Starpharm - A turnaround pharma stock

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24 Jun 2013 17:45 - 24 Jun 2013 20:28 #14704 by gangho
Hello Newbiestock,

I have started this thread for starpharm and copied yr message here.

I am interested in starpharm due to change in the leadership team from lay persons [VC + accountant] to pharma veterans late last yr. Furthermore, it has a relatively small float and it seems to be on track of turning around.

let's monitor the results for next few qtrs :)




gangho says Newbiestock, correction is great so that we can take the time to differentiate the gem among the hay stack, and buy into them slowly. I bought some starpharm few days back when I queued at 4.2c. Do you have chance to look into this pharma?

newbiestock says gangho, maybe u wan to start a separate topic for starpharm.

I took a quick look at their company website as well as their 1Q 2013 result.

it seems like in 2011 to 2012, the company is facing losses. The encouraging part is the 1Q2013 results looks like it has returned from losses to profits. so, it could be a good turnaround company and the rewards could be high.

But one concern I have is that its cash and bank balances shows RMB18 mil but it has a bank loan of RMB 20 mil payable within 1 year. Good thing is operating cashflow for 2013 Q1 is +v but i think the debt and cash seems to fall into a danger zone. If it can continue to make profits for the next consecutive quarters, it should be all right.

To play safe, u may wan to observe its Q2 result. Best is wait for two consecutive quarterly profits for a confirmation be4 adding any further entry.

I am a mechanical engineer by training so pharm and chemical industry is not my area of familiarity. But a few qns i think u should ask them are:

1) what are the main reasons for their losses in 2011 to 2012? if they are manufacturing generic drugs and have a stable customer base from hospitals and clinics, why are there losses? Have to ask them more about the industy trends as well as their future earning outlook. Compare their earning peak year vs now and see if they can repeat consistent earnings for next few quarters.

2) what is their R&D expenditure? pharm do make a lot of $, esp if they have granted patents on any special cures. But then clinical trials and doctor endorsement also costs a lot of money. Of all drugs, oncology (chemotherapy drugs for cancer treatment) has the highest margin. also who are their competitors and their competitive advantage.

hope this helps... starpharm could be an interesting company. thanks for sharing. But best is attend any briefing, if have, and prompt the directors for questions...
Last edit: 24 Jun 2013 20:28 by niadmin.

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24 Jun 2013 18:22 - 24 Jun 2013 18:36 #14705 by newbiestock
Great, gangho :)

I hv added starpharm into my stock watchlist. Need to observe n dig up more info first.
Last edit: 24 Jun 2013 18:36 by newbiestock.

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24 Jun 2013 19:34 #14708 by qwerty89
$10m market cap -.-

Typically for this type of nanocap, it takes a really strong catalyst (eg. killer product, strong dividend increase, etc.) for things to work out.

Look at Fujian Zhenyun. Profitable business, huge cashpile, even has a special audit back in 2011 to ascertain cash is real.
bschool.nus.edu.sg/LinkClick.aspx?fileti...2&forcedownload=true

Current situation: still languishing with NAV of $1.44 vs market price of $0.18

Of course, I haven't looked in-depth at Starpharm yet, but I would say the value discrepancy must be really huge for me to want to jump in.

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24 Jun 2013 19:54 #14710 by gangho

newbiestock wrote: Great, gangho :)

I hv added starpharm into my stock watchlist. Need to observe n dig up more info first.

one of the new special drugs it launched last yr was to reduce side effect from chemotherapy, which I believe has strong prospect. It is planning to launch a few more drugs in 2013. Hope it will turn out to be a super good yr for Starpharm and also Eratat :)

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25 Jun 2013 15:50 #14715 by gangho

qwerty89 wrote: $10m market cap -.-

Typically for this type of nanocap, it takes a really strong catalyst (eg. killer product, strong dividend increase, etc.) for things to work out.

Look at Fujian Zhenyun. Profitable business, huge cashpile, even has a special audit back in 2011 to ascertain cash is real.
bschool.nus.edu.sg/LinkClick.aspx?fileti...2&forcedownload=true

Current situation: still languishing with NAV of $1.44 vs market price of $0.18

Of course, I haven't looked in-depth at Starpharm yet, but I would say the value discrepancy must be really huge for me to want to jump in.

Hi qwerty89, I always look out for positive changes in companies that are not still not doing well and also the shareholders behind them that will drive the share price when more positive results are announced.

Starpharm has good positive change in mgt team [from laymen to veterans] and new products line to more speical drugs and TCM products. Its western generic drugs will continue to be the cash cow while it launches new products with much higher margin. It has a new factory which has been recently certified. After being stagnant for so many yrs, we can expect it to start growing with the new mgt team who has a strong network in the pharma industry.

On shareholders, the new CEO has bought 31m shares at 5c/share from ex-CEO in Jan 13. And, I noted one famous local investor, Bobby Lim, has accumulated some shares in the company.

Cheers

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26 Jun 2013 20:26 - 26 Jun 2013 20:27 #14737 by newbiestock
gangho, is he Bobby Lim Chye Huat?

if u look at Eratat 2012 annual report, this bobby lim also owns 3,000,000 shares of Eratat and ranks 19th on the top 20 shareholders list. Maybe this bobby lim likes s chip a lot...

gangho wrote:

qwerty89 wrote: $10m market cap -.-

On shareholders, the new CEO has bought 31m shares at 5c/share from ex-CEO in Jan 13. And, I noted one famous local investor, Bobby Lim, has accumulated some shares in the company.

Cheers

Last edit: 26 Jun 2013 20:27 by newbiestock.

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