WEIFANG, Shandong, China, Nov. 13 /Xinhua-PRNewswire-FirstCall/ --
Shengtai Pharmaceutical, Inc. (OTC:SGTI) (BULLETIN BOARD: SGTI)
("Shengtai" or "the Company"), a leading manufacturer and
distributor of high-quality, pharmaceutical grade glucose products
in China, today reported financial results for the first quarter of
fiscal 2009 ended September 30, 2008. First Quarter 2009 Financial
Summary -- First quarter 2009 revenues totaled $18.12 million --
First quarter had positive operating cash flow of $2.46 million --
Cash and restricted cash of $7.19 million "Sales of our cornstarch
and glucose products during the first quarter were impacted by the
events of the Beijing Olympics. Our cornstarch products sales to
the food and beverage industry were disrupted, as the Chinese
government placed multiple restrictions on manufacturing and
transportation during the weeks leading up to the events in August
in an effort to reduce pollution," said Mr. Qingtai Liu, Shengtai
Pharmaceutical's CEO. "However, we believe these events are
temporary in nature and do not pose a long-term challenge to our
operations. In the coming quarters, we expect a gradual recovery of
the food and beverage industry. Moreover, the recent restructuring
of the international sales team will position us to take advantage
of opportunities in targeted overseas markets. The international
sales team recently attended the Guangzhou International Fair and
presented Shengtai's products. The response from potential
customers was positive and we are encouraged by this positive
feedback." First Quarter Fiscal 2009 Financial Results First
quarter 2009 revenues were $18.12 million, a 6.4% decrease year-
over-year compared to the $19.37 million reported in the first
quarter of fiscal 2008. Sales of glucose products totaled $8.2
million during the first quarter as it accounted for 45.3% of
sales. Cornstarch sales for the quarter totaled $5.2 million or
28.6% of revenues. Sales of other products totaled $4.7 million or
26.1% of revenues. Gross profit for the three months ended
September 30, 2008 was $3.19 million compared with $4.59 million
the same period last year. Gross margin was 17.6%, a decline from
23.7% in the first quarter of fiscal 2008. The decline in gross
margin in the first quarter was primarily driven by a decrease in
the sales of our cornstarch products. We also experienced an
increase in competition in the market for cornstarch, which lowered
the average selling price of our cornstarch products. Selling,
general and administrative (SG&A) expenses for the three months
ended September 30, 2008 were $2.43 million, an increase of
$733,235 compared with the same period last year. The increase in
selling, general and administrative expenses was partly the result
of higher labor cost and increased in bad debt expenses. In
addition, the Company incurred higher administrative expenses such
as stock-based compensation and other professional fees as a
publicly listed company. Non-cash stock option expenses totaled
$158,818 during the 2009 fiscal first quarter. First quarter 2009
net income was $629,796 or 3 cents per diluted share, compared to
first quarter 2008 net income of $2.25 million or 11 cents per
diluted share. Financial Condition As of September 30, 2008,
Shengtai Pharmaceutical had cash and restricted cash totaling $7.19
million. The Company generated $2.46 million in positive cash flow
from operations during the first quarter. The Company's short-term
debt totaled $21.74 million and long-term debt totaled $2.27
million. The Company's total shareholders' equity increased to
$47.71 million. Business Outlook Based on its current outlook, and
existing and anticipated business conditions, Shengtai expects net
income for the fiscal year ending June 30, 2009 to grow by
approximately 20%. Mr. Qingtai Liu, Shengtai Pharmaceutical's CEO
commented, "Over the past few years, due to our production capacity
constraint, we were unable to meet the demand from our customers.
With the new facility opened in October 2008, we have the ability
to meet the growing demand for our pharmaceutical grade glucose
products. We continue to improve our product mix, and focus on
higher-margin sustainable pharmaceutical grade glucose products
sales. The recently announced stimulus package by the Chinese
government came just in time to bolster the healthcare market
growth. As one of only three licensed dextrose monohydrate glucose
manufacturers, with nearly a 40% share of the existing market in
China, we already enjoy a high barrier of entry and a
well-established reputation with our customers. With all these
favorable elements, we are confident that we will achieve
continuous growth in fiscal year 2009." "The $586 billion stimulus
package announced by the Chinese government should help to
stabilize the overall domestic economy. The stimulus package should
improve the nation's healthcare system by increasing
healthcare-related spending in the urban markets, in community
clinics as well as medical insurance establishments in rural areas.
