China Modern Dairy Holdings Ltd. · HKEX:1117
China Modern Dairy — FY2012 Earnings Presentation
31 slides from China Modern Dairy's earnings presentation, Sep 18, 2012
Slide 1: 2012 Results Announcement
China Modern Dairy Holdings Ltd. 中国现代牧业控股有限公司 (Incorporated in Cayman Islands with limited liability) (Stock Code: 1117) 2012 Results Announcement 18 Sep 2012
Slide 2: Disclaimer
Disclaimer This presentation material is prepared by China Modern Dairy Holdings Ltd. (the ―Company‖) solely for your information only. All or any part of this presentation material may not be taken away, reproduced, redistributed, or retransmitted in any manner. You agree to be bound by the above c
Slide 3: Company Overview
Company Overview <e® Fag $ vv: FRR BL
Slide 4: Company Overview
Company Overview The largest dairy farming company in China, producing raw milk with the quality better than international standard ► Product safety crisis ► Environmental Crises protection crisis Industrialized free-stall dairy farming business model and standardized operational procedures and
Slide 5: Our History and Vision
Our History and Vision China Modern Dairy‘s Mission and Vision To become the world‘s most advanced farm operator while remaining environmentally friendly To produce the highest-quality milk in the world with scientific breeding and feeding To provide the most trusted and safest source of dairy milk
Slide 6: Company Status Update
Company Status Update The Largest Dairy Farming Company in China Nationwide Strategic Presence Number of Number of Dairy Number of Company farms Cows Milkable Cows (1) 20 159,347 70,793 (2) 25 23,000 45,000 (2) 50 109,000 45,000 (2) 18 37,000 19,000 Source: China Dairy Statistical Year Book 2009 Not
Slide 7: Results Overview
Results Overview <e® Fag $ vv: FRR BL
Slide 8: 2012 Results Highlights
2012 Results Highlights 2012 Net profit increased by 67.0% compared to the same period of last year FY2012 FY2011 Increase/ (Decrease) Rmb’000 Rmb’000 % Sales of raw milk produced 1,677,615 1,113,354 50.7% Gains or loss from changes in fair 131,481 55,538 136.7% value EBITDA 442,091 314,813 40.4% EB
Slide 9: Strong Track Record of Growth
Strong Track Record of Growth Sales (1)（Rmb mm) Net profit (Rmb mm) 1,677.6 407.3 1,113.4 243.9 589.8 107.4 334.0 42.7 FY09 FY10 FY11 FY12 FY09 FY10 FY11 FY12 (1) Transportation expense deducted 9
Slide 10: Strong Track Record of Growth (continued)
Strong Track Record of Growth (continued) Raw milk sales volume（1,000 ton） Average milk yield（ton/year） 431.4 8.1 7.7 288.6 7.3 158.1 6.9 96.3 FY09 FY10 FY11 FY12 FY09 FY10 FY11 FY12 10
Slide 11: Achieved Targets on Growth of Farms and Milkable Cows
Achieved Targets on Growth of Farms and Milkable Cows Farms Distribution Number of Milkable Cows 180,000 159,347 160,000 140,000 107,576 120,000 88,554 100,000 80,000 72,191 61,309 60,000 43,959 45,584 40,000 70,793 , 23,532 20,000 46,267 20,427 26,607 0 Mikable cows Heifers and Calves Note: Operati
Slide 12: Key Financials
Key Financials <e® Fag $ vv: FRR BL
Slide 13: Operational Efficiency Improvement
Operational Efficiency Improvement Increase Milk Yield and Reduce Cost Breakdown of FY2012 Cost Structure Cash Cost (RMB) 7% 3% Feed costs 9% 2,959 Other farm operating expenses Employee benefits 10% expenses Depreciation 2,841 Others 71% FY2011 FY2012 Note (1): Feed costs include semen and medicine
Slide 14: Profit Margin Expansion
Profit Margin Expansion Rising Profit Margin Net Profit (RMB mm) Net Profit Margin(%) 407.3 24.3% * 243.9 18.2% 107.4 FY2010 FY2011 FY2012 FY2010 FY2011 FY2012 14
Slide 15: Driver of Margin Expansion: Illustrative Economics of a Dairy Farm
Driver of Margin Expansion: Illustrative Economics of a Dairy Farm Number of Cows (‗000s) Milk Yield (ton / annum) 12 10 9 10 Milk Yield (tons / annum) 8 Number of cows ('000s) 8 7 6 6 4 Breeding – Herd Expansion At Capacity – Breeding – Rapid Yield Gradual Yield Heifers Self-Sustaining 5 No Milk Im
Slide 16: Rapid Expansion of Assets
Rapid Expansion of Assets FY2012 FY2011 Increase/ (Decrease) RMB‘000 RMB’000 % Biological assets 4,185,600 2,651,407 57.9% Fixed assets 2,964,585 2,221,265 33.5% Total assets 8,651,814 6,906,933 25.3% Total liabilities 3,519,098 2,184,225 61.1% Total borrowing 2,590,789 1,522,934 70.1% Leverage rati
Slide 17: Asset Turnover Rates
