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"as far as the latest expansion, what % increase does that add to capacity? I couldn't get a feel for it. "
100% increase in capacity.
Previous capacity was 60,000 tons of IV solution.
New capacity 120,000 tons, "with full scale production by calandar year end 2009".
see page 15 of powerpoint:
http://www.shengtaipharmaceutical.com/images/SGTI%20Investor%20Presentation%20(Final)%20Feb%2009.ppt
haha, yeah. i am. i'm not saying that this thing isn't blockbuster. i just focus on negatives when investing. Negatives are what keep people from buying and this one might be running out of them.
as far as the latest expansion, what % increase does that add to capacity? I couldn't get a feel for it.
I'm looking at future growth rates, not the latest quarter and year.
There were multiple factors that had a negative impact on SGTI's earnings that are no longer an issue. This was a cash cow company, making .62/share in 2007 and I think it will be there again in 12 months (or less).
This is also the undisputed market leader in the sector- a sector that's groing very fast.
Thanks for your input Glen- divergent opinions are what make a market after all.
But keep an eye on it when they report the 10-K in a few weeks- more will be clear on where they are (or are not) in the recovery process at that time.
Negatives:
There are other opportunities out there that are making more money (latest quarter and year) with similar or equal growth rates for each dollar spent. Opportunity cost.
Skepticism is good when evaluating...
But can you go beyond that and say why you are a skeptic?
This is what I see:
Positives:
China's largest manufacturer of IV dextrose solutions, with 40% market share.
Only 2 other companies besides SGTI are licensed to provide IV dextrose monohydrate + high cost of entry for any new competitor = moat.
Margins should improve with corn starch costs down (as discussed in the most recent filing)
Health care stimulus spending by government- especially in more rural areas.
Large sales network with contacts in all provinces (excluding Tibet).
DSO under 30 days/no collections issues that plague many other China pharmas
Large expansion completed and currently ramping up production as demand increases
No history of dilution
P/S ratio of 0.2
Previous "cash cow" made .62/share in 2007
Positive statements by CEO in statements he made in March:(see link in I-box)
Negatives
Decline in revenue/income due to reduction in sales during recession and lower margins due mostly from higher cost of corn starch.
Highly leveraged with short term bank loans. Current ratio 0.5
Any others? (please let me know what I may be missing!)
What they do is expensive for new companies to enter- and only 3 companies can do it in China, so there is a bit of a moat here for them. And they've got 40% of China's market now.
yeah, that's what i thought. just wanted to confirm my bias.
Pharmaceutical grade dextrose is used in IV solutions. It's a pure form of sugar. Usually known as the glucose IV.
lol- that was the 10-k from 2008.
sorry
thanks, i'll start my quest for knowledge on shengtai
Glen- click & read the powerpoint presentation in the I-box.
It's pretty good at explaining what they do and where they're going.
There are only 3 companies in China that can make IV dextrose solution and SGTI is one of them with a 40% market share. There is a pretty good moat here- this isn't a cheap business to enter. And since corn is lower in price (they use corn starch to make many of the solutions)margins should increase. This is also mentioned in the 10-k.
They are highly leveraged, but I've seen worse balance sheets (GSI and CHGY come to mind).
I know this company pretty well- traded it successfully back in fall of 2007 and I think it's a good time to revisit here.
so they make a bunch of sugar?
what's the big deal? i just don't get the competitive edge.
Sugar - glucose.
what is dextrose?
Read the 10-k they filed on Friday. They made .52/share fully diluted. PE is 2 here, and forward guidance from CEO was good. New facility ramping up production. I see a potential for nice (maybe even BIG) turn-around in the works.
Hell, this is China's LARGEST pharmaceutical grade dextrose manufacturer. With China's big push to expand healthcare into the rural areas, and SGTI's large network and existing presence in every province in the country, I think they're going to have a nice ramp in sales.
Not saying this is a $10 stock by eoy...but easily looks like it should be $2/share right now after reporting .52/share (fully diluted) on Friday, and positive forward guidance.
i dont see what you see. maybe i'm wrong. maybe you are right. this could be very very cheap if this thing pulls numbers like it did last year at this time.
China's LARGEST Dextrose IV solution manufacturer.
Looks way too cheap here.
Shengtai Pharmaceutical Schedules 2009 Third Quarter Financial Results and Conference Call
May 13, 2009 9:38:00 AM
Email Story Discuss on ZenoBank
View Additional ProfilesWEIFANG, Shandong, China, May 13 /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 announced that it will issue financial results for the three months ended March 31, 2009 after the close of the stock market on Thursday, May 14, 2009. Management will conduct a conference call on Friday, May 15, 2009 at 8:30 A.M. Eastern Daylight Time to discuss these results. A question and answer session will follow management's presentation.
Ms. Yiru Melody Shi (Chief Financial Officer), and Ms. Michelle Wang (Investor Relations Manager) will be the primary speakers on the call.
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.
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 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.
