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Shengtai Pharmaceutical, Inc. Reports Unaudited Third Quarter Fiscal 2009 Financial Results

WEIFANG, Shandong, China, May 15 /PRNewswire-Asia-FirstCall/ -- Shengtai Pharmaceutical, Inc. (OTC Bulletin Board: SGTI) ("Shengtai" or "the Company"), a leading manufacturer and distributor of high-quality, pharmaceutical grade glucose products in China, today reported unaudited financial results for the third quarter of fiscal 2009 ended March 31, 2009.

"The global economic environment has impacted our operations thus far in fiscal year 2009, as our third quarter financial results generated lower sales volume and lower average selling prices for our cornstarch and other products when compared to the same period last year," said Mr. Qingtai Liu, Shengtai Pharmaceutical's CEO. "However, we are beginning to see higher level of market activities, as unit shipments for these two segments have increased on a sequential basis. Meanwhile, our glucose product unit shipments posted an 18% year-over-year growth in the last quarter. Glucose revenue growth was 6% in the same period. Lastly, we are also seeing a significant increase in customer deposits during the most recent quarter, an early indication of a pick up in sales in the subsequent quarters."

Mr. Liu continued, "The challenging market conditions have prompted us to initiate a number of cost saving measures throughout our operations which we believe will help us maintain near-term competitiveness. As market conditions improve, we are prepared to leverage our new state-of-the-art manufacturing facility to increase our production utilization rate to meet the growing glucose demand of our customers."

Third Quarter and Nine Months Fiscal 2009 Financial Results

Total revenues for the third quarter of fiscal 2009 were $16.3 million, as compared to $20.7 million the same period last year, and $14.8 million reported in the second quarter of fiscal 2009. Total revenues for the nine months ended March 31, 2009 were $49.2 million, as compared to $65 million for the same period last year.

Sales of glucose products totaled $8.4 million during the third quarter, representing 52% of revenues. Cornstarch sales totaled $3.6 million, or 22% of revenues. Sales of other products totaled $4.3 million, or 26% of revenues. Sales of glucose products for the nine months ended March 31, 2009 totaled $25.9 million, representing 53% of revenues. Cornstarch sales totaled $10.8 million, or 22% of revenues. Sales of other products totaled $12.5 million, or 25% of revenues.

Gross profit for the three months ended March 31, 2009, was $1.0 million compared with $4.5 million the same period last year. Gross margin for the quarter was 6.2%, as compared with 21.6% the same period last year. The decline in gross margin was mainly due to the lower overall sales volumes, and lower average selling prices ("ASP"). Gross profits for the nine months ended March 31, 2009 totaled $6.2 million, a decrease of $8.7 million compared to the same period last year. Gross margin for the nine months ended March 31, 2009 was 12.6%, as compared with 23% the same period last year.

Selling, general and administrative (SG&A) expenses during the quarter were $1.3 million, a decline of $281,754 compared with the third quarter last year. The Company implemented a new sales policy requiring some customers to manage their own shipping and handling, this lowered the Company's overall SG&A expense. Non-cash stock option expenses for the quarter were $158,818. Total SG&A expenses for the nine months ended March 31, 2009 totaled $6.1 million, an increase of $959,990 compared to the same period last year. Total non-cash stock option expenses for the nine months ended March 31, 2009 were $476,454, as compared with $158,818 the same period last year. The Company began granting stock options on January 4, 2008.

Operating loss for the quarter was $304,585 compared with a profit of $2.9 million in the same period last year. Operating income for the nine months ended March 31, 2009 totaled $129,436 as compared with $9.8 million the same period last year.

Net loss for the third quarter 2009 was $661,398, or $0.03 per diluted share compared with net income of $1.9 million, or $0.10 per diluted share the same period last year. Net loss for the nine months ended March 31, 2009 was $505,489, or $0.03 per diluted share compared with net income of $7.3 million, or $0.36 per diluted share the same period last year.

As of March 31, 2009, Shengtai Pharmaceutical had cash and restricted cash totaled $11.2 million. Net cash generated from operating activities for the three month ended March 31, 2009 was $2.0 million.

