3SOF

I still dont udnerstand how the current news would impact the stock price this way, but I can say that there have been times in the past, i.e. around 2 months ago when AOB traded this way for no apparent reason that I could see.  I am going to stick this one out until earnings unless there is tangible bad news.

The paper KCScott kindly posted tells us the company increased the number of authorized shares from 60 million to 150 million so they could do the private placement they already did.

The details of that private placement are as follows:

« On November 28, 2005, we entered into a stock purchase and warrant
agreement, to which we refer as the Purchase Agreement, with thirty-one (31)
accredited investors, to which we collectively refer to as the selling
shareholders. Pursuant to the Purchase Agreement, the selling shareholders
purchased 12,500,000 units, each unit consisting of (a) one (1) share of common
stock and (b) three-tenths of one common stock purchase warrant, at a purchase
price of $4.80 per unit. The private placement closed on December 8, 2005. The
Units were issued in two tranches, the first tranche consisted of 6,973,400
units issued on December 8, 2005. The second tranche consisted of 5,526,600
units issued on January 23, 2006, following the expiration of the waiting period
under Rule 14c-2 of the Exchange Act and the amendment of our articles of
incorporation.

     The exercise price of the warrants issued to the selling shareholders is
$6.50 per share. Pursuant to these warrants the selling shareholders are
entitled to purchase an aggregate of 3,750,000 shares of our common stock. The
warrants will expire on December 8, 2008.»

So, below $4.80 these investors (31 in total) are losing money. But, above it, they are making money.

I don't know why AOB is falling, the stock is at a critical technical point. I will also hold for the earnings release and will continue holding AOB for the long term.

Is this a head & shoulders? OUCH what is everyone doing with AOB?

nice news:
American Oriental Bioengineering Rated 'Buy/4,' Target Valuation $6 By Investrend Analyst Kipley Lytel, CFA
Monday March 13, 8:30 am ET

NEW YORK--(BUSINESS WIRE)--March 13, 2006--(Investrend Research Syndicate) American Oriental Bioengineering (AMEX: AOB - News) has been rated 'Buy/4' in an initiating Institutional report by Investrend Research analyst Kipley Lytel, CFA, and assigned a target valuation of $6.

The full report is at http://www.investrendresearch.com. In it the analyst also stated:

The rating is predicated on the price gap between AOB's current stock price and the implied company intrinsic value, along with::

(1) AOB's 10+ year seasoned history recently marked by visible operational execution;

(2) 81% revenue and 85% net income year-over-year comparable period increases for the nine-month period ended Sept. 30, 2005 (9mo2005), respectively;

(3) operating income margin (EBIT) for the 9mo2005 period increased 3.1% to 34.7% compared to 31.6% in the same period last year;

(4) balanced organic company growth via new products, expanding distribution, and greater product penetration;

(5) external acquisition growth uniquely benefiting China-based companies accessing capital by means of its US exchange traded status to garner extraordinary opportunities of the privatization of China state-owned pharmaceuticals;

(6) successful array of growth products in market, complemented with a strong series of new products the together bring the product portfolio into triple digits;

(7) distribution of over 10,000 points of sale to pharmacies, hospitals, supermarkets, and both small & chain retail penetration (new company-owned retail agenda with PBN products, called Life Peptide; and

( a world-class management team with experience in fusing both Western & Eastern markets.

American Oriental has more than quadrupled its sales since 2001. In both 2003 and 2004 annual sales grew by more than $10 million. Furthermore, revenue for 9mo2005 grew by 81% year-over-year.

AOB is continuing its organic growth potential while also diversifying the company away from product concentration risk. Plant-Based Pharmaceutical (PBP) and Plant-Based Nutraceutical (PBN) together have over 100 products in the portfolio and over 10,000 points of sale.

An InvestorPower(TM) page has been created regarding the company at http://www.investrend.com/company/list.asp?sPathParam=yes.

Investrend Research has been the leading independent equity research publishing and distribution program since 1996, with over 75 qualified professional analysts posting more than 1,000 reports to date. Anyone may enroll a company. Enrollment fees for the Institutional research platform are $36,890, which are being paid by the company. Analysts are paid in advance for their initial reports by Investrend Research to limit or eliminate pecuniary interests, and no one associated with the program may own or trade in the equities of companies under coverage.

