Equity Snap Shot
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Transcript of Equity Snap Shot
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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
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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
Located near raw material supplies in Shandong, largest corn producing province in China; Convenient to ship products to Beijing, Shanghai, Seoul and Tokyo
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
$20.0
$24.9
$36.0
$51.7
$10.6
$19.4
2004 2005 2006 2007 1Q07 1Q08
Revenue ($ Million)
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Net Income ($ Million)
$0.5
$1.6
$4.2
$7.1
$1.5$2.3
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
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Average Gross Profit Margin,7/01/2006-6/30/2007
27%
15%
25% 27%
15%22%
0%
10%
20%
30%
40%
50%
Monohydrate
Series
Dextrin Multivitamin
glucose
Glucose base
solution
Pharmaceutical
grade starch
Food, Beverage
and Processing
Industries
Products
Revenue By Products,7/01/2006-6/30/2007
61.0%
3.7%2.1%32.7%
0.5% 0.1%
Monohydrate Series
Dextrin
Multivitamin glucose
Glucose base solution
Pharmaceutical gradestarch
Food, Beverage andProcessing IndustriesProductsTotal Revenue (7/01/2006-6/30/2007) = $ 51.7 Million
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Growth Strategy
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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
Benefits 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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About New Cornstarch Plant 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
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Existing Glucose Production Facilities
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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
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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
EmulsionCornstarchConvert
GlucoamylaseAdd in
Clean and Dry
Filter
Discolor
Ion exchange
Inspissation
Crystallization and separation
Glucose
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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
GuangzhouGuangzhou
ChengduChengdu
ShantouShantou
WuhanWuhan
NanningNanning
GuilinGuilinNanchangNanchang
HangZhouHangZhou
SuzhouSuzhou
ShandongShandong
Representative offices in 7
provinces, with business
in 27 provinces
Export to over 60 countries
Target Customers
Pharmaceutical companies
Medical supply companies
Medical supply exporters
Food and beverage
companies
Domestic Market
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Representative OfficeChinese Operation Headquarters
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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
5.76.3
7.3
9.3
11.0
12.9
0.4 0.5 0.5 0.7 1.11.7
0
3
6
9
12
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2001 2002 2003 2004 2005 2006
Starch Production Glucose Production
Million mt
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
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Source: China Fermentation Industry Association
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Growth Opportunity in China
Population in China
1276
1285
1292
1300
1308
1270
1280
1290
1300
1310
2001 2002 2003 2004 2005
Million
About 300,000 medical service providers
Increasing population drives over 15% annual growth on Chinese pharmaceutical market
Strong demand for higher quality drugs and medical equipment
China will become world’s 5th largest pharmaceutical market, valued at $75 billion by 2010
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Number of Health Institutions
291
298299
284
288
292
296
300
2003 2004 2005
Thousand
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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$20.0$24.9
$36.0
$51.7
$10.6
$19.4
2004 2005 2006 2007 1Q07 1Q08
Million $
Strong Revenue Growth
Note: 1Q 2007, 1Q 2008 unaudited financial statements
4 year CAGR 26.8%
4 year CAGR 26.8%
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$3.5
$5.3
$8.5
$2.4
$4.6
$12.2
23.7%23.0%23.6%23.5%
21.3%
17.6%
0
2
4
6
8
10
12
14
2004 2005 2006 2007 1Q07 1Q08
Million $
0%
5%
10%
15%
20%
25%
Gross profit Gross margin
Increasing Gross Margin
Note: 1Q 2007, 1Q 2008 unaudited financial statements
4 year CAGR 36.5%
4 year CAGR 36.5%
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$0.5
$1.6
$4.2
$7.1
$1.5
$2.3
14.0%
11.6%
2.4%
6.5%
11.7% 13.8%
0
1
2
3
4
5
6
7
8
2004 2005 2006 2007 1Q07 1Q08
Million $
0%
2%
4%
6%
8%
10%
12%
14%
16%
Net Income Net Profit Margin
Strong Net Income Growth
Note: 1Q 2007, 1Q 2008 unaudited financial statements
4 year CAGR 95.7%
4 year CAGR 95.7%
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$0.05
$0.16
$0.42
$0.64
$0.15$0.12
2004 2005 2006 2007 1Q07 1Q08
Earnings Per Share (Diluted)
Note: 1Q 2007, 1Q 2008 unaudited financial statements.
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Balance Sheet Highlights
September 30 For year ended June 30
2007 2007 2006
($ in Thousand)
Cash $1,383 $6,420 $502
Current Assets 21,870 31,266 12,150
Total Assets 70,605 73,760 31,271
Current Liabilities 32,865 38,468 23,612
Total Liabilities 36,276 42,130 24,614
Total Stockholder's
Equity34,328 31,631 6,657
September 30, 2007 unaudited financial statement
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Attractive Valuation
CompanyTicker
Symbol
Stock
Price ($)
Market Cap
($M)EPS $
(ttm)P/E
(ttm)P/S (ttm)
P/B (mrq)
Shengtai Pharmaceutical, Inc.
SGTI
3.50 69 0.64 5.5 1.2 2.0
Xiwang Sugar Holdings 2088.HK 0.34 280 0.04 7.7 1.4 1.8
Global Bio-Chem 0809.HK 0.32 731 0.03 10.7 1.1 1.0
Corn Products International Inc.
CPO
37.97 2,924 2.41 15.8 0.9 1.9
Archer-Daniels-Midland Co.
ADM
36.27 23,467 3.38 10.7 0.5 2.0
Average 5,502 1.30 10.1 1.0 1.7
All data are extracted from Reuters.com
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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.
Philips Zhang, CFO
Changda Road East, Development
District, Changle County, Shandong
Province
Tel: +86-536-629-5728
CCG Elite Investor Relations Inc.
Crocker Coulson, President
1325 Avenue of the Americas,
Suite 2800
New York, NY 10019
Tel: 1 (646) 213-1915
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