Origin Agritech Limited · NASDAQ:SEED
Origin Agritech — Investor Presentation (November 2007)
22 slides from Origin Agritech's investor presentation, Nov 28, 2007
Slide 1: Origin Agritech Ltd. (NASDAQ: SEED)
Origin Agritech Ltd. (NASDAQ: SEED) Origin Agritech Ltd. is China’s top hybrid-seed producer and an innovative agricultural company specializing in feeding the growing population in China and Southeast Asia. It is vertically integrated, currently selling via 3,200 distributors in an industry that is
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains "forward-looking statements" within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual resul
Slide 3: Investment Highlights
Investment Highlights Arguably the largest corn seed producer in China Sells 100 different varieties of hybrid seeds 25 proprietary seeds approved to enter into market Vertically integrated, network of over 60,000 distributors Exclusive regional sales rights Named by Forbes Asia magazine as one of A
Slide 4: Corporate Profile
Corporate Profile Founded in 1997 and headquartered in Beijing The first private seed company in China Vertically integrated; focused on R&D Product portfolio includes 100 hybrid seeds Building a genetically modified seed portfolio Approx. 850 employees in China Stock listed on the Nasdaq GS (market
Slide 5: Market Opportunity
Market Opportunity China is world’s second-largest producer of corn Corn is used primarily for animal feed, particularly for chickens and pigs, as well as for human consumption Demand for corn for animal feed and human dietary consumption is expected to increase. Average corn prices in China increas
Slide 6: Business Overview
Business Overview Products Hybrid seeds (corn, rice cotton, canola) 93.7% of revenue Genetically modified (GM) cottonseeds 6.3% of revenue Customers 200 million small farms throughout China Distribution network 3,200 first-level distributors 60,000 second-level distributors Largest production capaci
Slide 7: Expansive National Presence
Expansive National Presence 7
Slide 8: Research & Development
Research & Development Production of hybrid seeds The only Chinese crop seed company with an in-house biotech center 10,000 sq. meter of Life Science Research Center 12 breeding stations, including 7 corn sites Proprietary portfolio 14 corn hybrids 18 rice seeds 2 canola seeds 1 cotton seed 10 more
Slide 9: Government Regulation
Government Regulation China’s hybrid seed industry is going through transitions: Government-sponsored and under-capitalized seed companies are being forced out of business and liquidating their inventories at below-market prices The result is nationwide price discount for hybrid seeds Stringent regu
Slide 10: Peer Group Comparison
78.72 n/a $35 Mln $230 Mln Shandong Denghai (002041.SH) 5.85 $0.09 $492 Mln $2.15 Bln Chaoda Modern (0682.HK) n/a $0.33 $64.3 Mln $650 Mln Agria (GRO) 19.67 $6.35 $8 Bln $23 Bln Syngenta (SYT) 30.30 $1.79 $8.6 Bln $50 Bln Monsanto (MON) 12.29 $0.38 $66 Mln $150 Mln Origin Agritech (SEED) P/E (2008)
Slide 11: Marketing & Pricing
Marketing & Pricing Origin makes more than 40,000 new crosses for field testing every year Working with 100,000 farmers in two provinces in China Building a database to scientifically measure seed yields New hybrids command pricing power because of higher yield 5,000 farmers recruited nationwide to
Slide 12: Management Team
Management Team Dr. Gengchen Han, Chairman & Co-CEO Ph.D. in plant breeding & cytogenetics from Iowa State University 20 years of seed industry experience, including Pioneer Hi-Bred, International Maize and Wheat Improvement Center (CIMMYT) Yuan Liang, Co-CEO and President Director of a publicly lis
Slide 13: FY2007 Financial Results & Outlook
FY2007 Financial Results & Outlook
Slide 14: Balance Sheet
(USD ’000s) June 30, 2007 Sept. 30, 2006 Cash and Cash Equiv. $ 17,225 $ 36,408 Receivables 1,201 1,577 Inventories 69,549 43,468 PP&E, net 18,760 15,869 Total Assets 136,335 124,508 Total Current Liabilities 75,293 64,474 Total Debt 75,540 64,839 Stockholders’ Equity 54,104 58,018 Balance Sheet Fis
Slide 15: FYQ3 Income Statement
(USD 000s, except EPS) June 30, 2007 June 30, 2006 Revenue $ 58,818 $ 65,318 Gross Profit 14,945 20,080 Operating Income 6,777 15,547 Net Income 4,846 15,498 EPS (Diluted) 0.20 0.65 Wgt. Avg. Diluted Shares 24.6 23.9 FYQ3 Income Statement 15
Slide 16: Segment Performances
Segment Performances % of Revs Gross Margin % of Revs Gross Margin % of Revs Gross Margin 24.9% 19.5% 40.8% 23.8% NM 42.9% 27.1% NM 43.4% 4.1% NM 7.3% 2005 2006 2004 Maize hybrids 64.8% 97.7% Rice hybrids 28.4% NM Cotton 6.35% 1.6% FY2006 comprises January through September 16
Slide 17: Profitability
1.3 7.9% $51,400 626.3 2.4% 7.3% 2005 2006 2004 Operating Margin 10.8% 23.8% Return on Assets 10.9% 17.9% Inventory Days 179.8 285.5 Sales Per Head $118,800 $95,400 Tax Rate 0.5% 10.5% Current Ratio 1.4 1.2 Profitability FY2006 comprises January through September 17
Slide 18: Overseas Sales
Overseas Sales India 34%-owned Biocentury Transgene approved to sell Bt cotton 3 varieties of insect-resistant Genetically-modified (GM) cotton Available for sale in time for 2008 growing season Origin to share in upfront payments and future sales royalties Vietnam Sell premium rice hybrid, effectiv
Slide 19: Growth Drivers
Growth Drivers International expansion Obtained pre-approval to sell premium rice hybrid in Vietnam Vietnam also presents opportunity for sales of rice products Corporate reorganization Completed $40 Mln financing in July 2007 Line of credit for $100 Mln Internal realignment plan completed Rationali
Slide 20: Refreshed Organizational Structure
Refreshed Organizational Structure State Harvest Bio-Technology Inc. Corn Division Beijing Origin Seed Technology Inc. Rice Division Denong Zhengcheng Seed Inc. Cotton & Fertilizer Division Origin Henan Cotton Technology Ltd. 20
Slide 21: Summary
Summary Arguably the largest corn seed producer in China Sells 100 different varieties of hybrid seeds 25 proprietary seeds approved to enter into market Vertically integrated, network of over 60,000 distributors Exclusive regional sales rights Named by Forbes Asia magazine as one of Asia’s “Best Un
Slide 22: Thank you! Contact
Origin Agritech Ltd. (NASDAQ: SEED) Thank you! Contact: Mr. Irving Kau, VP Finance Phone: (760) 918-1781 Email: irving.kau@originseed.com.cn
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