31, 2008, China Medicine had approximately $31.5 million in working capital, an increase of 10.5% from $28.5 million as of December 31, 2007. Also as of March 31, 2008, China Medicine had $5.2 million in cash and cash equivalents, a decrease of 11.2% from $5.7 million as of December 31, 2007. For the quarter ended March 31, 2008, cash used in operating activities was $1.1 million, compared with cash used in operating activities of $0.9 million for the quarter ended March 31, 2007. This increase in cash used in operations was primarily due to an increase in bank-guaranteed trade receivables of $1.7 million which resulted from our growth in sales. Stockholders' equity as of March 31, 2008 was $33.8 million, an increase of 3.7% over the $32.6 million recorded as of December 31, 2007.

2008 Outlook

"We believe our business is well positioned to take advantage of the industry growth as well as the increasing insurance coverage and government support in China," Mr. Yang commented. "Expenditures on pharmaceutical products in China are forecasted to grow 23.5% annually between 2007 and 2011 and reach $126.8 billion in 2011."

"As we enter into the second quarter, we remain focused on our near-term objectives of increasing our exclusive distribution rights and continuing our efforts to bulk up our proprietary product portfolio. We are also planning on identifying a pharmaceutical manufacturing acquisition target to become a more vertically integrated pharmaceutical company. We are confident that we have the right strategies for our Company. With a seasoned management team, we believe that we can continue to successfully execute our business plan going forward," concluded Mr. Yang.

Although China Medicine did not win any new exclusive distribution rights during the first quarter of 2008 due to the Chinese New Year holiday, the Company expects to make bids for, and succeed in obtaining, new exclusive distribution rights throughout Guangdong Province for a number of products before year end.

The Company is also on track to complete the documentation for laboratory trial results for Yutian Capsule for the treatment of chronic obstructive pulmonary disease, and plans to submit them for approval by the State Food and Drug Administration in June 2008. In addition, the Company expects to complete its final laboratory experiments for aflatoxin-detoxifizyme (ADTZ) products in May and to proceed with experiments in animal feed June. Upon successful completion of these experiments and approval of production permit, the Company intends to launch trial sales in late 2008.

Based on China Medicine's solid first quarter performance, the Company expects to meet its prediction of 25-35% growth in revenue with gross margins in the range of 30-35% for the full year 2008. Additionally, the Company also expects to achieve 20-22% growth in net income for the full year 2008.

Conference Call

China Medicine will hold its first quarter conference call for all interested persons at 10:00 a.m. Eastern Time on May 12, 2008 to discuss its results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 800-688-0796. International callers should dial 617-614-4070. When prompted by the operator, mention conference passcode 91479292. If you are unable to participate in the call at its scheduled time, a replay will be available for seven days starting on Monday, May 12 at 12:00 p.m. Eastern Time. To access the replay, dial 888-286-8010 (international callers dial 617-801-6888), and enter the passcode 57612969.

About China Medicine Corporation

China Medicine Corporation is a leading pharmaceutical company which discovers and develops medical formulations and distributes over 2,200 pharmaceutical products in China including prescription and over-the-counter drugs, traditional Chinese medicine products, herbs and dietary supplements. The Company distributes the products to wholesale distributors in 28 provinces and to more than 300 hospitals, 500 medicine companies, and 1,788 drug stores throughout China. The Company actively develops a number of proprietary products for many uses including oncology, high blood pressure and the removal of toxins from food and animal feeds. For more information visit the Company's website at http://www.chinamedicinecorp.com .

Cautionary Statement

This press release contains forward-looking statements concerning the Company's business and products. The Company's actual results may differ materially depending on a number of risk factors including, but not limited to, the following: general economic and business conditions, obtaining regulatory approval for new products, the expected contribution of higher margin products, government support for rural health care, competition from existing and new competitors, changes in technology, and various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risk factors detailed in the Company's reports filed with the Securities and Exchange Commission. China Medicine Corporation undertakes no duty to revise or update any forward- looking statement to reflect events or circumstances after the date of this release.

