WEIFANG, Shandong Province, China, Feb. 14
/Xinhua-PRNewswire-FirstCall/ -- Shengtai Pharmaceutical, Inc. (OTC
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 December 31, 2007.
Second Quarter of Fiscal 2008 Highlights -- Net sales increased
102.7% to $25.0 million -- Gross profit rose 91% to $5.9 million --
Gross profit margin was 23.5% -- Operating income increased 121.2%
to $4.1 million -- Net income increased 97% to $3.1 million --
Weighted avg. diluted shares outstanding were 20.3 million vs. 10.1
million -- Fully diluted EPS was $0.15 versus $0.16 Second Quarter
of Fiscal 2008 Results For the second quarter of fiscal 2008, net
revenues increased 102.7% to $25.0 million from $12.3 million for
the second quarter of fiscal 2007. This increase was largely due to
more cornstarch production, higher product prices, diversification
of product lines and the expansion of higher-value products. The
Company raised the sales of cornstarch, which constituted a higher
proportion of total sales revenue compared to the same reporting
period last year. Although cornstarch had a lower gross profit
margin, the Company nevertheless increased its production to
generate necessary working capital and funds for construction of
its new glucose complex. In addition to its pharmaceutical glucose
series of products and cornstarch, the Company also produced
significant amounts of other non- medicinal glucose or cornstarch
related products. The sales revenues generated from these products
were approximately 5.9 times of those the same period last year,
and constituted approximately 26.6% of its total sales revenues for
the six months ended December 31, 2007. "We continued to see strong
growth in second quarter of fiscal 2008," said Chairman and CEO,
Mr. Qingtai Liu. "Our revenues and net income kept growing
dramatically during this quarter due to higher glucose product
prices, increased cornstarch production and sales, improved sales
of higher value products and the benefits from our vertically
integrated production line. We believe that through manufacturing
innovative products to meet market demand, we would be able to
command better profit margins, diversify our product lines and
minimize our operating risks." Gross profit for the three months
ended December 31, 2007 was $5.9 million, an increase of 91% from
$3.1 million for the same period of the prior year. Gross margin
for the second quarter of fiscal 2008 was 23.5%. The increased
gross profit was mostly due to economies of scale resulting from
the expansion of production output and enhanced operating
efficiencies. Although product cost increased as a result of
commodity price increases and other raw material price increases,
the selling price was higher than the price increase of raw
materials, thus making its gross profit higher. Selling, general
and administrative expenses for the three months ended December 31,
2007 were $1.8 million, an increase of $0.9 million, or 89.4%
compared with the corresponding period in 2006. The increase in
selling, general and administrative expenses was the result of the
increase of our production output, expansion of the Company's
domestic sales network and increased shipping costs due to higher
sales of cornstarch. Shengtai Pharmaceutical's operating income in
the three months ended December 31, 2007 increased 121.2% to $4.1
million from $1.8 million in the prior year, while the operating
margin increased to 16.2% from 14.9%. Net income for the three
months ended December 31, 2007 was $3.1 million, an increase of
$1.5 million, or 97% compared with the corresponding period in
2006. The increase in net income was due to an increase in our
product prices, sales volume and the introduction of new products.
Weighted average diluted earnings per share were $0.15 for the
three months ended December 31, 2007, compared to $0.16 for the
three months ended December 31, 2006. The higher share count in the
second fiscal quarter of 2008 was due to a private placement of
stock in May 2007. Financial Condition As of December 31, 2007,
Shengtai Pharmaceutical had cash and restricted cash of $2.9
million and working deficit of $14.7 million. During the three
months ended December 31, 2007, the Company generated $9.6 million
in cash flow from operations. As of December 31, 2007, the Company
had $36.2 million in total debt, and $38.9 million of shareholders'
equity. Business Outlook Shengtai Pharmaceutical's new cornstarch
production facility, with a maximum production capacity of 240,000
metric tons per year, was completed at the end of October 2007.
