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Presentation Transcript
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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
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
Company Overview
  • Market leader of pharmaceutical grade glucose in China
  • The most importantmanufacturer 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
Investment Highlights
  • Rapid revenue growth and strong profitability
  • Positioning itself to be the leading pharmaceutical grade glucosesupplier
  • 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

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principal products
Principal Products

Food, Beverage and Processing Industries Products

  • Syrup
  • Industrial glucose
  • Starch
  • Dextrin
  • Sodium Gluconate
  • Maltose
  • Maltitol

Pharmaceutical and medicinal materials

  • Dextrose Monohydrate Series
  • Starch, Dextrin,
  • Multivitamin glucose
  • Glucose base solution
  • Pharmaceutical grade starch
  • Avermectins (Ointment, refinement)

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growth strategy
Growth Strategy
  • Higher living standards make glucose affordable in China, thusstimulate 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 of New Factory

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

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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existing glucose production facilities
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

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
Production Process

Convert

Cornstarch

Emulsion

Add in

Glucoamylase

Filter

Discolor

Ion exchange

Inspissation

Crystallization and separation

Glucose

Clean and Dry

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quality control
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
Distribution Channel and Target Market
  • Representative officesin 7 provinces, with business in 27 provinces
  • Export to over 60 countries

Domestic Market

  • Target Customers
  • Pharmaceutical companies
  • Medical supply companies
  • Medical supply exporters
  • Food and beverage companies

Shandong

Suzhou

Wuhan

Chengdu

HangZhou

Nanchang

Guilin

Nanning

Shantou

Guangzhou

Representative Office

Chinese Operation Headquarters

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customer base
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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growth opportunity in china
Growth Opportunity in China
  • 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

Source: National Bureau of Statistics of China

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experienced management team
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, Shanghaiand 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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financial highlights
Financial Highlights

Shengtai Pharmaceutical, Inc.

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strong revenue growth
Strong Revenue Growth

4 year CAGR 26.8%

Note: 1Q 2007, 1Q 2008 unaudited financial statements

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increasing gross margin
Increasing Gross Margin

4 year CAGR 36.5%

Note: 1Q 2007, 1Q 2008 unaudited financial statements

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strong net income growth
Strong Net Income Growth

4 year CAGR 95.7%

Note: 1Q 2007, 1Q 2008 unaudited financial statements

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earnings per share diluted
Earnings Per Share (Diluted)

Note: 1Q 2007, 1Q 2008 unaudited financial statements.

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balance sheet highlights

Balance Sheet Highlights

September 30, 2007 unaudited financial statement

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attractive valuation
Attractive Valuation

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
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
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
Contact

Shengtai Pharmaceutical, Inc.

Philips Zhang, CFO

Changda Road East, Development District,Changle County,Shandong Province

Tel: +86-536-629-5728

[email protected]

CCG Elite Investor Relations Inc.

Crocker Coulson, President

1325 Avenue of the Americas, Suite 2800 New York, NY 10019

Tel: 1 (646) 213-1915

[email protected]

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