I really don`t understand todays price action  ???
....
Financial Condition

As of March 31, 2008, China Medicine had approximately $31.5 million in working capital, an increase of 10.5% from $28.5 million as of December 31, 2007. Also as of March 31, 2008, China Medicine had $5.2 million in cash and cash equivalents, a decrease of 11.2% from $5.7 million as of December 31, 2007. For the quarter ended March 31, 2008, cash used in operating activities was $1.1 million, compared with cash used in operating activities of $0.9 million for the quarter ended March 31, 2007. This increase in cash used in operations was primarily due to an increase in bank-guaranteed trade receivables of $1.7 million which resulted from our growth in sales. Stockholders' equity as of March 31, 2008 was $33.8 million, an increase of 3.7% over the $32.6 million recorded as of December 31, 2007.

2008 Outlook

"We believe our business is well positioned to take advantage of the industry growth as well as the increasing insurance coverage and government support in China," Mr. Yang commented. "Expenditures on pharmaceutical products in China are forecasted to grow 23.5% annually between 2007 and 2011 and reach $126.8 billion in 2011."

"As we enter into the second quarter, we remain focused on our near-term objectives of increasing our exclusive distribution rights and continuing our efforts to bulk up our proprietary product portfolio. We are also planning on identifying a pharmaceutical manufacturing acquisition target to become a more vertically integrated pharmaceutical company. We are confident that we have the right strategies for our Company. With a seasoned management team, we believe that we can continue to successfully execute our business plan going forward," concluded Mr. Yang.

Although China Medicine did not win any new exclusive distribution rights during the first quarter of 2008 due to the Chinese New Year holiday, the Company expects to make bids for, and succeed in obtaining, new exclusive distribution rights throughout Guangdong Province for a number of products before year end. The Company is also on track to complete the documentation for laboratory trial results for Yutian Capsule for the treatment of chronic obstructive pulmonary disease, and plans to submit them for approval by the State Food and Drug Administration in June 2008. In addition, the Company expects to complete its final laboratory experiments for aflatoxin-detoxifizyme (ADTZ) products in May and to proceed with experiments in animal feed June. Upon successful completion of these experiments and approval of production permit, the Company intends to launch trial sales in late 2008.

Based on China Medicine's solid first quarter performance, the Company expects to meet its prediction of 25-35% growth in revenue with gross margins in the range of 30-35% for the full year 2008. Additionally, the Company also expects to achieve 20-22% growth in net income for the full year 2008.

more information in the CHME April Presentation:
http://www.chinamedicinecorp.com/Investors/Presentations.htm

probably this is a good entry point and the chart will act as a few weeks before?

Volume is the problem. Today it traded half the 60 days average.  Needs around a lot more to make substantial upward moves.  Too many outstanding warrants trying to get out with profit.
IMO

Quote from: la-onda on May 12, 2008, 08:41:00 PM
I really don`t understand todays price action  ???
....
probably this is a good entry point and the chart will act as a few weeks before?

Hi la-onda,

This could be a «sell the news» short term effect, mixed with the proximity of the $3 resistance level...

Quote from: jorgegr on May 12, 2008, 09:50:52 PM
Volume is the problem. Today it traded half the 60 days average.  Needs around a lot more to make substantial upward moves.  Too many outstanding warrants trying to get out with profit.
IMO

Hi jorgegr,
Yes... volume is always an issue on this kind of stocks  :-\ That kind of selling pressure also doesn't helps for now...

Update:

From a technical perspective, Monday's sell-off didn't affect the current short term up swing and we can look into it as part of a normal consolidation process, as CHME just tested the current ascending support located near $2.50. I would say that until CHME remains above this ascending support, we still have a nice short term setup to break through the $3.00 resistance.

Trading Plan:
HOLD CHME.OB

Regards,

MACD looks interesting, stochastics and ADX also positive, Rams what's your point?

Quote from: la-onda on June 03, 2008, 09:09:58 PM
MACD looks interesting, stochastics and ADX also positive, Rams what's your point?

Hi la-onda,
I can't say I enjoy CHME's current chart layout.
About indicators, in stocks like this (with low volume and irregular charts) I don't trust or follow any technical indicators, as they can be easily disturbed by market noise (due to the low volume and liquidity).

We'll keep holding it and wait for developments, but if it makes a new relative low, we'll probably have to drop this one in order to adapt the portfolio to the new strategy requirements.

Trading Plan:
HOLD CHME.OB

Quote from: Ramsburg on June 04, 2008, 09:18:44 AM

We'll keep holding it and wait for developments, but if it makes a new relative low, we'll probably have to drop this one in order to adapt the portfolio to the new strategy requirements.

Hey Ramsburg, where is David? are you guys changing the strategy again from Long-term fundamentals  to Technicals.