Business Outlook

Mr. Liu concluded, "The current economic conditions may slow down the demand growth of our cornstarch and other products sales, nonetheless, I am encouraged that our glucose business remains stable and continues to grow. The long-term outlook for our glucose business remains on track. The recently approved healthcare reform spending is designed to expand the healthcare coverage to many people currently without healthcare. Increased government investment and greater product quality control should translate to additional sales opportunities for our high-quality glucose products. As a leading domestic supplier of pharmaceutical grade glucose, we are dedicated to producing products that meet or exceed the highest quality standards. Our modern new production facilities and added capacity, combined with our ability to produce the highest quality products, are key factors that will separate us from our competitors. We will be prepared to take advantage of any additional sales opportunities, especially glucose, resulting from the healthcare reforms. Our stringent cost controls initiatives are designed to help us to remain competitive in the near-term, as we work to build long-term shareholder value."

Conference Call

The Company will host a conference call and webcast on Friday, May 15, 2009 at 8:30 A.M. Eastern Daylight Time / 8:30 P.M. Beijing Time. A question and answer session will follow management's presentation. 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) 407-9205 (North America)
               Phone Number + 1 (201) 689-8054 (International)

A live webcast of the conference call will be available by accessing the below website at the Investor Relations page of Shengtai Pharmaceutical's website at . 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 Thursday, May 21, 2009, at 11:59 P.M. Eastern Daylight 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: 323305

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 .

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.

    For more information, please contact:

    Shengtai Pharmaceutical, Inc.
     Ms. Yiru Melody Shi
     Chief Financial Officer

     Eddie Cheung
     Investor Relations
     Tel:   +1-646-284-9414

                                Tables Follow

                        Shengtai Pharmaceutical, Inc.
                         Consolidated Balance Sheets
                    As of March 31, 2009 and June 30, 2008

                                                March 31,          June 30,
                                                  2009               2008
      Cash                                $      2,249,064 $       3,405,606
      Restricted cash                            8,992,823         6,763,500
      Notes receivable                             149,447           458,630
      Accounts receivable, net of
       allowance for doubtful accounts
       of $492,918 and $440,701 as of
       March 31, 2009 and June 30,
       2008, respectively                        6,518,464         7,614,236
      Other receivables                            249,284           691,215
      Inventories                                6,929,686         5,039,278
      Prepayments                                  371,267           310,381
      Loan to related party                        439,500                --
        Total current assets                    25,899,535        24,282,846

    PLANT AND EQUIPMENT, net                    71,893,618        69,943,021

      Investment in Changle Shengshi
       Redian Co., Ltd.                          3,739,131         3,607,912
      Loan to related party - noncurrent                --           437,700
      Intangible assets - land use right,
       net of accumulated amortization           3,494,976         3,042,183
        Total other assets                       7,234,107         7,087,795

          Total assets                    $    105,027,260 $     101,313,662


      Notes payable - banks               $     13,185,000 $      10,942,500
      Accounts payable                           6,289,009         7,669,728
      Accounts payable - related parties           637,792           714,776
      Short term loans                          22,707,500        22,658,270
      Accrued liabilities                          212,595           261,187
      Other payable                              2,917,200         2,146,108
      Employee loans                               841,297         1,382,287
      Employee loan - officer                       43,549            53,605
      Third party loan                             192,642           640,228
      Customer deposit                           1,729,702           804,323
      Taxes payable                              2,618,424         4,631,252
      Current portion of capital lease
       obligations                                 398,862                --
        Total current liabilities               51,773,572        51,904,264

      Capital lease obligation                   4,875,368                --
      Other payable - noncurrent                 1,424,044         2,653,995
        Total long term liabilities              6,299,412         2,653,995

        Total liabilities                       58,072,984        54,558,259


      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                           20,464,837        19,987,708
      Statutory reserves                         3,004,008         2,894,902
      Retained earnings                         18,521,982        19,136,577
      Accumulated other comprehensive
       income                                    4,944,279         4,717,121
        Total shareholders' equity              46,954,276        46,755,403

          Total liabilities and
           shareholders' equity           $    105,027,260 $     101,313,662

                        Shengtai Pharmaceutical, Inc.
       Consolidated Statements of Income and Other Comprehensive Income
         For the three and nine months ended March 31, 2009 and 2008

                             Three months ended          Nine months ended
                                  March 31,                  March 31,
                             2009          2008          2009        2008

    SALES REVENUE      $  16,301,522 $  20,701,577 $  49,220,996 $ 65,028,934

    COST OF SALES         15,283,929    16,220,665    43,016,707   50,085,971

    GROSS PROFIT           1,017,593     4,480,912     6,204,289   14,942,963

     EXPENSES              1,322,178     1,603,932     6,074,853    5,114,863

     OPERATIONS             (304,585)    2,876,980       129,436    9,828,100

      Earnings on
       equity investment      59,524        43,070        92,936      192,826

