WEIFANG, China, Sept. 28 /Xinhua-PRNewswire-FirstCall/ -- Shengtai
Pharmaceutical, Inc. (OTC:SGTI) (BULLETIN BOARD: SGTI) ("Shengtai
Pharmaceutical" or "the Company"), a leading manufacturer and
distributor of high-quality, pharmaceutical grade glucose products
in China and glucose and starch products that serve as raw
materials for food, beverage and industrial production, today
reported record annual financial results ended June 30, 2007.
Fiscal Year 2007 Highlights -- Net sales increased 43.5% to $51.7
million -- Gross profit rose 43.9% to $12.2 million -- Gross profit
margin was 23.6% -- Operating income increased 62.1% to $7.5
million -- Net income increased 69.8% to $7.1 million -- Fully
diluted EPS was $0.62 versus $0.42 Fiscal Year 2007 Results For the
fiscal year 2007, net revenues increased 43.5% to $51.7 million
from $36.0 million in fiscal 2006. This increase was largely due to
strong sales of glucose and cornstarch products, as well as higher
product selling prices. In addition, the Company's new cornstarch
plant began production in 2007, maximizing the production of its
glucose manufacturing facility and the sale of additional
cornstarch to outside customers. "Our 2007 fiscal year was a record
for Shengtai Pharmaceutical. We will continue to identify and
pursue innovative products and technology to our increase market
share and optimize our cost structure," said Chief Financial
Officer Philips Zhang. "Our ability to meet increased customer
demand and remain profitable will however, still depend on factors
such as our production capacity and working capital." Gross profit
in fiscal year 2007 was $12.2 million, an increase of 43.9% from
$8.5 million a year ago. Gross profit margin for the year ended
June 30, 2007 was 23.6%, a slight improvement from 2006. Shengtai
Pharmaceutical produced some new products with higher profit
margins, which was offset by rising sales of lower gross margin
cornstarch to customers. Selling, general and administrative
expenses for the year ended June 30, 2007 was $4.7 million, an
increase of $0.8 million, or 22% compared with the corresponding
period in 2006. The increase in selling, general and administrative
expenses was the result of the expansion of the Company's domestic
sales network, higher worker insurance requirements and
environmental related expenditures. The Company achieved higher
operating leverage for the year. Operating income in fiscal year
2007 increased 62.1% to $7.5 million from $4.6 million in prior
year. Operating margin during fiscal 2007 was 14.5% in 2006, up
from 12.9% a year ago. Net income for the year ended June 30, 2007
was $7.1 million, an increase of $2.9, or 69.8% compared with 2006.
The increase in net income was due to higher production levels,
sales volumes, as well as a net gain of approximately $1.3 million
derived from both the gain of surrendering its land use rights for
property in downtown Changle to the local government and the loss
of fixed assets' early retirement. Diluted weighted average
earnings per share were $0.62 for fiscal year of 2007, which
compared to $0.42 in fiscal year of 2006. Financial Condition As of
June 30, 2007, Shengtai Pharmaceutical had cash and restricted cash
of $12.0 million and working capital of $(7.2) million. In fiscal
2007, the Company generated $5.1 million in cash flow from
operations. At June 30, 2007, the Company had $42.1 million in
total debt, and $31.6 million of shareholders' equity. Business
Outlook Shengtai Pharmaceutical's market share in the PRC for
pharmaceutical grade glucose products, especially dextrose
monohydrate, has increased. Dextrose monohydrate is widely used for
restorative and nutritional purposes, as well as for transfusions
and intravenous drips. The company's newly established cornstarch
production facility with annual capacity to produce 240,000 tons is
close to the existing glucose production plant. This allows the
company to produce its own cornstarch, replacing other suppliers,
reduces shipping costs, and resulting in lower manufacturing costs.
The research and development team has been very active to improve
production techniques, and to develop new technologies and higher
value-added products such as sodium gluconate and Avermectins,
which have higher profit margins. After acquiring the rights to use
85,880 square meters of new land in Changle Economic and Technology
Development Zone in April 2007, Shengtai Pharmaceutical planned to
develop the land and build a new glucose production complex with an
expected production capacity of 150,000 tons per year. The Company
commenced construction in early July 2007 and expects construction
to be completed in the first half of calendar year 2008.
