WEIFANG, Shandong, China, May 16 /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 March 31, 2008. Third Quarter of Fiscal 2008
Highlights -- Sales increased 64.8% to $20.7 million -- Gross
profit rose 37.2% to $4.5 million -- Gross profit margin was 21.7%
-- Operating income increased 30.4% to $2.9 million -- Net income
increased 5.2% to $ 1.9 million -- Weighted avg. diluted shares
outstanding were 19.8 million vs. 10.1 million -- Fully diluted EPS
was $0.10 versus $0.18 Third Quarter of Fiscal 2008 Results For the
third quarter of fiscal 2008, sales increased 64.8% to $20.7
million from $12.6 million for the third quarter of fiscal 2007.
Cornstarch sales were $7.1 million in this quarter, up 212.5% from
$2.3 million in the same period of 2007, sales of glucose products
were $7.9 million in this quarter, down 4.3% from $8.3 million in
the same period of 2007 and sales of other products were $5.6
million, up 177.5% from $2.0 million in the same period of 2007.
The increased sales of cornstarch resulted in a higher proportion
of total cornstarch sales compared to the same reporting period
last year. Along with an improving utilization rate of the new
cornstarch manufacturing plant, the Company manufactured and sold
more cornstarch with lower gross profit margins to generate
necessary working capital and funds for construction of its new
glucose complex. The significant growth of its other products
business was mainly attributable to more sales of higher margin
sodium gluconate and cornstarch byproducts associated with the
greater operational size of the cornstarch business. "The sales
kept growing during this quarter due to more cornstarch production,
higher product prices and increased sales of higher-value products.
We were pleased with our sales this quarter despite seasonal
softness due to the Chinese Spring Festival, the snow storm in
February, and machine maintenance incurred in this quarter," said
Chairman and CEO, Mr. Qingtai Liu, "We believe our business will
continue to grow significantly in the next several quarters since
we successfully launched trial production at the new glucose
complex." Gross profit for the three months ended March 31, 2008
was $4.5 million, up 37.2% from $3.3 million for the same period of
the prior year. The increased gross profit was mostly due to
economies of scale resulting from the expansion of production
output and enhanced operating efficiencies. Gross margin for the
third quarter of fiscal 2008 was 21.7%, a decrease from 26% for the
same period of 2007 due to an increase in the price of raw
materials and a higher proportion of cornstarch with lower profit
margins. Selling, general and administrative expenses for the three
months ended March 31, 2008 were $1.6 million, up 51.4% compared
with the corresponding period in 2007. The increase in selling,
general and administrative expenses was attributable to increased
administrative expenses such as stock-based compensation and
professional and listing fees of being a listed company. Shengtai
Pharmaceutical's operating income in third quarter of fiscal 2008
increased 30.4% to $2.9 million from $2.2 million in the same
period of prior year, while the operating margin was 13.9% versus
17.6% in the third quarter of fiscal 2007. Net income for the three
months ended March 31, 2008 was $1.9 million. The increase in net
income was due to greater sales volume and revenue, and the fast
expansion of new products. Weighted average diluted earnings per
share were $0.10 for the three months ended March 31, 2008,
compared to $0.18 for the three months ended March 31, 2007. The
diluted weighted average shares was 19.8 million in the third
fiscal quarter of 2008 versus 10.1 million for the same period of
last year, primarily due to a private placement of stock in May
2007. Financial Condition As of March 31, 2008, Shengtai
Pharmaceutical had cash and restricted cash of $5.7 million and
working deficit of $20.6 million. During the three months ended
March 31, 2008, the Company generated $12.7 million in cash flow
from operations. As of March 31, 2008, the Company had $45.8
million in total debt, and $42.5 million of shareholders' equity.
Business Outlook In October 2007, Shengtai Pharmaceutical completed
a new cornstarch production facility with maximum annual capacity
to produce 240,000 metric tons, which is close to its existing
glucose production plant and new glucose production complex.
Currently, the cornstarch production facility produces cornstarch
to satisfy the Company's own glucose production needs, and the some
excess cornstarch is sold to outside customers. The Company has
been upgrading its existing glucose facilities and is expected to
reach projected annual production capacity of about 90,000 metric
tons in first half of 2008. It is currently utilizing more
cornstarch internally for the production of pharmaceutical glucose
and other higher value-added products. The new cornstarch
production facility ensures the adequacy and quality of the
cornstarch as the main material of pharmaceutical glucose and lower
shipping costs to improve its profit margins. During the nine
months ended March 31, 2008, we estimate that by using cornstarch
manufactured internally, we have saved $1.0 million. Shengtai
Pharmaceutical nearly finished the construction of the new glucose
production complex with expected annual production capacity of
120,000 tons. The new facility is now equipped with most of the
major high-tech operational machines and the Company will apply its
international quality control standards over the production. The
new facility successfully commenced trial production at the
beginning of May 2008. "We are very pleased to see our successful
trial production at the new glucose complex. The official launch of
its production should further satisfy strong demand of glucose
products, especially for pharmaceutical grade glucose products,"
said Chairman and CEO, Mr. Qingtai Liu, "We will be shifting more
excess cornstarch to be utilized internally to the new glucose
complex, which will strengthen our glucose business and improve our
profitability. We will also continue to manufacture innovative
products and diversify our product lines to meet market demand to
pursue higher profit margin and minimize our operating risks."
