China Biologic Products (NASDAQ:CBPO)

Item 1.01 Entry Into A Material Definitive Agreement.

On May 14, 2013, China Biologic Products, Inc. (the "Company") and WP X Biologics LLC ("WPX") entered into a registration rights agreement (the "Registration Rights Agreement"), pursuant to which the Company is obligated to file a registration statement with the Securities and Exchange Commission within a pre-defined period, to register an aggregate of 3,112,920 shares of the Company’s common stock (the "Shares") transferred and sold to WPX by Ms. Lin Ling Li, one of the Company’s significant stockholders, pursuant to a share purchase agreement dated April 29, 2013 (the "Purchase Agreement"). The closing of the Purchase Agreement, which occurred on May 14, 2013, was subject to the satisfaction of certain closing conditions, including the Company’s execution of the Registration Rights Agreement. The Registration Rights Agreement also gives WPX certain customary piggyback registration rights.

First Quarter 2013 Financial Highlights

• Total sales in the first quarter of 2013 increased by 14.4% to $54.0 million from $47.2 million in the same quarter of 2012.
• Gross profit increased by 18.7% to $37.4 million from $31.5 million in the same quarter of 2012. Gross margin increased to 69.2% in the first quarter of 2013 from 66.7% in the first quarter of 2012.
• Income from operations increased by 38.0% to $26.0 million from $18.8 million in the same quarter of 2012. Operating margin increased to 48.1% in the first quarter of 2013 from 39.9% in the same quarter of 2012.
• Net income attributable to the Company increased by 15.1% to $14.9 million from $13.0 million in the same quarter of 2012. Fully diluted net income per share was $0.53 in the first quarter of 2013 as compared to $0.44in the same quarter of 2012.
• Non-GAAP adjusted net income attributable to the Company was $16.4 million, representing a 29.0% increase from $12.7 million in the same quarter of 2012. Non-GAAP adjusted net income per share was $0.59, compared to $0.48 in the same quarter of 2012.

Mr. David (Xiaoying) Gao, Chairman and Chief Executive Officer of China Biologic, commented, "We were pleased to experience consistently strong demand for our products as well as a favorable pricing environment during the first quarter, which allowed us to enjoy steady top-line growth. Our operating margin continued to climb due to adjustments in our product mix in recent years to include more higher-margin products, the implementation of our direct sales strategy to hospitals and inoculation centers resulting in more favorable pricing power and from the implementation of efficient cost control measures."

"During the quarter, the China Food and Drug Administration ("CFDA") conducted site inspection on Shandong Taibang production facility and we expect to obtain the renewed GMP certification in the third quarter of 2013. We also obtained the required operating permits from local authorities to commence plasma collection at the new station in Cao County, Shandong Province in April and remain on track with commencing plasma collection operations by the end of the second quarter. Additionally, we expect to commence our Guizhou Taibang facility upgrade in the beginning of June which will result in a six-to-nine month production suspension. We have already factored in this suspension to our 2013 financial forecast and have been building inventory in recent quarters to ensure we have adequate customer supply."

Mr. Gao concluded, "We are off to a solid start in 2013 and remain confident we can meet market demand during ourGuizhou production facility transition. Our outlook for the remainder of the year is strong and we reiterate comfort with our full year financial guidance forecast."

Outlook

For the full year of 2013, the Company reiterates comfort with its full year financial forecast of total sales in the range of$195 million to $205 million and full year non-GAAP adjusted net income in the range of $50 million to $53 million. This guidance assumes the anticipated production suspension at the Company's Guizhou facility, only organic growth and excludes acquisitions and necessarily assumes no significant adverse product price changes during 2013

Fourth Quarter 2012 Results

• Total sales in the fourth quarter of 2012 decreased by 4.6% to $34.0 million from $35.7 million in the same quarter of 2011.
• Gross profit decreased by 5.2% to $23.9 million from $25.2 million in the same quarter of 2011. Gross margin decreased to 70.4% in the fourth quarter of 2012 from 70.8% in the fourth quarter of 2011.
• Income from operations increased by 41.5% to $13.9 million from $9.8 million in the same quarter of 2011. Operating margin increased to 41.0% in the fourth quarter of 2012 from 27.6% in the same quarter of 2011.
• Net income attributable to the Company increased by 25.3% to $5.8 million from $4.6 million in the same quarter of 2011. Fully diluted net income per share was $0.21 in the fourth quarter of 2012 as compared to$0.18 in the same quarter of 2011.
• Non-GAAP adjusted net income attributable to the Company was $7.3 million, representing a 15.6% decrease from $8.6 million in the same quarter of 2011.
• Non-GAAP adjusted net income per share was $0.27, compared to $0.33 in the same quarter of 2011.

Mr. David (Xiaoying) Gao, Chairman and Chief Executive Officer of China Biologic, commented, "We're pleased to see consistently strong demand for our products throughout 2012, which allowed us to enjoy steady top-line annual growth. Our effort over recent years in expanding our sales force and focusing on direct sales to hospitals and inoculation centers has bolstered aspects of our pricing power and reduced our reliance on distributors. We also implemented additional cost control measures since the second half of 2012, resulting in lower selling expenses as a percentage of total sales. Additionally, thanks to enhanced corporate management initiatives, accounts receivable decreased 33.1% year-over-year. Inventories increased 6.1%, in line with production expansion.

"In response to the previously announced delay in construction of our new production facility in Guizhou due to slower-than-expected government approval of land use rights, we implemented an alternative strategy to commence upgrading our current production facility at Guizhou Taibang in June or July 2013 to meet the more stringent Good Manufacturing Practice ("GMP") standards that take effect by year end. We expect the comprehensive upgrading to our Guizhou Taibang facility to take six to nine months, during which time we will suspend production at this facility. We expect the upgrade of the production facility will be complete in the first half of 2014. To mitigate the negative impact on sales and ensure supply continuity, we have been increasing inventory levels in the past few quarters, adjusting product shipment plans for 2013, and have been and will continue to increase production volume during the first half of 2013."

Mr. Gao continued, "We are also pleased to announce that in January 2013, Shandong Taibang obtained approval from local authorities to establish a new plasma collection station in Cao County, Shandong Province. We expect to obtain operating permits and commence plasma collection operations by the end of June 2013. Cao County is home to a population of 1.6 million and we expect our new plasma station there to ramp up in the next three years, potentially enlarging our collection base in Shandong by 10 to 15 percent."

Outlook

For the full year of 2013, the Company expects total sales to be in the range of $195 million to $205 million. This guidance assumes, the production suspension at the Company's Guizhou facility, only organic growth and excludes acquisitions and necessarily assumes no significant adverse price changes during 2013. The Company estimates full year non-GAAP adjusted net income to be in the range of $50 million to $53 million.

BEIJING, January 2, 2013 /PRNewswire-FirstCall/ -- China Biologic Products, Inc. (NASDAQ: CBPO, "China Biologic" or the "Company"), a leading fully integrated plasma-based biopharmaceutical company in China, today announced that the construction of a new production facility at its Guizhou Taibang subsidiary could be delayed due to slower-than-expected government approval of land use rights. The Company is working closely with local authorities to secure approval as soon as possible and will inform investors once it makes material progress in these regards along with an updated schedule for when it expects to complete the new Guizhou facility.

The Company had expected to commence preparation work for this project in late 2012 and complete the project by mid 2014. The Company expects to halt production at its existing production facility in Guizhou by the end of 2013 as a more stringent Good Manufacturing Practice ("GMP") standard enacted by China's State Food and Drug Administration (the "SFDA") goes into effect.

China Biologic is evaluating the possible impacts of a production suspension in Guizhou by the end of 2013 and the delay of the construction of the new facility, including, among others, the possible reduction in sales revenue and possible additional investment in GMP upgrading. To mitigate possible negative impacts and ensure supply continuity, the Company is also evaluating the feasibility of reallocating certain production resources, options to build up inventory, and the feasibility of adjusting shipping plans for 2013.

BEIJING, November 20, 2012 /PRNewswire-FirstCall/ -- China Biologic Products, Inc. (Nasdaq: CBPO, "China Biologic" or the "Company"), a leading fully integrated plasma-based biopharmaceutical company in China, today announced that its board of directors has adopted a stockholder rights plan. Pursuant to the plan, the Company will issue a dividend of one right for each share of its common stock held of record by stockholders as of the close of business on November 30, 2012.

The stockholder rights plan, which has a term of two years, is designed to guard against partial tender offers and other coercive tactics to gain control or undue influence of China Biologic without offering a fair and adequate price and terms to China Biologic's stockholders. The plan does not prevent China Biologic's board of directors from considering or accepting an offer to acquire China Biologic if the board believes that such action is fair, advisable and in the best interest of China Biologic's stockholders as a whole.

Each right will initially entitle stockholders to purchase one one-thousandth share of China Biologic's preferred stock for $60.00. However, the rights are not immediately exercisable and will become exercisable only upon the occurrence of certain events. More specifically, if a person or group acquires 10% or more of China Biologic's common stock (including through derivatives) while the stockholder rights plan remains in place, then the rights will become exercisable by all rights holders (except the acquiring person or group) for shares of China Biologic's common stock having a then-current market value of twice the exercise price of a right. However, if a stockholder's beneficial ownership of China Biologic's common stock as of the time of this announcement of the stockholder rights plan and associated dividend declaration is at or above the 10% threshold, that stockholder's existing ownership percentage would be grandfathered, but the rights would become exercisable if at any time after this announcement the stockholder increases its ownership percentage by 2% or more without the prior approval of the Company's board of directors. In addition, if after a person or group acquires 10% or more of China Biologic's outstanding common stock, China Biologic merges into another company, an acquiring entity merges into China Biologic or China Biologic sells or transfers more than 50% of its assets, cash flow or earning power, then each right will entitle its holder to purchase, for the exercise price, a number of shares of common stock of the person engaging in the transaction having a then-current market value of twice the exercise price. The acquiring person will not be entitled to exercise these rights. China Biologic's board may redeem the rights for $0.001 per right at any time before an event that causes the rights to become exercisable.

