WEIFANG, China, Sept. 29 /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 record financial results for the fourth
quarter and fiscal year ended June 30, 2008. Fourth Quarter 2008
Highlights -- Revenues of $25.84 million, an increase of 59%
year-over-year -- EPS of 16 cents per fully diluted share, an
increase of 23% year-over-year Fiscal Year 2008 Highlights --
Revenues increased 76% to $90.87 million -- Operating income
increased 71% to $12.87 million -- Net income increased 46% to
$10.41 million, exceeding our make good provision -- Fully diluted
EPS was 52 cents, exceeding our make good provision on a greater
number of shares outstanding -- Operating cash flows of $7.48
million -- Cash and restricted cash of $10.17 million Mr. Qingtai
Liu, Shengtai Pharmaceutical's CEO, said, "I am very pleased by the
progress we have made during fiscal year 2008 towards achieving our
long-term goals. Our record annual sales validated the market
recognition of our high quality products and our strong sales
execution to gain shares in the domestic pharmaceutical grade
glucose market. With the completion of our new glucose production
facility, we are now able to not only expand our mass production
capability for high-quality glucose products, but also leverage our
in-house cornstarch production facility to strengthen our cost
management." Fiscal Fourth Quarter 2008 Financial Results For the
fiscal 2008 fourth quarter, record sales revenue was $25.84
million, a 59% increase as compared with $16.23 million for the
same period in 2007. Gross profit for the fourth quarter of fiscal
2008 was $5.31 million, an increase of 56% as compared with $3.40
million in the same period in 2007. Gross margin was 20.6% for the
2008 fourth quarter as compared with 20.9% for the same period in
2007. Operating income for the fiscal 2008 fourth quarter was $3.04
million, an increase of 77% as compared with $1.71 million for the
same quarter a year ago. The operating margin reached 11.8% in the
fourth quarter of 2008 as compared to 10.6% for the same period in
2007. Net income was $3.14 million, an increase of 38% as compared
with net income of $2.28 million in the fourth quarter last year.
Net income margin was 12.2% in the fourth quarter of 2008 compared
with 14.1% for the same quarter in 2007. The fully diluted earnings
per share were $ 0.16, a 23% increase as compared to $ 0.13 for the
same quarter a year ago. Fiscal Year 2008 Results For the fiscal
year 2008 ended June 30th, record net revenues increased 76% to
$90.87 million from $51.71 million in fiscal year 2007. The growth
in sales was largely due to higher sales of cornstarch and other
products including fibers, dextrin, corn embryo, protein powders,
and phytin. As the new cornstarch facility gradually reached higher
production capacity, the Company increased the sale of cornstarch
and other products. Glucose sales remain the same as in FY07, as we
have reached full annual production capacity of 60,000 to 90,000
tons. Glucose products still accounted for 38.04% of the total net
revenues in FY08. Revenue from exports accounted for approximately
10% of total revenue in FY08. Gross profit in fiscal year 2008 was
$20.26 million, an increase of 66% from $12.18 million a year ago.
Gross profit margin was 22.3%, a decline from 23.6% for fiscal year
2007. The gross margin decline was mainly due to higher corn prices
and more sales from lower gross margin cornstarch. The new glucose
production facility, which was completed at July 2008, with an
annual production capacity of 120,000 tons, will increase the
Company's glucose production in the near future. As a result, the
majority of cornstarch we produced will be consumed internally,
thus improving the gross profit margin in the future. Selling,
general and administrative (SG&A) expenses for the fiscal year
ended June 30, 2008 were $7.39 million, an increase of $2.72
million, or 58% compared with fiscal year 2007. The Company
incurred higher SG&A expenses as it expanded the domestic sales
network. Selling expenses accounted for 4.7% of total revenue in
FY08, as compared 5.7% of total revenue in FY07. In addition, the
Company also recorded a non-cash stock option expense totaling
$317,636 during FY2008. Overall, SG&A expenses accounted for
8.1% of total revenue in FY2008 as compared to 9.0% in FY2007 as
the increased spending help generate greater sales revenue.