China Medicine Maintains Exclusive Rights to Distribute 2,300 Pharmaceutical Products
Monday , June 23, 2008 14:59ET

GUANGZHOU, China, June 23 /Xinhua-PRNewswire/ -- China Medicine Corporation (OTC Bulletin Board: CHME; "China Medicine" or "the Company"), a leading distributor and developer of ethical and over-the-counter drugs, traditional Chinese medicines (TCMs), nutritional and dietary supplements, medical devices, and medical formulations in the People's Republic of China (PRC), today announced it has successfully obtained the exclusive rights to sell 2,300 products included in the Company's current catalogue.

The Company won the exclusive rights through an on-line bidding system called the "Guangdong Sunshine Medicine Public Internet Bidding System." The system was established in 2007 by the Guangdong government to help consolidate the provincial medicine acquisition market and to promote a transparent bidding process. Among the 2,300 products that the Company has maintained exclusive rights to sell, four were developed by China Medicine. They include Ozagrel, a powder-injection that is used for treatment of acute myocardial infarction; Bumetanide, an injection used for treatment of diuretic and chronic kidney failure; Levocarnitine, an injection used for the treatment of coronary heart disease; and Ji Xue Gan Pian, a tablet which is used for the treatment of cuts from surgery and skin disease.

"We are excited that we have bid against more than 1,700 medicine distributors nationwide and have maintained the rights to sell over 2,300 products that were already included in our product catalogue," said Mr. Senshan Yang, Chairman and CEO of China Medicine. "We will be selling our products to hospitals throughout Guangdong Province through an online drug sales system."

China Medicine believes that securing and maintaining the rights to sell the drugs previously included in its portfolio will help to increase revenues going forward since the Company has already gone through the introductory phase, which is typically a period of slower sales when new products are advertised and marketed. With the introductory phase complete, the Company can now focus more on promoting existing drugs thereby increasing sales volume. China Medicine maintains a strong reputation in the pharmaceutical industry and an extensive distribution network.

"China Medicine will continue to actively participate in the online bidding system in order to add more products to our portfolio," commented Mr. Yang. "We will also increase our research and development efforts in order to increase our portfolio of self-developed drugs."

rebounding chart:

double bottom with March low???

Can CHME go lower?

Yes CHME can  ::)

Rams, Aussie whats your trading plan for CHME?

China In-Focus: China Medicine Retains Australian Patent
Friday , July 18, 2008 18:06ET

Jul 18, 2008 (financialwire.net via COMTEX) -- July 18, 2008 (FinancialWire) China Medicine Corp. (OTCBB: CHME) (Current Market Cap. US$28.96 Mil.) has obtained a patent from Australia Patent Office for recombinant Aflatoxin Detoxifizyme. The patent is valid through January 13, 2025.

According to China Medicine, rADTZ is a product that has the potential to detoxify aflatoxin, a potential cancer causing agent, in food and feed. It is a compound that is a derivation of aflatoxin-detoxifizyme, an extracellular enzyme. Developed by Guangzhou Co-Win Bioengineering Co., Ltd., a subsidiary of China Medicine, rADTZ can be used as an additive to remove aflatoxins from animal feed as well as other food products. The company intends to develop rADTZ for this and other applications.

The company is currently testing rADTZ on animal feed and is scheduled to begin working with the Chinese Department of Agriculture on a large scale experiment in order to meet national standards and apply for production permits. Once the company receives production permits, it expects to begin trial sales of rADTZ by the end of 2008.

Update:

CHME reported Q2 results and they are pretty good:

Revenue $11.6M
Gross Profit $4.2M
GP Margin 35.7%
Net Income $2.5M or $0.16 per share

The full release is here http://money.cnn.com/news/newsfeeds/articles/prnewswire/200808130800PR_NEWS_USPR_____CNW019.htm (http://money.cnn.com/news/newsfeeds/articles/prnewswire/200808130800PR_NEWS_USPR_____CNW019.htm)

Now, this is a legacy position as far as I am concerned, the stock has very low liquidity and our plan will be to look to sell into any technical strength that may appear. Perhaps this release may catalyse some momentum and volume to appear.

We will watch the reaction to earnings today and use that as a guide for an exit strategy.

Trade Plan:

HOLD CHME

Update:

The market reacted very well to CHME earnings, volume and momentum were strong and we got a close pretty near to the highs of the day.