"Nevertheless, among our total 253,746 square meters of land,
approximately only 60% is being utilized, leaving room for future
expansion," said Mr. Zhang. "The 2008 fiscal year presents
tremendous opportunities for Shengtai Pharmaceutical, as we expect
higher living standards, rising purchasing power, public awareness
of quality health care products will continue to lead to higher
consumption of pharmaceutical dextrose," said Mr. Zhang. "We
believe that through manufacturing innovative products to meet
market demand, we would be able to command higher profit margins
and diversify our operating risks." About Shengtai Pharmaceutical,
Inc. Shengtai Pharmaceutical, Inc. through its wholly-owned
subsidiary Shengtai Holding, Inc. (SHI), a New Jersey corporation,
and the holding company for Weifang Shengtai Pharmaceutical Co.,
Ltd., is a leading manufacturer and supplier of glucose products,
which include pharmaceutical grade glucose used for medical
purposes, and glucose and cornstarch products for the food and
beverage industry and for industrial production in China. For more
information about Shengtai Pharmaceutical, Inc. please visit
http://www.chinaglucose.com/ . Safe Harbor Statement Safe Harbor
Statement Under the Private Securities Litigation Reform Act of
1995: Certain statements in this press release and oral statements
made by the Company, constitute forward-looking statements for
purposes of the safe harbor provisions under The Private Securities
Litigation Reform Act of 1995. These statements include, without
limitation, statements regarding our ability to prepare the company
for growth, the Company's planned capacity expansion in 2007 and
predictions and guidance relating to the Company's future financial
performance. We have based these forward-looking statements largely
on our current expectations and projections about future events and
financial trends that we believe may affect our financial
condition, results of operations, business strategy and financial
needs but they involve risks and uncertainties that could cause
actual results to differ materially from those in the
forward-looking statements, which may include, but are not limited
to, such factors as unanticipated changes in product demand
especially in the pharmaceutical industry, pricing and demand
trends for the Company's products, changes to government
regulations, risk associated with operation of the Company's new
facilities, risk associated with large scale implementation of the
company's business plan, the ability to attract new customers,
ability to increase its product's applications, cost of raw
materials, downturns in the Chinese economy, and other information
detailed from time to time in the Company's filings and future
filings with the United States Securities and Exchange Commission.
Investors are urged to consider these factors carefully in
evaluating the forward-looking statements herein and are cautioned
not to place undue reliance on such forward-looking statements,
which are qualified in their entirety by this cautionary statement.
The forward-looking statements made herein speak only as of the
date of this press release and the Company undertakes no duty to
update any forward-looking statement to conform the statement to
actual results or changes in the company's expectations.
--Financial tables below-- SHENGTAI PHARMACEUTICAL INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2007 AND
2006 A S S E T S 2007 2006 CURRENT ASSETS: Cash $ 6,420,439 $
502,457 Restricted cash 5,628,500 3,881,200 Accounts receivable,
net of allowance for doubtful accounts of $431,178, $357,970 and
$233,976 as of June 30, 2007, 2006 and 2005, respectively 5,779,967
3,531,810 Notes receivable 984,675 358,920 Other receivables
3,484,484 369,884 Other receivables - related parties 2,491,656 --
Other receivables - shareholder 1,229,625 -- Loan to related party
657,500 -- Inventories 4,449,267 1,895,878 Prepayments 140,376
231,352 Prepayments - related party -- 1,378,133 Total current
assets 31,266,489 12,149,634 PLANT AND EQUIPMENT, net 30,178,074
14,562,974 OTHER ASSETS: Investment in Changle Shengshi Redian Co.,
Ltd. 2,675,678 2,245,086 Loan to related party - non-current
394,500 -- Prepayments - non-current 7,429,371 1,166,998 Intangible
assets - land use right, net of accumulated amortization 1,816,021
1,146,765 Total other assets 12,315,570 4,558,849 Total assets $
73,760,133 $ 31,271,457 L I A B I L I T I E S A N D S H A R E H O L
D E R S' E Q U I T Y CURRENT LIABILITIES: Accounts payable $
3,807,997 $ 1,582,812 Accounts payable - related party 949,992
348,366 Notes payable - banks 8,942,000 7,011,200 Short term loans
18,870,250 8,576,200 Investment payable - 888,920 Accrued
liabilities 229,643 92,862 Other payable 1,526,903 256,291 Employee
loans 596,516 640,667 Employee loan - officer -- 93,149 Third party
loan 318,274 57,319 Dividends payable -- 389,216 Customer deposit
796,228 276,609 Long term liabilities - current maturities 381,350
876,400 Payable - officer -- 1,925,996 Taxes payable 2,048,932
596,420 Total current liabilities 38,468,085 23,612,427 LONG TERM