Operating income increased 71% to $12.87 million from $7.50 million
in the prior year. Operating margin during fiscal 2008 was 14.2%, a
slight decline when compared with 14.5% from a year ago. Interest
expenses grew from $ 1.27 million in the FY07 to $ 2.45 million in
the FY08 reflecting a 92.7% year-over-year increase. The interest
expenses growth was mainly due to increased short-term revolving
loans and short term notes payables with the local branches of
seven national banks. Tax rate for Shengtai's China operations in
FY08 was 12%, same as in the FY07. As a Sino-foreign joint venture,
Shengtai Pharmaceutical enjoyed the 2 year tax holiday and 3 year
50% tax reduction. For FY08, Shengtai was in the fourth year of tax
benefit program granted by the government. The prevailing corporate
income tax rate in China is now 25%. Record net income grew 46% to
$10.41 million and fully diluted earnings per share were $0.52,
compared with $7.15 million, or fully diluted earnings per share of
$0.62 in fiscal year 2007. The weighted average number of shares on
fully diluted basis increased by 73% to 19,874,486 shares in fiscal
year 2008 versus 11,477,545 shares in fiscal year 2007. The
disparity between the growth of the amount of net income and that
of diluted EPS is due to the increase in the weighted average
number of common stock for the purpose of calculating EPS on fully
diluted basis, which was caused by the issuance of stocks and
warrants in the $17.5 million financing closed in May 2007. The net
income margin was 11.5% compared with 13.8% same period last year.
Financial Condition As of June 30, 2008, Shengtai Pharmaceutical
had cash and restricted cash totaled $10.17 million. In fiscal
2008, the Company generated $7.48 million in cash flow from
operations as compared to $5.55 million in the same period in FY07.
DSO as of FY08 was 30 days as compared to 38 days for FY07. At June
30, 2008, the Company has short-term debt totaled $22.66 million
and $2.65 million of long-term debt outstanding. The Company's
total shareholders' equity increased to $46.76 million from $31.63
million at June 30, 2007. Business Outlook Ms. Yiru Shi, Chief
Financial Officer of Shengtai Pharmaceutical, commented, "Over the
past two years, we have invested heavily for growth through major
capital investments to vertically integrate our business and expand
our glucose production capacity. We are now nearing the end of this
major transformation. We are not planning any in house projects in
fiscal year 2009 that will require additional large capital
expenditures. As a result, our day-to-day operating cash flows and
liquidity positions should improve considerably. In addition, our
vertically integrated in house cornstarch production facility will
relatively lower our exposure to raw material and commodity pricing
volatility. With this new production capacity, we expect to
increase the sales of our higher-margin products such as
pharmaceutical grade glucose which will help improve the overall
gross margin." "We are very excited about the prospects and
opportunities in 2009, as our recent expansion has positioned the
Company to capture shares in the growing market for pharmaceutical
grade glucose products in China," stated Mr. Qingtai Liu, Shengtai
Pharmaceutical's CEO. "Shengtai Pharmaceutical is already one of
the top domestic producers of pharmaceutical graded glucose
products such as dextrose monohydrate and dextrose anhydrous. We
will continue to fuel the strong demand from urban populations who
are in need of higher quality pharmaceutical product offerings and
better living standards. As for other potential markets, we see the
Chinese government subsidized rural healthcare system is creating
greater demand for pharmaceutical products in rural areas. We also
see a great opportunity in international markets, as we have
already exported to developed countries such as Japan, Korea and
Australia. As a result, our pharmaceutical graded glucose business
is poised for solid growth in the coming years." Mr. Liu added, "In
order to better serve the growing number of domestic and
international customers, we have proactively recruited a number of
new sales staff as well as made exciting new changes to our sales
department. As part of this new realignment, we divided the
original glucose sales department into three separate units along
product lines: 1) monohydrate glucose, 2) anhydrous glucose and 3)
food and beverage grade glucose. We believe these steps will help
to ensure the anticipated ramp up in sales as we enter fiscal year
2009. " Conference Call The Company will host a conference call and
webcast on Tuesday September 30, 2008 at 9:00 A.M. Eastern Daylight
Time / 9:00 P.M. Beijing Time. A question and answer session will
follow management's presentation. Mr. Qingtai Liu (Chief Executive
Officer), Ms. Yiru Shi (Chief Financial Officer), and Ms. Michelle
Wang (Investor Relations Manager) will be the primary speakers on
the call. To participate, please call the following numbers ten
minutes before the call start time: Phone Number + 1 (877) 407-8035
(North America) Phone Number + 1 (201) 689-8035 (International) A
live webcast of the conference call will be available on the
Investor Relations page of Shengtai Pharmaceutical's web site at
http://www.shengtaipharmaceutical.com/. Please visit the Web site
at least 15 minutes early to register for the webcast and download
any necessary audio software. A replay of the call will be
available through Tuesday, October 7, 2008, at 11:59 P.M. Eastern
Daylight Time/ Wednesday, October 8, 2008, 11:59 A.M. Beijing Time.
