Transcript November 2007 www.shengtaipharmaceutical.com

www.shengtaipharmaceutical.com
November 2007
Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995: Any statements set forth in this presentation that are not historical facts
are forward-looking statements that 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, increased competition, changes in
the scope or timing of the Company’s projects, slowdown in the demand for
glucose series products and starch products, uncompetitive levels of research
and development, failure to obtain regulatory approvals, and other information
detailed from time to time in the Company’s filings and future filings with the
United States Securities and Exchange Commission. The forward-looking
statements contained in this presentation are made only as of this date, and the
Company is under no obligation to revise or update these forward-looking
statements.
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Equity Snap Shot

Ticker:
SGTI

Price (11/19/2007):
$3.50

Market Cap:
$69.0mil

Revenues (ttm):
$58.8 mil

Net Income (ttm):
$7.8 mil

Diluted shares outstanding
as of 09/30/2007:
19.7 mil

Earnings Per Share (ttm):
$0.64

P/E (ttm):
5.5x
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Company Overview

Market leader of pharmaceutical grade glucose in
China

The most important manufacturer and supplier of
Dextrose Monohydrate transfusion solutions in
China

Background



Established and acquired state-owned
enterprise in 1999
Became an indirect wholly-owned subsidiary of
West Coast Car Co. in 2007
Current name since June 2007

Headquartered in East Windsor, NJ, with major
operating subsidiary in Weifang, Shandong
Province, China

Total of 766 employees
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Investment Highlights

Rapid revenue growth and strong
profitability

Positioning itself to be the leading
pharmaceutical grade glucose
supplier
Revenue ($ Million)
$51.7
$36.0
$24.9


Located near raw material supplies in
Shandong, largest corn producing
province in China; Convenient to ship
products to Beijing, Shanghai, Seoul
and Tokyo
$20.0
$19.4
$10.6
2004
2005
Vertical integration of raw materials
manufacturing facility enhances
production capacity and product
quality

Development of high value-added
industrial-use products

Growth opportunities from domestic
and overseas markets
2006
2007
1Q07
1Q08
Net Income ($ Million)
$7.1
$4.2
$2.3
$1.6
$1.5
$0.5
2004
2005
2006
2007
1Q07
1Q08
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Principal Products
Pharmaceutical and
medicinal materials
 Dextrose Monohydrate
Series
 Starch, Dextrin,
 Multivitamin glucose
 Glucose base solution
 Pharmaceutical grade
starch
 Avermectins (Ointment,
refinement)
Food, Beverage and Processing
Industries Products
 Syrup
 Industrial glucose
 Starch
 Dextrin
 Sodium Gluconate
 Maltose
 Maltitol
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Revenue Mix
Monohydrate Series
Revenue By Products,
7/01/2006-6/30/2007
Dextrin
61.0%
Multivitamin glucose
Glucose base solution
32.7%
Pharmaceutical grade
starch
2.1%
3.7%
0.5%
0.1%
Total Re ve nue (7/01/2006-6/30/2007) = $ 51.7 M illion
Food, Beverage and
Processing Industries
Products
Average Gross Profit Margin,
7/01/2006-6/30/2007
50%
40%
30%
27%
25%
27%
22%
15%
20%
15%
10%
0%
Monohydrate
Seri es
Dextri n
Mul ti vi tami n
gl ucose
Gl ucose base
sol uti on
Pharmaceuti cal
grade starch
Food, Beverage
and Processi ng
Industri es
Products
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Growth Strategy

Higher living standards make glucose affordable in China, thus
stimulate glucose consumption

Vertically integrate the new cornstarch plant to assure adequate
supply of quality raw materials

Upgrade existing glucose manufacturing plant capacity and construct
a new domestic high-quality glucose production complex to satisfy
fast growing domestic and overseas markets

Consolidate domestic market before ambitiously targeting overseas
customers

Develop new higher-margin, industrial grade products and
downstream products

Build brand loyalty by leveraging sales and marketing
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Benefits of New Factory
About New Cornstarch Plant
Benefits