LIABILITIES Other payable - noncurrent 3,661,472 -- Long term loans
-- 1,001,600 Total long term liabilities 3,661,472 1,001,600 Total
liabilities 42,129,557 24,614,027 COMMITMENTS AND CONTINGENCIES --
-- SHAREHOLDERS' EQUITY: Preferred stock, $0.001 par value,
5,000,000 shares authorized, no shares issued and outstanding -- --
Common stock, $0.001 par value, 100,000,000 shares authorized,
18,875,351, 10,125,351, and 10,125,351 shares issued and
outstanding as June 30, 2007, 2006 and 2005, respectively 18,875
10,125 Paid-in capital 19,163,549 3,915,871 Capital contribution
receivable -- (1,925,996) Statutory reserves 1,735,484 1,001,088
Retained earnings 9,885,670 3,470,940 Accumulated other
comprehensive income 826,998 185,402 Total shareholders' equity
31,630,576 6,657,430 Total liabilities and shareholders' equity $
73,760,133 $ 31,271,457 SHENGTAI PHARMACEUTICAL INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER
COMPREHENSIVE INCOME FOR THE YEARS ENDED JUNE 30, 2007 AND 2006
2007 2006 SALES REVENUE $ 51,706,215 $ 36,029,179 COST OF SALES
39,527,662 27,568,092 GROSS PROFIT 12,178,553 8,461,087 SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES 4,674,679 3,831,778 INCOME FROM
OPERATIONS 7,503,874 4,629,309 OTHER (EXPENSE) INCOME: Earnings
(loss) on equity investment 131,420 41,635 Other income 1,769,631
181,874 Other expense (225,898) (214,641) Interest expense and
other charges (1,270,418) (555,572) Interest income 119,353 128,306
Other income (expense), net 524,088 (418,398) INCOME BEFORE
PROVISION FOR INCOME TAXES 8,027,962 4,210,911 PROVISION FOR INCOME
TAXES 878,836 -- NET INCOME 7,149,126 4,210,911 OTHER COMPREHENSIVE
INCOME: Foreign currency translation adjustments 641,596 185,402
COMPREHENSIVE INCOME $ 7,790,722 $ 4,396,313 Earning per share -
basic $ 0.64 $ 0.42 Earning per share - diluted $ 0.62 $ 0.42
Weighted average number of shares outstanding - basic 11,252,063
10,125,351 Weighted average number of shares outstanding - diluted
11,477,896 10,125,351 SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30,
2007 AND 2006 2007 2006 CASH FLOWS FROM OPERATING ACTIVITIES: Net
income $7,149,126 $4,210,911 Adjustments to reconcile net income to
cash provided by operating activities: Depreciation 2,239,157
1,478,734 Amortization 42,644 41,454 Allowance for bad debts
271,602 114,780 Loss on building disposal 186,470 -- Gain on
disposal of land use right (1,647,833) -- (Earnings) loss on equity
investment (131,420) (41,635) Change in assets and liabilities:
Accounts receivable (2,288,351) (261,286) Notes receivable
(591,936) (126,992) Other receivables (1,082,008) 1,567 Other
receivables - related party (2,427,043) -- Other receivables -
shareholder (366,185) -- Inventories (2,394,250) 173,225
Prepayments 99,957 (28,710) Prepayments - related party 1,409,944
301,037 Accounts payable 1,773,031 176,458 Accounts payable -
related party 390,986 200,660 Accrued liabilities 130,238 (65,014)
Other payable 410,174 166,860 Customer deposit 492,586 201,045
Taxes payable 1,385,613 (14,792) Net cash provided by operating
activities 5,052,502 6,528,302 CASH FLOWS FROM INVESTING
ACTIVITIES: Acquisition of equity investment (909,439) (124,020)
Purchase plant and equipment (731,295) (418,498) Additions to
construction in progress (10,308,985) (5,814,096) Acquisition of
land use right (949,900) -- Purchase of software program (1,281) --
Advance on plant and equipment purchase (7,225,790) (1,155,999)
Loan to related party (1,024,720) -- Net cash used in investing
activities (21,151,410) (7,512,613) CASH FLOWS FROM FINANCING
ACTIVITIES: Increase in restricted cash (1,524,720) (279,045)
Borrowings on notes payable - banks 8,710,120 12,201,088 Payments
on notes payable - banks (7,173,040) (10,743,853) Borrowings on
short term loans 24,785,415 8,979,048 Payments on short-term loans
(15,178,665) (8,358,948) Borrowings on employee loans 384,224
431,111 Payments on employee loans (458,632) (113,060) Borrowings
on employee loan - officer 1,281 -- Payments on employee loan -
officer (96,580) -- Borrowings on third party loan 251,378 57,319
Borrowings on long term loans -- 992,160 Payments on long-term
loans (1,549,889) (868,140) Cash proceeds from issuance of common
stock 15,256,428 -- Payments of amounts due officer (1,925,996) --
Proceeds from capital contribution receivable 696,371 -- Dividend
paid to shareholders -- (1,664,503) Net cash provided by financing
activities 22,177,695 633,177 EFFECTS OF EXCHANGE RATE CHANGE IN
CASH (160,805) 25,408 INCREASE (DECREASE) IN CASH 5,917,982
(325,726) CASH, beginning of year 502,457 828,183 CASH, end of year
$6,420,439 $ 502,457 For more information, please contact: Mr.
Philips Zhang CFO Shengtai Pharmaceutical, Inc. Tel: +86-
536-629-5728 E-mail: Mr. Crocker Coulson President CCG Elite
Investor Relations Tel: +1-646-213-1915 (NY Office) E-mail:
DATASOURCE: Shengtai Pharmaceutical, Inc. CONTACT: Mr. Philips
Zhang, CFO of Shengtai Pharmaceutical, Inc. at +86- 536-629-5728,
or ; Mr. Crocker Coulson, President of CCG Elite Investor Relations
at +1-646-213-1915 (NY Office), or Web site:
http://www.chinaglucose.com/
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