Yongye International — Investor Presentation (December 2009)
27 slides from Yongye International's investor presentation, Dec 17, 2009
Slide 1: Company Presentation December 2009
“Improving the nutrition of plants and animals to better meet the health needs of consumers” Company Presentation December 2009 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement The market and industry information contained in this document has not been independently verified. No representation or warranty, whether express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such informa
Slide 3: Offering Summary
Offering Summary Issuer: Yongye International, Inc. Equity Snapshot: NASDAQ Ticker: YONG Offering Size: 8,500,000 common shares (all primary) Green Shoe: 15% (all primary) Use of Proceeds: Secure strategic raw material (lignite coal) resources Increase production capacity Establish demonstration sit
Slide 4: Company and Business Overview
Company and Business Overview 4
Slide 5: Corporate Overview
Corporate Overview We are a leading developer, manufacturer, and distributor of plant and animal nutrient products in the People's Republic of China Key Facts Revenue 94.7% Founded in 2003 ($ millions) Growth Headquarters in Beijing 2006-2008 CAGR 259.4% Research and production facilities in Hohhot,
Slide 6: Shengmingsu: Superior, Broad-Based Plant Nutrient
Shengmingsu: Superior, Broad-Based Plant Nutrient Fulvic Acid A complex, acidic, biochemical polymer Naturally occurring substance created by the decomposition of plant and animal materials Chemically extracted from humic acid, which is derived from lignite coal Increases natural strength and abilit
Slide 7: Supplements and Enhances Traditional Fertilizers
Supplements and Enhances Traditional Fertilizers Shengmingsu (targets the plant) Best via foliar (direct) application Immediate effect on plant ( < 8 hrs) Corrects micronutrient deficiencies Increases uptake of soil nutrients Adds own macro & micro nutrients Biotechnology Fertilizer (targets the see
Slide 8: Key Investment Highlights
Key Investment Highlights 1 Imperative to enhance agricultural yields creates strong market demand 2 An effective and scalable “branded store” distribution model 3 Name brand recognition supported by integrated marketing campaign Proprietary extraction process for high quality fulvic acid backed by
Slide 9: Imperative to Improve Agricultural Productivity in China
Imperative to Improve Agricultural Productivity in China Limited and shrinking arable land China’s Arable Land and Population Arable land per capita in China is one-third of global average Urbanization, desertification due to climate change and pollution encroaches upon farmland Increasing wealth of
Slide 10: Rising Preference for Organic Fertilizers and Nutrients
Rising Preference for Organic Fertilizers and Nutrients Overuse of Chemical Fertilizers Rapid Increase of Green Food Sales Spurs in Attempt to Boost Productivity Demand for Organic Fertilizers/Nutrients Source: National Statistics Bureau of China Source: China Green Food Development Center Demand fo
Slide 11: An Effective and Scalable Distribution Model
An Effective and Scalable Distribution Model Local Partnership Leverage provincial level distributor’s local knowledge to Xinjiang enable quicker market entry Gansu Inner Mongolia Hebei Liaoning Shanxi Branded stores at village level sell product directly to Shandong farmers Henan Jiangsu Highly sup
Slide 12: Integrated Marketing Campaign Builds Brand Recognition
Integrated Marketing Campaign Builds Brand Recognition National and Local Advertising Strengthens Brand Image CCTV-7 – China’s national agricultural channel Local television stations Local newspapers Village-Level Marketing Raises Local Awareness of Shengmingsu 12
Slide 13: Integrated Marketing Campaign Builds Brand Recognition
Integrated Marketing Campaign Builds Brand Recognition Highly Effective Village-Specific Case Studies Stories that are highly relevant to farmers Demonstrates a farmer’s incremental revenue, original investment and harvesting time saved from using Shengmingsu Crop - Radish Expense – RMB 42 Translate
Slide 14: Highly Efficient Manufacturing