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, future increases in market demand, possible increases in our market share 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 our products' applications, cost of raw materials, downturns in the Chinese and world 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
Email: shengtaicfo@hotmail.com
Grayling
Eddie Cheung
Investor Relations
Tel: +1-646-284-9414
Email: eddie.cheung@us.grayling.com
SOURCE Shengtai Pharmaceutical, Inc.
----------------------------------------------
Shengtai Pharmaceutical
Inc. - Ms. Yiru Melody Shi
Chief Financial Officer
shengtaicfo@hotmail.com; Grayling - Eddie Cheung
Investor Relations
+1-646-284-9414
or eddie.cheung@us.grayling.com
SGTI looks great...
from todays PR:
"Shengtai Pharmaceutical has nearly finished the construction of the new glucose production complex with expected annual production capacity of 120,000 metric tons. The new facility has been equipped with state-of-the-art, high-tech operational machines and since May 2008, the Company successfully launched trial production of glucose products. This facility combined with the Company's existing glucose facility will provide total production capacity of 210,000 metric tons of glucose per year. Once the plant is fully operational, Shengtai's glucose quality will be able to match that produced in the rest of the world."
Seeking Alpha article:
http://seekingalpha.com/article/56105-shengtai-pharmaceutical-attractive-at-current-levels
Shengtai Pharmaceutical (SGTI.OB) is the largest domestic producer of pharmaceutical grade glucose in China. In 2006 SGTI began the process of bringing production of their primary raw material, corn starch, 'in house' by building a cornstarch manufacturing facility. This serves to increase margins & provide a steady supply of quality raw material required to reliably expand glucose production. SGTI are expanding existing glucose production by 50% to 90000 tons/year by mid 2007. They are also building a new glucose production facility that will have annual capacity of 150000 tons per year. SGTI have make good clauses in place related to a private placement that call for 2007 FDEPS of 0.33 & 2008 FDEPS of 0.43. However, based on their last calendar quarter ASP & margin along with projected capacity expansion they will probably earn 60 cents per share or more over the next 4 quarters. At a modest 10x multiple, that represents >100% total return given the stock's current price of $3.30
New website up...
http://www.shengtaipharmaceutical.com/
It has more info on management an directors as well as updated news.
Conference call scheduled Nov 15 after earnings.
The China version of the website seems to be updated more than the US version. Hit the Chinese letters at the extreme top right and the page not only looks a little different, the wording is different.
Then convert the address with babelfish (Chinese simp to English)and look at the news on the right. There are some in May. The only one that seems important is something about the new vetranary medicine they have now. Other than that, the US version is pretty complete.
http://babelfish.altavista.com/
does anyone know why has there website not been updated in quite some time???
thanks
CharlieB
I found a similiar company in India which sells constarch and glucose products. They had a fire which reduced production for 5 months in 07. They have projected profits in 2008 to be 50% higher than 2007. Even then, their current pps is 10x the 2008 projections (not a US exchange, as far as I know).
That's one good reason I say SGTI should be at least 10x the current, audited earnings/share of $0.62 I have no idea if or when they will give revenue projections for 2008.
Here are clips from the article I was refering to.
http://www.business-standard.com/common/storypage.php?autono=301882&leftnm=0&subLeft=0&c....
"At the beginning of the current financial year, the sales turnover and net profit of Riddhi Siddhi Gluco Biols (RSGB), the largest manufacturer of starch and its derivatives in the country, were projected to be higher by about 50 per cent in FY08 over FY07.
More importantly, per capita consumption of corn starch in India is estimated to be about 1 kg as compared with 64 kg in US and the world average of 6 kg, which leaves room for a sustainable growth in the years to come.
At the current market price of Rs 240, the stock is trading at a P/E multiple of 10 times its FY08 estimated earnings and 5 times FY09 earnings. Considering that the company is the largest player in its sector, shareholders can expect good returns. "
IMO, this is still undervalued based on the .62 earnings/share and the consistant year over year increases. Another thing I like is that they are not resting where they are but they are still growing rapidly and becoming more efficient.
These are clips from the 10K which support my statement.
Higher profits from existing products:
"The new cornstarch production facility was commissioned at the end of 2006 and started production in January 2007. Currently, the production capacity of the new cornstarch production plant is 240,000 tons per year. The new cornstarch facility will allow us to supplement and eventually replace our purchases from Shougang Shengtai, which had inadequate production to meet our needs. In addition, Shougang Shengtai utilized older equipment which led to unpredictable quality in the cornstarch it produced. It is approximately 60 kilometers from our facility and resulted in additional shipping costs, which then led to higher manufacturing costs."
Growing market for existing products:
"We believe that the global market for pharmaceutical grade glucose (dextrose) is approximately 3 billion bottles per year and growing
In the PRC alone, from 2002 to 2004, the annual demand for glucose has increased from 250,000 tons to 800,000 tons per year, and the annual demand for glucose is expected to increase to 1.7 million tons per year by 2009
During the reporting period, we expanded our manufacturing and supply of Avermectins, which is a veterinary medicine derived from glucose. The market prospect for it has been encouraging."