Teleconference Information Shengtai Pharmaceutical, Inc. will
conduct a conference call at 9:00 a.m. Eastern Time on Friday, May
16, 2008 to discuss the third quarter results of fiscal year 2008.
To participate in the live conference call, please dial the
following number five to ten minutes prior to the scheduled
conference call time: 800-688-0796. International callers should
dial 617-614-4070. When prompted by the operator, mention
Conference Passcode 502 870 72. If you are unable to participate in
the call at this time, a replay will be available for 14 days
starting on Friday, May 16 at 11:00 a.m. Eastern Time. To access
the replay, dial 888-286-8010, international callers should dial
617-801-6888, and enter the passcode 924 807 90. 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/ . 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 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 STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED) Three months ended Nine months ended March 31, March
31, 2008 2007 2008 2007 SALES REVENUE $20,701,577 $12,563,088
$65,028,934 $35,472,898 COST OF SALES 16,220,665 9,297,002
50,085,971 26,694,321 GROSS PROFIT 4,480,912 3,266,086 14,942,963
8,778,577 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,603,932
1,059,579 5,114,863 2,989,524 INCOME FROM OPERATIONS 2,876,980
2,206,507 9,828,100 5,789,053 OTHER (EXPENSE) INCOME: Earnings on
equity investment 43,070 83,182 192,826 105,389 Non-operating
income 67,451 1,704 177,160 98,867 Non-operating expense (96,191)
(18) (300,035) (2,801) Interest expense and other charges (738,634)
(323,688) (1,674,515) (692,326) Interest income 55,697 42,396
154,101 86,041 Other (expense), net (668,607) (196,424) (1,450,463)
(404,830) INCOME BEFORE PROVISION FOR INCOME TAXES 2,208,373
2,010,083 8,377,637 5,384,223 PROVISION FOR INCOME TAXES 321,220
216,990 1,108,388 518,128 NET INCOME 1,887,153 1,793,093 7,269,249
4,866,095 OTHER COMPREHENSIVE INCOME: Foreign currency translation
adjustments 1,554,258 130,758 2,966,909 377,729 COMPREHENSIVE
INCOME $3,441,411 $1,923,851 $10,236,158 $5,243,824 EARNINGS PER
SHARE Basic $0.10 $0.18 $0.38 $0.48 Diluted $0.10 $0.18 $0.36 $0.48
WEIGHTED AVERAGE NUMBER OF SHARES Basic 19,069,805 10,125,000
18,967,857 10,125,000 Diluted 19,845,195 10,125,000 19,959,689
10,125,000 SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2008 AND JUNE 30, 2007
A S S E T S March 31, June 30, 2008 2007 (Unaudited) CURRENT
ASSETS: Cash $ 3,229,336 $ 6,420,439 Restricted cash 2,490,000
6,128,500 Accounts receivable, net of allowance for doubtful
accounts of $350,618 and $431,178 as of March 31, 2008 and June 30,
2007, respectively 7,530,395 5,779,967 Notes receivable 567,571
984,675 Other receivables 1,416,761 2,984,484 Other receivables -
related parties -- 2,491,656 Other receivables - shareholder --
1,229,625 Loan to related party -- 657,500 Inventories 6,222,975
4,449,267 Prepayments 805,641 140,376 Total current assets
22,262,679 31,266,489 PLANT AND EQUIPMENT, net 41,998,981
30,178,074 OTHER ASSETS: Investment in Changle Shengshi Redian Co.,
Ltd. 3,395,183 2,675,678 Loan to related party - non-current
428,400 394,500 Prepayments - non-current 17,979,164 7,429,371
Intangible assets - land use right, net of accumulated amortization
2,272,278 1,816,021 Total other assets 24,075,025 12,315,570 Total
assets $ 88,336,685 $ 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 $ 5,224,288 $ 3,807,997 Accounts payable - related parties
507,612 949,992 Notes payable - banks 4,284,000 8,942,000 Short
term loans 21,934,080 18,870,250 Accrued liabilities 135,731
229,643 Other payable 2,407,234 1,526,903 Employee loans 1,651,578
596,516 Employee loan - officer 52,572 -- Third party loan 421,776
318,274 Customer deposit 1,181,468 796,228 Long term loan - current
maturity 414,120 381,350 Taxes payable 4,625,019 2,048,932 Total
current liabilities 42,839,478 38,468,085 LONG TERM LIABILITIES
