News blog

Taihua

  • BY: Andrew Hore |
  • POSTED: 24/07/2009 |

Trading remains tough for Chinese natural medicine ingredients supplier Taihua but there are signs of improvement.

Revenues in the first half of 2009 will be below expectations. Customers have found it difficult to gain credit to pay for orders and foreign exchange rate fluctuations havenít helped.

Sales of paclitaxel, an anti-cancer ingredient made from yew trees, and leukaemia treatment ingredient Homoharringtonine have both suffered. Taihua says that it has been refusing orders from what it describes as unacceptably high risk customers.  Sales have started to rise again, partly due to indications that the companyís credit risk policy may be relaxed. Getting the balance right between a sensible credit risk policy and one that increases sales but leads to bad debts is going to be difficult.

Shares in Taihua fell 1.5p to 7.75p each, which values the company at £6.33m.

Taihua reported a 2008 profit of RMB16.4m on revenues of RMB42.3m, although that was well down on the profit of RMB39.8m and revenues of RMB71.8m in 2007. Nearly all of last yearís profit and more than two-thirds of revenues were in the first half. The 2009 interims are likely to be much worse than that.

Taihua is looking at potential acquisitions and is not paying a dividend in order to conserve cash. The 2007 dividend still has not been paid because the funds have not been transferred from the companyís subsidiary.

Taihua is still waiting for news of its application for a certificate of suitability for paclitaxel from the European Directorate for the Quality of Medicines.

Taihua plans to replace Mike Wyllie, who resigned in 2008, with another independent non-executive director.

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