Yongye International — Yongye Biotechnology International — Investor Presentation (May 2009)
30 slides from Yongye International's investor presentation, May 8, 2009
Slide 1: Investor Presentation
Investor Presentation March 2009
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 results
Slide 3: Disclosure Statement
Disclosure Statement This presentation and the information herein contained are confidential. By your attendance at this presentation (if you attended in person) or your receipt of a copy of this presentation, you agree to hold in strict confidence the existence and contents of this presentation, in
Slide 4: Company Snapshot
Company Snapshot Symbol OTCBB: YGYB Price (3/23/09) $1.50 Basic Shares Outstanding 26.7 mm Market Cap (3/23/09) $40.1 mm Total Debt (3/23/09) $0.4 mm Revenue (FY08 Dec) $48.1 mm Net Income (FY08 Dec) $11.2 mm EPS (Basic) $0.66 EPS (Fully Diluted) $0.64 # of Employees 153 4
Slide 5: Investment Highlights
Investment Highlights Yongye is engaged in the sale of fulvic acid-based plant and animal nutrients in the People’s Republic of China Plant nutrients products developed with Yongye patented research Fulvic acid-based nutrients yield better results when complementing traditional fertilizer products G
Slide 6: Corporate History
Corporate History 2001 2004 2006 2008 Products Inner Mongolia $3 mm in U.S. Listing conceptualized Yongye factory revenue $19.4 mm PIPE opened $48 mm in revenue 2003 2005 2007 Inner Mongolia First product $13 mm in revenue Yongye Biotech sale Filed patents Intl established Patent product research an
Slide 7: Corporate Structure
Corporate Structure Yongye Biotechnology Listco registered in NV, USA International, Inc. (Nevada) Headquarters in Beijing 100% Contracted production facility in Hohhot, Inner Mongolia Fullmax Pacific Ltd. (BVI) CJV established to distribute and sell products 100% Asia Standard Oil Ltd. (HK) 99.4% Y
Slide 8: Growing Domestic Market for Plant Nutrients
Growing Domestic Market for Plant Nutrients Growing scarcity of arable land in PRC 20 percent of the world’s population; 7 percent of the world’s arable land* Situation worsening as more land used for industrial production Every fertile hectare must support 10.3 people (vs. 5.1 in Europe; 1.6 in the
Slide 9: YGYB Plant Nutrients: Complimentary to Fertilizer
YGYB Plant Nutrients: Complimentary to Fertilizer YGYB Plant Nutrients (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 (Target
Slide 10: Our Flagship Product: Shengmingsu for Plants
Our Flagship Product: Shengmingsu for Plants Nutrient-rich liquid made up of a highly concentrated fulvic acid base Supplements the absorption of fertilizer and soil minerals Enhances plant’s natural resistance against disease and pests Increases water and nutrient holding capacity, especially in ad
Slide 11: Measurable Improvements for Farmers
Measurable Improvements for Farmers Increased yields Shorter harvest times Extended life-cycles (stronger & larger leaves/roots) Enhanced crop taste, nutrition and appearance Superior financial return for farmers Carrots Increased yield up to 25%* Celery Increased yield up to 25%* Cucumbers Increase
Slide 12: Fulvic Acid: The Key Nutrient
Fulvic Acid: The Key Nutrient Fulvic Acid: complex, acidic, biochemical polymer Produced naturally by the decomposition of plant and animal material Extracted from humic acid, which is available in Leonardite coal China has 12% of the world’s Leonardite coal reserves Increases natural strength and a
Slide 13: A Boost to the Fertilizer Industry
A Boost to the Fertilizer Industry PRC uses 50 million tons of traditional nitrogen fertilizer Fertilizers with Fulvic Acid Roughly $50bn in 2008 164 Products (1/3 of global production) 5 Over-use leads to Combination of Products Combination of decline in nitrogen, mineral ions phosphorus 1 product
Slide 14: Advanced Scalable Production
Advanced Scalable Production YGYB proprietary extraction process of fulvic acid from humic acid Produces high quality fulvic acid Smallest possible molecular weight Higher possible bio-activity coefficients Final process stabilizes the extract and mixes it with micro-nutrients (patented) 10,000TPA c
Slide 15: Shengmingsu for Animals
Shengmingsu for Animals Fulvic acid for animals Maximizes digestion for better health Provides natural antibiotic to prevent disease Products Nutrients mixed into animal feed Tested and approved for rollout Sold in Inner Mongolia, Hebei and Shandong Reduced seasonality going forward Cows Increased m
Slide 16: National Market Coverage