Looking at the chart we can see CHME ran into the descending resistance created by the Oct 2007 run. We have 2 key barriers at play here; $2.50 zone (where it is now) and the $3 zone (failed breakouts of Dec 2007 and May 2008. This time we do have significant volume increase and hopefully fundamental story combining to break this extended downturn.

Yesterdays solid candle and volume and the break of some key longer trem averages means we can now construct a trade plan. If this is going to continue onwards I would like to see the 200sma (Green line) hold the price in the upper third of this breakout candle, so that will be my area to watch. I won't put a stop there it won't make sense to do that just yet. Also on the chart I have marked the half way point of yesterdays candle as a reference.

So, for now I am looking for 1) immediate continuation towards $3 or consolidation in the upper area of the bakout candle before resuming upwards again. $3 will probably be a tempting exit point.

Trade Plan:

HOLD CHME

Update:

Profit taking, but in relative small volume (relative to the breakout day). Technically it remains in line with my analysis so we will continue watching the pattern develop. 200sma expecting to hold (green line). Orange line half way on the breakout candle.

Trade Plan:

HOLD CHME

Update:

Huge volatility in the day which is in part due to the very low volume being traded here. Technically still in line with the strategy outlined a couple of sessions back. The good news is that the price is holding up nicely on dramatically lower volume following the breakout, which is what you want to see in a consolidation period.

Trade Plan:

HOLD CHME

still in consolidation, but chart could get very interesting soon.
Nice set up imho..

Update:

Not much to update, La-onda covered it in his post. Techncally consolidating and holding the mid point of the breakout candle with Fridays low touching the 50ema reacting off it nicely..but..closing just below 200sma.

The main problem we have with this type of stock is the very poor liquidity, it sometimes can make analysis of a chart somewhat meaningless because a few small orders can drmamticaly impact the bid / ask and ultimately price.

The chart pattern suggests upside continuation most likley.

Trade Plan:
HOLD CHME

Update:

Quote from: AussieTrader on August 25, 2008, 05:24:02 AM
Update:
The main problem we have with this type of stock is the very poor liquidity, it sometimes can make analysis of a chart somewhat meaningless because a few small orders can drmamticaly impact the bid / ask and ultimately price.

Monday CHME traded 700 shares. Trust me when I say 3SoF will never purchase and hold onto stocks with such terrible liquidity again. Due to the size of our position we can only ever exit when volume picks up to decent levels.
Anyway that said, still consolidating the breakout day, I will be planning a limit sell exit over the coming days as it is a waste of time and money commenting and watching this thing.

Trade Plan:

HOLD CHME

Regret I violated my own rules abt this crap (volumewise) and fully agree with your comments.
I'm stuck with 2500 shares and wasting time trying to recover my money.

disappointing price action today

no news, just down  :-X

CHME update:


China Medicine's Letter to Shareholders and Business Update
Friday , October 10, 2008 09:00ET

GUANGZHOU, China, Oct. 10 /Xinhua-PRNewswire/ -- China Medicine Corporation (OTC Bulletin Board: CHME; "China Medicine" or "the Company"), a leading distributor and developer of prescription and over-the-counter pharmaceuticals, traditional Chinese medicines ("TCM"), nutritional and dietary supplements, medical devices, and medical formulations in the People's Republic of China ("PRC"), today released a letter to shareholders from its Chairman and CEO, Mr. Senshan Yang.

Dear shareholders:

First and foremost, thank you for your continued support. As Chairman and CEO of China Medicine, I would like to take this opportunity to share my opinion with you on the global capital markets crisis, which has resulted in downward pressure on stock prices.

We believe that the current financial turmoil is a once-in-a-century global crisis. It is inevitable that bubbles in the economy, such as the one that we have witnessed with housing prices in the United States, will eventually burst. However, the economy eventually begins to find a path to recovery, especially in an era when the economies of many countries are interconnected. As one analyst has observed, the whole world has been trapped by the breakdown of "Wall Street's alchemy." Nevertheless, the real economy of the United States has for a long time been ranked among the best in the world. We believe this will continue to be the case.

Despite the global financial crisis, China Medicine's operations and performance have not been directly affected by current events. In the second quarter of 2008, we reported strong financial results, and we are maintaining our strategy of increasing profitability by including higher-margin products in our portfolio. Most importantly, our strong cash flows will work to our advantage as we weather the difficult financial climate.

