3SOF

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 

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."

Chart:

One of the 4 stocks presently active in this portfolio.

Updated chart look...

Sold @ $1.70 mp

Reason: this stock doesn't fit the current portfolio strategy.