All announced 11.49M doses of Panflu.1 have to be delivered by December 12 (see PRs). In other words, nearly 11M will be recorded for Q4. The company is not allowed to reveal pricing but rough estimates have been widely reported to be around 20-22 yuan (US$3-3.2). The low end will give about US$30M revenue from Panflu.1 alone. The yearly revenue estimate range of 55-60M was given way before H1N1. Assuming it does and sells nothing else after December 12, annual renenue will be at the minimum of 80M. The CEO said "we are on track to EXCEED ... not realize ...". Athough this kind of "under promise" and "over deliver" attitude hurts the PPS in the short run, I like the CEO's style. On the announced Panful.1 orders alone, I am anticipating a blow out Q4 and have hence taken necessary steps to position myself. I need patience to wait until Feb.
SVA is a very rare case of BIO that is generating revenue and income. DNDN, HGSI and the like don't even have any product on the market yet their MCAP is exceeding 3-5B. High growth BIO commends very high P/S ratios, leaving alone P/E (many are highly negative).
There are a total of 8 H1N1 vaccine manufacturers in China. The Central Government purchases vaccines from all manufacturers and distributes to local CDC's. I have no idea who is supplying vaccines for BJ or any other place.
If you compare this Q3 and last year's Q3 ER, you will see very clearly where the source of growth comes from: all the 4 vaccines it makes and sells: Healive, Bilive, Anflu and Panflu. I have said it earler that Panflu.1 hardly figiured in this Q3 revenue.
This is from the ER: During the third quarter of 2009, sales were $21.2 million, up 142% from $8.7 million in the third quarter of 2008. During the third quarter of 2009, Sinovac's unit dose sales were:
Three months ended September 30, 2009 2008 (000 doses)
----------- -----------
Healive 989 1,087
Bilive 215 28
Anflu 4,312 512
Panflu (H5N1) 20 0
PANFLU.1 (H1N1) 586 0
We have communicated quite a bit. My feeling is that you are very contradictory from one case to another. On many occasions, you said you want to get in BIO that will release trial data. But in the case of SVA, you have the revenue and income to work with and you are applying traditional valuation. Simply put, traditional valuation doesn't work in the BIO world.
I have no idea how SVA will trade tomorrow, the day after, this week, next week. My eyes are on Q4 and thereafter.
My understanding is that SVA is closely associated with BJ university and a lot of research work is done by the BIO students at very low cost.
Let me repeat, stock operation is very personal. With different perspectives, we can discuss the companies to death and yet come up with very different views. My SVA position is rather big (Jan. 7.5 and 10 calls, -Jan. 7.5 puts, April 10, 12.5 and 15 calls). The drop since yesterday has eaten up all my sizable paper profits by today's close (close to 70K). Today, I sold some non-performing positions to have dry powder on hand such that I can add April options should it drop further. Let me stop with that.
Thanks for the comments. I couldn't figure out SVA due mainly to following details:
1. SVA is one of FOUR H1N1 suppliers to Beijing government. It is not clear to me who are the other three.
2. SVA's net margin is at 25% and is obviously quite respectable. The R&D spending is pretty low at around $5 M per year. This is a bit puzzling but may fit into my speculation that SVA is more focused on manufacturing side of vaccines.
3. SVA has 11 M doses of H1N1 order outstanding. Based on a very rough estimate on its other vaccine prices, it is about $4.45 per dose. So, this is another $50 M revenue and $12 M net profit (at 25% net margin).
4. SVA has $45 M revenue in the first nine months and the CEO said the company was on tract to realize $60 M in 2009. So, Q4 would be $15 M revenue and $3.75 net profit. This also implies majority of H1N1 order won't be filled till 2010.
5. To justify market cap of $300 M (net of cash), the company has to grow revenue at 30%. At this point, the only source of that growth is probably H1N1 or other future vaccines.
So, Jia, I would appreciate it if you can share your digging on SVA on its sources of high growth, in addition to H1N1 story ...
