WEIFANG, Shandong, China, Feb. 13 /PRNewswire-Asia-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 second quarter
of fiscal 2009 ended December 31, 2008. "Sales of our glucose
products increased during the second quarter compared with the
September quarter," said Mr. Qingtai Liu, Shengtai Pharmaceutical's
CEO. "Sales of our cornstarch and other products were impacted in
the second quarter due to lower demand from the food and beverage
sector along with slower economic growth. We believe that the solid
demand for glucose products and the increased healthcare spending
included in the Chinese government's recently approved 850 billion
RMB healthcare reform plan, will propel the continued growth of our
domestic glucose business. With the growth of our higher-margin
glucose business, we look to consume more cornstarch internally to
feed our glucose production, as our cornstarch plant directly
connects into our glucose plant through pipes, eliminating
shipping, lowering manufacturing costs and ensuring quality.
Furthermore, we are pleased to see the declining corn prices in
recent months, which will help improve our margins." "On the sales
front, our sales team is aggressively seeking new strategic
partnerships, both domestically and internationally, to increase
our market share and expand sales channels. In the midst of
healthcare reform including new hospital build-out and increased
healthcare budgets, many of our key customers are actively
launching new products including higher margin non-PVC soft
packaging transfusion products. We continue to engage with our
current customers in an effort to increase their purchase volumes,
as we seek to better understand their current procurement needs and
new product development plans. With our new state-of-the-art
glucose facilities, we now have the production capacity to meet the
anticipated increase in glucose demand. We believe that we are well
positioned to benefit from the fast growing healthcare spending in
China," Mr. Liu concluded. Second Quarter Fiscal 2009 Financial
Results Second quarter 2009 revenues were $14.80 million, as
compared to $24.95 million reported in the second quarter of fiscal
2008. Sales of glucose products rose to $9.25 million during the
second quarter, representing 62.5% of revenues and 12.7%
quarter-over-quarter growth. Cornstarch sales for the quarter
totaled $2.03 million or 13.7% of revenues. Sales of other products
totaled $3.52 million, or 23.8% of revenues. Gross profit for the
three months ended December 31, 2008, was $1.99 million compared
with $5.87 million in the same period last year. Gross margin for
the quarter was 13.5%, as compared with 23.5% in the second quarter
of fiscal 2008 primarily due to lower overall sales, reduced
cornstarch and other products production, and higher depreciation
costs from our new production facilities. Selling, general and
administrative (SG&A) expenses were $2.32 million, an increase
of $508,509 compared with the second quarter last year. The
increase in SG&A expenses was mainly the result of higher labor
costs. Non-cash stock option expenses for the quarter were
$158,818. Operating income for the quarter was a loss of $328,730.
Net loss for the second quarter 2009 was $473,887 compared with net
income of $3.13 million for the year-ago same quarter. Financial
Condition As of December 31, 2008, the Company's cash and cash
equivalents and restricted cash increased to $13.2 million. The
Company's total shareholders' equity amounted to $47.52 million.
Business Outlook "For the 2009 third quarter, we expect sales of
our pharmaceutical grade glucose will continue to grow and
cornstarch and other products should begin to show a recovery,"
stated Mr. Qingtai Liu, Shengtai Pharmaceutical's CEO. "As we look
further into the second half of our fiscal year 2009, we expect our
domestic glucose business will further benefit as the government
builds more rural hospitals and community health clinics as part of
the 850 billion RMB health care reform package. As more patients
receive basic health coverage, we believe there will be increased
demand for our glucose as medical transfusions are the most common
form of medical treatment in China. We continue to execute our plan
to optimize our product portfolio by expanding our glucose
business, which carries a higher gross margin than our cornstarch
business. As an industry leader in the production of pharmaceutical
grade glucose with about 40% of China's glucose market share, as
well as being one of only three certified Dextrose Monohydrate
manufacturer in China, we are confident in our long-term growth
opportunities, and in our ability to succeed as a leading supplier
of high-quality, pharmaceutical grade glucose products," Mr. Liu
concluded. Conference Call The Company will host a conference call
and webcast on Friday February 13, 2009 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. Yiru Melody Shi (Chief Financial
Officer), and Ms. Haining 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 by accessing the below website at
http://www.investorcalendar.com/IC/CEPage.asp?ID=141087 or on the
Investor Relations page of Shengtai Pharmaceutical's website at
http://www.shengtaipharmaceutical.com/ . Please visit the website
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 Saturday, February 21, 2009, 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: 313673
About Shengtai Pharmaceutical, Inc. Shengtai Pharmaceutical, Inc.
through its wholly owned subsidiary, Shengtai Holding, Inc. (SHI),
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 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.
