WEIFANG, China, Nov. 15 /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, today reported financial results for the three months
ended September 30, 2007. First Quarter of Fiscal 2008 Highlights
-- Net sales increased 82.8% to $19.4 million -- Gross profit rose
88.3% to $4.6 million -- Gross profit margin was 23.7% -- Operating
income increased 97.4% to $2.9 million -- Net income increased
51.8% to $2.3 million -- Weighted avg. diluted shares outstanding
were 18.9 million vs. 10.1 million -- Fully diluted EPS was $0.11
versus $0.15 First Quarter of Fiscal 2008 Results For the first
quarter of fiscal 2008, net revenues increased 82.8% to $19.4
million from $10.6 million in the first quarter of fiscal 2007.
This increase was largely due to increased sales of glucose and as
well as higher product selling prices. In addition, sales of excess
cornstarch produced from the Company's own cornstarch manufacturing
facility and sold to customers comprised 31.2% of total revenue for
the reporting period. "We had a good start to our business
operations for the fiscal year of 2008," said Chairman and CEO, Mr.
Qingtai Liu. "Both our revenues and net income are growing
dramatically due to strong market demand, and as we benefit from
our strategy of becoming vertically integrated, to focus on
achieving operating efficiencies and introducing higher-value
products." Gross profit for the three months ended September 30,
2007 was $4.6 million, an increase of 88.3% from $2.4 million for
the same period of the prior year. Gross profit margin was 23.7%, a
slight improvement from 2006. The improved gross profit was mostly
due to economies of scale resulting from the expansion of
production output and enhanced operating efficiencies. An increase
in raw material prices resulted in higher production costs, but the
increase in selling prices were however, higher than the increase
in raw material prices. Selling, general and administrative
expenses for the three months ended September 30, 2007 were $1.7
million, an increase of $0.7 million, or 74.6% 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 production output, but especially the strengthening of
its domestic sales network. The costs associated with being a
public company and higher worker insurance requirements and
environment related expenditures also contributed to the increase.
Shengtai Pharmaceutical's operating income in the three months
ended September 30, 2007 increased 97.4% to $2.9 million from $1.5
million in the prior year, while the operating margin increased to
15.0% from 13.8%. Net income for the three months ended September
30, 2007 was $2.3 million, an increase of $0.8 million, or 51.8%
compared with the corresponding period in 2006. The increase in net
income was due to higher selling prices, sales volumes, as well as
the sale of new, higher margin new products. Weighted average
diluted earnings per share were $0.11 for the three months ended
September 30, 2007, compared to $0.15 for the three months ended
September 30, 2006. The higher share count in the first fiscal
quarter of 2008 was due to a private placement of stock in May
2007. Financial Condition As of September 30, 2007, Shengtai
Pharmaceutical had cash and restricted cash of $4.0 million and
working deficit of $11.0 million. During the three months ended
September 30, 2007, the Company generated $4.3 million in cash flow
from operations. As of September 30, 2007, the Company had $36.3
million in total debt, and $34.3 million of shareholders' equity.
Business Outlook Shengtai Pharmaceutical began to decrease
purchases of cornstarch from its outside supplier, Shouguang
Shengtai, since January 2007, when its new 240,000 ton annual
capacity plant started production. The Company was fully self-
sufficient in so far as it relates to its cornstarch supply
beginning in the past quarter. This has allowed the Company to
reduce its raw material shipping costs, and has resulted in lower
manufacturing costs. During calendar year 2007, approximately 50%
of the new cornstarch production plant's output will be used as raw
materials for the Company's own glucose production, and the rest of
output will be sold to customers in the food and beverage,
pharmaceutical and industrial industries. 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 set up to develop the land and build a new glucose
production complex with an expected production capacity of 150,000
tons per year. The manufacturing plant's machines will be equipped
with state-of-the-art technology, and the quality of glucose
produced will, the Company believes, be able to match that produced
in the rest of the world. The Company commenced construction in
early July 2007 and expects construction to be completed in the
first half of calendar year 2008. The Company's existing glucose
production facility which has annual capacity of 60,000 tons has
been operating at full capacity and has been insufficient to meet
the strong market demand. Therefore, the Company began a capacity
upgrade of its existing facility to more than 90,000 tons from
October 2006 which is expected to be completed in May 2008. "The
research and development team has been very active in improving our
production techniques, and in developing new technologies and
higher value- added products such as sodium gluconate and
Avermectins, which have higher profit margins. We anticipate that
from this, along with our increasing capacity utilization, should
result in expanding profit margins over the next several years,"
commented Mr. Zhang, the Company's Chief Financial Officer.