With these cornstarch production facilities, which are close to the
Company's existing glucose production plant and new glucose
production complex, the Company is able to ensure the adequacy and
quality of the cornstarch as the main component of pharmaceutical
glucose and lower shipping costs to improve its 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 set out to build a new glucose production
complex with an expected production capacity of 120,000 tons per
year. The new facility will be equipped with state-of-the-art
machinery and technology, and the Company will apply international
quality control standards over the production. The new construction
commenced in early July 2007 and is expected to be complete in the
first half of calendar year 2008. Shengtai Pharmaceutical continued
to strengthen its domestic sales network through the establishment
of four representative offices in Chengdu, Guangzhou, Hangzhou and
Nanchang. However, international sales may be impacted somewhat due
to more strict government policies to discourage food and natural
resources processing exports, and the appreciation of the Renminbi
against the U.S. dollar. "By identifying and pursuing innovative
products and technology, we intend to improve our cost structure,
increase our market share, command better profit margins and reduce
our operating risks," commented Mr. Zhang, the Company's Chief
Financial Officer, "After we upgrade our existing facilities and
complete the new glucose production complex in the first half of
2008, we will shift excess cornstarch to be utilized internally for
pharmaceutical glucose production and other higher value-added
products, which should further increase our profitability." "We
project that for the fiscal year ending June 30, 2008 we will
achieve an after-tax net income of at least $9,000,000 or fully
diluted earnings per share of at least $0.43," said Mr. Zhang.
Teleconference Information A conference call will take place at
9:00 a.m. Eastern (U.S.) time on Friday, February 15, 2008. Anyone
interested in participating should call 866- 800-8648 if calling
from within the United States, or 617-614-2702 if calling
internationally; the passcode is 835 628 35. If you are unable to
participate in the call at this time, a replay will be available
for 14 days starting on Friday, February 15 at 11:00 a.m. Eastern
Time. 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 497 603 34 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 Chinese operating company of
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/ . Forward-looking Statements
Certain statements in this press release and oral statements made
by the Company, constitute forward-looking statements. These
statements include, without limitation, statements regarding our
ability to prepare the company for growth, the Company's planned
capacity expansion in 2008 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 DECEMBER 31, 2007
AND JUNE 30, 2007 A S S E T S December 31, June 30, 2007 2007
(Unaudited) CURRENT ASSETS: Cash $ 1,046,004 $ 6,420,439 Restricted
cash 1,885,500 5,628,500 Accounts receivable, net of allowance for
doubtful accounts of $319,887 and $431,178 as of December 31, and
June 30, 2007, respectively 6,345,988 5,779,967 Notes receivable
1,799,285 984,675 Other receivables 2,155,536 3,484,484 Other
receivables - related parties -- 2,491,656 Other receivables -
shareholder -- 1,229,625 Loan to related party -- 657,500
Inventories 4,474,855 4,449,267 Prepayments 631,130 140,376 Total
current assets 18,338,298 31,266,489 PLANT AND EQUIPMENT, net
38,350,904 30,178,074 OTHER ASSETS: Investment in Changle Shengshi
Redian Co., Ltd. 3,188,822 2,675,678 Loan to related party -
non-current 411,300 394,500 Prepayments - non-current 12,640,708
7,429,371 Intangible assets - land use right, net of accumulated
amortization 2,193,801 1,816,021 Total other assets 18,434,631
12,315,570 Total assets $ 75,123,833 $ 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 $ 3,408,140 $ 3,807,997 Accounts payable - related
party 935,077 949,992 Notes payable - banks 1,371,000 8,942,000
Short term loans 15,697,950 18,870,250 Accrued liabilities 164,386
229,643 Other payable 1,937,205 1,526,903 Employee loans 1,785,196
596,516 Employee loan - officer 36,963 -- Third party loan
2,160,193 318,274 Customer deposit 1,258,155 796,228 Long term loan
- current maturity 397,590 381,350 Taxes payable 3,856,304
2,048,932 Total current liabilities 33,008,159 38,468,085 LONG TERM
LIABILITIES Other payable - noncurrent 3,183,858 3,661,472 Total
long term liabilities 3,183,858 3,661,472 Total liabilities
36,192,017 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, 19,069,805
and 18,875,000 shares issued and outstanding as of December 31, and