We stand to benefit as the government invests to open up
potentially bigger and untapped rural end- markets," Mr. Liu
concluded. The approaching winter months are normally the high
season for cold and flu. Management expects to see an increase in
the demand for the Company's pharmaceutical graded glucose
products. In China, IV drips are widely used in hospitals to treat
the symptoms of cold and flu. Management also believes that
cornstarch inventories in the marketplace are decreasing, a
favorable condition which may lead to higher average selling prices
of cornstarch going forward. The Company believes the sales of
pharmaceutical grade glucose and cornstarch products will benefit
from these trends in the coming quarters. Conference Call The
Company will host a conference call and webcast on Friday November
14, 2008 at 9:00 A.M. Eastern Standard Time / 10:00 P.M. Beijing
Time. A question and answer session will follow management's
presentation. Mr. Qingtai Liu (Chief Executive Officer), Ms. Melody
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 Friday, November 21, 2008, at 11:59 P.M. Eastern
Standard 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: 302820
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/ . Forward-looking Statements
Certain statements made in this news release, may contain
forward-looking statements concerning the Company's business and
products. 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. Consolidated Statements of Income and Other
Comprehensive Income For the three months ended September 30, 2008
and 2007 (Unaudited) Three months ended September 30, 2008 2007
SALES REVENUE $ 18,123,728 $ 19,373,069 COST OF SALES 14,931,187
14,779,032 GROSS PROFIT 3,192,541 4,594,037 SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 2,429,790 1,696,555 INCOME FROM OPERATIONS
762,751 2,897,482 OTHER INCOME (EXPENSE): Earnings on equity
investment 1,851 148,779 Other income 11,869 39,747 Other expense
(8,910) (177,349) Interest expense and other charges (21,839)
(416,464) Interest income 17,293 66,161 Other income (expense), net
264 (339,126) INCOME BEFORE PROVISION FOR INCOME TAXES 763,015
2,558,356 PROVISION FOR INCOME TAXES 133,219 305,845 NET INCOME
629,796 2,252,511 OTHER COMPREHENSIVE INCOME: Foreign currency
translation adjustments 164,273 445,097 COMPREHENSIVE INCOME $
794,069 $ 2,697,608 EARNINGS PER SHARE Basic $ 0.03 $ 0.12 Diluted
$ 0.03 $ 0.11 WEIGHTED AVERAGE NUMBER OF SHARES Basic 19,094,805
18,875,000 Diluted 19,353,448 19,697,359 Shengtai Pharmaceutical,
Inc. Consolidated Balance Sheets As of September 30, 2008 and June
30, 2008 ASSETS September 30, June 30, 2008 2008 (Unaudited)
CURRENT ASSETS: Cash $ 1,621,671 $ 3,405,606 Restricted cash
5,570,525 6,763,500 Accounts receivable, net of allowance for
doubtful accounts of $486,406 and $440,701 as of September 30, 2008
and June 30, 2008, respectively 5,189,101 7,614,236 Notes
receivable 822,513 458,630 Other receivables 699,333 691,215
Inventories 4,626,569 5,039,278 Loan to related party - non-current
438,900 Prepayments 195,058 310,381 Total current assets 19,163,670
24,282,846 PLANT AND EQUIPMENT, net 72,326,330 69,943,021 OTHER
ASSETS: Investment in Changle Shengshi Redian Co., Ltd. 3,620,009
3,607,912 Loan to related party - non-current -- 437,700 Intangible
assets - land use right, net of accumulated amortization 3,037,480
3,042,183 Total other assets 6,657,489 7,087,795 Total assets $
98,147,489 $ 101,313,662 LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES: Accounts payable $ 7,662,624 $ 7,669,728
Accounts payable - related parties 534,740 714,776 Notes payable -
banks 8,543,920 10,942,500 Short term loans 21,740,180 22,658,270
Accrued liabilities 303,357 261,187 Other payable 2,361,874
2,146,108 Employee loans 1,294,292 1,382,287 Employee loan -