Teleconference Information The conference call will take place at
8:00 a.m. Eastern (U.S.) time on Thursday, November 15, 2007.
Anyone interested in participating should call 888-419-5570 if
calling from within the United States, or 617-896-9871 if calling
internationally; the passcode is 17815721. There will be a replay
available until November 22, 2007. To listen to the playback,
please call 888-286-8010 if calling within the United States, or
617-801-6888 if calling internationally. Please use passcode
96335341 for the replay. 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.shengtaipharmaceutical.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 Follow -- SHENGTAI PHARMACEUTICAL INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2007
AND JUNE 30, 2007 A S S E T S September 30, June 30, 2007 2007
(Unaudited) CURRENT ASSETS: Cash $ 1,382,647 $ 6,420,439 Restricted
cash 2,634,400 5,628,500 Accounts receivable, net of allowance for
doubtful accounts of $437,408and $431,178 as of September 30, and
June 30, 2007, respectively 6,384,033 5,779,967 Notes receivable
1,854,093 984,675 Other receivables 2,821,218 3,484,484 Other
receivables - related parties 1,006,789 2,491,656 Other receivables
- shareholder 1,282,378 1,229,625 Loan to related party 667,000
657,500 Inventories 3,729,407 4,449,267 Prepayments 108,250 140,376
Total current assets 21,870,215 31,266,489 PLANT AND EQUIPMENT, net
35,204,072 30,178,074 OTHER ASSETS: Investment in Changle Shengshi
Redian Co., Ltd. 2,990,876 2,675,678 Loan to related party -
non-current 400,200 394,500 Prepayments - non-current 7,992,765
7,429,371 Intangible assets - land use right, net of accumulated
amortization 2,146,489 1,816,021 Total other assets 13,530,330
12,315,570 Total assets $ 70,604,617 $ 73,760,133 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 $ 3,195,664 $ 3,807,997 Accounts payable - related
party 1,122,569 949,992 Notes payable - banks 4,268,800 8,942,000
Short term loans 16,394,860 18,870,250 Accrued liabilities 183,695
229,643 Other payable 1,741,194 1,526,903 Employee loans 513,584
596,516 Third party loan 322,872 318,274 Customer deposit 2,008,691
796,228 Long term loan - current maturity 386,860 381,350 Taxes
payable 2,726,465 2,048,932 Total current liabilities 32,865,254
38,468,085 LONG TERM LIABILITIES Other payable - non-current
3,411,179 3,661,472 Total long term liabilities 3,411,179 3,661,472
Total liabilities 36,276,433 42,129,557 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, 18,875,000 and 18,875,000 shares issued and
outstanding as of September 30, and June 30, 2007, respectively
18,875 18,875 Paid-in capital 19,163,549 19,163,549 Statutory
reserves 1,735,484 1,735,484 Retained earnings 12,138,181 9,885,670
Accumulated other comprehensive income 1,272,095 826,998 Total
shareholders' equity 34,328,184 31,630,576 Total liabilities and
shareholders' equity $ 70,604,617 $ 73,760,133 SHENGTAI
PHARMACEUTICAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
INCOME AND OTHER COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 2007 AND 2006 (UNAUDITED) Three months ended
September 30, 2007 2006 SALES REVENUE $ 19,373,069 $ 10,599,321
COST OF SALES 14,779,032 8,159,877 GROSS PROFIT 4,594,037 2,439,444
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,696,555 971,868
INCOME FROM OPERATIONS 2,897,482 1,467,576 OTHER (EXPENSE) INCOME:
Earnings on equity investment 148,779 4,524 Non-operating income
