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"Despite the further tightened blood inspection process from the PRCgovernment, we continued to see strong demand and price increases for ourplasma-based products due to the increased purchasing power and healthconsciousness of Chinese consumers," said Mr. Stanley Wong, CEO of ChinaBiologic Products. "We will continue our efforts to secure plasma supply aswell as to upgrade our product portfolio. We are optimistic about our growthprospects, given that our new production line is expected to be in place bymid-2008, and is expected to expand our production capacity to 500-800 metrictons per annum."
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First Quarter 2008 Results
Revenues for the first quarter of 2008 were $7.8 million, a 2.2% increase,compared to $7.7 million for the same period of 2007. The increase in revenuesduring the first quarter of 2008 is primarily attributable to a generalincrease in prices of plasma-based products together with foreign exchangetranslation benefits. During the first quarter of 2008, the Company's plasma-based products increased in price by approximately 78.4%, weighted average,period to period, which was offset by a decrease of in the volume of sales forthree of the Company's products, including human albumin. The Company'stemporary suspension of production for 70 days during fourth quarter 2007, formaintenance and for the building of the new production line, had a temporaryeffect on the supply of finished products available for sale in the firstquarter of 2008.
Gross profits increased 33.6% to $5.9 million with gross margins of 75.2%for the first quarter of 2008, compared with approximately $4.4 million and57.5% in the first quarter of 2007, respectively. The increase in gross marginwas mainly due to the increased sales of higher margin products.
Total operating expenses for the first quarter of 2008 were $2.3 million,up 42.6% from the same period in 2007. Selling expenses increased 2.7% to$0.49 million. General and administrative expenses increased 68.8%, which wasmainly attributable to the increase in personnel costs and auditing and legalfees. There were also increased activities related to investor relations andraising the profile of the Company in the US capital market. Research anddevelopment expenses increased 22.6% to $0.18 million.
Income from operations grew 28.5% to $3.6 million in the first quarter of2008, representing operating margins of 46.3%, as compared to $2.8 million and36.9% during the same period of 2007.
Provision for income taxes increased 64.5% year-over-year, to over $0.7million. The Company provisioned its income tax for the first quarter of 2008at the new PRC corporate unified income tax rate of 25%, as compared to the15% preferential tax rate during the fiscal year 2007. The Company is in theprocess of applying for status as a new or high technology company in order toqualify for the favorable tax rate of 15%.
Net income for the first quarter of 2008 increased 19.4% year-over-year,to $2.3 million, or $0.11 per basic share and $0.10 per diluted share.
Financial Condition
As of March 31, 2008, CBP had $5.2 million in cash, approximately $10.5million in working capital and a current ratio of 2.2. Shareholders' equityat the end of the first quarter of 2008 stood at $25.8 million, compared to$22.4 million at the end of 2007.
Recent Development
(1) Management change
On May 9, 2008, Mr. Stanley Wong resigned as President and Chief ExecutiveOfficer of the Company, effective as of June 1, 2008. He will continue toserve as a consultant to the Company until the en
