China-Biotics Inc (NASDAQ:CHBT)

Until recently, probiotics producer China Biotics shares had been in a moderate uptrend, a reflection of strong sales EPS growth and allowing the company to consistently surpass analyst estimates. However, since the CFO announced his resignation on October 23, 2009, shares have retreated by 30%. I often track high level management departure situations in order to take advantage of fallen stock prices caused by investor trepidation and uncertainty. If I can determine that there were no material reasons for the departure and that the position will be filled expediently, I often surmise that the stock will recover its losses. On January 22, 2010 CHBT announced the hiring of a new CFO. As luck would have it the news has become lost amidst the markets retreat. With a P/E of less than 10 and its recent above average EPS performance, I am banking that investor appetite for CHBT shares will return.

This evening, my thoughts have been reinforced, as CHBT reported that its fiscal 2010 EPS rose 45.45% to $0.32 on a 47.47% increase in revenues to $15.8 million.

Source: Source: PR Newswire (February 10, 2010) 

CHBT remains confident that the company can maintain its positive growth trend for the coming year, despite a weakening global scenario.

Source: Third Quarter 2009 Conference Call ( February 17, 2009)

CHBT may qualify as a GeoBargain. The GeoTeam will keep you posted on our findings.

The GeoTeam holds a position in CHBT