39,747 58,794 Non-operating expense (177,349) -- Interest expense
and other charges (416,464) (17,415) Interest income 66,161 27,967
Other income (expense), net (339,126) 73,870 INCOME BEFORE
PROVISION FOR INCOME TAXES 2,558,356 1,541,446 PROVISION FOR INCOME
TAXES 305,845 57,415 NET INCOME 2,252,511 1,484,031 OTHER
COMPREHENSIVE INCOME: Foreign currency translation adjustments
445,097 106,845 COMPREHENSIVE INCOME $ 2,697,608 $ 1,590,876
EARNINGS PER SHARE Basic $ 0.12 $ 0.15 Diluted $ 0.11 $ 0.15
WEIGHTED AVERAGE NUMBER OF SHARES Basic 18,875,000 10,125,000
Diluted 19,697,359 10,125,000 SHENGTAI PHARMACEUTICAL INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE
MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED) CASH FLOWS
FROM OPERATING ACTIVITIES: 2007 2006 Net income $ 2,252,511 $
1,484,031 Adjustments to reconcile net income to cash provided by
(used in) operating activities: Depreciation 686,653 354,249
Amortization 11,809 10,502 Allowance for bad debts -- 136,128 Loss
on disposal of land use right 5,903 -- Earnings on equity
investment (148,779) (4,524) Change in operating assets and
liabilities: Accounts receivable (516,885) (436,640) Notes
receivable (860,590) (375,932) Other receivables 479,437 (129,626)
Other receivables - related party 1,510,151 -- Other receivables -
shareholder (34,668) -- Inventories 778,620 (283,529) Prepayments
33,913 (458,101) Prepayments - related party -- (437,828) Accounts
payable (1,529,592) 267,953 Accounts payable - related party 31,921
(195,129) Accrued liabilities (77,963) 88,400 Other payable
(110,003) 65,193 Customer deposit 1,192,497 (13,240) Taxes payable
643,363 (166,804) Net cash provided by (used in) operating
activities 4,348,297 (94,897) CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equity investment -- (912,332) Purchase plant and
equipment (19,671) (131,565) Additions to construction in progress
(2,469,967) (3,247,404) Acquisition of land use right (314,500) --
Purchase of software program (5,298) -- Advances on plant and
equipment purchase (2,076,530) (827,866) Net cash used in investing
activities (4,885,965) (5,119,167) CASH FLOWS FROM FINANCING
ACTIVITIES: Decrease in restricted cash 3,046,580 656,289
Borrowings on notes payable - banks 1,324,600 4,245,232 Payments on
notes payable - banks (6,093,160) (5,529,920) Borrowings on short
term loans 887,482 7,754,456 Payments on short term loans
(3,616,158) (842,056) Borrowings on employee loans -- 17,595
Payments on employee loans (90,905) (164,641) Payments on long term
loans -- (879,760) Net cash (used in) provided by financing
activities (4,541,561) 5,257,195 EFFECTS OF EXCHANGE RATE CHANGE IN
CASH 41,437 5,932 (DECREASE) INCREASE IN CASH (5,037,792) 49,063
CASH, beginning of period 6,420,439 502,457 CASH, end of period $
1,382,647 $ 551,520 For more information, please contact: Company
Contact: Mr. Philips Zhang CFO Shengtai Pharmaceutical, Inc. Tel:
+86-536-629-5728 Email: Investor Relations Contact: Mr. Crocker
Coulson President CCG Elite Investor Relations Tel: +1-646-213-1915
(NY Office) Email: DATASOURCE: Shengtai Pharmaceutical, Inc.
CONTACT: Company Contact, Mr. Philips Zhang, CFO of Shengtai
Pharmaceutical, Inc., +86-536-629-5728, or ; or Investor Relations
Contact, Mr. Crocker Coulson, President of CCG Elite Investor
Relations, +1-646-213-1915 (NY Office), or , for SGTI Web Site:
http://www.shengtaipharmaceutical.com/
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