June 30, 2007, respectively 19,070 18,875 Paid-in capital
19,669,847 19,163,549 Statutory reserves 1,735,484 1,735,484
Retained earnings 15,267,766 9,885,670 Accumulated other
comprehensive income 2,239,649 826,998 Total shareholders' equity
38,931,816 31,630,576 Total liabilities and shareholders' equity $
75,123,833 $ 73,760,133 SHENGTAI PHARMACEUTICAL INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER
COMPREHENSIVE INCOME FOR THE SIX AND THREE MONTHS ENDED DECEMBER
31, 2007 AND 2006 (UNAUDITED) Three months ended Six months ended
December 31, December 31, 2007 2006 2007 2006 SALES REVENUE $
24,954,288 $ 12,310,489 $ 44,327,357 $ 22,909,810 COST OF SALES
19,086,274 9,237,442 33,865,306 17,397,319 GROSS PROFIT 5,868,014
3,073,047 10,462,051 5,512,491 SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 1,814,376 958,077 3,510,931 1,929,945 INCOME FROM
OPERATIONS 4,053,638 2,114,970 6,951,120 3,582,546 OTHER (EXPENSE)
INCOME: Earnings on equity investment 977 17,683 149,756 22,207
Non-operating income 69,962 38,369 109,709 97,163 Non-operating
expense (26,495) (2,783) (203,844) (2,783) Interest expense and
other charges (519,417) (351,223) (935,881) (368,638) Interest
income 32,243 15,678 98,404 43,645 Other (expense), net (442,730)
(282,276) (781,856) (208,406) INCOME BEFORE PROVISION FOR INCOME
TAXES 3,610,908 1,832,694 6,169,264 3,374,140 PROVISION FOR INCOME
TAXES 481,323 243,723 787,168 301,138 NET INCOME 3,129,585
1,588,971 5,382,096 3,073,002 OTHER COMPREHENSIVE INCOME: Foreign
currency translation adjustments 140,556 246,971 1,412,651 246,971
COMPREHENSIVE INCOME $ 3,270,141 $ 1,835,942 $ 6,794,747 $
3,319,973 EARNINGS PER SHARE Basic $ 0.17 $ 0.16 $ 0.28 $ 0.30
Diluted $ 0.15 $ 0.16 $ 0.27 $ 0.30 WEIGHTED AVERAGE NUMBER OF
SHARES Basic 18,961,992 10,125,000 18,918,496 10,125,000 Diluted
20,296,006 10,125,000 20,000,956 10,125,000 SHENGTAI PHARMACEUTICAL
INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
SIX MONTHS ENDED DECEMBER 31, 2007 AND 2006 (UNAUDITED) 2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 5,382,096 $
3,073,002 Adjustments to reconcile net income to cash provided by
operating activities: Depreciation 1,187,166 802,766 Amortization
23,820 21,159 Allowance for bad debts (126,334) 718 Gain on
equipment disposal (90,098) -- Loss on disposal of land use right
5,954 -- Earnings on equity investment (149,757) (22,207) Change in
operating assets and liabilities: Accounts receivable (185,355)
(1,042,970) Notes receivable (772,571) (569,932) Other receivables
1,186,223 (975) Other receivables - related party 2,531,257
(502,261) Other receivables - shareholder 1,254,248 -- Inventories
159,692 (393,469) Prepayments (472,365) (139,392) Prepayments -
related party -- (39,024) Accounts payable (1,668,080) 896,568
Accounts payable - related party (293,176) (412,070) Accrued
liabilities (150,906) 43,689 Other payable (313,162) 299,581
Customer deposit 417,062 398,934 Payable - officer 31,145 Taxes
payable 1,671,334 33,746 Net cash provided by operating activities
9,628,193 2,447,863 CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equity investment -- (898,150) Purchase plant and
equipment (28,455) (415,524) Proceeds from equipment disposal
34,733 Additions to construction in progress (5,865,225)
(7,553,156) Acquisition of land use right (317,183) (10,677)
Purchase of software program (5,343) -- Advances on plant and
equipment purchase (5,226,396) -- Loan repayment from related party
667,950 Loan to related party - non-current -- (723,205) Net cash
used in investing activities (10,739,919) (9,600,712) CASH FLOWS
FROM FINANCING ACTIVITIES: Decrease in restricted cash 3,842,060
28,071 Borrowings on notes payable - banks 1,335,900 7,055,930
Payments on notes payable - banks (9,084,120) (7,084,000)
Borrowings on short term loans 3,566,853 13,168,650 Payments on
short term loans (7,440,963) (4,946,150) Borrowings on employee
loans 1,271,112 -- Payments on employee loans (137,616) --
Borrowings on third party loan 1,781,556 -- Payments on long term
loans -- (885,500) Cash proceeds from issuance of common stock
506,493 -- Dividend paid to shareholders -- (393,257) Net cash
(used in) provided by financing activities (4,358,725) 6,943,744
EFFECTS OF EXCHANGE RATE CHANGE IN CASH 96,016 9,228 DECREASE IN
CASH (5,374,435) (199,877) CASH, beginning of period 6,420,439
502,457 CASH, end of period $ 1,046,004 $ 302,580 For more
information, please contact: Company Contact: Mr. Yizhao 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. Yizhao
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
Shengtai Pharmaceutical, Inc. Web Site:
http://www.shengtaipharmaceutical.com/
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