Until the rights become exercisable, they will not be evidenced by separate certificates and will trade automatically with shares of China Biologic's common stock.

Additional details about the stockholder rights plan will be contained in a Form 8-K to be filed by China Biologic with the U.S. Securities and Exchange Commission.

Third Quarter 2012 Financial Highlights

• Total sales in the third quarter of 2012 increased by 28.6% to $53.1 million from $41.3 million in the same quarter of 2011.
• Gross profit increased by 31.5% to $36.2 million from $27.5 million in the same quarter of 2011. Gross margin increased to 68.1% in the third quarter of 2012 from 66.7% in the third quarter of 2011.
• Income from operations was $20.4 million as compared to a loss of $9.4 million in the third quarter of 2011. The operating margin was 38.4% in the third quarter of 2012.
• Net income attributable to the Company increased to $13.6 million from a loss of $9.4 million in the same quarter of 2011.
• Non-GAAP adjusted net income attributable to the Company was $14.7 million or $0.54 per diluted share in the third quarter of 2012, representing a 33.2% increase from $11.0 million or $0.42 per diluted share in the same quarter of last year.

Mr. David (Xiaoying) Gao, Chairman and Chief Executive Officer of China Biologic, commented, "We're pleased to see continued strong demand for our plasma products in the third quarter, which allowed us to enjoy robust top-line growth. Our efforts to optimize our sales strategy by focusing more on direct sales to hospitals and inoculation centers and to improve profitability have been effective, evidenced by our operating margin increasing to a sizable 38.4% in the third quarter. Thanks to enhanced corporate management initiatives, accounts receivable and inventory levels also noticeably improved with a 10.7% year-over-year decrease in accounts receivable and a 4.3% decrease in inventories.

"Due to better-than-expected market success combined with efficient selling expense controls, as of the end of the third quarter of 2012, we have surpassed our full-year non-GAAP adjusted net income target. Looking to the fourth quarter, despite some uncertainty following the recent government announcement on price ceilings for some of our products, we believe China Biologic nevertheless will continue benefitting from strong market demand and expand our market penetration. For the full year of 2012, we are confident that total sales will reach or surpass the high end of our previous guidance of $176 million, representing mid-to-high-teens annual growth. We expect non-GAAP adjusted net income to be in the range of $46 million to $48 million, compared to previous guidance of $38 million to $40 million."

Mr. Gao continued, "We are also proud to announce that we received Good Manufacturing Practice certification for our Human Coagulation Factor FVIII ("FVIII") production facility from the Chinese State Food and Drug Administration in October and have since started commercial production of FVIII. This development rounds out our plasma product portfolio and further strengthens our competitive position as a leading plasma-based biopharmaceutical company inChina. Going forward, we intend to continue to develop and manufacture leading life-enhancing, quality-assured products."

Outlook

For the full year of 2012, the Company now expects sales to reach or surpass the high end of previous guidance of$176 million, representing mid-to-high-teens annual growth. The Company estimates full year non-GAAP adjusted net income to be in the range of $46 million to $48 million, compared to the previous guidance range of $38 million to $40 million.

Second Quarter 2012 Financial Highlights

• Total sales in the second quarter of 2012 increased by 21.1% to $50.5 million from $41.7 million in the same quarter of 2011.
• Gross profit increased by 17.8% to $34.3 million from $29.2 million in the same quarter of 2011. Gross margin was 68.0% in the second quarter of 2012 compared with 70.0% in the second quarter of 2011.
• Income from operations increased by 23.7% to $21.3 million from $17.2 million. The operating margin was 42.2% in the second quarter of 2012 compared with 41.4% in the second quarter of 2011.
• Net income attributable to the Company was $12.8 million, a decrease of 22.7% from $16.6 million in the same quarter of 2011. Non-GAAP adjusted net income attributable to the Company was $13.3 million or $0.50 per diluted share in the second quarter of 2012, representing a 52.2% increase from $8.7 million or $0.33 per diluted share in the same quarter of last year.

Mr. David (Xiaoying) Gao, Chairman and chief executive officer ("CEO") of China Biologic, commented, "The latest quarter and first half of the year represented periods of positive change and growth at the Company. In the second quarter, both sales and income from operations grew over 20%. Non-GAAP adjusted net income attributable to the Company increased 52.2% to $13.3 million. As of the end of the first half of 2012, we have achieved over 50% of our full-year revenue target. Our direct sales model allows us to achieve better margins on most of our products and we also experienced increased market demand due to industry supply shortage for most plasma products during the period."

"We are also pleased to announce that we received the manufacturing approval certificate from the SFDA for Human Coagulation Factor VIII in June 2012 and expect to commence commercial production later in 2012. This is a milestone for China Biologic, as the Company rounds out its product portfolio and reinforces its market leadership."

Mr. Gao continued, "While focused on developing new plasma sources to grow our market penetration, internally China Biologic continues to strengthen its corporate governance structures as well. During the first half of 2012, the Board of Directors implemented key senior personnel changes, including my appointment as Chairman and CEO, and Mr. Ming Yang's appointment as CFO. We believe we now have a strong executive team in place with valuable experience in Chinahealthcare industry to implement the Company's business strategies, ensure transparency and increase long-term shareholder value. At the board level, we are also proud to have added industry veteran Mr. Albert Yeung as an independent director."

Outlook

For the full year of 2012, the Company reiterates sales guidance of between $168 million and $176 million, representing a year-over-year growth of between approximately 10.0% and 15.0%. The Company estimates full year non-GAAP adjusted net income to be in the range of $38 million to $40 million.

BEIJING, June 25, 2012 /PRNewswire-Asia-FirstCall/ -- China Biologic Products, Inc. (NASDAQ: CBPO, "China Biologic" or the "Company"), a leading fully integrated plasma-based biopharmaceutical company in China, today announced that its indirectly owned subsidiary, Shandong Taibang Biological Products Co., Ltd. ("Taibang") has received a manufacturing approval certificate from the China State Food and Drug Administration ("SFDA") for Human Coagulation Factor VIII ("FVIII"). With this certificate, the only approval remaining for Taibang's commercial production of FVIII is the SFDA's good manufacturing practice ("GMP") certification of the FVIII production line itself.

Taibang began research for FVIII in 2007 and successfully developed the technology in 2008. The Company conducted clinical trials from 2009 to 2010. In June 2010, the Company submitted required materials to Center for Drug Evaluation for approval to start manufacturing and passed on-site products verification in January 2011. The Company received official manufacturing approval certificate on June 21, 2012. FVIII will be primarily used in the treatment of hemophilia A.

Mr. David Gao, Chairman & CEO, said, "Receiving SFDA manufacturing approval represents the culmination of more than five years of work and the first technological approval of a coagulation factor product developed by Taibang. With the addition of Factor VIII, we should soon be able to offer three major categories of blood products: albumin products, immunoglobulin products and coagulation factor products. This will further strengthen our competitive position as a leading plasma-based biopharmaceutical company in China."

"We are very proud to bring FVIII to hemophilia A patients in China," continued Mr. Gao. "We believe that Human Coagulation Factor VIII addresses a critically unmet need of a large patient population and helps ease under-supply of coagulation products. Although it is not possible to specify a definitive timeframe in which we will receive GMP approval, we expect our FVIII production to be inspected by SFDA and then GMP certified by the end of 2012. Going forward, we intend to continue to develop and manufacture life-enhancing, effective, quality-assured products."

ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

On June 20, 2012, the board of directors (the “Board”) of China Biologic Products, Inc. (the “Company”) nominated Mr. Guangli Pang to succeed Mr. Tung Lam as the Chief Executive Officer of Shandong Taibang Biological Products Co. Ltd. (“Shandong Taibang”), our majority owned operating subsidiary. Mr. Pang has been the Deputy Chief Executive Officer of Shandong Taibang since its inception and has extensive experience in the pharmaceutical industry in China. The Board has also removed Mr. Lam from any other positions he currently holds at the Company and its subsidiaries. These management changes are expected to be finalized upon the completion of necessary administrative procedures under PRC laws and the constitutional documents of each relevant subsidiary.

Financial highlights for the first quarter 2012

• Total sales increased 37.0% to $47.2 million in the first quarter 2012 from $34.5 in the first quarter 2011.
• Gross profit increased 25.2% to $31.5 million in the first quarter 2012 from $25.2 million in the first quarter 2011.
• Income from operations increased 29.6% to $18.8 million in the first quarter 2012 from $14.5 million in the first quarter 2011.
• GAAP net income attributable to China Biologic increased 105.4% to $13.0 million in the first quarter 2012 from $6.3 million in the first quarter 2011.
• GAAP net income attributable to China Biologic per diluted share was $0.44 in the first quarter 2012 compared with $0.23 per diluted share in the first quarter 2011.
• Non-GAAP adjusted net income attributable to China Biologic increased 59.6% to $12.7 million in the first quarter 2012 from $8.0 million in the first quarter 2011.
• Non-GAAP net income attributable to China Biologic per diluted share was $0.48 in the first quarter 2012 compared with $0.31 per diluted share in the first quarter 2011.

CEO Comments

Mr. Colin (Chao Ming) Zhao, Chief Executive Officer & President of China Biologic, said, "Our results for the first quarter 2012 were quite good, with sales up 37.0%, net income attributable to China Biologic up 105.4%, and diluted earnings per share up 91.3%, compared with the first quarter 2011. Our adjusted non-GAAP net income attributable to China Biologic also was up 59.6%, first quarter 2012 from first quarter 2011.

