China Animal Healthcare - potential for high earnings growth

From Kim Eng's "2011 7 top small cap picks"

To grow is to be glorious

The growth companies within our selection are in businesses as different as night and day. China Animal Healthcare provides vaccination drugs for domestic meat animals in China, Super Group is a market leader in convenience foods such as 3‐in-1 coffee mixes in the region with its biggest market in Thailand, and CWT has ambitions to build a logistics empire as global as any other. However, all three have one thing in common – the potential for high earnings growth but are not yet priced as such.

This therefore opens the way for ahead‐of‐the‐curve investors to make supernormal returns. In addition, at least one stock – Super Group – might attract new investors that could spark a further re-rating.

China Animal Healthcare – the healing touch

Rising meat consumption, along with higher animal drug penetration and the strong likelihood of industry consolidation, is expected to keep China’sanimal drug sector boiling over. In our view, this sector holds tremendous promise for many years to come and CAH is well‐positioned to ride this rising trend. The company has set its sights on capturing a bigger market share through selling a wider range of products to retailers and expanding its current pool of sales and technical personnel. It will also invest more in research and development to stay ahead of competition. The improving prospects notwithstanding, we believe its share price has yet to catch up with its pre‐crisis valuations.

From DMG:

China Animal Healthcare reported 33% growth in 4Q10 revenue to RMB176m (FY10: RMB591m, +35% YoY) but 45% contraction in net profit to RMB27m (FY10: RMB120m, -24% YoY). Excluding two key non-routine expenses of RMB43m for HK dual-listing expenses and RMB19m for employee share scheme, FY10 net profit would have been RMB182m.

Our thoughts: The HK listing expenses of RMB43m was higher than our expectation of RMB18-20m. Excluding non-routine items, FY10 recurring net profit of RMB182m was higher than our
estimates of RMB174m.

Maintain BUY at TP S$0.48.

This stock has been languishing like a lazy creature without any purpose in life!!!
Can it stir to life soon?

CIMB says China Animal (CAL SP; S$0.31; BUY; TP S$0.52) - CAL reported a strong set of result in a seasonally weaker 1Q, with net profit of Rmb58.3m (+59.1% yoy). The group has also commenced commercial production of the FMD vaccines and has tendered for the FMD vaccines sales order. Maintain BUY with TP S$0.

This animal is no pig that can fly! Still languishing at 23 cents, enjoying the mud? The chairman wants to delist from SG, let's see if he can make it happen in 2012.

Hello Joes, if you are patient you can arbitrage on China Animal Healthcare. Buy now at 27.5 cents and sell to the company at the 30 cents it has promised. The time frame is unknown at this point but it wouldnt be more than a few more months. I think it's probably sooner.

It should be getting closer now. I have been patiently waiting for China Animal Healthcare to officially announce a delisting scheme at 30 cents.