officer 53,738 53,605 Third party loan 362,521 640,228 Customer
deposit 1,412,531 804,323 Taxes payable 3,902,402 4,631,252 Total
current liabilities 48,172,179 51,904,264 LONG TERM LIABILITIES:
Other payable - noncurrent 2,267,020 2,653,995 Total long term
liabilities 2,267,020 2,653,995 Total liabilities 50,439,199
54,558,259 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 shares
issued and outstanding as of September 30, 2008 and June 30, 2008,
respectively 19,095 19,095 Paid-in capital 20,146,526 19,987,708
Statutory reserves 2,894,902 2,894,902 Retained earnings 19,766,373
19,136,577 Accumulated other comprehensive income 4,881,394
4,717,121 Total shareholders' equity 47,708,290 46,755,403 Total
liabilities and shareholders' equity $ 98,147,489 $ 101,313,662
Shengtai Pharmaceutical, Inc. Consolidated Statements of Cash Flows
For the three months ended September 30, 2008 and 2007 (Unaudited)
2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $
629,796 $ 2,252,511 Adjustments to reconcile net income to cash
provided by operating activities: Depreciation 951,659 686,653
Amortization 13,051 11,809 Allowance for bad debts 226,911 -- Loss
on disposal of land use right -- 5,903 Share based compensation to
employees 158,818 -- Earnings on equity investment (2,207)
(148,779) Change in operating assets and liabilities: Accounts
receivable 2,220,604 (516,885) Notes receivable (685,757) (860,590)
Other receivables (10,957) 479,437 Other receivables - related
parties -- 1,510,151 Other receivables - shareholder -- (34,668)
Inventories 426,788 778,620 Prepayments 175,061 33,913 Deferred
assets (58,966) -- Accounts payable (1,069,660) (1,529,592)
Accounts payable - related parties (727,816) 31,921 Accrued
liabilities 535,069 (77,963) Other payable (184,454) (110,003)
Customer deposit 606,375 1,192,497 Taxes payable (742,003) 643,363
Net cash provided by operating activities 2,462,312 4,348,298 CASH
FLOWS FROM INVESTING ACTIVITIES: Acquisition of plant and equipment
(1,723,339) (2,489,638) Acquisition of intangible assets --
(319,798) Advances on plant and equipment purchase -- (2,076,530)
Net cash used in investing activities (1,723,339) (4,885,966) CASH
FLOWS FROM FINANCING ACTIVITIES: Release of restricted cash
1,211,722 3,046,580 Borrowings on notes payable - banks 1,961,626
1,324,600 Payments on notes payable - banks (4,391,700) (6,093,160)
Borrowings on short term loans 1,463,900 887,482 Payments on short
term loans (2,444,713) (3,616,158) Borrowings on employee loans
201,287 -- Payments on employee loans (293,128) (90,905) Payments
on third party loan (279,634) -- Net cash used in financing
activities (2,570,640) (4,541,561) EFFECTS OF EXCHANGE RATE CHANGE
IN CASH 47,732 41,437 DECREASE IN CASH (1,783,935) (5,037,792)
CASH, beginning of period 3,405,606 6,420,439 CASH, end of period $
1,621,671 $ 1,382,647 SUPPLEMENTAL DISCLOSURE Cash paid for
Interest, net of capitalized interest $ -- $ 406,325 Cash paid for
Income taxes $ 731,950 $ 13,445 Non-cash investing and financing
activities - Acquisition of plant and equipment through advances on
plant and and equipment purchase $ 1,093,496 $ 2,754,637
Acquisition of plant and equipment in exchange for note receivable
and other receivables $ 327,638 $ -- For more information, please
contact: Shengtai Pharmaceutical, Inc. Ms. Yiru Melody Shi Chief
Financial Officer Tel: +1-949-468-7078 Email: Grayling Global Eddie
Cheung Investor Relations Tel: +1-646-284-9414 Email: DATASOURCE:
Shengtai Pharmaceutical, Inc. CONTACT: Shengtai Pharmaceutical,
Inc. - Ms. Yiru Melody Shi, Chief Financial Officer,
+1-949-468-7078, or ; Grayling Global - Eddie Cheung of Investor
Relations, +1-646-284-9414, or Web Site:
http://www.shengtaipharmaceutical.com/
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