"This performance is especially gratifying, given that our sources of raw plasma supply were reduced by the closing of four of our plasma collection stations in August last year as directed by the Guizhou provincial government. Those stations had accounted for about 34% of our total raw plasma volume collected in 2010. We believe our first quarter 2012 performance shows that our interim strategy is working well.

"The demand for most of our plasma products continues to hold relatively strong, driven in the long-term by China's growing and aging population, increasing urbanization, economic growth, and the government's promotion of health care and its strategies and policies that encourage the expansion in plasma collection and the use of plasma products.

"Most importantly, Mr. Zhu Chen, China's Minister of Health, has encouraged the country to double plasma supply from 2012 to 2016, as part of China's newest five-year plan. According to Mr. Chen, the current supply of plasma can barely meet half of the potential demand for plasma protein products. We continue to hope and believe that the Minister's statements will induce local governments to support and cooperate in broadening the regions for developing and building new plasma collection stations, which are vital to the nation's health.

"Our interim strategy to bridge the period of shorter raw plasma supply includes developing alternative solutions and opportunities to mitigate the plasma reduction from the closed collection stations, reallocation of resources from the closed stations to maximize their use within our company, and aggressively seeking new regions for new plasma stations. The process of locating and developing new stations includes numerous time-consuming activities and uncertainties, including analyzing and selecting the appropriate locations for successful plasma stations, gaining the extensive and detailed sequential approvals at various levels of government, station construction, equipment installation, inspections and licensing, and donor promotion and education programs.

"We also have adjusted our production plan and sales and marketing strategy to leverage our continuing plasma resources to maximize profit, given the changing market dynamics. We have focused on supplying our life-saving products through direct sales to those facilities with patients who have the most critical medical needs and to our best long-term customers. We are also focusing on our most profitable products. Our transition to direct sales continues to progress well. Clearly, those actions have started to deliver good performance in the first quarter of 2012.

"Our new product pipeline also continues to look good. We await approval from China's State Food and Drug Administration to begin selling our new Human Prothrombin Complex Concentrate and our new Human Coagulation Factor VIII. In addition, in the first quarter this year, we were authorized to begin phase III clinical trials for a new product, human fibrinogen, that is designed to be used to treat congenital or acquired fibrinogen deficiency associated with serious liver damage, cirrhosis, disseminated intravascular coagulation, or coagulation disorder resulting from the lack of fibrinogen related to postpartum hemorrhage, major surgery, trauma, or acute bleeding.

"Several words of caution are in order. If China's human health conditions change to require our products to help defend against major outbreaks of diseases, our inventory of plasma could be reduced, since we have less ability to collect higher levels of plasma due to having fewer plasma collection stations. As a result, we may not have the flexibility we currently have to choose the use of our plasma inventory to create and sell our most profitable products. Should major outbreaks of diseases occur, we would not likely be able to deliver improving financial performance. Because diseases are not easy to predict, we cannot estimate or assign a probability to that category of risk.

"With the additional assistance and support from our board of directors, we remain committed to accelerating our long-term earnings growth in the future by expanding our research and development and new product pipeline, increasing our direct sales to institutional customers rather than through distributors, expanding our geographic reach, locating and creating new raw plasma sources, and pursuing possible prudent acquisitions and mergers and potential international collaborations.

"With this good start to the year 2012, we are continuing to take the actions we believe will achieve our strategic goals that include creating long-term additional value for shareholders through outstanding products that are vital to human health."

BEIJING, April 2, 2012 /PRNewswire-Asia-FirstCall/ -- China Biologic Products, Inc. (NASDAQ: CBPO, "China Biologic" or the "Company"), one of the leading plasma-based biopharmaceutical companies in the People's Republic of China, today announced that its Board of Directors has adopted a series of measures to improve the Company's corporate governance, especially to enhance the independence and transparency of the Board.

The Board elected Mr. David (Xiaoying) Gao as Chairman of the Board of Directors with effect on March 30, 2012. Mr. Gao succeeds Ms. Siu Ling Chan who served for more than five years as China Biologic's Chairwoman. Ms. Chan will remain as a Director on the Board.

In addition, the Board, in accordance with Article III of the Company's Amended and Restated Bylaws, increased the size of the Board from seven to nine directors. The Board intends to appoint two additional independent directors to fill the vacancies created by such increase. The Governance and Nominating Committee of the Board is authorized to make recommendations to the Board regarding independent director candidates.

On March 19, 2012, China Biologic Products, Inc. (the “Company”) received a written consent (the “Written Consent”) signed by two shareholders who beneficially own 5,392,624 shares of common stock of the Company. The Written Consent purports to remove Dr. Tong Jun Lin from the board of directors of the Company and appoint Mr. Joseph Chow to fill the vacancy created by such removal. The Company believes that the number of shares owned by the shareholders who delivered the Written Consent does not constitute a sufficient number of shares to effectuate the purported action by the Written Consent. According to Amendment No. 4 to Schedule 13D filed by Lin Ling Li, a shareholder of the Company, dated March 19, 2012, Ms. Li delivered a written request to certain other stockholders of the Company soliciting their signature to the Written Consent in an attempt that stockholders owning at least a majority of the outstanding capital stock of the Company would sign the Written Consent. As of the date hereof, the Company has not received a Written Consent signed by shareholders owning enough shares to effectuate the action purported thereby.

After the Company received the Written Consent signed by the two shareholders, the board of directors of the Company held a special board meeting on March 19, 2012, at which Dr. Tong Jun Lin resigned as a director of the Company, a member of the Audit Committee, the Compensation Committee, and the Governance and Nominating Committee, and as Chairman of the Governance and Nominating Committee, effective immediately. Dr. Lin stated that his resignation was due to personal reasons and not because of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices.

BEIJING, March 23, 2012 /PRNewswire-Asia-FirstCall/ -- China Biologic Products, Inc. (NASDAQ: CBPO, "China Biologic" or the "Company"), one of the leading plasma-based biopharmaceutical companies in the People's Republic of China, today announced that its indirectly owned subsidiary, Shandong Taibang Biological Products Co., Ltd. ("Taibang"), recently received approval from the China State Food and Drug Administration ("SFDA") to begin clinical trials for its human fibrinogen to be used to treat congenital fibrinogen deficiency and acquired fibrinogen deficiency.Under Chinese regulations, the Company can begin with the phase III clinical trials, which includes the efficacy study, since phases I and II are not required for this product.

Mr. Chao Ming (Colin) Zhao, China Biologic's President & Chief Executive Officer, said, "We are very pleased to receive the SFDA's approval to enter clinical trials for our human fibrinogen product. Our human fibrinogen is made using our internally developed new manufacturing process, which improves product quality, compared with currently available products in the Chinese market. The new process also increases plasma utilization and production efficiency. We plan to secure a patent for our manufacturing invention. We believe this new product also will advance our plasma protein development pipeline. The phase III clinical trials are expected to last about two years, after which we will begin commercial production and sales, assuming the clinical trials prove that the product provides the safe and effective treatments we expect."

The Company began pre-clinical research in 2008 for its human fibrinogen, including its production process development and pharmaceutical research. In 2009, it completed pre-clinical inactivated virus research and validation work related to the product's development. In 2010, the Company conducted the pilot study for human fibrinogen and in mid-2010 submitted its application to the SFDA for approval to start human clinical trials for its human fibrinogen.

Full Year 2011 Results

• Total sales increased $13.4 million or 9.6% to $153.1 million for the year ended December 31, 2011, from $139.7 million in 2010, including the benefit of a 5.0% gain from foreign exchange translation. Total sales in terms of RMB increased 4.6% in 2011 from 2010.
• Gross profit increased $4.3 million or 4.2% to $107.1 million in 2011 from $102.7 million in 2010. The gross profit margin decreased by 3.6% to 69.9% in 2011 from 73.5% in 2010.
• Income from operations decreased by $36.4 million or 53.0% to $32.2 million in 2011 from $68.6 million in 2010. The year 2011 included a non-cash charge for impairment of goodwill of $18.2 million and non-cash loss on abandonment of long-lived assets of $6.6 million.
• GAAP net income attributable to China Biologic was $18.2 million in 2011 or $0.37 per diluted share, compared with $31.5 million or $1.30 per diluted share in 2010.
• Non-GAAP adjusted net income was $36.5 million or $1.37 per diluted share in 2011 compared with $39.0 million or $1.61 per diluted share in 2010.

Mr. Chao Ming Zhao, Chief Executive Officer of China Biologic, said, "As we stated in July, the supply for raw plasma in our Guizhou facility was unfortunately impacted by the closures of our four plasma collection stations at the direction of the Guizhou provincial government's then newly imposed plan. Those stations had accounted for about 34% of our total raw plasma volume collected in 2010.

"Since then, we have developed alternative solutions and opportunities to mitigate the negative impacts of the closures of these plasma collection stations, reallocated resources from the closed stations to maximize their utilization within our company, and continued to aggressively explore new regions for new plasma stations. The process of locating and developing new stations includes numerous time-consuming activities and uncertainties, including analyzing and selecting the appropriate locations for successful plasma stations, gaining the extensive and detailed sequential approvals at various levels of government, station construction, equipment installation, inspections and licensing, and donor promotion and education programs.

"We have adjusted our production plan and sales and marketing strategy to leverage our continuing plasma resources to maximize profit, given the changing market dynamics. We have focused on supplying our life-saving products through our direct sales to those facilities with patients who have the most critical medical needs and to our best long-term customers. We are also focusing on our most profitable products.

"In his recent statement, Mr. Zhu Chen, China's Minister of Health, encouraged the country to double plasma supply from 2012 to 2016, as part of China's newest five year plan. According to Mr. Chen, the current supply of plasma can barely meet half of the potential demand for plasma protein products. We hope the Minister's statements will induce local government's support and cooperation in broadening regions for development and building of new plasma collection stations.