I would like to point out that the tightening of China's credit policy and the lack of loans available to local Chinese companies have caused cash flow problems for many companies. As a result, our business results will be slightly affected in third quarter of 2008 for several reasons:

    1. Various suppliers and factories are facing cash flow problems and the
       distribution chain has been struggling.
    2. As a result of the Sichuan earthquake, provincial government spending
       in other provinces has decreased as funds have been used to help
       earthquake victims in Sichuan.
    3. Due to the Beijing 2008 Olympics Games, the Chinese government mandated
       that all tests and experiments involving toxic substances be
       temporarily halted during the Olympics, which delayed our trial sales
       of recombinant aflatoxin-detoxifizyme (rADTZ)
    4. The Guangdong Sunshine Bidding process, which has been postponed to
       September 1st, has resulted in collection delays from some hospitals.

However, we are convinced that these problems are only temporary. Though we now expect revenue growth for fiscal 2008 to be below our original guidance of 25%-35%, we expect to exceed our net income estimates of 20%-22% growth for the year. Overall, we believe that our strong cash flows, extensive distribution network, exclusive and provincial distribution rights, higher margin products, and progress in developing rADTZ will only serve to strengthen our position as a leading pharmaceutical distributor and specialty drug developer in China.

We also have an expansion plan in place to include a manufacturing facility to complement our pharmaceutical distribution business. The facility should contribute to China Medicine's growth and future returns. In addition, it should also facilitate the manufacturing of both our pharmaceutical products and rADTZ. In the long run, we believe our expansion plan will help bring down our overall cost ratios by reducing energy consumption and eliminating redundant spending on fixed assets.

Food safety in China has been in the spotlight, and China Medicine believes that the commercialization of rADTZ will play an important role in the animal feed, food, food inspection, pharmaceutical, and transgenic agriculture industries. China Medicine remains focused on the commercialization of rADTZ for the remainder of the year. We are currently constructing a manufacturing facility exclusively for rADTZ production and are committed to launching rADTZ trial sales for the animal feed industry in the first quarter of 2009. In China, 120 million metric tons of animal feed is sold yearly. Based on a pricing strategy of 70 RMB to treat one metric tons of animal feed, the potential market for rADTZ is estimated to reach approximately RMB 8.4 billion ($1.23 billion). Based on our projections, net margin for rADTZ is expected to be at least 60%. As a result, China Medicine believes that the successful launch of rADTZ, or licensing of rATDZ technology, has the potential to contribute substantially to our revenue and profit.

In conclusion, we believe that China's economy has very solid fundamentals and that the impact from the worldwide financial crisis should be less severe domestically. China's population of 1.3 billion ensures that strong internal consumption will help to support the domestic economy. We remain confident about China Medicine's ability to weather these challenging market conditions, and will continue to keep you informed about our recent activities.

I would like to thank all of our shareholders for their continued support as we look forward to a successful future.

    Sincerely,

    Senshan Yang
    Chairman and CEO
    China Medicine Corporation

is this the bottom  ???

seeking alpha:
China Medicine Corporation (CHME.OB) said a delay in a provincial bidding system caused its Q3 revenues to fall 17% to $10.5 million (see story). Even though margins rose slightly, the increases were not enough to offset Q3's lower revenues. As a result, net income dipped 10% to $2 million or 13 cents per share. Despite the negative Q3 comparisons, nine-month China Medicine revenues remain on the upside. Revenues so far in 2008 are up 13% to $29.2 million, and net income climbed 37% to $5.6 million or 36 cents per share, fully diluted.

CHME update:

China Medicine Announces Record Fourth Quarter and 2008 Results
Thursday , March 26, 2009 08:00ET

GUANGZHOU, China, March 26 /PRNewswire-Asia / -- China Medicine Corporation (OTC Bulletin Board: CHME) ("China Medicine" or "the Company"), a developer and a leading distributor of prescription and over-the-counter pharmaceuticals, traditional Chinese medicines ("TCM"), nutritional and dietary-supplements, medical devices, and medical formulations in the People's Republic of China ("PRC"), today reported outstanding financial results for the fourth quarter and full year ended December 31, 2008.

