Dutton Associates Announces Investment Opinion: Shengtai ...

Tag : monohydrate dextrose
Dutton Associates initiates coverage of Shengtai Pharmaceutical(OTCBB: SGTI) with a strong Speculative Buy rating and a pricetarget of $5.11. The 24-page report by Dutton senior analystStanley Ng is available at www.duttonassociates.com as well as fromFirst Call, Bloomberg Professional, Capital IQ, FactSet, Zacks,Reuters, Knobias, and other leading financial portals.

We are initiating coverage on Shengtai Pharmaceutical with a StrongSpeculative Buy rating and a 12-month price target of $5.11 pershare. Shengtai is principally engaged in the development,production, and distribution of pharmaceutical grade glucose in thePRC. Pharmaceutical grade glucose is the raw material forpharmaceutical manufacturers to add specific formulations toproduce medicated transfusion that is one of the most commonly usedclinical prescriptions in hospitals and heath care institutions anda well-accepted treatment routine for many ailments. Shengtai alsomanufactures glucose and starch products for food and beverageindustry for the domestic market. In our view, Shengtai is anattractive play to participate in the prosperous prospects of thehuge and rapidly growing PRC healthcare market, especially the fastgrowing pharmaceutical glucose for transfusion solution market.Shengtai enjoys several distinct advantages over its competitors,such as proximity to raw material supply, a dominate market shareof 40% in Dextrose Monohydrate and 25% in Dextrose Anhydrate inChina, vertically integrated manufacturing capability andgeographical proximity, and cross-cultural similarities to the endmarkets in Asia. Based on our production capacity expansion andutilization, product pricing and margin assumptions, we forecastShengtai's revenue to surge from $51.7 million in FY2007 to $119.5million in FY2009 and to $149.4 million by 2010. Diluted EPS areestimated at $0.49 for FY2008, $0.65 for FY2009 and $0.82 forFY2010.

About Dutton Associates

Dutton Associates is one of the largest independent investmentresearch firms in the U.S. Its 30 senior analysts are primarilyCFAs, and have expertise in many industries. Dutton Associatesprovides continuing analyst coverage of over 140 enrolledcompanies, and its research, estimates, and ratings are carried inall the major databases serving institutions and online investors.

The cost of enrollment in our one-year continuing research programis US $35,000 prepaid for 4 Research Reports, typically publishedquarterly, and requisite Research Notes. The Firm does not acceptany equity compensation. We received $35,000 from the Company for 4quarterly Research Reports with coverage commencing on 8/05/2008.Our principals and analysts are prohibited from owning or tradingin securities of covered companies. The views expressed in thisresearch report accurately reflect the analyst's personal viewsabout the subject securities or issuer. Neither the analyst'scompensation nor the compensation received by us is in any wayrelated to the specific ratings or views contained in this researchreport or note. Please read full disclosures and analyst backgroundat www.jmdutton.com before investing.