Shengtai Pharma Considers Business Disruptions Temporary

Shengtai Pharmaceutical, Inc. (SGTI.OB) reported that the August Olympics caused a slowdown in its fiscal year 2009 Q1 (ended September 30, 2008) financial performance. The government restrictions on manufacturing and transportation, put in place in Beijing to reduce pollution, disrupted normal business activity. As a result, Shengtai reported that Q1 revenues were 6% lower at $18 million, while net income fell a more serious 72% to $630,000.

Shengtai makes high-quality, pharmaceutical grade glucose products. It also supplies the food and beverage industry with glucose and cornstarch. Glucose products comprised 45% of sales, while cornstarch products contributed 29% of revenues.

The company said it considers the disruptions temporary. Shengtai expects better times ahead based on a resumption of normal business levels and its recently announced international sales initiative. In addition, a recently completed (and certified) glucose manufacturing plant tripled the company’s manufacturing capacity to 180,000 tons annually.

Shengtai reported it held $7.2 million of cash on September 30, 2008. During Q1, cash flow was a positive $2.3 million. Shareholder’s equity increased to $47.7 million.

For full-year 2009 (which will end June 30, 2009), Shengtai estimates net income will be up 20%. In FY2008, Shengtai produced net income of $10.4 million on $91 million of revenue.

Shengtai said it is one of only three licensed dextrose monohydrate glucose manufacturers in China, with a nearly 40% share of the market.

Disclosure: none.