New Oriental Energy & Chemical Corp · OTC:NOEC
New Oriental Energy & Chemical — Investor Presentation (February 2008)
25 slides from New Oriental Energy & Chemical's investor presentation, Feb 28, 2008
Slide 1: New Oriental Energy & Chemical Investor Presentation
~ New Oriental Energy & Chemical NOEC (NASDAQ) Investor Presentation
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: Company Overview
Company Overview New Oriental Energy & Chemical is a profitable and groviing specialty Financial Overview ($ in millions) ‘Chemical manufacturer that is leveraging its expertise to become an emerging manufacturer of alternative fuels: sony ss} ‘Qperations strategically located in Henan, saad PRC in
Slide 4: New Oriental's Current Product Portfolio
New Oriental’s Current Product Portfolio Urea Traditionally Crop fertilizer, also used in resin, plastics, medicine; Gross margins attainable approximately 18% ‘Ammonium Bicarbonate —_| Crop fertilizer, also used in pharmaceutical and food industries; Gross margins attainable approximately 7% Dimeth
Slide 5: New Oriental's Production Process
r New Oriental’s Production Process
Slide 6: China Market Overview: Specialty Chemical
& China Market Overview: Specialty Chemical Urea + The most common crop fertilizer used in China due to favorable cost and yield characteristics + Approximately 40 million tons per year consumed in China + 90% manufactured domestically with estimated industry-wide capital utilization of 90% + Demand
Slide 7: Specialty Chemical Growth Drivers
& Specialty Chemical Growth Drivers Demand is Growing Faster than Supply + Ammonium bicarbonate plays an important role in China's agricultural production as it contains no harmful substances and is one of the safest nitrogenous fertilizers + According to China Statistics Almanac, nitrogen fertilize
Slide 8: China Market Overview — Alternative Energy
China Market Overview — Alternative Energy DME + At the end of 2007 China will have 1,200,000 tons of available DME capacity + Only a select number of licenses have been granted by the Government in the Chinese market, and the Government is encouraging these producers to speed up the capacity buildi
Slide 9: What is DME and Methanol?
What is DME and Methanol? * DME (Dimethyl Ether) is a clean, environmentally-friendly alternative fuel that originates from coal and is commonly being used as a substitute for Liquid Petroleum Gas (LPG) in home heating and cooking and an alternative to traditional petrol- diesel in buses and cars +
Slide 10: Alternative Energy Growth Drivers
Alternative Energy Growth Drivers + Global Depletion of Accessible Oil Reserves r . + Strong China Related Trends: oe Lert eo aaa > Greater Dependence on Foreign Oil is Driving Chinese Government Intervention Wg taltlle > Increasing Number of Chinese Vehicles etre > Deteriorating Environmental Condi
Slide 11: Why DME and Bio-diesel?
Why DME and Bio-diesel? China's plentiful access to coal and other natural Fesources ensure ample supply of key production inputs Easy and safe to transport and disperse DME can seamlessly be substituted for LPG while yielding increased efficiency at a comparably lower price > Home Heating, Cooking
Slide 12: Forecasted Consumption of DME
Forecasted Consumption of DME New Oriental is one of a few Domestic Companies which possess the appropriate licenses to manufacture up to 600,000 tons of DME annually Projected 66% Demand CAGRoverNeHOyears || oe (DME Estimate Demand (1) (Unit: Milion Ton/Annual) 2006 2015 (Port Estimate) | 2016(€) |
Slide 13: Forecasted Consumption of Methanol
& Forecasted Consumption of Methanol Projected 14% Demand CAGR over Next 5 years ie China's Methanol Consumption and Estimate (Unit: Thousand/Ton Annual) (1) (1) 2007 China Methane & Oeraties Forum 13
Slide 14: Alternative Energy Cost Analysis