New, modern equipment with improved
technology


Maximum annual production capacity
of 240,000 tons

Capacity can be easily expanded to
300,000 tons when necessary

Located near corn production areas

Next to Shengtai’s existing glucose
production plant and the new complex




Low-cost, stable supply of
high-quality raw materials for
glucose production
Stable raw material supply
enables existing glucose
production plant to operate at
100% capacity
Reduced transportation costs
of raw materials
Quality assurance of raw
materials
Improved revenues by selling
excess cornstarch produced
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Existing Glucose Production Facilities
Existing Glucose Production Facilities

Before October 2006, the annual production capacity was 60,000
tons

Whatever we produced was insufficient to meet the strong market
demand

From October 2006 to May 2008, we have been upgrading their
capacities to more than 90,000 tons
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New Glucose Production Complex
New Glucose Production Complex

Expected annual capacity of 150,000 tons of pharmaceutical
glucose and value-added glucose products

Commenced construction in early July 2007 and anticipate that
construction will be completed in the first half of 2008

State-of-the-art machinery and technology

Strictest quality control standards

Most competent employees
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Production Process
Convert
Cornstarch
Emulsion
Add in
Glucoamylase
Filter
Discolor
Ion exchange
Inspissation
Glucose
Clean and Dry
Crystallization
and separation
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Quality Control

Production facilities fully certified for
GMP, ISO9002 and HACCP
international quality standards

Three-Tier quality control system
 Workshop team
 Production team
 Management accountability

Pollution- and contamination-free
production environment

Stringent hygiene controlled
warehouse

Output conforming to pharmaceutical
glucose product specifications is
maintained at 100%
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Distribution Channel and Target Market
 Representative offices in 7
provinces, with business
in 27 provinces
Domestic Market
 Export to over 60 countries
Shandong
Target Customers
Suzhou
 Pharmaceutical companies
 Medical supply companies
HangZhou
 Medical supply exporters
 Food and beverage
Wuhan
Chengdu
Guilin
Nanning
companies
Representative Office
Chinese Operation Headquarters
Nanchang
Shantou
Guangzhou
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Customer Base
Key Factors to reinforce customer loyalty:
 High quality, pharmaceutical grade products
 Certified product reliability
 On-time deliveries
 New and improved medicinal products and packaging
 Excellent service and support
 Strong referrals
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China Glucose Demand
Million mt
15
12.9
12
11.0
9.3
9
7.3
6
6.3
5.7
3
0.4
0.5
0.5
1.7
1.1
0.7
0
2001
2002
2003
Starch Production
2004
2005
2006
 Global sugar supply
remains tight
 Concentrated glucose
production results in short
supply of cornstarch
 Domestic demand increased
from 250,000 mt in 2000 to
800,000 mt in 2004.
 Expected 1.7 million mt
glucose demand in 2009
Glucose Production
Source: China Fermentation Industry Association
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Growth Opportunity in China
Number of Health Institutions
Thousand
299
300
298
 About 300,000 medical service
providers
296
291
292
288
284
2003
2004
2005
Population in China
Million
1308
1310
1300
1300
 Increasing population drives
over 15% annual growth on
Chinese pharmaceutical
market
 Strong demand for higher
quality drugs and medical
equipment
1292
1290
1280
1285
1276
1270
2001
2002
2003
2004
2005
 China will become world’s 5th
largest pharmaceutical market,
valued at $75 billion by 2010
Source: National Bureau of Statistics of China
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Experienced Management Team

Qingtai Liu – President, CEO
Formerly head of Science and Technology of Changle Power Factory, Bachelor
of Electrical Engineering Degree from Shandong Technical University

Yizhao Zhang – CFO
Held senior positions in Chinawe Asset Management Corporation (CHWE) and
China Natural Resources Incorporation (CHNR), received Bachelors degree in
Economics from Fudan University, Shanghai and MBA from State University of
New York at Buffalo. CPA of Delaware and member of AICPA