Highly Efficient Manufacturing Manufacturing facility in Hohhot, Inner Mongolia with capacity to produce: 10,000 tons per year of liquid plant product 1,000 tons per year of powder animal product Yongye has a proprietary extraction process for deriving fulvic acid from humic acid Produces high quali
Slide 15: Strong R&D Platform
Strong R&D Platform Six modern greenhouses and one open test field in Hohhot facility In-house research lab with 28 research personnel Project partnerships with top agricultural universities and research institutes Chinese Academy of Agricultural Sciences Beijing University of Agriculture Inner Mong
Slide 16: Compelling Value Proposition of Return on Investment for Farmers
Compelling Value Proposition of Return on Investment for Farmers Increased yields - shorter harvest times Extended life-cycles (stronger leaves/roots) Enhanced crop taste, nutrition and appearance Value proposition – for every 1 RMB spent, farmers will gain 10 RMB back in increased value in marketpl
Slide 17: Strong Competitive Positioning
Strong Competitive Positioning China Market Highly fragmented with over 4,000 fertilizer products and 522 humic acid based products as of November 2009 Fulvic acid based products are still high growth products in markets we serve We believe we have the following competitive advantages versus our int
Slide 18: Comparison with Listed Peers
Comparison with Listed Peers China Green Agriculture China Agritech (NASDAQ: YONG) (NYSE: CGA) (NASDAQ: CAGC) Products Humic acid-based Humic acid-based Fulvic acid-based liquid fertilizers liquid / granular liquid nutrients Agricultural products fertilizers Distribution Model Distributors Third-par
Slide 19: Focused Growth Strategy
Focused Growth Strategy Pursue vertical integration Seek to control lignite coal resources Secure raw material resource in our high growth industry Substantially Improve margin by addressing the most significantly cost component Increase product capacity to meet market demand Liquid plant product: 1
Slide 20: Experienced Management Team
Experienced Management Team Zishen Wu Managed ~$1.4 billion of investments in state planned economy Chairman / CEO Served as director and chairman of several SOE conglomerates Zhao Qiang Led marketing for large companies, including Galanz Group VP of Marketing, Recognized as one of the top ten marke
Slide 21: Commitment to Public Company Excellence
Commitment to Public Company Excellence Built an independent board of directors Sean Shao, independent director - Chairman of audit committees for several U.S. listed companies, with prior Deloitte experience. Xiaochuan Guo, independent director - Dean of the College of Economics & Management, Inner
Slide 22: Financial & Operational Overview
Financial & Operational Overview 22
Slide 23: Rapid Revenue Increase Driven by Highly Scalable Distribution Network
Rapid Revenue Increase Driven by Highly Scalable Distribution Network Sales Number of Yongye Branded Stores 94.7% Growth 2006-2008 CAGR 259.4% Yongye Group Yongye International Yongye Group Yongye International Revenue in 9M09 surged 94.7% vs. 9M08 due to rapid expansion of our distribution network
Slide 24: Solid Gross Profit and Margin
Solid Gross Profit and Margin Gross Profit Net Income ($US million) ($US million) 27.2% 44.6% 51.8% 52.0% 53.1% 12.0% 33.2% 23.3% 27.0% 26.4% Margin Margin 98.8% Growth 90.1% Growth 2006-2008 2006-2008 CAGR 396.3% CAGR 400% (1) (1) (1) Yongye Group Yongye International Yongye Group Yongye Internatio
Slide 25: Balance Sheet Highlights
Balance Sheet Highlights Yongye International Yongye Group ($ in millions) Sept. 2009 Dec. 2008 Dec. 2007 Cash and equivalents $3.5 $4.5 $0.4 Accounts receivable 43.3 2.7 1.6 Inventories 31.0 20.7 9.9 Total current assets 78.6 29.0 12.9 Total assets 87.6 34.5 23.1 Derivative liabilities – fair value
Slide 26: Key Investment Highlights
Key Investment Highlights 1 Imperative to enhance agricultural yields creates strong market demand 2 An effective and scalable “branded store” distribution model 3 Name brand recognition supported by integrated marketing campaign Proprietary extraction process for high quality fulvic acid backed by
Slide 27: Thank You
“Improving the nutrition of plants and animals to better meet consumers’ health needs” Thank You 27
Yongye International — Investor Presentation (December 2009) on 6ix