National Market Coverage Top 4 Hebei, Xinjiang, Inner Provinces Mongolia and Gansu New trial Yunnan, Hainan, Liaoning, markets Jilin and Heilongjiang Brand recognition based on over 5 years of field testing, certification, demonstration, promotion and sales success Demonstrations, trials and educati
Slide 17: Distribution Channels
Distribution Channels SELLER DISTRIBUTORS END USERS (RETAIL) 70% Yongye Branded Stores 5 Primary Smaller (independently operated) (Intra-Provincial, YGYB distributors for 4 County) largest provinces (25 in total) 30% Larger users (military farms; SOE farms) We work with a network of large exclusive
Slide 18: Primary Distributors: Relationship Framework
Primary Distributors: Relationship Framework Exclusive Arrangement with YGYB: 3 year contract Price: Fixed price for 3 years Volumes: Declared at the end of the prior season Orders: 1 month in advance Payment Terms: New Distributors (100% down-payment); L-T Customers (3 months in advance) Distributo
Slide 19: Branded Store Network (Independently Owned)
Branded Store Network (Independently Owned) 1,125 branded private owned stores (Dec 08) YGYB’s involvement Centralized marketing support Technical info with computers, CD- ROMs and TV ads Store proprietors responsible for inventory, collection and sales The Yongye brand has achieved market recogniti
Slide 20: Competitive Landscape
Competitive Landscape Inner Company/Product Mongolia Gansu Hebei Hubei Xinjiang Others Changsha Gaosheng x China Agritech (CAGC.OTC) Humic Acid Compound Fertilizer x x x x $39.3m & $8.5m FY08 Rev & Net Inc China Green Agritech (CGA.AMEX) Humic Acid Liquid Fertilizer; x x $22.6m & $9.5m FY08 Rev/Net
Slide 21: Our Business Model
Our Business Model Additional Capital: Translation into Additional Earnings Working Capital Deployed $1.00 Sale Price of Finished Goods $2.07 Gross Margin $1.07 Blended Plant & Animal Incremental SG&A $0.05 Also based on revenues Taxes $0.03 (Special Development Zone Rate); Expires Dec 2009 Minority
Slide 22: Growth Strategy
Growth Strategy Improve Asset Base: Bring manufacturing assets (10,000 TPA) on to Balance Sheet Continue to deploy electronic & print media campaign Infomercials on local channels targeting farmers Develop tailored product Targeting specific crops and develop customized and enhanced plant products t
Slide 23: Total PRC Plant Nutrient Market
Total PRC Plant Nutrient Market China Market The overall fertilizer market is estimated to be a $50B industry in China – estimated to grow about 30% a year from 2005 to 2009 China has about 1.81B Mu of arable land – all cash and row crops benefit from the use of Yongye’s “Shengmingsu” China purchase
Slide 24: Experienced Management Team
Experienced Management Team Wu Zishen, Chairman and CEO Managed approximately $1.4 billion of investments in state planed economy Director and Chairman of several large SOE conglomerates Zhao Qiang, VP Sales and Marketing, Director Led marketing for several large companies and awarded top 10 in mark
Slide 25: Financial Performance
Financial Performance USD mm FY 2007A FY 2008A FY 2009E (Dec) (Dec) (Dec) Revenue $13.1 $48.1 $66.0 Gross Profit 5.9 24.9 Gross Profit Margin 44.6% 51.8% EBITDA 5.14 13.8 Net Income $4.4 $11.2 $15.8 Net Income Margin 33.2% 23.3% 23.9% 25
Slide 26: Balance Sheet
Balance Sheet USD mm FY 2007A FY 2008A (Dec) (Dec) Cash $0.4 $4.5 Inventory 9.9 20.7 Receivables 1.6 2.7 Total Assets 23.1 34.5 Financial Debt (S-T) 0.0 0.4 Equity 23.1 34.5 26
Slide 27: Use of Proceeds
Use of Proceeds Proceeds will be used to fund the additional working capital requirement Funding gap is projected due to increased volumes during the busy quarters (Q2 and Q3) Majority of these orders are already secured Orders for Q2 and Q3 must be made now Down-payments expected given suppliers ne
Slide 28: Listing on NASDAQ
Listing on NASDAQ NASDAQ Capital Market Initial Listing Requirements Requirement Status Stockholders’ equity Y Market value of publicly held shares Y Operating history Y Net income from continuing operations (in the latest fiscal year or in two of the last three fiscal years) Y Publicly held shares
Slide 29: Investment Highlights
Investment Highlights Plant nutrients products developed with Yongye patented research Fulvic acid-based nutrients yield better results when complementing traditional fertilizer products Greater economies to be achieved by bringing manufacturing in-house Growing market penetration with franchised st
Slide 30: Contacts
Contacts Yong Ye Biotechnology Co. CCG Investor Relations Suite 608, Xueyuan International Tower Mr. Crocker Coulson, President No. 1 Zhichun Road Phone: 646.213.1915 Haidian District, Beijing, China E-mail: crocker.coulson@ccgir.com Phone: 86.10.8231.8626 http://www.ccgir.com/ Fax: 86.10.8231.1797
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