China Health Labs & Diagnostics Ltd CHLBF

RE: RE: China Health Labs earns $1.22-million in Q

[TheRock07]

My calculations as follows..................

.........2011 revs  = $6.8 divided by  0.13 = $52.5 million

........2010 net margins were  20 .5 % when  the $1.441 million of expenses related to the Qualifying Transaction are excluded  (  $33.8 divided by $6.95 million )

That is, net profit in 2011 at the 2010 net margin would be $10.75 million.

However, net margins are positively correlated with revenue size.................fixed expenses in the G & A become a smaller proportion as revenues grow.

Note that net margins were in excess of 25 % in Q4 when sales were $13.5 million ( excluding the onetime QT charges ).
We shall have at least 2 quarters in 2011 which will be larger than Q4 of 2010.

But, let us assume the same net margins as 2010 ( 20.5 % ) which results in net earnings of $10.75 million or about
.165 per share.

If net margins rise to 25 % ( as might be expected with much larger sales ) net earnings could be as high as $13.5 million or an EPS of
.205 per share.

These calculations are the basis of my analyses that CHO could earn up to if not in excess of
.20 per share in 2011.
They also have several large bids tendered ,which could push these estimates much higher later in the year..

The trading multiple averaged about 12 times during the short listing period................