The company's research has also been enrolled in the investor-monitoring program by the Shareholders Research Alliance (http://www.shareholdersresearch.com), to eliminate conflicts and bias, and Investrend subscribes to the "Standards for Independent Research Providers" at http://www.firstresearchconsortium.com.

Anyone interested in receiving alerts regarding American Oriental should e-mail [email protected] with "AOB" in the subject line.

fyi  :

AOB: Investrend Starts @ Buy; Sets Tgt @ $6; Analyst Notes
Tuesday , March 14, 2006 14:45 ET

Issuer: American Oriental Bioengineering Inc (AMEX: AOB)
Analyst Firm:  Investrend Research
Ratings Action: INITIATE
Current Rating: Buy
Target Price Action: INITIATE
Target Price: $6.00
Analyst Comments: The firm's rating is predicated on the price gap between AOB's current stock price and the implied Company intrinsic value, along with consideration of following: (1) AOB's 10+ year seasoned history recently marked by visible operational execution; (2) 81% revenue and 85% net income year-over-year comparable period increases for the nine-month period ended Sept. 30, 2005 (9mo2005), respectively; (3) operating income margin (EBIT) for the 9mo2005 period increased 3.1% to 34.7% compared to 31.6% in the same period last year; (4) balanced organic Company growth via new products, expanding distribution, and greater product penetration; and (5) external acquisition growth uniquely benefiting China-based companies accessing capital by means of its US exchange traded status to garner extraordinary opportunities of the privatization of China state-owned pharmaceuticals.


28 slides AOB analysis:

http://www.knobias.com/research.pdf?id=4180


chart:

blog quotation:
The MACD looks very bullish here, and would suggest that a good up move is coming. The RSI is also pointing up. More importantly though, will be the stocks ability to pass resistance at $4.80. Judging from the indicators, and the recent pattern, it seems like there is a good chance this will happen. It looks like the stock has been "bubbling up" to that $4.80 mark over the last few weeks, and building up pressure. Once it breaks through, if it breaks through, that should help fuel a big move up. This stock has a history of those types of breakouts. My initial target is $5.14 (50 DMA)

&
AOB: Short Interest DN 43.0% to 1.0M in Mar 2006
Tuesday , March 21, 2006 16:15 ET

According to new short interest data from AMEX, short interest for American Oriental Bioengineering Inc (AMEX: AOB) DECREASED 43.0% to 1,006,069 shares for the month ended mid-March, 2006.

SYMBOL      FEBRUARY           MARCH          CHANGE       %CHANGE     DAYS/COVER
--------   -------------   -------------   -------------  ------------  ----------
AOB            1,764,618       1,006,069        -758,549       -42.99%           2

Based on AOB's 20-day average daily share volume of 884,265, it would require approximately 2 day(s) of buying to cover this short interest.

FYI

AOB will release its 2005 fourth quarter and year end results before the market opens on Friday March 31, 2006.  A CC will take place at 10 AM ET.  Their web site is http://www.bioaobo.com.

Anyone still in the game.  Any thoughts on holding this one through earnings.

Alien

Bought it today at open $4.80.

Run-up before earning release.

The earning should be good. But if it runs too high before release, it will be subject to profit taking after good earning report unless the numbers are  very good similiar to GIGM case.

Yay! Today is the first time in a long time that I saw any green in my AOB.  Hope it keeps going!

ShawFund, how much do you think is "too high" in terms of where you would sell AOB before earnings if it got too far ahead of itself again?

Quote from: shawFund on March 29, 2006, 11:38:54 AM
Bought it today at open $4.80.

Run-up before earning release.

The earning should be good. But if it runs too high before release, it will be subject to profit taking after good earning report unless the numbers are  very good similiar to GIGM case.

Congrats Shawfund - Good timing. AOB showed significantly strength today finishing above MA50 and at the high of the day with above average volume. This is a good omen for the earnings on Friday. Q4 is normally AOB's strongest quarter so we will hopefully have a good reaction to earnings.

Quote from: alien41 on March 28, 2006, 10:15:36 AM
Anyone still in the game. Any thoughts on holding this one through earnings.

