Shengtai Pharmaceutical, Inc. Reports Financial Results for the Fiscal Year 2011

WEIFANG, Shandong, China, October 7, 2011 /PRNewswire-Asia-FirstCall/ -- Shengtai Pharmaceutical, Inc. (OTC Bulletin Board: SGTI) (''Shengtai'' or ''the Company'' or "We" or "Us"), a manufacturer and distributor in China of glucose and starch as pharmaceutical raw materials and other starch and glucose products, today reported financial results for the twelve months ended June 30, 2011.

"We are very glad that the Company has made tremendous progress in the year ended June 30, 2011." Qingtai Liu, CEO of Shengtai Pharmaceutical, Inc. stated, "Compared with last year, our sales increased $55,763,918, or 48.09% and our net income increased $4,452,070, or 139.17%. Our sales increased both domestically and internationally. Customer deposit also increased which shows a strong customer demand for our products. We also successfully expanded our corn storage from 36,000 tons 50,000 tons and our cornstarch annual production capacity from 300,000 tons to 400,000 tons. The storage expansion allowed us to lock in raw material prices by storing more raw material while the raw material prices are increasing. The expansion of cornstarch production line allows us to produce more cornstarch and related products to meet the increased demand for our cornstarch and related products, and provide more cornstarch as raw material for our glucose production."

Fiscal Year 2011 Result of Operations

Sales revenue for the fiscal year ended June 30, 2011 was $ 171,717,866, an increase of $55,763,918, or 48.09% compared with the corresponding period in 2010. The increase in sales revenue resulted from the increase of the Company's sales volume and average selling prices. Net sales from exports for the year ended June 30, 2011 increased approximately 60.06% compared with the same period in 2010. The increase is attributable to the upturn in the global economy and the Company's reorganization of its exporting department, resulting in an increase in international demand for the Company's glucose and corn meal products compared to the same period last year. Domestic sales for cornstarch and other products for the year ended June 30, 2011 increased approximately 60.02% compared with the same period last year. The increase in domestic sales was attributable to the higher demand for the Company's products and increase in unit sales prices.

Costs of sales for the year ended June 30, 2011 was $148,594,046, an increase of $50,317,857, or 51.20% compared with the corresponding period in 2010. The increase of cost of sales is due to an increase in corn prices and the increase in our sales. The percentage of increase in cost of sales was higher than the percentage of increase in net sales. Gross profit for the year ended June 30, 2011 was $23,123,820, an increase of $5,446,061, or 30.81%, compared with 17,677,759 the same period in 2010. Gross profit margin for the year ended June 30, 2011 was 13.47%, a decrease from 15.25% for the same period in 2010. The increase in gross profits is attributable to increased sales revenues, however gross profit margin decreased due to the percentage increase in the cost of sales being greater than the percentage increase in net sales.

Selling, general and administrative expenses were $9,805,044 for the year ended June 30, 2011, a decrease of $476,745, or 4.64% compared to $10,281,788 for the year ended June 30, 2010. The decrease of selling, general, and administrative expenses is mainly due to decreased expenses in the United States such as decreased option expenses. The Company's expenses in the United States decreased approximately $766,000 mainly due to decreased option expenses. The Company incurred $238,684 and $635,232 in non-cash stock option expenses for the year ended June 30, 2011 and 2010, which are included in selling, general and administrative expenses. The option expenses decreased because all options were fully amortized and forfeited during the year ended June 30, 2011. The Company does not expect any more option expenses for the year ended June 30, 2012. At the same time, the operating expenses related in China increased. The increased operating expenses in China, such as salaries and commission expenses, shipping and handling expenses, and other operating expenses, were incurred as a result of the expansion of the business and related to the increased sales in China.

Net income for the year ended June 30, 2011 was $7,651,051 or $0.80 per share, an increase of $4,452,070, or 139.17%, compared with a net income of $3,198,981 or $0.33 per share for the same period in 2010. The increase in net income was primarily due to the increase in the sales volume and prices of the Company's products.

Net cash provided by operating activities for fiscal year 2011 was $5,069,599, a decrease of $4,509,371, or 47.08%, compared to $9,578,970 provided by operating activities for fiscal year 2010. The decrease is due to increased payments to other receivable, accounts payable, and accrued liabilities, which were offset by increased customer deposit.

Net cash used in investing activities for fiscal 2011 was $6,083,012, a decrease of $10,493,481, or 63.30%, compared to $16,576,493 used in investing activities for fiscal year 2010. The decrease is due to reduced investment in property and equipment. In 2010, the Company invested more heavily in expanding cornstarch production and warehouse.

Net cash used in financing activities for fiscal 2011 was $184,385, a decrease of $9,886,466, or 101.90%, compared to $9,702,081 provided by financing activities for fiscal year 2010. The decrease is mainly due to decreased restricted cash because the Company has fewer notes payable.

Management Comments

Looking forward, Qingtai Liu, CEO of Shengtai Pharmaceutical, Inc. stated, "Our Company strives to keep our sales growth in the coming year by providing competitive pricing as well as super customer satisfaction. Most importantly, our company will take a few steps to keep our gross profit stable. We will continue to store more raw material corn inventory when the corn prices are increasing. At the same time, we will enhance our sales policy in monitoring pricing."

"The Company has sufficient cash for our operation for the coming year. The Company has no plan for large construction or project in the coming year. We will closely monitor our cash reserve to make sure we will have sufficient funding for our operation. We also are continually looking for new high technology products that will bring higher profit to the Company. Going forward we are confident for bring a successful year!" concluded Mr. Liu.

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 manufacturer and distributor in china of glucose and starch products as pharmaceutical raw materials, other starch products and other glucose products such as corn meals, food and beverage glucose and dextrin. For more information about Shengtai Pharmaceutical, Inc., please visit http://www.shengtaipharmaceutical.com.

Forward Looking Statements

Certain statements in this press release and oral statements made by the Company constitute 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, the Company's planned capacity expansion 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 its product's applications, cost of raw materials, downturns in the Chinese 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. Yukie Ying Gao
Investor Relations Manager
Tel: 86-536-2188831
Email: ir-yukie@shengtaipharmaceutical.com