      Other income            60,364        67,451       115,545      177,160

      Other expense           (4,428)      (96,191)     (255,540)    (300,035)
      Interest expense
       and other charges    (527,987)     (738,634)     (591,493)  (1,674,515)

      Interest income          7,548        55,697       104,221      154,101

        Other expense,
         net                (404,979)     (668,607)     (534,331)  (1,450,463)

     TAXES                  (709,564)    2,208,373      (404,895)   8,377,637

     INCOME TAXES            (48,166)      321,220       100,594    1,108,388

    NET  (LOSS) INCOME      (661,398)    1,887,153      (505,489)   7,269,249

         adjustments         (60,568)    1,554,258       227,158    2,966,909

     (LOSS) INCOME     $    (721,966)$   3,441,411 $    (278,331)$ 10,236,158


        Basic          $       (0.03)$        0.10 $       (0.03)$       0.38

        Diluted        $       (0.03)$        0.10 $       (0.03)$       0.36


        Basic             19,169,805    19,069,805    19,129,146   18,967,857

        Diluted           19,169,805    19,845,195    19,129,146   19,959,689

                        Shengtai Pharmaceutical, Inc.
                    Consolidated Statements of Cash Flows
              For the nine months ended March 31, 2009 and 2008

                                                    2009             2008


      Net (loss) income                       $    (505,489)  $    7,269,249
      Adjustments to reconcile net income to
       cash provided by operating activities:

          Depreciation                            3,612,903        2,076,992

          Amortization                               40,225           38,263

          Allowance for bad debts                    50,387           16,558

          Stock based employee compensation         476,454          158,818

          Loss (Gain) on equipment disposal         159,269          (91,480)

          Gain on disposal of land use right             --          (24,783)

          Earnings on equity investment             (92,936)        (192,826)
          Amortization of discount on capital
           lease obligation                         146,681               --

        Change in operating assets and

          Accounts receivable                     1,076,312       (1,108,695)

          Notes receivable                          310,963          380,411

          Other receivables                         444,622        1,987,660

          Inventories                            (1,869,045)      (1,404,996)

          Prepayments                              (471,355)        (620,451)

          Accounts payable                       (1,614,791)        (595,474)

          Accounts payable - related party          (79,896)      (1,252,106)

          Accrued liabilities                       (49,430)        (568,922)

          Accrued liabilities - related party            --          482,160

          Other payable                             596,396          362,035

          Customer deposit                          921,757          297,543

          Taxes payable                          (2,031,181)       2,261,984
            Net cash provided by operating
             activities                           1,121,846        9,471,940


      Other receivables - related party                  --        2,570,100

      Purchase plant and equipment                   (9,679)        (154,262)

      Proceeds from equipment disposal            5,125,750           35,266

      Additions to construction in progress      (4,810,511)      (7,725,153)

      Acquisition of land use right                (480,356)        (324,031)

      Purchase of software program                       --           (5,426)
      Advances on plant and equipment
       purchase                                          --       (9,876,385)

      Loan repayment from related party                  --          678,200

      Proceed from land use right disposal               --           30,826
            Net cash used in investing
             activities                            (174,796)     (14,770,865)


      Decrease in restricted cash                (2,201,573)       3,407,360

      Borrowings on notes payable - banks        16,607,430        5,425,600

      Payments on notes payable - banks         (14,410,680)     (10,579,920)

      Borrowings on short term loans             13,722,365       12,750,160

      Payments on short term loans              (13,766,300)     (11,380,196)

      Borrowings on employee loans                  392,147        1,412,554

      Payments on employee loans                   (938,635)        (459,082)

      Borrowings on employee loan - officer              --           45,187

      Other receivables - shareholder               (10,252)       1,273,495

      Borrowings on third party loan                113,650        2,898,529

      Payments on third party loan                 (563,715)      (2,826,195)
      Payment on other payable - equipment
       purchase                                  (1,033,127)        (614,633)

      Cash proceeds from warrants exercised             750          506,493
            Net cash (used in) provided by
             financing activities                (2,087,940)       1,859,352

    EFFECTS OF EXCHANGE RATE CHANGE IN CASH         (15,652)         248,470

    DECREASE IN CASH                             (1,156,542)      (3,191,103)

    CASH, beginning of period                     3,405,606        6,420,439

    CASH, end of period                       $   2,249,064   $    3,229,336

SOURCE Shengtai Pharmaceutical, Inc.
Copyright©2009 PR Newswire.
All rights reserved

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