"The demand for most of our plasma products continues to hold relatively strong, with China's growing and aging population, increasing urbanization, and economic growth, the government's promotion of health care and its strategies and policies that encourage the expansion in plasma collection and use of plasma products.

"We remain committed to accelerating our long-term earnings growth in the future by focusing on broadening our research and development pipeline, strengthening our direct institutional sales, expanding our geographic reach, locating and creating new raw plasma sources, pursuing possible prudent acquisitions and mergers and potential international collaborations.

"We will continue to take the actions needed to achieve our strategic goals to create additional value for shareholders through outstanding products that are vital to human health."

Guidance and business outlook for 2012

China Biologic expects 2012 revenue to be in the range of $168 million and $176 million. This guidance assumes only organic growth and excludes acquisitions and construction of new facilities. The guidance necessarily assumes no significant adverse price changes as a result of provincial tendering or additional price control imposed by National Development and Reform Commission (NDRC) during 2012.

The Company expects 2012 adjusted net income to be in the range of $38 million to $40 million, excluding any non-cash charge or gain related to change in the fair value of derivative liabilities and stock-based compensation expense and any adjustments in the U.S. federal income tax provision in 2012 related to the expiration of the look-through exception for Subpart F income on December 31, 2011. To support its business expansion, the Company expects to have substantially higher expenses in 2012 to expand its geographic market coverage, add new customers, and increase direct sales to institutional customers of its products. Due to the expected expense increase associated with our marketing and sales efforts, we anticipate modest growth in adjusted net income for 2012 despite anticipated growth in sales in 2012.

 

• Total sales increased $5.3 million or 14.7% to $41.3 million in the third quarter 2011 from $36.0 million in the third quarter 2010, including the benefit of a 6.1% gain from foreign exchange translation. Total sales in RMB increased 8.6% in the third quarter 2011 from the third quarter of last year.
  
• Gross profit increased $0.2 million or 0.8% to $27.5 million in the third quarter 2011 from $27.3 million in the third quarter 2010. The gross profit margin was 66.7% in the third quarter 2011 compared with 75.9% in the third quarter 2010.
  
• (Loss) income from operations decreased $28.2 million or 149.9% to a loss of $9.4 million in the third quarter 2011 from $18.8 million in the third quarter 2010. The third quarter 2011 included a non-cash charge for impairment loss of goodwill of $18.1 million and a non-cash loss on abandonment of long-lived assets of $6.5 million.
  
• GAAP net (loss)/income attributable to China Biologic decreased $23.1 million or 168.2% to a net loss of $9.4 million in the third quarter 2011 from a net income of $13.7 million in the third quarter 2010.
  
• Diluted net loss per share was $0.37 in the third quarter 2011, down from diluted net income per share of $0.39 in the third quarter 2010.
  
• Excluding non-cash employee stock compensation, non-cash gain related to change in fair value of derivative liability, impairment loss of goodwill and loss on abandonment of long-lived assets and write-off of raw plasma materials due to the closure of the plasma collection stations of Guizhou Taibang, the non-GAAP adjusted net income attributable to China Biologic was $11.0 million or diluted net income per share of $0.42 in the third quarter 2011, from $10.5 million or $0.40 per diluted share in the third quarter 2010.

TAI'AN, China, July 15, 2011 /PRNewswire-Asia-FirstCall/ -- China Biologic Products, Inc. (NASDAQ: CBPO) ("China Biologic," or the "Company"), a leading plasma-based biopharmaceutical company in China, today announced that the Guizhou Provincial Health Department has issued the revised "Plan for Guizhou Provincial Blood Collection Institutional Setting (2011-2014)" (the "Revised Plan"). The Revised Plan reduces the number of counties that are permitted to set up plasma collection stations from the originally proposed 10 counties to 4 counties.

The Revised Plan, in the relevant part, states that "in accordance with the demographic distribution, economic development condition, disease prevalence, and actual situation of plasma supply for the manufacturing of blood-based products, plasma collection stations will be set up in 4 counties, including Kai Yang, Du Shan, Pu Ding, Huang Ping, etc."

Currently, there are 18 plasma collection stations, in 18 separate counties, operating in Guizhou Province. China Biologic's 54% indirectly owned subsidiary, Guizhou Taibang Biological Technologies Co., Ltd., currently has 6 active plasma collection stations in the Guizhou Province. Among the 6 active plasma collection stations, 2 are located in the counties included in the Revised Plan (Pu Ding and Huang Ping) and are currently expected not to be affected directly by the Revised Plan.

Based on the Company's preliminary understanding of the Revised Plan, subject to further clarifications from Guizhou Provincial government regarding the implementation of the Revised Plan, the Company currently anticipates the licenses of its 4 other plasma collection stations in Dan Zhai, Wei Ning, San Sui, and Na Yong counties may not be renewed (until at least 2014) after their respective plasma collection permits expire at the end of July 2011.

The Company's 4 stations in Dan Zhai, Wei Ning, San Sui, and Na Yong counties together accounted for approximately 34.1% of China Biologic's total plasma collection by volume in 2010. In addition, 1 inactive plasma collection station that the Company purchased from the government is unlikely to be licensed as planned, because it is in Zhengyuan County, a location not included in the Revised Plan.

The 2 active plasma stations in the counties included in the Revised Plan that are expected to continue operating are scheduled for relicensing before the end of July. The relicensing will require inspection of the plasma collection stations by provincial and other government officials. While the Company believes it meets or exceeds all inspection requirements at those stations, it is not yet clear what influence on the inspections the Revised Plan may have, if any.

The Company is currently evaluating the effect of the Revised Plan and the anticipated closing of the 4 active plasma collection stations including, among other items, the potential reduction in China Biologic's previously issued financial guidance for the year 2011, potential reduction in its business operations and financial performance in current and future periods, potential assets impairments associated with these plasma collection stations and the 1 inactive station, and other possible effects.

In a bid to mitigate the reductions from the anticipated closing of the 4 plasma collection stations in Guizhou, the Company is exploring alternative solutions and opportunities, but no assurance can be given that it will be successful in doing so. Among all of the Company's efforts, the Company is (1) requesting that the Guizhou Provincial government to reconsider the implementation of the Revised Plan, (2) contemplating new regions to apply for establishing new plasma stations, (3) minimizing the writing off of already collected plasma within the required 90-day quarantine period that potentially may be affected by the Revised Plan, and (4) creating the contingency plan for moving assets and paying severance to employees related to the 4 plasma collection stations affected by the Revised Plan, if the anticipated closures happen.

Rodman and Renshaw on CBPO                               7/12/2011

Government Cut to Impact Plasma Supply

Yesterday, China Biologic Products announced that the Guizhou Provincial Health Department has issued a "Plan for Guizhou Provincial Blood Collection Institutional Setting (2011-2014)”. According to the plan, the local government is expected to shut down eight of the existing 18 plasma collection centers by the end of July 2011. China Biologic has six active plasma collection centers in the province and three of them are expected to be closed, according to the new policy. Currently, these three plasma collection centers contribute 24.5% of total volume collected by China Biologic in 2010. Following the potential shutdown, China Biologic is expected to have a total of 12 plasma collection centers, including two recently approved centers in Shandong Province. So far, there is no further information regarding the implementation of the policy, the compensation the government may provide to each affected company, as well as the fate of existing inventory at the affected centers during the required 90-day quarantine period. Of note, China Biologic owns the six active plasma collection centers in Guizhou Province through a 54% indirectly owned subsidiary, Guizhou Taibang Biological Technologies Co. Contribution to revenue is anticipated to be reduced by up to 24.5%. The company plans to appeal the implementation of the plan.

Pending a thorough re-evaluation of our model, once the impact of the shutdown is quantifiable, we are placing our rating and target price Under Review. Our previous rating was Market Outperform with a 12-month target price of $16/share.


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TAI'AN, China, July 11, 2011 /PRNewswire-Asia-FirstCall/ -- China Biologic Products, Inc. (NASDAQ: CBPO) ("China Biologic," or the "Company"), a leading plasma-based biopharmaceutical company in China, today announced that the Guizhou Provincial Health Department has issued a "Plan for Guizhou Provincial Blood Collection Institutional Setting (2011-2014)" (the "Plan").

The Plan, in the relevant part, states that "in accordance with the demographic distribution, economic development condition, disease prevalence, and actual situation of plasma supply for the manufacturing of blood-based products, plasma collection stations will be set up in 10 counties, including Xi Feng, Kai Yang, Zi Yun, Pu Ding, Du Shang, Long Li, Chang Shun, Huang Ping, Qing Long, and Na Yong, etc."

Currently, there are 18 plasma collection stations, in 18 separate counties, operating in Guizhou Province.

China Biologic's 54% indirectly owned subsidiary, Guizhou Taibang Biological Technologies Co., Ltd., currently has 6 active plasma collection stations in the Guizhou Province. Among the 6 active plasma collection stations, 3 are located in the counties included in the Plan (Pu Ding, Huang Ping, and Na Yong) and are currently expected not to be affected directly by the Plan.

Based on the Company's preliminary understanding of the Plan, subject to further clarifications from Guizhou Provincial government regarding the implementation of the Plan, the Company currently anticipates the licenses of its 3 other plasma collection stations in Dan Zhai, Wei Ning, and San Sui counties may not be renewed (until at least 2014) after their respective plasma collection permits expire at the end of July 2011. The Company's 3 stations in Dan Zhai, Wei Ning, and San Sui counties together accounted for about 24.5% of the Company's total plasma collection by volume in 2010. In addition, 1 inactive plasma collection station that the Company purchased from the government is unlikely to be licensed as planned, because it is in Zhengyuan County, a location not included in the Plan.

The 3 active plasma stations in the counties included in the Plan that are expected to continue operating are scheduled for relicensing before the end of July. The relicensing will require inspection of the plasma stations by provincial and other government officials. While the Company believes it meets or exceeds all inspection requirements at those stations, it is not yet clear what influence on the inspections the new Plan may have, if any.