New Products, thus new revenue streams:
"At the end of June 2007, we set up a new product line to manufacture sodium gluconate. ... The initial sales of sodium gluconate have been encouraging. ... Since we have only begun the production of sodium gluconate, we have insufficient profitability records for the reporting period, but we anticipate its gross profit margin to be between 25% and 30%, depending on our scale of production scale and our production efficiency.
Currently we are targeting the construction companies as our end customers since real estate construction is a booming sector in the PRC economy."
The 1st Q report is due in less than a month and should shed some light on the new product revenue and savings from the new cornstarch plant.
Got it added to stockcharts..
Selling sure dryed up today. Should be ready for next move up from here, IMO. Just has to get noticed by more people.
I'm trying to get Stockcharts to add it. I sent another e-mail just now. I don't think it went through the first time when I used their form because I don't use Outlook.
Anyway, good close near HOD today. Maybe it will stay on a steady climb from here.
Over $4 again. After CPHI's big move, maybe people are starting to look at other cheap Chinese pharma stocks....
Here are some highlights from the 10K that I picked out (in case someone is just pasing by).
http://www.sec.gov/Archives/edgar/data/1295079/000114420407051640/v088593_10k.htm
Sales rev, net income, and earnings/share have all increased year-over-year for the past 5 years (page 36).
Some numbers for year end 6-30-07 campared to 06 and 05:
Sales Rev = $24.9M (2005), $36.0M (2006), $51.7M (2007)
Net Income = $1.6M (2005), $4.2M (2006), $7.1M (2007)
EPS = .16 (2005), .42 (2006), .62 (2007)
*All the reports are audited also. Given the consistant increases over 5 years, I think it will achieve a P/E of 10 or more, easy, when the word gets out. That would be $6.20 or higher.
Another excelent point to this stock is the float. (found on page 51)
18,875,000 .....o/s
-7,766,325 .....held by ceo
-1,537,500 .....held by China Private Equity Partners
-3,975,000 .....held by Pope Investments
-----------------------------------------------------
5,596,175 ......float (not held by insiders)
Given the increase in volume the past couple days, it could ggo up very quickly. Just my opinion.
Check this out from the filing:
"Overseas demand had not been fully satisfied in the past because our products have been sold out due to strong domestic demand in the PRC."
and
"We believe that our new 300,000 ton cornstarch processing plant will supply enough raw materials to increase production volumes and sales to an expanding domestic client base and fulfill more overseas orders which offer higher profit margins. In line with this, we have commenced construction of our new glucose manufacturing facility, which is anticipated to be completed next year. "
They couldn't produce enough to meet demand (not a bad problem to have), and have since increased capacity in answer to demand.
The more I read from their entire filing, the more I like.
ya - i realized that after. But still, only real fast traders were on that one. Stock should move fast next week!!
The SEC filing of the 10-K actually came out @ noon on Friday, so I don't think there was a leak....I bought some right after someone alerted the Value Microcap board to SGTI's fantastic numbers on Friday afternoon:
http://investorshub.advfn.com/boards/read_msg.asp?message_id=23252817
Looking at the numbers, SGTI looks very cheap here in the $3's. Trailing p/e is in the 5's and it sounds like the numbers will only get better from here. Chinese stocks are hot and most comparable companies have a higher p/e and lower growth rate than SGTI. Anyone know why SGTI's share price took a drive in July? I seem to remember some sort of Chinese pharmaceutical scare over the summer....was this to blame? Whatever the case, the company looks stronger than ever before at this point. I think SGTI will have a good week....
See the move this stock made BEFORE news came out?? WOW!! Must have leaked out. Should EXPLODE monday. http://investorshub.advfn.com/boards/read_msg.asp?message_id=23282836
Agreed- Look at AOB! They only made .53/share for ttm.
SGTI just blew AOB's numbers away and is only in the $3s???
This one will move FAST.
Fiscal Year 2007 Highlights
-- Net sales increased 43.5% to $51.7 million
-- Gross profit rose 43.9% to $12.2 million
-- Gross profit margin was 23.6%
-- Operating income increased 62.1% to $7.5 million
-- Net income increased 69.8% to $7.1 million
-- Fully diluted EPS was $0.62 versus $0.42
Seriously undervalued here in the mid 3's ! Looks like a doubler+ in the making
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Shengtai Pharmaceutical is China's largest manufacturer of intravenous (IV) dextrose solution with a 40% market share.
The company is 1 of only 3 that are licensed to produce IV dextrose monohydrate in China.
New Glucose Manufacturing Facilities expanding production capacity by 100% by end of 2009.
In 2008, SGTI completed the construction of a new glucose manufacturing facility to boost to production capacity from 60,000 tons to 120,000 tons.
This expansion is scheduled for "full scale production by calandar year end 2009", according to page 15 of their presentation.
Investor Presentation (Feb. 2009)
Dutton Research Report (Dec. 2008)
Corporate News
Shengtai Pharmaceutical Hosts Key Customers at Its Headquarters for Facility Tour and Technology Exchange Conference (April 29, 2009)
Recent Industry Developmens Reaffirm Positive Glucose Industry Outlook (March 12, 2009)
Share Structure
19M shares issues/outstanding
11M float
SEC Filings (click here)
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