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Sunday, March 23, 2008

Shengda Tech (SDTH) Q4 Results

Shenda Tech issued their 10-K and a press release announcing Q4 results. I'll cover the full 10-K in [a future] post. Let's look at the quarter over quarter results (which they don't break out).

Q2: $22.7 million
Q3: $27.2 million (up 20% qoq)
Q4: $28.6 million (up 5% qoq)

Gross margin:
Q2: 33.8%
Q3: 35.5%
Q4: 35.8%, NPCC margin actually decreased from a year ago (deprec and coal prices)

Net income:
Q2: $6.0 million (11 cents per diluted share)
Q3: $7.8 million (14 cents per diluted share)
Q4: $7.8 million (14 cents per diluted share)

NPCC volume sold was 35,680 metric tons in Q4.
NPCC revenue was $13.8 million, up from $13.1 million in Q3.

SDTH is finishing up test runs on three new stainless steel NPCC lines in Shanxi Province, each with 20K metric tons capacity.

They're projecting 2008 revenue to be $132 million to $134 million, and net income to be $33 million to $35 million. Presumably that would be roughly 57 cents based on my 60 million totally diluted share count, 63 cents based on the current GAAP diluted share count.

They currently have 130K metric tons of NPCC capacity (reached in Nov 07), which includes the 40K above.

In Q4, they added 13 new customers: 5 tire makers, 3 PVC producers, 3 latex producers, 1 paint company, 1 paper company.

NPCC margin: 42.6%, down from 43.3% yoy

NPCC breakdown:
Tires: 43.4% (growth of less than 8.6% qoq)
PVC: 39.0% (growth of 8.6% qoq)
Latex: 9.9% (growth of 20.7% qoq)

The 40K metric ton facility reach full capacity in Nov (the middle of the quarter), although it was ramping up since July. Another 60K metric tons will ramp up in 2008, reaching full capacity in August.

Chemical revenues increased 7.5% yoy due to higher demand and higher prices.

Selling expenses were unchanged, but G&A increased to $1.3 million from $0.7 million in Q3 and $0.9 million yoy.

I'll cover the financial details when I look through the 10-K, but I notice a huge drop in operating cash flow due to $17 million advances to suppliers during Q4. Presumably this is due to timing of events.


The 10-K will fill in a lot more detail. The conference call will fill in even more. A big thanks to Seeking Alpha for providing a transcript.

9 hour jet lag is making it difficult to do this stuff right now.

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