For the replay, please call: Phone Number +1 (877) 660-6853 (North
America) Phone Number +1 (201) 612-7415 (International) Account
Number: 286 Conference ID Number: 297898 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
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. 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. Shengtai
Pharmaceutical, Inc. And Subsidiaries Consolidated Statements of
Income and Other Comprehensive Income For years ended June 30, 2008
and 2007 2008 2007 SALES REVENUE $ 90,871,223 $ 51,706,215 COST OF
SALES 70,613,757 39,527,662 GROSS PROFIT 20,257,466 12,178,553
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 7,390,623 4,674,679
INCOME FROM OPERATIONS 12,866,843 7,503,874 OTHER (EXPENSE) INCOME:
Earnings in income of unconsolidated affiliate 272,239 131,420 Gain
from sales of land use right - 1,647,833 Other income 584,749
121,798 Other expense (391,858) (225,898) Interest expense and
other charges (2,447,608) (1,270,418) Interest income 171,948
119,353 Other income (expense), net (1,810,530) 524,088 INCOME
BEFORE PROVISION FOR INCOME TAXES 11,056,313 8,027,962 PROVISION
FOR INCOME TAXES 645,988 878,836 NET INCOME 10,410,325 7,149,126
OTHER COMPREHENSIVE INCOME: Foreign currency translation
adjustments 3,890,123 641,596 COMPREHENSIVE INCOME $ 14,300,448 $
7,790,722 Earning per share - basic $ 0.55 $ 0.64 Earning per share
- diluted $ 0.52 $ 0.62 Weighted average number of shares
outstanding - basic 18,993,789 11,251,712 Weighted average number
of shares outstanding - diluted 19,874,486 11,477,545 Shengtai
Pharmaceutical, Inc. And Subsidiaries Consolidated Balance Sheets
As of June 30, 2008 and June 30, 2007 ASSETS ------ 2008 2007
CURRENT ASSETS: Cash and cash equivalents $ 3,405,606 $ 6,420,439
Restricted cash 6,763,500 6,128,500 Accounts receivable, net of
allowance for doubtful accounts of $440,701 and $431,178 as of June
30, 2008 and 2007, respectively 7,614,236 5,779,967 Notes
receivable 458,630 984,675 Other receivables 691,215 2,984,484
Other receivables - related parties - 2,491,656 Other receivables -
shareholder - 1,229,625 Loan to related party - 657,500 Inventories
5,039,278 4,449,267 Prepayments 310,381 140,376 Total current
assets 24,282,846 31,266,489 PLANT AND EQUIPMENT, net 69,943,021
30,178,074 OTHER ASSETS: Investment in unconsolidated affiliate
3,607,912 2,675,678 Loan to related party - non-current 437,700
394,500 Prepayments - non-current - 7,429,371 Intangible assets,
net 3,042,183 1,816,021 Total other assets 7,087,795 12,315,570
Total assets $ 101,313,662 $ 73,760,133 LIABILITIES AND
SHAREHOLDERS' EQUITY ------------------------------------- CURRENT
LIABILITIES: Accounts payable $ 7,669,728 $ 3,807,997 Accounts
payable - related party 714,776 949,992 Notes payable - banks
10,942,500 8,942,000 Short term loans 22,658,270 18,870,250 Accrued
liabilities 261,187 229,643 Other payable 2,146,108 1,526,903
Employee loans 1,382,287 596,516 Employee Loan - officer 53,605 -
Third party loan 640,228 318,274 Customer deposit 804,323 796,228
Long term loan - current maturities - 381,350 Taxes payable
4,631,252 2,048,932 Total current liabilities 51,904,264 38,468,085
LONG TERM LIABILITIES Other payable - noncurrent 2,653,995
3,661,472 Total long term liabilities 2,653,995 3,661,472 Total
liabilities 54,558,259 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, 19,094,805
and 18,875,000 shares issued and outstanding as of June 30, 2008
and 2007, respectively 19,095 18,875 Paid-in capital 19,987,708
19,163,549 Statutory reserves 2,894,902 1,735,484 Retained earnings
19,136,577 9,885,670 Accumulated other comprehensive income