Alien

Well 3SOF will hold over earnings. I expect earnings to come in significantly above Q3 05. Some caution though; the stock count has increased during the quarter so EPS will not increase as fast as earnings.

AOB is the last stock in 3SOF without a stop and it seems prudent to put a stop before the earnings are released. AOB will as said most likely produce a nice set off figures on Friday but to insure against negative surprises we will set a tight stop at 4.56 just below the support at 4.6.  AOB will release their earnings before the opening so we might adjust the stop if there are any significant deviations to our expectations.

I sold it this morning at $5.33.

My target before earning release is $5.5 but I have to go sleep now (This post is sent from Beijing China) and I don't want to hold it over earning release. It may give a very good surpvise, but for one day gain of 11% (I bought 15,000 shares), it is enough for me.

I hold EONC over its earning release because I did a very detailed analysis about what it would report (earn $0.02-$0.05 cents) and had confidence holding it but not for AOB.

Good luck for everyone holding over its earning release.

all details:
http://www.knobias.com/individual/public/news.htm?eid=3.1.74914e3919cd44edb5cedf65a1545a3ec6b433e5a4d560f11dcd5cc5f3b5283c

summarization:
AOB: Q4 EPS 9c vs 8c EPS +12% Y/Y
Thursday , March 30, 2006 17:13 ET

QUARTER RESULTS
American Oriental Bioengineering Inc (AOB) reported Q4 results ended December 2005. Q4 Revenues were $19.77M; +55.79% vs yr-ago. Q4 EPS was 9c; +12.50% vs yr-ago.

YEAR-END RESULTS
Co. also reported Year-End results ended December 2005. FY Revenues were $54.73M; +71.19% vs yr-ago; BEATING revenue consensus by +9.46%. FY EPS was 31c; +34.78% vs yr-ago; BEATING earnings consensus by +63.16%.


http://www.knobias.com/individual/public/news.htm?eid=3.1.55b3a5c4a059ecaffab0361732fe275d4453cb9147d0ba71fe0ec0712750f9dc

For AOB, it is the future growth we are looking for.

The revenue growth is expected. Because the company needs more money to expend its business, it issued a lot of new shares. Therefore, even revenue increased >70%, its EPS stayed the same as compared with last year.

If the company does not isuue new shares and its revenue growth keeps the same pace as it did this year, the stock is certaintly undervalued.

Otherwise, the fair value may be at $6.00 as analyst indicated.

The result for Q4 05 was $4.2 million, that is below my expectations which was around 4.6 million (Q3 2005 was $3.7 million). This is a rather large shortfall but we will still keep AOB in 3SOV unless it penetrates our stop at 4.56. Based on the reaction in after hours trading, this is unlikely.

Even with the Q4 result and dilution during 2005 AOB is still attractive priced and with the analyst's EPS expectations exceeded by 63% we should have a positive reaction to the earnings report.

As Shawfund rightly say it all comes down to the risk of further dilution. Without the dilution AOB would have had a 47% increase in EPS in Q4 year over year.

AOB is grossly overcapitalized at present with 57 million in cash and a healthy operational cash flow (11.6 million in 2005). In addition to this they received additonal $25 million in connection with the second tranche of the private placement. Total cash at present is therefore $82million with basically no debt.

There can only be one reason for this excessive amount of cash on the balance sheet: they will continue their aggressive acquisition policy in 2006 as they state in their annual report:

QuoteWe have set a two-pronged strategy for our business development,
organic growth and acquisitions. We plan to continue this strategy in 2006.

The privatization of state owned pharmaceutical industries in China offers a great opportunity for AOB and as they have already filled the war chest any acquisitions during 2006 will most likely be accreditive to earnings.

In the absence of a large acquisition in 2006 I think it is highly unlikely that we will see any further dilution. The likely scenario is rather new acquisitions, which will add to EPS and further accelerate AOB's tremendous growth.

Fundamentally, the company earned $0.09 in Q4 2005. If no growth, it will be equal to $0.36 for 2006. At around $5.00, I did not see much risk to own this stock.

Short term, the stock has support at $5.0 then strong support at $4.50.

Resistance is at $5.5 then $6.00

Long term bullish.