These factors 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 products' 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 and six months ended December
31, 2008 and 2007 (Unaudited) Three months ended Six months ended
December 31, December 31, 2008 2007 2008 2007 SALES REVENUE
$14,795,746 $24,954,288 $32,919,474 $44,327,357 COST OF SALES
12,801,591 19,086,274 27,732,778 33,865,306 GROSS PROFIT 1,994,155
5,868,014 5,186,696 10,462,051 SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 2,322,885 1,814,376 4,752,675 3,510,931 INCOME (LOSS) FROM
OPERATIONS (328,730) 4,053,638 434,021 6,951,120 OTHER INCOME
(EXPENSE): Earnings on equity investment 31,561 977 33,412 149,756
Other income 43,312 69,962 55,181 109,709 Other expense (242,202)
(26,495) (251,112) (203,844) Interest expense and other charges
(41,667) (519,417) (63,506) (935,881) Interest income 79,380 32,243
96,673 98,404 Other income (expense), net (129,616) (442,730)
(129,352) (781,856) INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES
(458,346) 3,610,908 304,669 6,169,264 PROVISION FOR INCOME TAXES
15,541 481,323 148,760 787,168 NET INCOME (LOSS) (473,887)
3,129,585 155,909 5,382,096 OTHER COMPREHENSIVE INCOME: Foreign
currency translation adjustments 123,453 140,556 287,726 1,412,651
COMPREHENSIVE INCOME (LOSS) $(350,434) $3,270,141 $443,635
$6,794,747 EARNINGS (LOSS) PER SHARE Basic $(0.02) $0.17 $0.01
$0.28 Diluted $(0.02) $0.15 $0.01 $0.27 WEIGHTED AVERAGE NUMBER OF
SHARES Basic 19,123,338 18,961,992 19,109,149 18,918,496 Diluted
19,123,338 20,296,006 19,109,149 20,000,956 Shengtai
Pharmaceutical, Inc. Consolidated Balance Sheets As of December 31,
2008 and June 30, 2008 ASSETS December 31, June 30, 2008 2008
(Unaudited) CURRENT ASSETS: Cash $6,881,595 $3,405,606 Restricted
cash 6,319,465 6,763,500 Accounts receivable, net of allowance for
doubtful accounts of $493,507 and $440,701 as of December 31, 2008
and June 30, 2008, respectively 6,192,651 7,614,236 Notes
receivable 703,206 458,630 Other receivables 175,554 691,215
Inventories 6,773,059 5,039,278 Prepayments 217,503 310,381 Loan to
related party 440,100 -- Total current assets 27,703,133 24,282,846
PLANT AND EQUIPMENT, net 70,803,112 69,943,021 OTHER ASSETS:
Investment in Changle Shengshi Redian Co., Ltd. 3,665,602 3,607,912
Loan to related party - noncurrent -- 437,700 Intangible assets -
land use right, net of accumulated amortization 3,032,706 3,042,183
Total other assets 6,698,308 7,087,795 Total assets $105,204,553
$101,313,662 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT
LIABILITIES: Accounts payable $7,377,921 $7,669,728 Accounts
payable - related parties 1,104,312 714,776 Notes payable - banks
10,767,780 10,942,500 Short term loans 23,266,620 22,658,270
Accrued liabilities 257,281 261,187 Other payable 2,474,936
2,146,108 Employee loans 1,080,531 1,382,287 Employee loan -
officer 53,871 53,605 Third party loan 242,783 640,228 Customer
deposit 1,203,835 804,323 Taxes payable 2,863,436 4,631,252 Current
portion of capital lease obligations 58,445 -- Total current
liabilities 50,751,751 51,904,264 LONG TERM LIABILITIES: Capital
lease obligation, net of current portion 5,076,055 -- Other payable
- noncurrent 1,859,323 2,653,995 Total long term liabilities
6,935,378 2,653,995 Total liabilities 57,687,129 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, 19,169,805 and 19,094,805 shares
