I found a very good stock during the long weekend.

Company info: WuYi Pharmacy (1889). It is a bio-tech co. research, develop, manufacture and retail western & eastern medicine among 22 provinces & 3 territories in China.

Financial ratio: 5 yr ave growth rate above 30%, P/E ratio 12.5, Forward 07 P/E ratio 8.5, PEG 0.42, Return on equity 67%

Sector info: the average health consumption growth rate in China was 11.1% between 2000 and 2004 while GDP growth was 10.5% and it is about 4.6% of total consumption in China. In 2004, health spending per person in China was US$73 while Canada was US$2,064; out of the total heath spending, 63% paid by private & only 27% by public (Canada was 30% from private).

Outlook: As 1) individual income rise, 2) living standard up 3) medical insurance coverage improve 4) +65 population increase from 6.4% in 1997 to 8.3% in 2010. Health industry will continue to grow faster than GDP. 5) To encourage health, government gave WuYi 2 years’ tax free (means from 33% tax rate to 0%) between 2007 and 2008, and then 3 years 50% tax off (from 25% to 12.5%) between 2009 and 2011.

Risk: Bio-tech business spends lots of $$ in reserach & development, R&D may lead the company to cash flow difficulty. Also, stock price will rise when its product pass certain stage of testing or receive government's premit. However, if those failed, the price will fall significantly (30%-50%) in 1 or 2 days.

Conclusion: My target price to WuYi is $2.66 (with a conservative assumption of 15% growth), current price $1.54 (rise 10% yesterday).