The Company is currently evaluating the effect of the Plan and the anticipated closing of the 3 active plasma collection stations including, among other items, the potential reduction in China Biologic's previously issued financial guidance for the year 2011, potential reduction in its business operations and financial performance in current and future periods, potential assets impairments associated with these plasma collection stations and the 1 inactive station, and other possible effects.

In a bid to mitigate the reductions from the anticipated closing of the 3 plasma collection stations in Guizhou, the Company is exploring alternative solutions and opportunities, but no assurance can be given that it will be successful in doing so. Among all of the Company's efforts, the Company is (1) requesting that the Guizhou Provincial government to reconsider the implementation of the Plan, (2) contemplating new regions to apply for establishing new plasma stations, (3) minimizing the writing off of already collected plasma within the required 90-day quarantine period that potentially may be affected by the Plan, and (4) creating the contingency plan for moving assets and paying severance to employees related to the three plasma stations affected by the Plan, if the anticipated closings happen.

Rodman and Renshaw on CBPO                         5/10/2010

Solid Quarter, Outlook Maintained

Key Points

• China Biologic reported $34.5MM in revenues in 1Q11, representing a 27% growth YoY, beating our estimate of $30MM.
• The company’s net income in 1Q11 was $6.3MM, or $0.23 per diluted share, and adjusted non-GAAP net income was $8MM, or $0.31 per diluted share, slightly higher than our estimate of $0.30 per diluted share.
• Cash position decreased from $65MM in 4Q10 to $56MM in 1Q11, partly due to a $7.6MM acquisition of the non-controlling interest, as well as an $8MM increase in accounts receivables and inventories.
• We maintain our Market Outperform rating and our 12-month target price of $16/share.

Growth Mainly Driven by Volume Increase

China Biologic reported unaudited top line of $34.5MM in 1Q11, higher than our estimate of $30MM. Revenue increase was mainly driven by the volume increase of the key products human albumin and IVIG, as well as the price increase of the specialty IgG. Going forward, pricing pressure remains high for albumin and IVIG with limited upside on volume in the short term. However, the supply of specialty IgG is expected to improve in 2H11. In addition, Human Prothrombin Complex Concentration and human coagulation Factor VIII are expected to receive the SFDA approval in 2H11 with material contribution anticipated by YE11. Therefore, we maintain our 10% growth projection for the rest of 2011 and our estimate of $158MM in revenue for 2011.

Tax Expenses Increased, Potential to Re-Obtain Preferential Rates in the Near Term

China Biologic has incurred an increase of the statutory tax rate from 15% to 25% for both Shandong Taibang and Guizhou Taibang starting in 2011. As a result, the effective tax rate changed from 21% in 2010 to 30% in 1Q11. Accordingly, we have adjusted our tax rate projection from 20% to 30% for 2011 – 2013. However, the company is in the process of re-application for the preferential tax rate of 15%. If approved, the 15% tax rate is applicable retroactively to the beginning of 2011, bringing in a potential upside to our EPS estimates. Our estimate for 2011 net income is $31MM including non-cash items. Based on the $2MM non-cash adjustment for 1Q11, our non-GAAP projection of 2011 net income is approximately $40MM.

Cash Generation Less Robust

China Biologic reported $56MM in cash in 1Q11, a decrease from $65MM in 4Q10. The decrease in cash is mainly due to one-time expenses of $7.6MM related to the acquisition of non-controlling interest and a $5.6MM dividend payment to non-controlling shareholders, as well as increases of $5MM in inventories and $3.3MM in accounts receivables. Due to the new marketing strategy of direct sales to hospitals implemented in 2H10, the company has incurred increasing amount of accounts receivables and Days Sales Outstanding are expected to increase gradually. Additionally, changing of the lot approval process by the government is expected to increase Days Inventory on Hand going forward. Therefore, we believe the cash conversion cycle is expected to increase and cash generation would be less robust during the transition period.

Valuation

We maintain our Market Outperform rating with a 12-month target price of $16 per share. The price target is derived from an NPV analysis of future cash flows with a 15% annual discount rate and a 5% terminal growth rate.

Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
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Financial highlights for the first quarter 2011

• Total sales increased 27.2% to $34.5 million in the first quarter 2011, from $27.1 million the first quarter 2010.
• Gross profit increased 23.9% to $25.2 million in the first quarter 2011, from $20.3 million the first quarter 2010.
• Income from operations increased 9.8% to $14.5 million in the first quarter 2011, from $13.2 million the first quarter 2010.
• Net income attributable to China Biologic decreased 40.8% to $6.3 million in the first quarter 2011, from $10.7 million in the first quarter 2010.
• Diluted earnings per share attributable to China Biologic decreased 11.5% to $0.23 in the first quarter 2011, from $0.26 per diluted share in the first quarter 2010.
• Non-GAAP adjusted net income attributable to China Biologic increased 5.2% to $8.0 million in the first quarter 2011, from $7.6 million in the first quarter 2010.
• Non-GAAP adjusted diluted earnings per share attributable to China Biologic increased 6.9% to $0.31 per diluted share in the first quarter 2011, from $0.29 in the first quarter 2010.

GeoTeam® Note: 2011 First quarter analyst EPS estimates were $0.23.

CEO Comments

Mr. Chao Ming Zhao, Chief Executive Officer of China Biologic, said, "We are pleased with our 27% sales increase during the 2011 the first quarter from the first quarter of last year, which we primarily attribute to general price increases for many of our products due to a continued supply shortage. During the first quarter, we also continued to aggressively expand our direct sales to hospitals and inoculation centers in order to boost our future sales. We believe that our strategy to expand our direct institutional sales remains the best long-term model for serving our customers and expanding our products and markets in China.

"We expect that the following strategies will help improve our performance this year: (1) we expect our direct sales to continue expanding as a result of our direct and aggressive promotion; (2) the supply of raw material necessary for the production of hepatitis B and human rabies immunoglobulin products is expected to improve in the second half of the year; (3) we expect two of our new products to be approved by China's State Food and Drug Administration this year, potentially generating sales by year's end; and (4) we will continue to stringently control our expenses while sustaining our pursuit in achieving higher direct institutional sales.

"We believe that the successful implementation of the foregoing strategies, along with the continued expansion of China's economy, the government's continued emphasis on higher health standards, and our strategic locations and high operating standards, strengthens the Company's outlook for 2011, and so we continue to be optimistic that our results for 2011 will be good. To emphasize our confidence and determination, we are maintaining our previous guidance for the year 2011."

2010 Year End:

• Sales increased $20.7 million or 17.4% to $139.7 million for the year ended December 31, 2010 from $119.0 million in 2009.
• Gross profit increased $16.4 million or 18.9% to $102.7 million in 2010 from $86.4 million in 2009. Gross profit as a percent of sales increased to 73.5% in 2010 from 72.6% in 2009.
• Income from operations increased $8.1 million or 13.3% to $69.5 million in 2010 from $61.4 million in 2009.
• GAAP Net income attributable to China Biologic in 2010 was $31.5 million or $1.30 per diluted share, including a $3.2 million non-cash charge related to change in the fair value of derivative liabilities, compared with $2.2 million or $0.10 per diluted share in 2009, which includes a $28.9 million non-cash charge related to change in the fair value of derivative liabilities.
• Non-GAAP adjusted net income was $39.0 million or $1.61 per diluted share in 2010 compared with $31.5 million or $1.43 per diluted share in 2009.

GeoTeam Note: Adjusted Fourth Quarter  2010 vs. 2009 EPS was $0.52 vs. $0.51.

"We believe that our strategy of direct institutional sales remains the good long-term model for serving our customers for our products and markets in China. When we acquired Dalin, we converted its sales model to direct institutional sales from sales conducted mainly through distributors. In 2010, direct institutional sales of Dalin did not grow as quickly as we expected. We will continue to strengthen Dalin's direct institutional sales approach in 2011.

China Biologic expects 2011 revenue to be in the range of $154 million and $168 million. This guidance assumes only organic growth and excludes acquisitions and construction of new facilities. The guidance necessarily assumes no significant adverse price changes during 2011.

The Company expects 2011 adjusted net income to be in the range of $41 million to $43 million, excluding any non-cash charge or gain related to change in the fair value of derivative liabilities and stock-based compensation expense and any adjustments in the U.S. federal income tax provision in 2011 related to the expiration of the look-through exception for Subpart F income on December 31, 2011. To support its business expansion, the Company expects to have substantially higher expenses in 2011 to expand its geographic market coverage, add new customers, and increase direct sales to institutional customers of its products. Due to the expected expense increase associated with our marketing and sales efforts, we anticipate modest growth in adjusted net income for 2011 despite anticipated growth in sales in 2011.

We expect that cash on hand, funds generated from our operations and funds generated from companies that we may acquire in the future will be sufficient to satisfy our current and future commitments for at least the next twelve months.

We will require additional working capital to support our long-term business plan, which includes identifying suitable targets for horizontal or vertical mergers or acquisitions, so as to enhance the overall productivity and benefit from economies of scale

Management believes that the Company has sufficient cash on hand and continuing positive cash inflow, from the sale of its plasma-based products in the PRC market. Our management expects continued growth in revenues throughout the term of the convertible notes, largely due to the ongoing limited supply of plasma-based products in the PRC market due to the introduction of more stringent health and safety measures which we already meet. In light of the foregoing, we believe that the Company will have the financial ability to fulfill its payment obligations under the convertible notes when they come due.

Preliminary Results:

The Company has filed for a delay in its 10k

• Estimated revenues increased 17.4% to $139.7 million for the year ended December 31, 2010 from $119.0 million in 2009
• Estimated gross profit increased 18.9% to $102.7 million in 2010 from $86.4 million in 2009. Gross profit margin (gross profit as a percent of revenues) increased to 73.5% in 2010 from 72.6% in 2009.
• Estimated income from operations increased 13.3% to $69.5 million in 2010 from $61.4 million in 2009.

