Harbin Electric Co. Ltd. Class H · HKEX:1133
Harbin Electric Co. Ltd. Class H — 3rd Annual China Dragon Call Conference (Oppenheimer & Co.) (May 2009)
33 slides from Harbin Electric Co. Ltd. Class H's conference presentation, May 21, 2009
Slide 1: My Power, Your Future
NASDAQ: HRBN May 19, 2009 New York My Power, Your Future 3'™ Annual China Dragon Call Conference Oppenheimer & Co.
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements included in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This presentation may contain statements which address such key issues as the company’s growth strategy, future financi
Slide 3: Overview
Overview
Slide 4: Welcome to Harbin Electric
Welcome to Harbin Electric m NASDAQ, HRBN @ Headquarters Harbin, China " ~ ™ Operations Harbin = come Shanghai ‘erssoam 9 unt Se, Weihai eg m Founded in 2000 eae itn een H Full-Time Employees 2,000 ee / ¢ wee ae co Loe Fina Kons ou A Leading Developer and Manufacturer of a Wide Array of Electric Mot
Slide 5: Core Businesses
Core Businesses @ Linear Motors & Integrated Systems @ Specialty Micro-Motors @ Industrial Rotary Motors HARBIN ELECTRIC 5
Slide 6: Investment Highlights (1)
Investment Highlights (1) @ Rapid growth in Revenue & Net Income; Consistent High Margins Q 2008 vs. 2007 —> Sales up 85%; Op. Income up 45%; NI up 50% @ Open-Ended Market Potential; stimulus package Q Wide range of applications; Target markets are wide-open Q Oil Fields, Logistic Systems, Food Indu
Slide 7: Investment Highlights (II)
Investment Highlights (II) @ Multi Manufacturing Facilities Q Extensive certification processes (ISO for Quality mgmt; AQA for technical specification of automobile industry) Q Harbin: mainly linear motors Q Shanghai: dedicated to auto micro-motors Q Weihai: dedicated to rotary motors @ Multi-Facete
Slide 8: Historical Financial Highlights
Historical Financial Highlights Revenues ($mm) Operating Income ($mm) +459 150 40 5%. 34.4 30 e237 100 20 +335 E 56 rosie El 10 2.3 0 0 =. 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Net Income ($mm) 30 +51 a 0y, 1% L High Double-Digit | ee YoY Growth in 2.3 ; — Revenues and Earnings 2004 2005
Slide 9: Strong Balance Sheet
Strong Balance Sheet December 31, March 31, 2008 2009 Cash 48.41 MM 63.57 MM Working capital 85.67 MM 82.44 MM Total debt 46.00 MM 44.00 MM Shareholders’ equity 235.0 MM 240.2 MM HARBIN ELECTRIC Fiscal year ends December 31
Slide 10: Competitive Strengths
Competitive Strengths
Slide 11: Strong R & D Capabilities
Strong R & D Capabilities Global Talent in Strong In-House R&D Q ~60 researchers and engineers with diverse experience and specialization Linear Motors/Specialty Micro-motors/Controllers & Automations Manufacturing Technologies and Processes Q 12 patents related to LMs and Micro-motors ® Collaborati
Slide 12: Leader in Linear Motor (LM) Technology
Leader in Linear Motor (LM) Technology @ First in China to enter linear motor (LM) market Q Focus on technical innovation, creativity & value-added products; not competing in low-cost commodity segments @ In most cases, we are the only supplier of LMs to our clients Q Majority of our sales come from
Slide 13: Strong Manufacturing Capabilities
Strong Manufacturing Capabilities @ Established manufacturing platform Q North (Harbin), South (Shanghai), and Central Region (Weihai) @ State-of-the-Art Manufacturing Equipment Q Imported production lines, inspection & testing equipment plus quality control systems # International Expertise Q Inter
Slide 14: Competitive Advantage
Competitive Advantage @ Over Foreign Competitors U1 Closer Customer Contact & Partnerships: Geography, culture and language QO Customization allows us to work closely with our clients, giving us time to understand their needs and become their partners QO) Lower Cost: Labor, raw material and product
Slide 15: Strategic Vision
Strategic Vision # Positioned in products and markets strongly supported by government policy Q From “Made in China” to “Developed in China” Q Linear motors for transportation and oil industries Q Rotary motors for rural development and industry H Promoting Technology-Oriented & Value-Added Firms Q
Slide 16: = ed ES i) = Oo
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Slide 17: New Product: Oil Pump System for Oil Fields
New Product: Oil Pump System for Oil Fields @ Patented “Tower Type Oil Pump” driven by permanent magnetic linear motors in 2007 Q Generates >25% energy savings “41th Five-Year Plan” (2006-2010) expects to reduce energy consumption by 20% per unit GDP Q Delivered 214 units to Petro China in Daqing in