issued and outstanding as of December 31, 2008 and June 30, 2008,
respectively 19,170 19,095 Paid-in capital 20,306,019 19,987,708
Statutory reserves 3,003,993 2,894,902 Retained earnings 19,183,395
19,136,577 Accumulated other comprehensive income 5,004,847
4,717,121 Total shareholders' equity 47,517,424 46,755,403 Total
liabilities and shareholders' equity $105,204,553 $101,313,662
Shengtai Pharmaceutical, Inc. Consolidated Statements of Cash Flows
For the six months ended December 31, 2008 and 2007 (Unaudited)
2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $155,909
$5,382,096 Adjustments to reconcile net income to cash (used in)
provided by operating activities: Depreciation 2,124,286 1,187,166
Amortization 26,110 23,820 Bad debt expense 77,061 -- Stock option
expense 317,636 -- (Gain) Loss on equipment disposal 201,766
(90,098) Loss on disposal of land use right -- 5,955 Earnings on
equity investment (33,412) (149,756) Change in operating assets and
liabilities: Accounts receivable 1,383,582 (311,689) Notes
receivable (243,183) (772,571) Other receivables 482,406 1,186,223
Other receivables - related party -- 2,531,257 Other receivables -
shareholder -- 1,254,248 Inventories (1,703,009) 159,692
Prepayments (1,549,571) (472,365) Accounts payable 1,492,834
(1,668,080) Accounts payable - related parties (717,373) (293,176)
Accrued liabilities - related party (61,824) -- Accrued liabilities
1,102,279 (150,906) Other payable (2,538,294) (313,162) Customer
deposit 394,375 417,062 Payable - officer -- 31,145 Taxes payable
(1,789,911) 1,671,334 Net cash (used in) provided by operating
activities (878,333) 9,628,195 CASH FLOWS FROM INVESTING
ACTIVITIES: Purchase of plant and equipment (1,033) (28,455)
Proceeds from equipment disposal 5,125,050 34,733 Additions to
construction in progress (841,746) (5,865,225) Acquisition of land
use right -- (317,183) Purchase of software program -- (5,343)
Advances on plant and equipment purchase -- (5,226,396) Loan
repayment from related party -- 667,950 Net cash provided by (used
in) investing activities 4,282,271 (10,739,919) CASH FLOWS FROM
FINANCING ACTIVITIES: Decrease in restricted cash 479,144 3,842,060
Borrowings on notes payable - banks 10,747,962 1,335,900 Payments
on notes payable - banks (10,982,250) (9,084,120) Borrowings on
short term loans 4,392,900 3,566,853 Payments on short term loans
(3,909,682) (7,440,963) Borrowings on employee loans 787,061
1,271,112 Payments on employee loans (1,095,828) (137,616)
Borrowings on third party loan 113,633 1,781,556 Payments on long
term loans (513,852) -- Cash proceeds from issuance of common stock
750 506,493 Net cash provided by (used in) financing activities
19,838 (4,358,725) EFFECTS OF EXCHANGE RATE CHANGE IN CASH 52,213
96,016 INCREASE (DECREASE) IN CASH 3,475,989 (5,374,433) CASH,
beginning of period 3,405,606 6,420,439 CASH, end of period
$6,881,595 $1,046,006 For more information, please contact:
Shengtai Pharmaceutical, Inc. Ms. Yiru Melody Shi Chief Financial
Officer Email: Grayling Eddie Cheung Investor Relations Tel:
+1-646-284-9414 Email: DATASOURCE: Shengtai Pharmaceutical, Inc.
CONTACT: Ms. Yiru Melody Shi, Chief Financial Officer of Shengtai
Pharmaceutical, Inc., ; or Eddie Cheung, Investor Relations,
Grayling, +1-646-284-9414, Web site:
http://www.shengtaipharmaceutical.com/
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