American Oriental Bio Growing

American Oriental Bioengineering Inc. (AOB - Snapshot Report) is a China-based specialty pharmaceutical company which develops, manufactures and commercializes both plant-based pharmaceutical (PBP) and plant-based nutraceutical (PBN) products.

Third quarter financials were strong and in line with our expectations. We expect the company to continue to deliver strong performance in the 4Q08 and 2009 due to relatively high growth in Traditional Chinese Medicine (TCM) market in China.

We maintain our Buy rating on AOB with a price target of $12. We view AOB as a China play stock and growth story. In the past few years, from 2003 and 2007, the company achieved more than impressive top-line CAGR [compound annual growth rate] of 66.6%. EPS grew from $0.15 in 2003 to $0.60 in 2007, a CAGR of 42.7%. Both top line and bottom line continued to grow in the first nine months of 2008.

Read the full analyst report on AOB