discussed how natural gas can potentially bring you wealth as the need for natural gas continue to rise as well as rise in its price. Today, we will examine a third sector in China related to Health care and how medicine manufacture company can also be a great investment.
Similar to agriculture and energy industries, China is actively changing its health care system to privatization and entrepreneurship. Currently, about 80% of all drugs are administered through hospitals and only 20% are going through pharmacies. China wants to reverse this number by cutting costs in hospitals. This is the reason why medicine manufacturer will benefit from this change. Below are two Chinese pharmaceutical companies with P/E below 7.
The first company is China Pharmaceuticals Holdings (CPHI). Their market capitalization stands at about $144 million and growing. Currently trading below $3.50, it would seem like there is a good entry point at this time. Looking at 1 year chart, there is a major support at around $3 level. So, we can safely expect CPHI to decline towards this support and at that time, investors can start adding this stock to their portfolio. There is a high potential for CPHI to increase by 33% in 2010.
The second company is China Yongxin Pharmaceuticals (CYXN). Their market capitalization stands at about $20 million and there is tremendous growth opportunity. This stock is currently trading at around $0.55 and it is a good entry point. However in looking at 1 year chart, there is a consolidation funneling towards $0.55 - $0.60 level. This indicates that CYXN could move either direction and it is not clear on which direction it will move at this time. Therefore, a more cautious strategy would be to wait and see if CYXN clears $0.60 level before buying to minimize the risk of going the other direction. We should watch this stock very carefully.
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