ShengdaTech, Inc. (SDTH)

On September 21, 2009 at 9:28 PM, caidencollett07 (99.29) wrote:

They no longer manufacture coal-based chemicals, including ammonium bicarbonate, liquid ammonia, methanol and melamine due to rezoning issues. The nano precipitated calcium carbonate is now their only business; they have ridden themselves of the lower margin coal-based business. This is what has the stock running under the radar. Their lack of earnings growth is because they cut off 60% of the business, in favor of a fast growing nano precipitated calcium carbonate business. To date their NPCC business has recouped 28% percent of lost earnings from their prior chemical businesses.

Nano precipitated calcium carbonate is an additive that makes products such as paper, asphalt, and tires stronger and more cost efficient. The company's R&D efforts are also opening more doors for the company. China's growth of the middle class ensures that there will be more roads and tires, which should greatly benefit Shengda Tech. I also believe they should return to earnings growth in the future.

The company’s current production capacity is 180,000MT; this number is set to increase 3 to 4 four fold in the next three to four years. They also have acquired rights to a huge limestone quarry which will bring down their raw materials cost. SDTH could be at $10 to $12 by end of the year.