4,717,121 826,998 Total shareholders' equity 46,755,403 31,630,576
Total liabilities and shareholders' equity $ 101,313,662 $
73,760,133 Shengtai Pharmaceutical, Inc. And Subsidiaries
Consolidated statements of Cash Flows For the years ended June 30,
2008 and 2007 2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES: Net
income $ 10,410,325 $ 7,149,126 Adjustments to reconcile net income
to cash provided by operating activities: Depreciation 2,964,678
2,239,157 Amortization 57,254 42,644 Bad debt expense 93,557
271,602 Stock option expense 317,636 - (Gain) loss on building and
equipment disposal (169,726) 186,470 Gain on disposal of land use
right - (1,647,833) Equity in income of unconsolidated investment
(603,261) (131,420) Change in operating assets and liabilities:
Accounts receivable (1,127,048) (2,288,351) Notes receivable
(2,274,840) (591,936) Other receivables 1,994,157 (582,008) Other
receivables - related parties 2,608,944 (2,427,043) Other
receivables - shareholder 1,292,742 (366,185) Inventories (304,476)
(2,394,250) Prepayments (165,981) 99,957 Prepayments - related
party - 1,409,944 Accounts payable (7,730,549) 1,773,031 Accounts
payable - related party (320,156) 390,986 Accrued liabilities
(781,690) 130,238 Other payable (906,285) 410,174 Customer deposit
(74,646) 492,586 Taxes payable 2,201,518 1,385,613 Net cash
provided by operating activities 7,482,153 5,552,502 CASH FLOWS
FROM INVESTING ACTIVITIES: Investment in affiliate - (909,439)
Proceeds from building and equipment disposal 139,163 - Acquisition
of plant and equipment (14,517,157) (11,041,561) Acquisition of
intangible assets (296,893) (949,900) Advances on plant and
equipment purchase - (7,225,790) Repayments on loan to related
party 688,450 - Loan to related party - (1,024,720) Net cash used
in investing activities (13,986,437) (21,151,410) CASH FLOWS FROM
FINANCING ACTIVITIES: Increase in restricted cash (524,140)
(2,024,720) Borrowings on notes payable - banks 11,703,650
8,710,120 Principal payments on notes payable - banks (10,739,820)
(7,173,040) Borrowings on short term loans 21,383,257 24,785,415
Principal payments on short term loans (19,758,515) (15,178,665)
Borrowings on employee loans 1,458,353 384,224 Principal payments
on employee loans (778,444) (458,632) Borrowings on employee loan -
officer 53,605 1,281 Principal payments on employee loan - officer
- (96,580) Borrowings on third party loan 3,139,855 251,378
Principal payments on third party loan (2,868,909) - Borrowings on
long term loan - - Principal payments on long term loan (399,301)
(1,549,889) Proceeds from issuance of common stock 506,743
15,256,428 Payments of amounts due officer - (1,925,996) Proceeds
from capital contribution receivable - 696,371 Dividends paid to
shareholders - - Net cash provided by financing activities
3,176,334 21,677,695 EFFECTS OF EXCHANGE RATE CHANGE IN CASH
313,117 (160,805) (DECREASE) INCREASE IN CASH (3,014,833) 5,917,982
CASH, beginning of year 6,420,439 502,457 CASH, end of year $
3,405,606 $ 6,420,439 SUPPLEMENTAL DISCLOSURE Cash paid for
Interest, net of capitalized interest $ 1,901,531 $ 1,270,418 Cash
paid for Income taxes $ 14,809 $ 125,782 Non-cash investing and
financing activities - Acquisition of land use right in exchange
for other receivable $ 692,304 $ -- DATASOURCE: Shengtai
Pharmaceutical, Inc. CONTACT: Ms. Yiru Shi, Chief Financial Officer
of Shengtai Pharmaceutical, Inc., +1-949-468-7078, ; or Eddie
Cheung, Investor Relations, of Grayling Global for Shengtai
Pharmaceutical, Inc., +1-646-284-9414, Web Site:
http://www.shengtaipharmaceutical.com/
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