Estimated adjusted non-GAAP net income in 2010, although not yet disclosed, is expected to exceed China Biologic's upper end of its guidance range of $34 million to $36 million for the year 2010. Adjusted non-GAAP net income is defined below.

The Company's estimated revenues of $139.7 million were 1.6% lower than its minimum revenues guidance of $142 million to $149 million, which was primarily due to lower than expected demand for human albumin resulting from unexpected high volume of lower-priced human albumin imports into China and less than expected direct institution sales from Dalin. The Company chose not to compromise the reputation of its high-quality products by reducing prices.

Mr. Chao Ming (Colin) Zhao, Chief Executive Officer of China Biologic, said, "We are pleased with our progress and good operating and financial results for 2010. We believe our acquisitions from 2008 and 2009 are starting to deliver the expected good performance.

"China Biologic's outlook for 2011 remains good, with China's economy continuing to expand. Higher health standards are among the government's priorities. And our plasma collection stations and processing facilities are in good locations and are operating at high standards.

"In addition, we have completed the development stages for two new products and expect their approval by China's State Food and Drug Administration in 2011."

Rodman and Renshaw on CBPO                                                3/16/2011

Long Term Potential but a Short-Term Bump

Key Points

• China Biologic filed a Notification of Late Filing for 10K due to reevaluation of non-cash items by the newly appointed auditor, KPMG
• Unaudited revenues in 2010 were $140MM, lower than our estimates of $147MM
• Estimated adjusted non-GAAP net income in 2010 beat our estimates and beat the company’s upper end guidance
• Top line growth may slow to 10% in 2011 (from 17%), in our opinion, but could rebound to 20% in 2012 and beyond
• We maintain our Market Outperform rating but lower our 12-month target price from $17 to $16/share due to reduced anticipated free cash flow to equity

Big Four Costs Extra Time – But Worth the Waiting

China Biologic appointed KPMG as its independent auditor on December 22, 2010. It is a dedicated movement to provide high-standard financial reports. Reevaluation by KPMG on warrants and deferred tax liabilities has delayed the filing report.

Top Line Growth Slows Down in the Near Term…

China Biologic reported unaudited top line of $140MM in 2010, lower than our estimates of $147MM and slightly lower than the lower end of the company’s guidance of $142MM. Revenue decrease is due to increasing pricing pressure on albumin and IVIG. Imported albumin is taking market share with competitive pricing. Price of domestic albumin is expected to drop 25% in 2011. Meanwhile, IVIG is also losing pricing power and is expected to flatten out in 2011. Therefore, top line growth is anticipated to decline to 10% in 2011, in our view.

…but is Expected to Rebound in the Future

China Biologic recently obtained approvals to build two more plasma collection stations. Once completed, the company would own a total of 18 collection stations, increasing plasma collection capacity from 600 to 660 tons. These two stations are expected to have material contribution in 2012. Secondly, a new facility is expected to be built in 2011 – 2012 with a capacity of 1,000 tons (vs. the current 400 tons). Thirdly, launches of new products Factor VIII and PCC could have material contribution in 2012. Lastly, China Biologic is planning to sell an increased portion of its products directly to hospitals, bypassing distributors, in order to improve margins. The direct institutional sales are expected to become mature in 2012. Taken together, we project a 20% top line growth in 2012 and beyond

Valuation

We maintain our Market Outperform rating but lower the 12-month target price from $17 to $16 per share. The price target is derived from an NPV analysis of future cash flows with a 15% annual discount rate and a 5% terminal growth rate.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

TAI'AN, China, Jan. 11, 2011 /PRNewswire-Asia-FirstCall/ -- China Biologic Products, Inc.  today announced that its wholly-owned PRC subsidiary, Logic Management Consulting (China) Co., Ltd. ("Logic China"), has agreed to acquire the remaining 10% ownership in Guiyang Dalin Biologic Technologies Co., Ltd. ("Dalin"), a limited liability company established under the laws of the People's Republic of China, from Mr. Shaowen Fan, a PRC individual, pursuant to an Equity Transfer Agreement, dated January 4, 2011, between Logic China and Mr. Fan, for a purchase price of RMB 50 million (approximately $7,530,120). Logic China already owns a 90% majority interest in Dalin, pursuant to an equity transfer agreement, dated September 26, 2008, among Dalin, Mr. Fan, and the other shareholders of Dalin at the time.

Rodman & Renshaw on CBPO                   1/11/2011

Additional Grip to Maintain Controlling Interest 

Key Points: 

• China Biologic acquired the remaining 10% ownership of Guiyang Dalin Biologic Technologies for $7.5MM. 
• The acquisition increased China Biologic’s ownership from 49% to 54% of Guiyang Qianfeng Biological Products, the operating subsidiary of Dalin. 
• Potential dispute of China Biologic’s controlling interest in Qianfeng still exists. 
• We maintain our Market Outperform rating with a $17 target price.   

Increased Ownership to Retain Active Control 

Dalin has 54% ownership of Qianfeng, one of the major plasma companies with an approximately 8% of total market share in China. After the acquisition, China Biologic retains its controlling interest in Qianfeng with increased equity of 54% from the previous 49%. With consolidated revenues, China Biologic is the largest non-government-owned plasma company in China.

Dispute on Potential Ownership Dealt in the Past 

In May 2007, 9% of Qianfeng shareholders (Jie’an) disagreed with the majority shareholders on a $7.5MM capital raise and did not waive their rights of first refusal. Jie’an brought a law suit to claim additional shares, which could reduce Dalin’s equity interest in Qianfeng to 41.3% from current 54%. The high court of Guizhou ruled in favor of China Biologic and denied Jie’an’s claim in October 2010. Subsequently, Jie’an appealed to the Supreme Court in Beijing. Given previous court precedents, we believe China Biologic has a favorable chance to win the case and to retain its controlling interest in Qianfeng.

Potential Share Increase in Other Minority Interests 

China Biologic has a 35% equity interest in Xi’an Huitian Blood Products. Given the track record of successful acquisitions, we believe the company is capable of executing additional equity increase on Huitian at an appropriate time for the right price.

Maintaining Our Market Outperform Rating and $17 Target Price 

We maintain our projections, as well as Market Outperform rating and a 12 – month target price of $17 per share. The price target is derived from an NPV analysis with a 15% annual discount rate and a 5% terminal growth rate.


Notice Regarding Privacy and Confidentiality: 


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Logic Management Consulting (China) Co., Ltd. entered into an equity transfer agreement, dated January 4, 2011, pursuant to which Logic China agreed to acquire the 10% minority interest in Guiyang Dalin Biologic Technologies Co., Ltd., a limited liability company established under the laws of the People's Republic of China, from Shaowen Fan, for a purchase price of RMB 50 million (approximately $7,530,120).

Findings of the Special Committee

As previously reported, on January 27, 2010, in response to allegations appearing on certain financial websites of fraud and criminal activity of certain principals and affiliates of the Company and the legitimacy of the Company’s ownership of its Chinese operating subsidiary, Shandong Taibang Biological Products Co. Ltd. (“Shandong Taibang”), the Company established a special independent committee comprised of the Company's independent directors, Mr. Sean Shao and Dr. Tong Jun Lin (who were later joined by new director Dr. Xiangmin Cui) (the "Special Committee"), to investigate the allegations with the assistance of a reputable international firm, and report its findings to the board of directors as soon as practicable. On March 1, 2010, the Special Committee retained O'Melveny & Myers LLP, an international law firm, to advise the Special Committee and to assist in the investigation of the allegations. On November 26, 2010, the Special Committee reported to the Company’s board of directors concerning the investigation. In submitting its report, the Special Committee reported that the investigation had been constrained by substantial limitations on access to relevant official records from Chinese military and governmental authorities and the availability of other relevant information in China. Subject to these limitations, below is a summary of key findings of the Special Committee:

Allegations Regarding Seed Money – With respect to the allegations that Mr. Xiaowei Zhang, the former manager of Minfa Securities Company (“Minfa”) who is currently imprisoned in China for financial crimes including embezzlement of capital from Minfa, embezzled funds to provide the original seed capital for Taibang’s predecessor, Shandong Missile Biologic Products Co Ltd. (“Missile”), in 2002, the Special Committee could find no evidence that embezzled funds provided the seed capital for Missile. While the Special Committee found that Beijing Chen Da Technology Investment Co Ltd. (“Chen Da”), an entity owned and controlled by Minfa and a founding shareholder of Missile, had borrowed RMB 39.2 million from Minfa in connection with the establishment of Missile, from which Chen Da used RMB 19.2 million to acquire a 24% interest in Missile and loaned RMB 20 million to Dr. Zuying Du for him to acquire a 25% interest in Missile, none of the several Chinese judicial, law enforcement, and administrative authorities who examined the loan from Minfa to Chen Da during the subsequent criminal case against Xiaowei Zhang treated the loan as funds embezzled from Minfa.

Allegations Regarding Control of Company – With respect to allegations that Mr. Xiaowei Zhang continues to exercise control over the Company and/or Shandong Taibang, the Special Committee found that, while Feiguang Zhang, the brother-in-law of Xiaowei Zhang, is currently a deputy general manager of Shandong Taibang, and Lei Zhang, the nephew of Xiaowei Zhang, currently serves on the board of directors of Shandong Taibang, it could find no evidence that any of the current shareholders, inside directors, or officers of the Company currently act at the direction of, or for the benefit of, Xiaowei Zhang.