Slide 18: New Product: Urban Railways
New Product: Urban Railways # Developing China’s First Homemade Linear Motor Train System for Urban Mass Transportation # Positioning our technology as the “Standard” for all future urban railway system construction across China Passed a team evaluation successfully Delivered a few units to our cust
Slide 19: Expanding Market: Urban Railways
Expanding Market: Urban Railways @ Next 15 years, “a golden period” in China to develop metro railway transportation Hm Government’s objectives: Q Estimated investment of ~US$70 billion in 15 cities to operate a minimum of 1,500 km (61 lines) urban railways by 2010 Q Build more than 2,000-2,500 km o
Slide 20: Expanding Market: Coal Transportation
Expanding Market: Coal Transportation Co-developing linear motor freight train for coal transportation Substantially reduce transportation cost for coal mines Reduce coal generated energy prices (Government objective) Government supported infrastructure building project Positioning our technology as
Slide 21: Major New Business: Auto Micro-Motors
Major New Business: Auto Micro-Motors @ Capacity Q 2.4 million units in Harbin Q 10 million units in Shanghai @ Sales Successes QO Up 223% (2008: $33.8 million; 2007: $10.5 million) QO Developed three new products for Magna International @ New Plant - Shanghai Q Trial production passed first evaluat
Slide 22: Major New Business: Industrial Rotary Motors
Major New Business: Industrial Rotary Motors @ Product expansion; diversification; risk reduction $27.8 million revenues in 2008 ( 6 months) @ Integration progressing well; improving margins @ Increasing demand (Stimulus package) @ Help weather economic downturn HARBIN ELECTRIC 2
Slide 23: Foreign Sales: Getting traction
Foreign Sales: Getting traction @ Overseas Markets Represent a Huge Opportunity for Us Q Our positioning — High-quality products meeting int'l standards at lower prices Q Barriers to entry — Strong, proven R&D; our ability to undergo extensive testing and qualification of our products makes HRBN uni
Slide 24: Upside Potential
Upside Potential Upside earnings potential nai ste " ns /* HARBIN ELECTRIC
Slide 25: Growth in Uncertain Times
Growth in Uncertain Times — China continues to grow H Massive economic stimulus package strongly supports many of our products BH Weare strongly positioned in growing domestic sectors in addition to high-quality micro motors for exports @ Our strategy is geared to advanced engineering and proprietar
Slide 26: Appendix
Appendix
Slide 27: Linear Motors (LM) & Integrated Systems
Linear Motors (LM) & Integrated Systems H Applications Q Mail sorting equipment for post offices and warehouses Power switches Meat slicers Electric pumps Oil pump systems Mass Transit Railway linear motor systems oooooco Cargo train for coal transportation HARBIN ELECTRIC
Slide 28: Specialty Micro-Motors
Specialty Micro-Motors @ Applications Q Auto Industry = Car seat automation Automatic seat folding EPS (power steering) Automated window Automated trunk opening Electronic door locks Engines ABS Q Other Industries = Medical devices = Communications equipment HARBIN ELECTRIC
Slide 29: Industrial Rotary Motors
Industrial Rotary Motors H Applications Q Petrochemical industry Metallurgical and mining industry Textile industry Agricultural machinery Transportation machinery Machine tools Medical devices Ventilation equipment Air Compressor ooooooooo Electric pumps HARBIN ELECTRIC
Slide 30: Diversified Product Portfolio
Diversified Product Portfolio Revenues by Product Segment @ Linear Motors § Auto Specialty Micro- Motors @ Rotary Motor B Other 2007 2008 HARBIN ELECTRIC
Slide 31: Strong Management Team
Strong Management Team Domestic Entrepreneurship Expertise Tianfu Yang, Chairman & CEO Zedong Xu, cFo @ Founder of Harbin Electric @ Over 12 years of industry experience @ Over 20 years of industry experience = _™ Previously CFO for Harbin WanDa @ 2009 National Outstanding Electical Entrepreneur Awa
Slide 32: Strong Management Team
Strong Management Team International Experience Kanenori Okawa, Chief Technology Officer @int'l expert in electric motor technology and manufacturing processes Formerly Chief Technology Advisor of Nittoku Engineering Co., Ltd., Japan Lanxiang Gao, Chief Operating Officer, Shanghai Tech-Full Speciali
Slide 33: Thank you for your interest
Thank you for your interest i www.harbinelectric.com
Harbin Electric — 3rd Annual China Dragon Call Conference (Oppenheimer & Co.) (May 2009) on 6ix