Shengtai Pharmaceuticals (OTC BB:SGTI)

Re-pricing of risk premium

We are coding Shengtai Pharma as a GeoSpecial:

• The company reported its second consecutive profitable quarter:

Source: See Filing For the quarterly period ended December 31, 2009

• The company maintained its net income guidance of $3.0 to $5.0 million

We don't think this is a slam dunk for a huge run, but we do feel the stock has a enough positive news  to push shares to its book value per share of $2.46. 

Investors need to be cognizant that:

• The company has 4,398,945 warrants that are exercisable at $2.60 which could place a ceiling on the stocks appreciation potential.

  Potential fully diluted shares outstanding as of February 16, 2010:

  19,169,805: Primary Shares
   4,398,945 :  Warrants
  __________
  23,568,750

• The company's guidance range could imply a sequential decrease in EPS in coming quarters. (Net Income for the  6 months 2010 is $1.8 million)