2,965,162 Other payable - noncurrent 3,661,472 Total long term
liabilities 2,965,162 3,661,472 Total liabilities 45,804,640
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 March 31, 2008 and
June 30, 2007, respectively 19,070 18,875 Additional paid-in
capital 19,828,665 19,163,549 Statutory reserves 1,735,484
1,735,484 Retained earnings 17,154,919 9,885,670 Accumulated other
comprehensive income 3,793,907 826,998 Total shareholders' equity
42,532,045 31,630,576 Total liabilities and shareholders' equity $
88,336,685 $ 73,760,133 SHENGTAI PHARMACEUTICAL INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE
MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED) 2008 2007 CASH
FLOWS FROM OPERATING ACTIVITIES: Net income $ 7,269,249 $ 4,866,095
Adjustments to reconcile net income to cash provided by operating
activities: Depreciation 2,076,992 1,295,570 Amortization 38,263
31,992 Allowance for bad debts 16,558 53,445 Gain on equipment
disposal (91,480) -- Gain on disposal of land use right (24,783) --
Compensation expense for options issued to employees 158,818 --
Earnings on equity investment (192,826) (105,389) Change in
operating assets and liabilities: Accounts receivable (1,108,695)
(2,401,163) Notes receivable 380,411 147,315 Other receivables
1,987,660 473,493 Other receivables - related parties 2,570,100
(575,729) Other receivables - shareholder 1,273,495 (20,900)
Inventories (1,404,996) (1,175,968) Prepayments (620,451) 87,447
Prepayments - related parties -- (746,328) Accounts payable
(595,474) 2,756,521 Accounts payable - related parties (1,252,106)
(467,190) Accrued liabilities (568,922) 169,404 Accrued liabilities
- related party 482,160 -- Other payable 362,035 105,702 Other
payable - equipment purchase (1,241,003) -- Other payable -
discount on equipment purchase 626,370 -- Other payable -
Intercompany -- -- Customer deposit 297,543 1,128,506 Taxes payable
2,261,984 316,605 Net cash provided by operating activities
12,700,902 5,939,428 CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equity investment -- (904,043) Purchases of plant
and equipment (154,262) (497,603) Proceeds from equipment disposal
35,266 -- Additions to construction in progress (7,725,153)
(11,697,698) Acquisition of land use right (324,031) (10,747)
Purchase of software program (5,426) -- Advances on plant and
equipment purchase (9,876,385) (1,069,809) Loan repayment from
related party 678,200 -- Proceed from land use right disposal
30,826 -- Net cash used in investing activities (17,340,965)
(14,179,900) CASH FLOWS FROM FINANCING ACTIVITIES: Decrease
(increase) in restricted cash 3,407,360 (1,518,640) Borrowings on
notes payable - banks 5,425,600 12,959,405 Payments on notes
payable - banks (10,579,920) (11,431,445) Borrowings on short term
loans 12,750,160 17,100,419 Payments on short term loans
(11,380,196) (7,550,669) Borrowings on employee loans 1,412,554
627,960 Payments on employee loans (459,082) (378,336) Borrowings
on employee loan - officer 45,187 -- Borrowings on third party loan
2,898,529 -- Payments on third party loan (2,826,195) -- Payments
on long term loans -- (1,334,641) Cash proceeds from issuance of
common stock 506,493 -- Dividend paid to shareholders -- (395,838)
Net cash provided by financing activities 1,200,490 8,078,215
EFFECTS OF EXCHANGE RATE CHANGE IN CASH 248,470 14,494 DECREASE IN
CASH (3,191,103) (147,763) CASH, beginning of period 6,420,439
502,457 CASH, end of period $ 3,229,336 $ 354,694 For more
information, please contact: Company Contact: Ms. Melody Shi CFO
Shengtai Pharmaceutical, Inc. Tel: +1-949-468-7078 Email: Investor
Relations Contact: Mr. Crocker Coulson President CCG Elite Investor
Relations Tel: +1-646-213-1915 (NY Office) Email: Website:
http://www.ccgelite.com/ DATASOURCE: Shengtai Pharmaceutical, Inc.
Web site: http://www.shengtaipharmaceutical.com/
http://www.ccgelite.com/
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