ShengdaTech, Inc. (SDTH)

jahbu (81.65) Submitted: 9/10/07 12:20 AM : Start Price: $4.78 SDTH Score: 8.38

This company has a lot going for it. Has one business that has good cash flow and allows expansion of their other high growth business.

Coal based chemical business- ammonium bicarbonate for fertilizer, liquid ammonia for refrigerants and pesticides, methanol for formaldehyde and fuel and melamine for adhesives. Low growth but steady income.

This companies growth imho comes from limestone. Nano percipitated calcium carbonate. Used as filler or additive in all sorts of stuff. As a filler NPCC is added for a number of different reasons. Reduces cost by replacing higher cost materials while adding strengh and quality. Used in rubber, plastics, coatings, paper, paint and possibly many more things in the future. SDTH is focusing on Tires, PVC, and Paper. Sounds like they have a patent pending on their techinques and a strong R&D team. Also they have economy of scale by having a limestone quary close which reduces production costs and helps create higher margins.

In a nutshell this limestone filler lowers cost and strenghtens products that SDTH's customers produce.

SDTH cannot produce enough of this stuff and is expaning capacity to meet demands. By using profits from the chemical side of their busines, this shouldnt be a problem.

Chinese tire companies have been under fire for weak tires recently. NPCC that SDTH produces could help strengthen the tires and reduce costs at the same time.

I live on the Mississippi River north of St louis, and we have a huge limestone quarry operated by JM HUBER. This stuff is used in everything. From toothpaste to countertops, used in food used in paint, used in fertilizer, cosmetics and who knows what else.

IMHO I think SDTH has huge potential with their growing NPCC business and a chemical business to finance it. They seem to have good management and a solid research team.

I guess my major concern is if this company is for real. I also own HRBN, another Chinese stock, the numbers look great, the future looks bright, but will the management perform?

Time will tell.

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