    Fourth Quarter 2008 Highlights

    -- Revenues increased 51.2% to $24.4 million
    -- Gross profit increased 30.4% to $5.8 million
    -- Operating income increased 24.5% to $4.2 million
    -- Net income increased 26.6% to $3.5 million
    -- Received approval from the Guangdong Food & Drug Administration
       ("Guangdong FDA") to distribute dental equipment and instruments in
       Guangdong Province
    -- Once again awarded GSP (Good Supply Practice for Pharmaceutical
       Products) certification from State Food and Drug Administration
       (SFDA).
    -- Received rADTZ patent approval for Australia, South Africa and Korea

    Full Year 2008 Highlights

    -- Total revenues increased 27.4% to $53.6 million
    -- Gross profit increased 25.6% to $15.6 million
    -- Operating income increased 30.0% to $11.0 million
    -- Net income increased 32.7% to $9.1 million, or $0.60 per diluted
       share


''We are very pleased with our fourth quarter and full year 2008 results despite the challenging economic environment. In the fourth quarter, revenue increased 51.2% compared to the same period last year. Any slowdown from the global economic crisis was mitigated by expansion of our distribution network and positive seasonal factors in which orders were booked just prior to the end of the year,'' said Mr. Senshan Yang, CEO and Chairman of China Medicine Corporation.

''Our top selling drugs for the fourth quarter included Hongjin Xiaojie Capsule, which is used for the treatment of coughs, accounted for 5.66% of revenue; Xueshuantong injection, which is used to improve blood circulation, remove vascular stasis and dilate blood vessels, accounted for about 5.44% of revenues; Cinepazide maleate injection, which is used in the treatment of vascular sclerosis, accounted for 4.11% of revenue. During the quarter, we also received approval from the Guangdong Food and Drug Administration (FDA) to distribute dental and oral surgery equipment, which we view as an attractive market in China as the demand for dental services is expected to grow.

Our gross profit margin fell 4% compared to the fourth quarter of 2007 due to intense competition in the Chinese pharmaceutical industry. We are currently taking steps to improve our gross margin, such as upping our efforts to obtain more exclusive distribution rights on high-margin prescription products. We also plan on developing more specialty pharmaceutical products and increasing our existing product offerings. This will help us strengthen our competitive advantages and diversify business risk,'' said Mr. Yang.

Fourth Quarter Results

China Medicine's total revenues in the fourth quarter of 2008 were $24.4 million, an increase of 51.2% over the fourth quarter of 2007. This was attributable to a 66.2% increase in product sales, primarily driven by an increase in over-the-counter product sales made through the company's increased market share in the municipal and rural areas of Guangdong Province. In addition, an earlier Chinese New Year resulted in many orders being booked prior to December 31, 2008, helping to contribute to the Company's strong top line growth.

Product sales in the fourth quarter of 2008 totaled $24.4 million and accounted for 99.97% of total net revenues. Sales of prescription products accounted for 78.94% of total net revenues, and over-the-counter medicines accounted for 17.9% of total revenues during the quarter. Sales of dietary supplements, medical equipment and others accounted for 1.12%, 1.87% and 0.14% respectively. Medical formula sales accounted for 0.03% of total revenues, totaling $7,254, down 99.5% from the fourth quarter of 2007. The decline was due to stricter regulations by the State Food and Drug Administration (SFDA) in China, where approvals for new medical formulas were limited since the process has become more complex due to concerns over food and pharmaceutical safety.

Gross profit in the fourth quarter of 2008 was $5.8 million, an increase of 30.4% over the fourth quarter of 2007. Gross margin was 24% of total revenues, down from 28% of total revenues in the fourth quarter of 2007. The decline in gross margin was due to lower selling prices for some of the pharmaceutical products the Company distributes as the Chinese government set a price ceiling on certain generic drugs. To counter this situation, China Medicine is adjusting its portfolio to increase pharmaceutical products with exclusive distribution rights, which have a higher margin.

Operating expenses in the fourth quarter of 2008 were $1.6 million, up 48.1% from $1.1 million in the fourth quarter of 2007. This increase was due to higher selling, general and administrative expenses related to increase in revenues for the fourth quarter of 2008.

Operating expenses represented 6.7% of total revenues in the fourth quarter of 2008, slightly down from 6.9% in the fourth quarter of 2007.

The Company recorded $0.36 million in research and development expenses in the fourth quarter of 2008, compared to $0.21 million in the fourth quarter of 2007. The increase in R&D expense was due to the pre-clinical study of Yutian Capsule, a traditional Chinese medicine developed for use in the treatment of lung cancer.

