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Shengtai Pharmaceutical, Inc. (SGTI.OB) Reports Fiscal 2010 Financial Results, Returns to Profit

|Includes: Shengtai Pharmaceutical, Inc. (SGTI)

Shengtai Pharmaceutical Inc. operates through its wholly owned subsidiary, Shengtai Holding Inc., to manufacture and distribute glucose and starch as pharmaceutical raw materials and other starch and glucose products in China. The company today reported its financial results for the 12 months ended June 30, 2010.

Shengtai Pharmaceutical posted sales revenue for the fiscal year ended June 30, 2010, of $115.9 million, a 58-percent increase over sales revenue for fiscal 2009. The company attributes the increase in sales revenue to an increase in sales volume and selling prices.

Net sales from exports for the fiscal year increased approximately 131 percent over the same period in 2009. Domestic sales for cornstarch and other products for the year increased approximately 55 percent compared with the same period last year. The increase is due to the higher demand for the company’s products and increase in unit sales prices.

Qingtai Liu, CEO of Shengtai Pharmaceutical, said the company is on track to extend its global reach and ramped up production of various products to meet demand.

“We are continuing our global expansion and diversification strategies which are currently benefiting from strong market growth. During this past year we increased our production of pharmaceutical grade glucose products, in particular dextrose monohydrate. Dextrose monohydrate is one of the five most important medical prescriptions in the PRC and one of the most widely used pharmaceutical products for restorative and nutritional purposes. It is used as a raw material in a wide array of pharmaceutical products such as transfusions and intravenous drips. Our cornstarch production capacity has been enhanced to 300,000 tons a year,” Liu stated in the press release.

Costs of goods sold for the year ended June 30, 2010 was $98. 2 million, 49 percent more than the cost of goods reported in the comparable 12-month period of 2009. Gross profit for the year ended June 30, 2010, was $17.6 million, an increase of $10.1 million, or 135 percent, compared with the same period in 2009; gross profit margin for the year ended June 30, 2010, was 15.2 percent, a 5 percent increase for the same period in 2009.

Net profit for fiscal 2010 was $3.1 million, or 0.17 per share, as compared to a net loss of $2.6 million, or $0.14 per share for fiscal 2009.

“Our return to profitability is a combination of our cost controls, diversified product lines and numerous sales initiatives. Our glucose facility allows us to use self-produced cornstarch to produce glucose and to be able to ensure the adequacy and quality of the cornstarch we use. Since cornstarch is produced on our premises, we are able to eliminate costs to ship the cornstarch to our glucose production facility, thus resulting in lower manufacturing costs,” Liu stated.

Liu also said the company is applying new production technology to recycle its waste water and by products, while improving overall production.

“Environment protection and production efficiency are important in our growth,” concluded Liu.

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