American Oriental Bioengineering Inc. (AOB) 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 performances in the coming quarters due to relatively high growth in the Traditional Chinese Medicine market in China. We maintain our Buy rating on AOB with a price target of $16.

PBPs are Traditional Chinese Medicines (TCM) based on non-synthetic medicinal compounds that are extracted from leaves and roots of one or more plants. Each PBP has certain medicinal functions and proven efficacy in the treatment of at least one or more illnesses or symptoms of illnesses. PBNs, also frequently referred to as "dietary supplements" or "nutritional supplements," are prophylactic or preventive, in contrast to PBP products which are used to treat an illness or symptoms of an illness.