Chris W. Wang – Independent Director, Chairman of Audit
Committee
Served as Chief Financial Officer of Fushi International, Inc., Executive VP of
Redwood Capital, Inc., obtained MBA in Finance and Corporate Accounting from
Simon Business School of University of Rochester
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Shengtai Pharmaceutical, Inc.
Financial Highlights
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Strong Revenue Growth
Million $
$51.7
$36.0
$24.9
$20.0
$19.4
$10.6
2004
2005
2006
2007
1Q07
1Q08
Note: 1Q 2007, 1Q 2008 unaudited financial statements
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Increasing Gross Margin
Million $
14
12
23.5%
23.6%
23.0%
21.3%
23.7%
$12.2
17.6%
10
20%
$8.5
15%
8
$5.3
6
4
25%
$4.6
10%
$3.5
$2.4
5%
2
0
0%
2004
2005
2006
2007
Gross profit
1Q07
Gross margin
1Q08
Note: 1Q 2007, 1Q 2008 unaudited financial statements
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Strong Net Income Growth
Million $
8
16%
$7.1
7
11.7%
13.8%
14.0%
6
12%
5
6.5%
11.6%
$4.2
4
1
10%
8%
3
2
14%
$2.3
2.4%
$1.6
$1.5
6%
4%
$0.5
2%
0
0%
2004
2005
2006
Net Income
2007
1Q07
1Q08
Net Profit Margin
Note: 1Q 2007, 1Q 2008 unaudited financial statements
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Earnings Per Share (Diluted)
$0.64
$0.42
$0.16
$0.15
$0.12
$0.05
2004
2005
2006
2007
1Q07
1Q08
Note: 1Q 2007, 1Q 2008 unaudited financial statements.
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Balance Sheet Highlights
September 30
2007
For year ended June 30
2007
2006
($ in Thousand)
Cash
$1,383
$6,420
$502
Current Assets
21,870
31,266
12,150
Total Assets
70,605
73,760
31,271
Current Liabilities
32,865
38,468
23,612
Total Liabilities
36,276
42,130
24,614
34,328
31,631
6,657
Total Stockholder's
Equity
September 30, 2007 unaudited financial statement
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Attractive Valuation
Ticker
Symbol
Stock
Price
($)
Market Cap
($M)
EPS $
(ttm)
P/E
(ttm)
SGTI
3.50
69
0.64
Xiwang Sugar Holdings
2088.HK
0.34
280
Global Bio-Chem
0809.HK
0.32
Corn Products
International Inc.
CPO
Archer-Daniels-Midland
Co.
ADM
Company
Shengtai Pharmaceutical,
Inc.
Average
P/S (ttm)
P/B (mrq)
5.5
1.2
2.0
0.04
7.7
1.4
1.8
731
0.03
10.7
1.1
1.0
37.97
2,924
2.41
15.8
0.9
1.9
36.27
23,467
3.38
10.7
0.5
2.0
5,502
1.30
10.1
1.0
1.7
All data are extracted from Reuters.com
HKD 7.8/USD is foreign exchange applied for price adjustment on 2008.HK and 0809.HK
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Investment Summary

Market leader and preferred supplier of pharmaceutical grade glucose
in China

Vertically integrated cornstarch plant enables stable, high-quality and
low cost material supply.

Glucose capacity expansion by upgrading and building production
facilities to meet strong demand

Target domestic and overseas opportunities

Develop new, higher-margin, industrial-use products

Solid financial performance

Experienced management team with track record of success
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Outlook
 Optimistic about our outlook
 Confident in achieving “make-good” numbers
 Existing Risks:
 Inability to complete the new glucose complex as previously
scheduled
 Increasing interest rates in China
 Uncontrollable commodities prices
 Sudden appreciation of Chinese currency versus foreign
currencies
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Contact
Shengtai Pharmaceutical, Inc.
CCG Elite Investor Relations Inc.
Philips Zhang, CFO
Crocker Coulson, President
Changda Road East, Development
1325 Avenue of the Americas,
District, Changle County, Shandong
Suite 2800
Province
New York, NY 10019
Tel: +86-536-629-5728
Tel: 1 (646) 213-1915
[email protected]
[email protected]
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