Asset Turnover Rates Operating Cash Flows (RMB Million) Cash Conversion Days FY11 FY12 Inventory Days 59 53 Trade 24 26 Receivable Days Trade Payable 49 56 Days • For year 2012, the average inventory days are 53 • For year 2012, trade receivable days are 26, which is determined by the credit period
Slide 18: Investment Highlights
Investment Highlights eh Fay oy FRR BL
Slide 19: The Largest Dairy Farming Company in China with Significant Growth Potential
The Largest Dairy Farming Company in China with Significant Growth Potential Growing Dairy Consumption Rising milk powder import Dairy Product Consumption in China Hundred thousand tons (RMB hundred million) 2,294 44.9 41.6 1,882 1,600 1,411 24.6 10 2008 2009 2010 2011 2008 2009 2010 2011 Strong Gov
Slide 20: Well Established and Replicable Business Model
Well Established and Replicable Business Model Successful and Replicable Standardized and Scalable Farm Design Achieving Scientific Logistics Business Model Management of Cows, Workers and Materials Milking Hall in Close Grouping Strategies Applied ► Large-scale industrialized dairy Proximity to M
Slide 21: Comprehensive, Modern and Scientific Operations
Comprehensive, Modern and Scientific Operations Large-scale industrialized farms High Milk Yields Average Milk Yield (tons / annum) 9 8.09 Importing high quality heifers 4.8 FY12 Mature farms FY12 China average Comprehensive and modern average insemination techniques High Quality Milk <2,000k
Slide 22: High Quality and Safety Standards
High Quality and Safety Standards ► Centralized IT systems to constantly ► Carry out inspections at systematic intervals monitor cows Quality Control Quality Control Over Milking ► Teats and equipment sanitized before use Over Dairy Cows ► Disease detection and prevention through daily inspections a
Slide 23: Eco-Friendly Production
Eco-Friendly Production Comprehensive Waste Recycling System Improving Cost Efficiency Automatic Cow Waste Collection Reduce waste pollutants Improve work environment Anaerobic Digester Reduce operational costs Organic Bedding for Electricity Fertilizers Cows Generator Diversify revenue streams 23
Slide 24: Experienced Management Team
Experienced Management Team Highly Experienced Management Team ► Outstanding management team with an exceptional track record of building a successful business from scratch and also investing a significant portion of their personal wealth in the firm ► Senior management demonstrating leadership, str
Slide 25: Strategic Partnership with Mengniu
Strategic Partnership with Mengniu Our 10 year off-take agreement with Mengniu signed in 2008 allows us to sell up to 100% of our raw milk to Mengniu while maintaining the flexibility of selling up to 30% of our production of each farm to certain other customers Benefits for China Modern Dairy Benef
Slide 26: Business Outlook
Business Outlook eh Fay oy FRR BL
Slide 27: Highly Visible and Strong Growth Prospects
Highly Visible and Strong Growth Prospects Maturing of Herds on Existing Farms New Farm Expansion ► 20 farms have been built as at FY2012 ► Established, successful business model ► More dairy cows in 3rd &4th lactation, more ► Complete location selection of 2 farms for 2nd generation cows with gene
Slide 28: Future Strategy for Growth
Future Strategy for Growth China Modern Dairy aims to be recognized as the best dairy farm brand for raw milk in China Improve milk yield through gene improvement < > Penetrate Regions with High Demand Growth Optimize Feed Mixing < > Replicate Successful Business Model Optimize Breeding Techniques <
Slide 29: Continue to raise milk yield and raw milk quality
Continue to raise milk yield and raw mike quality Technological means Continue to raise milk yield ► China Modern Dairy applies the most advanced ► Working hard to raise milk yield to the sam level of developed countries feeding and breeding technology in the industry to milk yield per milkable cow（
Slide 30: Enhance Operational Efficiency
Enhance Operational Efficiency Invest in advanced technology and Develop and implement new Strengthen cooperation with local management system technologies and new techniques farmers and agricultural institutions ► Install and implement herd ► Apply new technologies and techniques ► Reseach and supp
Slide 31: Thank you!
Thank you! <e® Fag $ vv: FRR BL
China Modern Dairy Holdings — FY2012 Earnings Presentation on 6ix