Allegations Regarding Du Claims – With respect to allegations that Mr. Zuying Du may bring actions challenging the validity of the Company’s ownership interest in Shandong Taibang in the future, the Special Committee reported that relevant available information obtained during its investigation, including certain records of past judicial and administrative proceedings and the personal accounts of certain relevant witnesses, tends to support the Company’s historical position in related litigation, as disclosed under the “Legal Proceedings” heading in applicable SEC filings, that Mr. Du’s claims against the Company lack merit underChinese law. The Special Committee further reported that, as of the date of its report, no administrative or judicial authority has issued any final, binding measure or order determining that the transfer of Mr. Du’s ownership interest to Chen Da was invalid under Chinese law.

Allegations Regarding Identity of Tung Lam – With respect to the allegation that Mr. Tung Lam, the Chief Executive Officer of one of the Company's primary operating subsidiaries, Shandong Taibang, and spouse of Mrs. Siu Ling Chan, the Company's board chair, was previously known as Mr. Lin Ziping and was imprisoned for smuggling in China, the Special Committee found evidence supporting Mr. Lam's denial of the allegation, as well as conflicting evidence with respect to this claim. As a result, the Special Committee concluded that it could neither confirm nor exclude the allegation.

Allegations Regarding Ze Qin Lin – With respect to the allegations that Mr. Ze Qin Lin, the husband of current CBPO director Ms. Lin Ling Li, is a former associate of Mr. Tung Lam and was imprisoned in China in connection with the same smuggling activities, the Special Committee found support for the allegation that Mr. Ze Qin Lin was sentenced to imprisonment in China in connection with smuggling offenses of Fuzhou Bonded Zone Western Industrial, Ltd.

Rodman & Renshaw on CBPO

Key Points: 

• China Biologic Products reported $36MM in revenues and $13.7 MM net income to controlling interest for 3Q10, or $0.53 per diluted share. Top line revenues are slightly higher than our estimate of $34MM, and the bottom line beats our adjusted estimate of $0.41 per diluted share. 
• Management reiterated guidance of $142MM - $149MM in revenue (19 - 25% organic growth) and adjusted net income of $34MM - $36MM for 2010. 
• Future growth potential could be driven by new product launches (2011), as well as expansion of plasma collection. 
• The company ended 3Q10 with a cash position of $64.6MM, an increase of $8MM from 2Q10. 
• We maintain our growth assumptions but increase 2010 revenues to $147MM from $145MM and EPS to $1.76 from $1.51, to reflect strong results in 3Q10. 
• We reiterate our Market Outperform rating with a $17 target price. 

Strong Quarter, Scheduled Annual Maintenance Has Minimum Impact 

During 3Q10, China Biologic Products suspended manufacturing as scheduled for approximate 45 days and 30 days, respectively, at two major operating facilities. This scheduled annual maintenance and inspection process, due to management’s careful planning – had a minimum impact on the company’s revenues. In 3Q10, the company experienced organic revenue growth of 33% year over year. Gross margins remained above 76%, although slightly lower than 78% in 2Q10. GAAP net income benefited from a $3.8MM non-cash gain related to the change of fair value of derivative liabilities. We continue to expect non-cash charges/gains to be incurred until these securities are converted into common stock. 

Pricing Power Continues but Facing Future Pressure 

Strong revenue in 3Q10 was due to price and volume increases. Sales of IVIG accounted for 36% of total revenue in 3Q10, which was partly attributable to a 27% price increase YoY. Hep B continues to enjoy 56% price increase in 3Q10 after experienced a 434% price increase in 2Q10. However, the company’s major product albumin (49% of total revenue) experienced 4.3% price decrease due to competition from imported albumin. Although sales volume increased, albumin revenue was flat in 3Q10. Human IgG also experienced 12% decrease in price. In our opinion, pricing power continues to contribute to growth in the near term. However, long term growth is driven by expanding plasma supply and introduction of new plasma products into Chinese market. We project annual sales of $147MM in 2010 and $254MM in 2013.

Reimbursement Awaits Government Decision 

Over 85% of company’s sales are expected to be covered by National Insurance Catalog in China as Class B drugs. Unlike Class A drugs, which are reimbursed 100%, Class B drugs reimbursement policies are determined by each province. To date, the regional governments have not provided guidance on reimburse rate of each drug. 

Allegation Investigation Under Process 

China Biologic Products appointed the Special Committee of independent directors to investigate allegation against Mr. Lam, the CEO of the operating subsidiary Shandong Taibang. Special committee has not disclosed investigation process since its commencement in March 2010. 

Maintaining Our Market Outperform Rating and $17 Target Price 

We increased our revenue projection to $147MM in 2010 and $46MM in net income to the controlling interest ($36MM after adjusted for non-cash change in fair value of derivative liabilities) for 2010. We maintain our Market Outperform rating and a 12 – month target price of $17 / share. The price target is derived from an NPV analysis with a 15% annual discount rate and a 5% terminal value growth rate.

Notice Regarding Privacy and Confidentiality: 

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

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Third Quarter 2010 Highlights

• Revenues increased 33.2% period-over-period to $36.0 million.

• Gross profit rose 36.1% period-over-period to $27.3 million, representing a gross margin of 75.9%, as compared to 74.3% a year ago.

• Income from operations grew 34.2% to $18.8 million.

• GAAP net income attributable to controlling interest was $13.7 million, or $0. 53 per diluted share, including a $3.8 millionnon-cash gain from change in the fair value of derivative liabilities.

• Excluding the non-cash gain from change in fair value of derivative liabilities, interest on convertible notes and non-cash employee compensation, non-GAAP adjusted net income was $10.5 million or $0.39 per diluted share, a 48.7% increase from $7.1 million, or $0.33 per diluted share a year ago.

• The Company established Ning Yang Taibang Plasma Company and Yi Shui Taibang Plasma Company in July 2010 for the purpose of operating two new plasma stations in Shandong Province, PRC.

"Our 2010 third quarter results were very strong, with 33.2% growth in revenues and 48.7% growth in adjusted net income, driven by robust demand and an overall favorable pricing environment for our plasma-based products," said Mr. Chao Ming Zhao, Chief Executive Officer of China Biologic. "During the quarter, we established two new plasma collection stations in Yishui and Ninyang counties in Shandong Province, and we expect to begin trial collections at the Yishui station by the end of the year and at the Ninyang station by early 2011.  We expect that when these sites are at their full capacity, we will realize up to 80 metric tons of incremental plasma collection capacity."

2010 Guidance and Business Outlook

China Biologic reaffirms its guidance for 2010 of

• revenues in the range of $142 million to $149 million.
• adjusted net income between $34 million and $36 million.

Guidance for 2010 adjusted net income excludes any non-cash gain or loss related to change in the fair value of derivative liabilities, stock-based compensation expense and any adjustments in the U.S. federal income tax provision in 2010 related to the expiration of the look-through exception for Subpart F income on December 31, 2009, and excludes any acquisitions, new product approvals or operational impact from new plasma stations. The guidance also does not assume any material price or volume increases during the year.

Mr. Zhao added, "We believe that the results for the first nine months of 2010 reinforce the merits of China Biologic's strategy to acquire or build new locations, scale up our existing plasma infrastructure, and advance exciting products through our pipeline. From investing in strategic marketing to drive collection center donor volumes, to developing closer relationships with hospitals and inoculation centers, we intend to maximize the utilization of our growing plasma network. We expect that our strong balance sheet and solid operating cash flow will provide us with the resources to take advantage of opportunities created by rising consumer demand and tight supply conditions based on strict government regulation. On the research and development front, we continue to expect our applications for production of Human Prothrombin Complex Conentrate and Human Coagulation Factor VIII to be approved by the SFDA in early 2011. Heading into next year, we intend to leverage our expertise in the field to capitalize further on China's under-pentrated plasma market and build value for our shareholders."

Second Quarter 2010 Highlights 

• Revenues increased 23.3% year-over-year to $40.9 million.
  
• Gross profit rose 32.6% year-over-year to $31.8 million, representing a gross margin of 77.9%, as compared to 72.4% a year ago.
  
• Operating income grew 37.7% to $22.8 million.
  
• GAAP net income attributable to controlling interest was $12.9 million, or $0.49 per diluted share, including a $2.3 million non-cash gain from change in the fair value of derivative liabilities.
  
• Excluding the non-cash gain, interest on convertible notes and non-cash employee compensation, non-GAAP adjusted net income was $10.9 million or $0.41 per diluted share, a 31.2% increase from $8.3 million or $0.38 per diluted share a year ago

"Our second quarter results were very strong, with 23.3% growth in revenues and 31.2% growth in adjusted net income, primarily driven by robust demand and a favorable pricing environment for our plasma-based products," said Mr. Chao Ming Zhao, Chief Executive Officer of China Biologic. "We are moving forward with establishing our two new plasma collection stations in Yishui and Ninyang counties in Shandong Province, and expect to begin trial collections at the new locations by the end of the year. We also increased our focus on marketing and educational medical conferences in the second quarter, as part of our strategy to strengthen our ties with hospitals and clinics, since we believe that direct sales to these customers can secure our market share and support our long-term growth."

2010 Guidance and Business Outlook

China Biologic maintained its guidance for 2010:

• Revenues in the range of $142 million and $149 million.
• 2010 adjusted net income in the range of $34 million and $36 million.

As part of its scheduled annual maintenance and inspection process, the Company shut down its facility in Qianfeng for approximately 45 days in June and July and its Taibang facility for 30 days beginning in late July. Due to careful planning of production and inventories, this is expected to have minimal impact to the company's revenue generation.

Guidance for 2010 adjusted net income excludes any non-cash gain or loss related to change in the fair value of derivative liabilities, stock-based compensation expense and any adjustments in the U.S. federal income tax provision in 2010 related to the expiration of the look-through exception for Subpart F income on December 31, 2009, and excludes any acquisitions, new product approvals or operational impact from new plasma stations. The guidance also does not assume any material price or volume increases during the year.