Alternative Energy Cost Analysis Price per ton in USD 800 $000 S400 $200 so Petrotdiesel LPG Methanol OME Blowdiesel + Methanol is less than half the cost of traditional petrol-diesel and is recognized as a viable fuel additive + DME is 20% cheaper than diesel and 13% less than LPG + Bio-diesel is 1
Slide 15: Shanghai Case Study
Shanghai Case Study Around 15,000 of Shanghai's 19,000 buses are diesel powered Government officials have stated that the use of DME in Shanghai would save the city $37.4 million USD per year at current diesel prices (1) “In order to use DME we only need to redesign the engine of each bus which will
Slide 16: China's Competitive Landscape
China’s Competitive Landscape Urea: 100 companies in China with gross output of approximately 25 mil > Primary competitors: Henan Zhongyuan Dahua Group, Junma Group, Crop., Shandong Luxi Group, Anhui Linhua Group, and Buyang Chemical Corp, Ammonium Bicarbonate: > Primary competitors: Shiji Jinyuan G
Slide 17: DME Profitability Analysis
& DME Profitability Analysis DME (initial 150,000 tons, + Capital Expenditure Approximately $14 million + Total Annualized Revenue at Current Prices = $57 million* + EBIT Margin @ optimal capacity of 10%: $5.7 million + Additional opportunities to decrease COGS with “Coal Stick” introduction Payback
Slide 18: Current and Anticipated Production Capacity
& Current and Anticipated Production Capacity Current Product Mix and Capacity Anticipated Capacity Additions: 150,000 tons of Urea + 600,000 tons of DME Capacity + 150,000 tons of DME by 2010 + Additional Methanol Capacity + 100,000 tons of Methanol c) expected in the next year + 50,000 tons of Amm
Slide 19: Financial Performance
Financial Performance jus, Third Quarter Ended | Third Quarter Ended | Full Yoar Endod Dee 31, 2007 Dec 31, 2006 ‘March 31, 2007 Revenue 20,168,977 10,639,802 38,997,412 Cost of Goods Sold (15,760,191) (6444,015) (63,352,455) Gross Profit 4,408,785 2,195,787 5,644,957 Selling & Distribution (277661)
Slide 20: Product Breakdown as a % of Revenue
Product Breakdown as a % of Revenue FY2007 Revenue Breakdown (03 FY2008 Revenue Breakdown 2% re Fries Products nergy Products Management Expects to Significantly Increase DME and Methanol as a Percentage of Revenue which will Drive Higher Margins and Greater Profitability Revenue Guidance (Q3 Press
Slide 21: Geographic Revenue Breakdown
Geographic Revenue Breakdown a Hunan ‘mShandong mdiangx OZhefiang FY2007 % of Revenue - Henan Province + Henan’s central location, where the manufacturing facility is located, provides convenient access to other major metropolitan areas such as Shanghai, Beijing and Shenzhen through three important
Slide 22: Balance Sheet Highlights
& Balance Sheet Highlights ¢..::2s:2007, + Total Current Assets $23.7 million > Cash $17 million (includes restricted cash) > Inventory $2 million > Limited Accounts Receivable (60% prepay: 40% COD) + Total Assets $51.8 million + Total Current Liabilities $33.6 million > Short Term Debt $19.8 millio
Slide 23: Management Team
Management Team + Chen Si Qiang, Chief Executive Officer ~ Mr. Chen has been a director of New Oriental Energy and Chemical since 2003, and was part of the senior management team that helped to privatize the assets ‘of New Oriental from the Chinese Government in October 2003, From 2000 to 2003, he s
Slide 24: Investment Conclusions
é Investment Conclusions Increasing gasoline and diesel consumption in conjunction with strong economic growth and environmental concerns in China create a significant opportunity for alternative fuels New Oriental has first mover advantage in alternative energy with the ability to capitalize on an
Slide 25: Contacts
& Contacts Other Corporate Informatio New Oriental Energy & Chemical Company Xicheng Industrial Zone, Luoshan, Xinyang City Henan Province, China 464200 Tel: 86-376-2169990 Investors: Mark Miller Ken Donenfeld East West Network Group DGI Investor Relations mmeastwest@hotmail.com Pe G70) aae-7aze don
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