My first buy back of shares in SVA- I had closed both trading and LT positions in early September, 2009- was this week, at $6.30.
My next buy back of SVA shares will be at $6.10- capital for this buy in my trading account will come from cash and a slight reduction of trading shares of CSKI- and my next buy back of SVA after that will be in my regular LT accounts, in the $5.00 range, down to around $5.20.
I think highly of this company and its management. I don't think a decline in PPS is an indictment of the company, or of its plan for growth
and service to the improved health of the people- particularly children- of the Peoples Republic of China. Sinovac is a leader- perhaps THE leader- in pediatric vaccines in the Peoples Republic. My plan since 2005 has been to own shares in it as one of 3-4 key equity positions in the health care industry in China.
That said, here are three reasons I think PPS of SVA will keep falling:
#1- fundamentals. The current PE is SVA is around 20. That is out of line with other Chinese biotechs/pharmas. SVA is priced so that the perception of a lowdown in earnings growth after the 'flu season will drop the price. That is occurring now.
SVA is and has been a superior hepatitis vaccine company which entered the 'flu market in China two years ago, and rose in PPS on speculation concerning the global H1N1 pandemic.
#2- technicals. SVA is falling in price, and has dropped through its support points (see left column of linked page below):
The news regarding Mr. Yin's nomination for 2009 Economic Man Of The Year is another impressive accolade this company has received, and has slowed PPS descent, but it won't reverse the trend.
#3- rotation within the Chinese pharma sector. SVA is simply one good company among a number. While its price was falling in December,
the PPS of SSRX was rising:
I'm not writing or posting this to extol SSRX's virtues. I closed my SSRX position this week. I had used capital from the sale of SVA shares in September to finance my accumulation to SSRX, and take strong positions in AOB and TPI.
Here's the ST SVA chart, for contrast with the SSRX chart above:
Other companies than SVA within the Chinese pharma sector will get investor attention short-term, such as China Sky One Medical (CSKI), which rose on the recent inclusion of 30 products in the China Medical Insurance Directory:
Again, this is a matter of timing the buys, and working out a strategy for acquiring, holding, and deriving a profit from an equity position.
While I certainly admire Mr Yin, Helen, and the other managers at SVA for not trading out their shares (some of which are not restricted), I think more is to be gained by selling and buying when its most opportune, since my ownership and trading of shares is a means to an end.
All the best,
PS- I have no doubt that this post will rate "One Star" or "Two Stars".
I'd personally rate it a bit higher. :)
Overall, an excellent post. However, you left out the most important reason why the price of SVA has been on a steady downward slide. SVA can be easily influenced by the MM's. I won't bother to cite the details, because they are readily available to anyone who looks at the two-year chart and locates S.E.C. filings.
You can also watch Level II Quotes for a few days to see the how the price of SVA is manipulated. Currently, small investors are being driven out by a steady decline in share price as well as a sudden bear raid meant to swallow stop loss orders.
What can you expect in the future? A continued decline in the price until 3-4 weeks before 4 Q earnings.
My tentaive plan is wait until SVA's price falls near $5 before buying, or even lower, depending on circumstances.
At this point, SVA is a buy. But I intend to wait further.
First buyback of SVA in trading account only was on Friday, 12/16/09 @$6.30
Second buyback of SVA in trading account only was today, Monday 12/21/09 @$6.04, filled around 1:45PM NYT
Next buyback of SVA shares- still in trading account only- is planned in the high $5s...
I think SVA will reach the mid-5s in early 2010, and double digits again in 2012.
Great company, with the usual PPS ups and downs...
I read your post several times. I agree with almost all. Just want to comment/expand a little on this thought.
"SVA is priced so that the perception of a lowdown in earnings growth after the 'flu season will drop the price."
Personally, I think the perception of "such a lowdown in earning" may be false ... because:
SVA has emerged/grown so much after H1N1 as The vaccine company in China. Not so much on "tangible" like revenue.. but intangible like "good will" and "name brand" I did not know about this company before H1N1... and even if I knew it before, I would not trust SVA, till I saw what they have done. The company did not get any discouragement from SARS-H5N1 "failure", it tackled H1N1 with the same determination, and succeed. Speaking of medical-related products...good will is critically important. If the growth for a company is mathematically expressed as y = mx + b . Goodwill improvement increases the "m" (slope, rate).
Additionally, Dr. Yin is now getting free "advertizing" and tremendous "nationalism" from China. The slogan Dr. Yin used "I bet .. not with money, but with life" ..is so clever. Whether he would become the winner of "Man of the Year" or not, the publicity has ALREADY won the SVA a "stamp of approval" nationally and internationally. Other words, I bet, Dr. Yin and his company can even sell "donuts" and call it "bread of life", and 1.4 billion donuts will be sold!
I agree with Dan, when he said "SVA falls because of TA, and therefore it will rise because of TA". Like you and don't predict the PPS, but I guess 6.30 is VERY CLOSE to the bottom. :) I guess the price will rise from here to low 8 mid January (hehe.. optimistic guess!!).
Merry Christams, Rand. :)
(Disclaimer: All of the above is my personal opinion. I've never claimed to be an expert investor.)
Are you new to the msg board? How did you come up with lower $5? I can say below $6 or over $10. What is the basis of your prediction? Do not post this garbage if you do not know how you came up with your number. Or else people will call you an idiot like someone already did.
Be careful who you call an 'idiot'. It may come back to bite you. Look at the chart (see link). Where do you see support between where we are and $5.00? S.