China Biologic expects 2010 revenue to be in the range of $142 million to $149 million vs  $119 million in 2009. This guidance assumes only organic growthand does not include and excludes acquisitions or approval for the construction of new plasma collection stations. The guidance does not assume any material price or volume increases during 2010.

The Company expects 2010 non-GAAP^a net income to be in the range of $34 million to $36 million vs. $31.3 million in 2009.

As a matter of policy, the Company does not intend to update this guidance during the year.

Source: PR Newswire (March 23, 2010)

Recall that CBPO was added to Geo Bargain list on April 27, 2009. ($4.15).

Earlier today we removed CBPO from the GeoBargain list due to an opinionated blog insinuating that members of the management team have been involved in fraudulent activities.  The author of the blog is short the stock, so it’s clearly a biased opinion.

The allegations are not new, but the stock reacted as if they were.  Funny that there were no pot shots at the financials. We still like the company and will keep the stock on the GeoBargain on the Radar List until we receive clarification on this matter.  Until the resolution, investing in CBPO is not worth the risk as we have plenty of non controversial stocks to choose from, especially during this market pull back.

China Bio Products reported third quarter results.

Investors may not initially view this quarter enthusiastically as GAAP EPS appear weak. But after adding back one time charges to net income CBPO reported a much more favorable non-GAAP EPS comparison, which is what we will choose to focus on.

^a Non-GAAP EPS Figures exclude certain non-operating gains and losses as well as certain non-cash items contained in the company's filings. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information . The GeoTeam® non-GAAP figures may, from time to time, differ from company supplied figures.

2009 Third quarter discussion per SEC 10Q filing

The continuing price increase of our products since 2008 was primarily attributable to the government’s stringent control on the quality standard of the plasma-based production industry, which resulted in a shortage in the supply of finished products. We were able to adjust our production plan to take advantage of the limited market supply of plasma resources to realize higher profit margins. In addition, there is a shortage in the market supply for human albumin products which has increased the value of our products in the market place. The plasma-based industry has been immune from the impact of the on-going global financial crisis as the demand for our products has out-paced supply. As a result, our selling price, cost of revenue and operating expenses during the third quarter of 2009 were not impacted by the global financial turmoil. With the acquisition of Dalin, and its operating subsidiary Qianfeng, we are better situated to serve our existing and new customers with expanded production capacity and market coverage. Our management expects that our revenue growth will remain strong for the remainder of 2009.

Valuation Scenarios

Added to Geo Bargain list on April 27, 2009. ($4.15). 

Data Inputs:

Fiscal Year Ends in December
2008 Tax-Adjusted non-GAAP EPS: $0.50 (previous calculation was $0.54)

^a CBPO does not pay a full U.S. tax rate.  Therefore, all EPS numbers have been adjusted by the GeoTeam® to reflect an average marginal tax rate of 36%. EPS are Non-GAAP figures and excludes non-cash compensation expense. EPS number are non-GAAP. Non-GAAP EPS Figures exclude certain non-operating gains and losses as well as certain non-cash items. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information . For a more complete explanation of the company's definition of non-GAAP please refer to its financial press releases. The GeoTeam® non-GAAP figures may, from time to time,  differ from company supplied figures.

Short-Term Valuation Scenarios

China Bio Products reported 2009 second quarter financial results well above the GeoTeam's internal expectations. 

• Revenues increased 178.2% year-over-year to a record $33.2 million
• Non-GAAP EPS increased 151.5% to $0.38 per diluted share.
• Non-GAAP EPS increased 90% from the 2009 first quarter.

The GeoTeam® participated on China Bio Products 2009 second quarter conference call.  Overall the call was bullish.  CBPO showed impressive internal growth even if the contribution from a recent acquisition are omitted.  On the call the company maintained guidance.

See Updated Financial Tables
See Updated Valuation Scenarios

Source: See Release, August 17, 2009

Source: See Release

^a CBPO does not pay a full U.S. tax rate.  Therefore, all EPS numbers have been adjusted by the GeoTeam® to reflect an average marginal tax rate of 36%. EPS are Non-GAAP figures and excludes non-cash compensation expense.

Short-Term Valuation Scenarios

Source: See Release

^a EPS Figures exclude non-operating gains and losses. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information.For a more complete explanation of the company's definition of non-GAAP please refer to their Fourth Quarter financial press release.

^b The company issued net income guidance of $18 million to $22 million, but did not provide EPS guidance. The GeoTeam® used the March 31, 2009 outstanding share count of 21,434,942 to calculate an implied 2009 EPS figure. The lack of EPS guidance may cause some investors to infer that dilutive events are expected to occur in the near future. However, per the 10K page 45, it appears that the company does not need to raise cash via a capital raise:

"With the bank credit facilities that are available to us and other financing activities, we expect that cash on hand, funds generated from our operations and funds generated from companies that we may acquire in the future will be sufficient to satisfy our current and future commitments for at least the next twelve months."

^a CBPO does not pay a full U.S. tax rate.  Therefore, all EPS numbers have been adjusted by the GeoTeam® to reflect an average marginal tax rate of 36%. EPS are Non-GAAP figures and excludes non-cash compensation expense.

Short-Term Valuation Scenarios

GeoNuggets - Quick Check List Highlighting Undiscovered Opportunities

China Bio Products Inc. (OTCBB:CBPO)

Company Description:  China Bio Products is principally engaged in the research, development, production and manufacturing and sale of plasma-based biopharmaceutical products to hospitals and other health care facilities in China. The Company's human albumin products are mainly used to increase blood volume and its immunoglobulin products are used for the treatment and prevention of diseases.

Price (5/01/09): $3.75  
Trailing P/E: 6.94 ^a

Fiscal Year Ends In December

12 Months trailing Non-GAAP EPS (tax adjusted ): $0.54 ^a
Average Company Non-GAAP EPS Guidance for 2009 (tax adjusted): $0.81 ^a,b 

^a. All EPS numbers have been adjusted by the GeoTeam to reflect a United States standard tax rate.  Non-GAAP figures excludes non-cash compensation expense

^b. The company issued net income guidance of $18 million to $22 million, but did not provide EPS guidance.  The GeoTeam® used the March 31, 2009 outstanding share count of 21,434,942 to calculate an implied 2009 EPS figure.  The lack of EPS guidance may cause some  investors to infer that dilutive events are expected to occur in the near future.  However, per the 10K page 45, it appears that the company does not need to raise cash via a capital raise:

"With the bank credit facilities that are available to us and other financing activities, we expect that cash on hand, funds generated from our operations and funds generated from companies that we may acquire in the future will be sufficient to satisfy our current and future commitments for at least the next twelve months."

Reasons for optimism

1. The company meets nine out of ten GeoBargain categories.

	Recent 52-week high The stock has recently attained a new 52-week high.
	30% EPS growth rate Earnings per share (EPS) grew 62.6% in 2008.
	10% revenue growth 2008 Revenues grew 44%.
	Strong balance sheet The company meets two of three requirements. Debt to Equity Ratio is 16% (The GeoTeam prefers less than 20%).  The company is Cash Flow Positive. Current Assets to Current Liabilities is a little light at 1.3 to 1 (The GeoTeam prefers less than 2 to 1)
	15% ROE Tax adjusted 2008 Return on Equity (ROE) was at 30%.
	The company is seeking to ultimately achieve minimum pre-tax operating margins of 8%. 2008 adjusted (Non-GAAP) pre-tax margins were 45%.
	Under 50 million shares The company currently has 21,434,942 shares outstanding.
	High insider ownership All officers and directors as a group own 63.7% of company stock.
	Limited institutional ownership
	Peg Ratio (P/E / EPS Growth Rate) is less than 1 PEG Ratio based on 2008 tax adjusted EPS growth rate is .08.

2.  The recent Acquisition of a 90% Controlling Interest in Chongqing Dalin Biologic Technologies Co., Ltd. makes China Biologic the largest non-state-owned producer of plasma- based biopharmaceutical products in China. This development strengthens their already solid competitive advantage, especially in light of the limited supply of plasma sources in China.

3.  "The plasma-based industry has been immune from the impact of the ongoing global financial crisis as the demand for the products has out-paced supply."

4.  The current regulatory requirements to participate in the China biopharmaceutical industry poses a barrier to entry, limiting the competitive landscape.

5. The company is forecasting revenue to increase between  93% and 114% ($90 million to $100 million), while adjusted net income is forecasted to rise between 35% and 65% ($18 million to $22 million).  This guidance assumes the successful integration of  the Chongqing Dalin Biologic Technologies transaction as well as the completion of one more pending acquisition.

Potential valuation scenarios if the company can achieve its EPS growth goals.

Potential value based on fully taxed adjusted nom-GAAP trailing EPS ^a

 o  P/E 15*  $0.54= $8.10
 o  P/E 20*  $0.54= $10.80
 o  P/E 25*  $0.54= $13.5

 Potential value based on fully taxed adjusted 2009 Average Company Non-GAAP EPS Guidance ^a,b
 

o P/E 10*  $0.81 =   $8.00
o P/E 15*  $0.81= $12.15

These scenarios are not intended to be investment advice, but are scenarios based on some commonly used investment guidelines. They are provided to aid investors in making their own investment decisions.

Guidance Update:

The company did not provide EPS guidance.  Thus, investors may infer that dilutive events are expected to occur in the near future.  However, per the third quarter report  page 34, it appears that the company does not need to raise cash via a capital raise:

"Overall, we believe that cash flow from our operating activities and the existing credit facilities available to us should be adequate to sustain our operations at current levels through the next twelve months."

 A clarification of this situation is needed.  The GeoTeam^® would urge the company to issue address whether shares outstanding will remain stable in 2009.  If shares do remain stable 2009 tax adjusted net income guidance would be around $17 million ($.77), implying a forward P/E of only 2.6.

   Source: PR Newswire (November 12, 2008)