SGTI Shengtai Pharmaceutical Inc (GM)

Dutton Associates updates its coverage of Shengtai Pharmaceutical (OTCBB: SGTI) maintaining a strong Speculative Buy rating and a price target of $2.55. The 11-page report by Dutton senior analyst Stanley Ng is available at www.duttonassociates.com as well as from First Call, Bloomberg Professional, Capital IQ, FactSet, Zacks, Reuters, Knobias, and other leading financial portals.

Shengtai Pharmaceutical recently announced its 1Q FY2009 financial results. Revenue amounted to $18.12 million, a 6.4% year-over-year decline from 1Q in FY2008. Net income fell 72.0% year-over-year to $0.63 million, and gross margin fell to 17.6% in the first quarter of 2009. The major culprit of the poor financial results in the 1Q 2009 was the negative impact of the Olympic Games in Beijing, as the Chinese government imposed multiple restrictions on manufacturing and transportation during the weeks leading up to and during the events in August in an effort to reduce pollution. The decline in gross margin for the first quarter of 2009 was primarily driven by a decrease in the sales of the Company's cornstarch products. Sharp drops in food prices amidst the global financial turmoil in August and September, and excess inventories for cornstarch in the market, led to aggressive price-cutting in the cornstarch market, which sharply reduced margin. Going forward, we concur with management's view that the disruption of business in August, ahead and during the Olympic Games in Beijing, was temporary in nature. In the coming few quarters, we expect a gradual recovery of the food and beverage industry and thus the demand for its cornstarch products. We reduced our net income forecast for FY2009 to $10.28 million and our revised net income forecast for FY2010 is now $14.42 million. Diluted EPS are now $0.51 for FY2009 and $0.71 for FY2010.

About Dutton Associates

Dutton Associates is one of the largest independent investment research firms in the U.S. Its 30 senior analysts are primarily CFAs, have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 140 enrolled companies, and its research, estimates, and ratings are carried in all the major databases serving institutions and online investors.

The cost of enrolment in our one-year continuing research program is US $35,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. The Firm does not accept any equity compensation. We received $35,000 from the Company for 4 quarterly Research Reports with coverage commencing on 8/05/2008. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.

About Shengtai Pharmaceutical

Shengtai Pharmaceutical, Inc. through its wholly owned subsidiary, Shengtai Holding, Inc. (SHI), a New Jersey corporation, and the Chinese operating company of Weifang Shengtai Pharmaceutical Co., Ltd., is a leading manufacturer and supplier of pharmaceutical grade glucose used for medical purposes. It also manufactures and supplies glucose and cornstarch products to the food, beverage and industrial production industries in China.

Contact: Dutton Associates John Dutton 916/960-0623 Shengtai Pharmaceutical Yiru Melody Shi 949/468-7078