Lihua International — Investor Presentation (April 2010)
22 slides from Lihua International's investor presentation, Apr 9, 2010
Slide 1: April 2010
= Dy} | April 2010 INTERNATIONAL
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Alll statements, other than state
Slide 3: Offering Summary
3 Offering Summary Lihua International, Inc (NASDAQ: LIWA) $stmm Fllow-on Ofteng Overallotment Optio: 15% (primary) Wee of Proceed: General corporate purposes including Capex & Working capital Rodman & Renshaw, LLC Underwriters: Chardan Capital Markets, LLC Brean Murray, Carret & Co. Expected Pricin
Slide 4: Company Profile: Lihua International, Inc.
Company Profile: Lihua International, Inc (NASDAQ: LIWA) Lihua International, Inc (NASDAQ: LIWA) is a vertically integrated leading manufacturer of Smm copper alternative products $30 Net Income * Products include pure copper fine and superfine $25.6 magnet wire, copper rod and copper cla $25 alumin
Slide 5: Investment Highlights
5 Investment Highlights Large and rapidly growing copper alternative products and wire market Viable, vertically integrated and highly scalable business model Leading market position with low cost advantage Proprietary recycling, drawing and enameling technologies up to the highest environmental sta
Slide 6: Huge Demand in China
Huge Demand in China China is the largest copper consuming country in the world witha market share of 22% China is highly under-resourced in domestic copper In 2008, copper consumption in the Chinese market was approximately 7.9 million metric tons, for an addressable market of approximately US$56 b
Slide 7: Recent Accomplishments
7 Recent Accomplishments ¢ Completed 2 new copper wire production lines in February 2010 ¢ Customer accounts increased by ~50% from 200 in ‘08 to 300 in 09 ¢ Expanded wire production capacity in October 2009 + CCA wire capacity reached 7,500 tons p/a * Pure copper wire capacity reached 18,000 tons p
Slide 8: Limited Copper Supply Creates Opportunity
Limited Copper Supply Creates Opportunity China is deficient in copper reserves and is a net importer, driving growth in: « Recycling and recycling technologies + High copper prices, low mine production, lack of reserves and high import costs have fueled an increase in recycling copper « Alternative
Slide 9: Strategic Locations Throughout China
Strategic Locations Throughout China ¢ More than 98% of products sold in China ¢ Exported to ~20 countries through distributors & Headquarters in Danyang, Jiangsu province © Satellite offices LiHUA INTERNATIONAL
Slide 10: Copper Recycling to Capture Surging Demand
Copper Recycling to Capture Surging Demand « Launched copper recycling facility in Q1:09 + Current production 25,000 tons per annum ° Proprietary cleaning process leads to a large addressable market estimated at 7.9 million metric tons in 2008, or US $56 billion, based on recent copper prices + 99.9
Slide 11: What is Copper Clad Aluminum (CCA)?
“ What is Copper Clad Aluminum (CCA)? Lihua purchases CCA from suppliers and draws it into superfine wire, which accounted for approximately 25% of 2009 sales. ¢ CCA, a bimetallic wire, is a conductor comprising an inner aluminum core and outer copper cladding © Low-cost alternative to solid copper
Slide 12: Magnet and Fine Wire Production
Magnet and Fine Wire Production + Leading Chinese producer of CCA fine & magnet wire + Established sales channels + Diversified customer base with over 300 customers * Large Chinese and multi-national companies * Midea ($10 billion in revenue) + One patent granted and three patents pending CSA + ISO
Slide 13: Manufacturing Process
Manufacturing Process Input Recycling Wire Processing End Products CCA Raw Wire Cleaning / Smetting ‘Super Fine Wire Scrap Copper. —> (Proprietary Cleaning z Fine Wire rechnobeyl Drawing — Coating /Plating —> yiatret wire ce Tin Plated Wire . | 1s Copper Rod Copper Rod Copper Wire Copper Cable - GE
Slide 14: Improving Product Mix to Drive Higher Margins
Improving Product Mix to Drive Higher Margins Volume (% of total) by Product 12 2009 4 2009 CCAWire, 25% Copper Rod, 23%, =) Copper Wire, 28% copper Wire, 52% Pa A mua ay | \\ INTERNATIONAL
Slide 15: Growth Strategy
Growth Strategy Increase earnings and return on invested capital Significantly expand production capacity to meet demand * Increasing vertical integration drives cost efficiencies Strengthen relationships with key customers and further diversify customer base * Cross selling opportunities with exist
Slide 16: Production Capacity Expansion
Production Capacity Expansion Production Capacity In tons, FYE 12/31 2009 2010E 2011E Copper 18,000 25,000 50,000 CCA 7,500 10,000 15,000 Total 25,500 35,000 65,000 Smelter (Copper Rod) 25,000 25,000 100,000 ne ee \ i INTERNATIONAL
Slide 17: Experienced Management with Industry Expertise
Experienced Management with Industry Expertise Name Zhu Jian Hua Wang Ya Ying Yu Yang (Roy) Daphne Huang Title Founder, Chairman & CEO Founder &COO CFO EVP of Finance & Director of IR Experience » Founded Lihua and built the Company to its current level + Over 25 years experience in China’s copper i
Slide 18: Impressive & Experienced Oversight Board
Impressive & Experienced Oversight Board Name Title Experience Robert C. Independent + President & founder of Oakmont Advisory Group, a financial Bruce Director management consulting firm + COO, Treasurer and Director for Enterix Inc (1999-2004) + MBA - Yale School of Management; BA - Princeton Univ
Slide 19: Income Statement
Income Statement Selected Income Statement Items ron, FYE 1961 CAGR 2009 2008 _——-2007_—=—2006——— 06-09 Revenues S165 $500 $327 S157 I7.5% ory growth 223.1% 629% 083% EBITDA o 33000 15d 94 49 88.8% yrory growth 183% 609% 918% — - EBITDA Margin 24% 302% 287% 31.2% EBIT 305142 89 43 893% Margin 189% 2
Slide 20: Strong Balance Sheet
Strong Balance Sheet Balance Sheet Extracts (in thousands of $USD) Dec. 31, 2009 | Dec. 31, 2008 | Dec. 31, 2007 Cash $34,615 $26,042 $3,214 Accounts Receivable 10,996 5,043 5,385 Inventory 17,534 587 2,598 Total Assets 91,166 56,813 30,075 Total Liabilities 9,386 9,021 10,992 Total Debt 2,196 6,145
Slide 21: Sources & Uses
Sources & Uses Sources (Smm s % Common stock offering $35.0 100.0% Total $35.0 100.0% Uses (Smm) $s % New smelting facility, land, building & equipment 35.0 100.0% Total $35.0 100.0% ¢ New smelting facility will add approximately 75,000 tons of capacity LiHUA INTERNATIONAL
Slide 22: Lihua: Well Positioned for Growth
Lihua: Well Positioned for Growth Growth Opportunity Large and growing market Positive economic trends Leading industry producer izable market $56Bn hina is the largest copper consuming country Government stimulus package supports sustainable demand ble Business Model Proprietary technology & low co
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