Shengtai Pharmaceutical, Inc. (OTCBB: SGTI) reported that its revenues climbed 76% in fiscal 2008 (ended June 30) to $91 million. Net Income was up 46% to $10.4 million. Shengtai makes and distributes pharmaceutical grade glucose products in China, as well as glucose and other products for the food and beverage industry. According to the company, the increased revenues and earnings were the result of a two-year investment program that integrated the company vertically and increased its production capacity.

Pharmaceutical grade glucose products are the company’s high margin offerings, and Shengtai expects to increase its market share in this area. It also expects the expansion of healthcare in the rural areas of China to enlarge the glucose market overall.

However, in 2008, Shengtai’s glucose revenues were flat year-over-year because production capacity limits of 60,000 to 90,000 tons per year kept a lid on sales. Glucose contributed 38% of the company’s revenues in 2008, down from 62% in 2007. The future looks more promising for Shengtai because the company completed a new glucose production plant in July 2008, which passed its GMP inspection this month. The new facility will add 120,000 tons of new glucose production capacity. Production in the plant has begun at low levels, and will be increased in stages. The facility cost a total of $32 million, of which $10 million paid for the building while the remainder was spent on equipment.

In announcing its results, Shengtai pointed out that it exceeded a make good provision requiring at least $9 million of net income in fiscal 2008. Fully diluted earnings per share were 52 cents, which also surpassed the make good hurdle. In May 2007, the company raised $17.5 million in a private placement of shares and warrants that included the make good clause. Company officers placed a total of 5 million shares of common stock in an escrow account. Private placement investors would receive one-half of the shares if the company did not attain $7 million in net income in 2007, and the other half if Shengtai did not produce after-tax net income of $9 million in 2008. Shengtai managed to meet both requirements.

During Q4, Shengtai produced $26 million in revenue, a 59% increase and net income of $5.3 million, a 56% rise over the year earlier. The company ended its fiscal year with just over $10 million in cash.

With the expansion of the company now completed, capital investments will be reduced and Shengtai expects its cash flows to improve.

The company’s pharmaceutical grade products are Dextrose Monohydrate Transfusion, Dextrose Anhydrous, Dextrin and Pharmaceutical Grade Cornstarch.

After the company released its earnings report, Shengtai was trading unchanged at $2.40 per share.