Operating income was $4.2 million in the fourth quarter of 2008, up 24.5% from $3.4 million in fourth quarter of 2007. Operating margin was 17%, as compared to 21% a year ago.

Net income for the fourth quarter of 2008 was $3.5 million, or $0.23 per diluted share, compared to $2.8 million, or $0.17 per diluted share in the fourth quarter of 2007.

Full Year 2008 Results

For the full year 2008, total revenues were $53.6 million, up 27.4% from $42.1 million in 2007. Approximately 97.5% of revenue came from product sales and 2.5% came from medical formula sales. Gross profit for the full year 2008 was $15.6 million, an increase of 25.6% from $12.4 million in 2007. Gross profit margin was 29% in 2008, the same as in 2007. Operating income was $10.9 million, up 29.9% from $8.4 million in 2007. Operating margin was 20%, the same as in 2007. Net income for 2008 was $9.1 million or $0.60 per diluted share, compared to $6.9 million or $0.50 per diluted share in 2007.

Financial Condition

As of December 31, 2008, China Medicine had $2.8 million in cash and cash equivalents, and approximately $32.58 million in working capital, an increase of 14.1% from $28.5 million in 2007. For the year ended December 31, 2008, China Medicine's cash flow from operations was $4.2 million. Stockholders' equity as of December 31, 2008 was $42.8 million, an increase of 38.5% over the $30.9 million recorded as of December 31, 2007.

During the fourth quarter, the Company spent $2.7 million on purchasing and installing equipment for the production of rADTZ. The Company also spent $2.9 million as the deposit on the purchase of the ownership of BCG (Bacillus Calmette-Guerin) vaccine for the prevention of infection in bladder cancer patients post surgery and $2.3 million on exclusive distribution rights for multivitamin food supplement products.

2009 Outlook

"Looking forward to 2009, we expect to see continued growth from our pharmaceutical products distribution business as the Chinese government rolls out its plan to spend RMB850 billion ($123 billion) in the next three years to establish a universal health care system. As a pharmaceutical developer and a leading pharmaceutical distributor in China today, we are committed to further expanding our distribution network, increasing the number of higher margin products in our distribution catalogue, and focusing our R&D efforts on increasing our pipeline of proprietary pharmaceutical products," said Mr. Yang.

"During the first quarter of 2009, we are continuing to make progress in our efforts to introduce to the market recombinant Aflatoxin Detoxifizyme (rADTZ), our novel and innovative product that has the potential to detoxify aflatoxin (AFT), a cancer causing agent, in food and feed. We recently achieved another milestone with rADTZ, where we have successfully completed all rounds of initial rADTZ experiments and testing. The product is currently being reviewed by the Department of Agriculture, China. In addition, we have also applied for a production permit for rADTZ and expect to receive approval in the second quarter of 2009,'' said Mr. Yang.

''The pharmaceutical industry in China is undergoing reform and competitors might see delays in getting new pharmaceutical products approved or receiving Good Manufacturing Practices (GMP) certification for their manufacturing facilities as a result of stricter rules and tighter regulations. However, due to the success of our distribution model, we believe China Medicine is well positioned to take advantage of the increasing demand for good quality healthcare products from the burgeoning middle class and the elderly population in China," concluded Mr. Yang.

&

China Medicine wins distribution rights for Liao Yuan's surgical solution
Friday , April 17, 2009 09:19ET

Apr 17, 2009 (Datamonitor via COMTEX) -- China Medicine, a developer and distributor of prescription and over-the-counter pharmaceuticals and medical formulations in the People's Republic of China, has signed a two-year renewable agreement with Heilongjiang Liao Yuan Technology, for exclusive provincial-level rights to distribute Nianlianping in Guangdong province, with the exception of Foshan, Zhongshan, Dongguan areas and the Guangzhou Military Hospital.

Nianlianping is a medical macrogol berberine solution used to restrain tissue from adhering to the lesion site after surgical operation. It is widely used in the prevention of surgical adhesions, which include ascites, joint effusion, pelvic fluid and pelvic inflammatory disease. It is also used to reduce tissue fluid exudation and antibiotic usage.

Senshan Yang, chairman and CEO of China Medicine, said: "We are very excited to work together with Liao Yuan to distribute Nianlianping. With our current extensive distribution network and highly qualified sales personnel, we believe we have the competitive advantage it takes to reach our sales target for this product. We remain confident that Nianlianping will become one of China Medicine's best selling products in coming years."

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