Hot stock to watch: China Biologic Products Holdings Inc (NASDAQ: CBPO)

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China Biologic Products Holdings Inc (NASDAQ: CBPO) stock rose 10.52% on September 19th, 2019 and continued its bullish momentum on September 20th, 2019 (as of 10:48 am GMT-4; Source: Google finance). The company received a take-private deal for $4.59 billion in cash from a consortium of buyers, that includes Beachhead Holdings Ltd, CITIC Capital China Partners IV LP, PW Medtech Group Ltd, Parfield International Ltd, HH Sum-XXII Holdings Ltd and V-Sciences Investments Pte Ltd. The offer price of $120 per share reflects the premium of 16.3% to China Biologic’s Wednesday close of $103.10.

On the other hand, Non-GAAP adjusted net income attributable to the company rose by 29.1% in RMB terms and 21.1% in USD terms, to $48.7 million in the second quarter of 2019 from $40.2 million in the same period of 2018. Non-GAAP net margin expanded to 35.9% in the second quarter of 2019 from 33.4% in the same period of 2018. Non-GAAP adjusted net income per diluted share grew to $1.24 in the second quarter of 2019 from $1.17 in the same period of 2018.

Moreover, the total sales in the second quarter of 2019 rose 20.4% in RMB terms, and 12.7% in USD terms, to $135.7 million from $120.4 million in the same quarter of 2018. During the second quarter of 2019, human albumin and IVIG products were the Company’s two largest sales contributors.

Additionally, the company has appointed Mr. Joseph Chow as the CEO of the Company, effective August 5, 2019.

Meanwhile, in May 2019, the company had authorized a share repurchase program under which China Biologic may repurchase up to US$150 million value of shares over a year period. As of June 30, 2019, the Company had repurchased 121,852 shares at a total of $11 million under this program.

For the full year 2019, the company anticipates both non-GAAP adjusted income from operations and non-GAAP adjusted net income to grow by 4% to 6% in RMB terms over full year 2018 financial results.

CBPO project growth in albumin sales to decline further during the second half of the year, due to the relatively fixed level of annual production of albumin, and the large volume of albumin which was oversold in the first half of the year. Sales of IVIG products during the second quarter were behind the company’s expectations, due to the continued negative affect of the policy controls on higher unit cost prescription drugs. Going forward, the polypeptide products may be included in China’s national and regional key drug lists for monitoring and prescription control, which the company anticipates would significantly impact its sales.

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