Case Study: Tiens Biotech

Tiens Biotech Group USA Inc. (TBV) is a "nutrition supplement and personal care products" company in China. The company has 1,350 employees, and its particular business focus of marketing Chinese nutritional wellness and dietary products seems to be a segment that has not yet reached its full market potential in the United States. An investment in TBV is nice because it is also an instant diversification into foreign currency, something Warren Buffett did with his recent purchase of Iscar Metalworking. According to Barron's, the CEO of TBV has a salary of $145,455. It's refreshing to be able to invest in a healthcare company without CEO financial fiascos like that of Unitedhealth Group (UNH).

Some Statistics
The company has an extremely low debt/equity ratio of 0.094.
Price/earnings is also low at only 8.098.
The short interest as a percentage of public float is 4%, which is extremely high for a small company like TBV, which only has a market capitalization of 208 million.
Its 52-week range is 2.61 - 8.24, which gives this stock some significant potential.
Pre-tax return on capital greater than 50%.

Concluding Thoughts
This is an undervalued healthcare company that has relatively little downside due to its high earnings yield of 16% and low market capitalization. If the company becomes any more undervalued, it has the potential to be acquired by a larger healthcare company looking to gain a foothold in both China and wellness products at the same time. This would be something that I would look to hold for the long-term, expecting high volatility in the short-term but the potential for extremely high appreciation in the long-term.

TBV update
Additional post from November 7, 2006. A stock-price prediction from Beacon Equity, and a news report that makes the case for a potential acquistion down the line.