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November 2007 Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Any statements set forth.

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Presentation on theme: "November 2007 Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Any statements set forth."— Presentation transcript:


2 November 2007

3 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 Companys 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 Companys 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. 2

4 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 3

5 Company Overview 4 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

6 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 5

7 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 6

8 Revenue Mix 7

9 Growth Strategy 8 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

10 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 9 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 Shengtais existing glucose production plant and the new complex

11 Existing Glucose Production Facilities 10 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

12 New Glucose Production Complex 11 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

13 Production Process EmulsionCornstarch Convert Glucoamylase Add in Clean and Dry Filter Discolor Ion exchange Inspissation Crystallization and separation Glucose 12

14 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% 13

15 Distribution Channel and Target Market Guangzhou Chengdu Shantou Wuhan Nanning Guilin Nanchang HangZhou Suzhou Shandong 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 14 Representative Office Chinese Operation Headquarters

16 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 15

17 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 worlds 5th largest pharmaceutical market, valued at $75 billion by 2010 16 Source: National Bureau of Statistics of China

18 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 17

19 Financial Highlights 18 Shengtai Pharmaceutical, Inc.

20 Strong Revenue Growth Note: 1Q 2007, 1Q 2008 unaudited financial statements 4 year CAGR 26.8% 19

21 Increasing Gross Margin Note: 1Q 2007, 1Q 2008 unaudited financial statements 4 year CAGR 36.5% 20

22 Strong Net Income Growth Note: 1Q 2007, 1Q 2008 unaudited financial statements 4 year CAGR 95.7% 21

23 Earnings Per Share (Diluted) Note: 1Q 2007, 1Q 2008 unaudited financial statements. 22

24 Balance Sheet Highlights September 30For year ended June 30 2007 2006 ($ in Thousand) Cash$1,383$6,420 $502 Current Assets21,87031,266 12,150 Total Assets70,60573,760 31,271 Current Liabilities32,86538,468 23,612 Total Liabilities36,27642,130 24,614 Total Stockholder's Equity 34,32831,631 6,657 September 30, 2007 unaudited financial statement 23

25 Attractive Valuation Company Ticker Symbol Stock Price ($) Market Cap ($M) EPS $ (ttm) P/E (ttm) P/S (ttm)P/B (mrq) Shengtai Pharmaceutical, Inc. SGTI 3.50 690.645.5 1.22.0 Xiwang Sugar Holdings2088.HK0.34 2800.047.7 1.41.8 Global Bio-Chem0809.HK0.32 7310.0310.7 1.11.0 Corn Products International Inc. CPO 37.97 2,9242.4115.8 0.91.9 Archer-Daniels-Midland Co. ADM 36.27 23,4673.3810.7 0.52.0 Average 5,502 1.30 10.1 1.0 1.7 All data are extracted from 24 HKD 7.8/USD is foreign exchange applied for price adjustment on 2008.HK and 0809.HK

26 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 25

27 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 26

28 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 27

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