China XD Plastics Company Limited
China XD Plastics — Investor Presentation (August 2010)
24 slides from China XD Plastics's investor presentation, Aug 12, 2010
Slide 1: China XD Plastics Company Ltd. Investor Presentation
Exhibit 99.1 China XD Plastics Company Ltd. Investor Presentation August 2010
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains statements that constitute "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which statements reflect the beliefs and expectations of China XD Plastics Company Limited (“China XD”) about the futur
Slide 3: Capital Markets Summary
Capital Markets Summary Exchange / Ticker Nasdaq / CXDC Stock Price (as of 08/06/2010) $6.57 Market Capitalization $293 Million Fully Diluted Shares 44 .6 Million Outstanding TTM Revenues* $189 Million TTM Net Income* $32 Million TTM EPS** $0.72 * TTM Revenue and Net Income as of June 30, 2010 **Net
Slide 4: Who We Are
Who We Are Plastic Resin Modified Plastics Plastic Parts Oil Refineries End Users Suppliers Manufacturers Manufacturers 90% 10% Advantages of Modified Plastics over Metals for Use in Cars Ø Much lighter - reduces parts weight by 30%-50% Ø Fuel efficiency - 10% weight reduction results in 6%-8% fuel
Slide 5: Corporate Overview
Corporate Overview A Leading Manufacturer of Automotive Modified Plastic in China Key Financials > China’s largest manufacturer of automotive Revenue modified plastic Market US$ > Among the largest number of product Million Position certifications by automakers in China with 159 certifications > Har
Slide 6: Investment Highlights
Investment Highlights Leading Position in a Large and Fast-Growing Market High Quality Products with Lower Costs Long-Term Relationships with Reputable Customers Established Distribution Model with Broad Coverage Strong Customer-Oriented R&D Capabilities Seasoned Management Team with Strong Market K
Slide 7: Favorable Automobile Policies in China
Growth of Automobile Production Volume million Favorable Automobile Policies in China Cutting sales tax on cars “Vehicles to the with an engine size under Countryside” program 1.6L
Slide 8: Favorable Modified Plastic Policies in China
Modified Plastic per Vehicle Trend kg Favorable Modified Plastic Policies in China
Slide 9: Our Leading Market Position
Our Leading Market Position Ø China’s largest manufacturer of Auto Modified Plastics Market Share automotive modified plastic in terms of sales volume and production capacity § Sales volume - 74,000 MT in 2009 § Annual production capacity - 100,000 MT as ofcertifications Ø 159 product March 31, 2010
Slide 10: Competitive Advantages
Competitive Advantages International Local Competitors Competitors Cost-Efficiency Product Quality Local Market Knowledge Customization Brand Recognition R&D Advantages over International Competitors Advantages over Local Competitors Ø Customized products for Chinese clients Ø Economy of scale and s
Slide 11: Unique Business Model with High Barriers to Entry
Unique Business Model with High Barriers to Entry Economy of Scale Customer Loyalty Ø Largest production capacity with significant Ø Long-standing customer relationship orders volume Ø High cost for customers to switch suppliers Ø Intensive CAPEX requirement Ø Characteristics and formula of modified
Slide 12: Our Product Mix
Our Product Mix Modified Modified Modified Engineering Alloy Environment- Product Group Polypropylene (PP) ABS Nylon Plastics Plastics Friendly Plastics Gross Margin 20-22% 21-24% 25-29% 28-30% 25-28% 25-31% # of Certifications* 114 9 13 9 8 6 0.1% 4.1% 4.8% 2.8%
Slide 13: Expanding Customer Base
Expanding Customer Base Ø Over 60 auto models used our products Selected End Customers in 2009, increased from 11 in 2006 Ø Leading end customers, incl. Audi, Red Flag, Volkswagen and Mazda § 8 of China’s top 10 automaker OEMs Ø No customer constitutes over 10% of revenues Ø Continuing end customer
Slide 14: Established Distribution Network
Established Distribution Network Geographic Coverage Distribution Model and Strategies Ø Currently cover northeast, north and east China through 6 distributors Ø Benefits from distribution model: § Quickly respond to customers § Lower marketing expenses 2Q 2010 Revenue Breakdown § Secure collection
Slide 15: Strong R&D Capabilities
Strong R&D Capabilities Leading R&D Platform R&D Achievement Ø One of the provincial-level top Ø 159 product certifications - among the macromolecule materials institutes in China largest number of certifications in China Ø 77 professionals, 22 of whom have Ø 10 projects granted as national or provi
Slide 16: Seasoned Management Team
Seasoned Management Team Ø Co-founded China XD and founded our former affiliate, Harbin Xinda Nylon Factory; over 25 years of experience in the modified plastics industry Mr. Jie Han Ø Executive director of China Plastic Processing Industry Association Chairman and CEO Ø Member of the Standing Commi
Slide 17: Experienced Board of Directors
Experienced Board of Directors Ø Mr. Leighton has had an extensive 40 year international investment banking Lawrence W. career. His previous positions include Co-Head of the Corporate Finance Leighton Department at Clark, Dodge & Co., LP of Bear Stern, Managing Director of Independent Director & JPM
Slide 18: Growth Strategies
Growth Strategies Long-term Growth Strategies Pursue Strategic Acquisitions Expand Customer Base & Geographic Distribution Enhance R&D Capabilities Continue Product Shift to Higher Margin Segments Increase Production Capacity 18
Slide 19: Financial Highlights
Financial Highlights Ø Robust Revenue Growth § FY06-09 CAGR - 116% § 2Q10 YoY growth - 94% Ø Strong Earnings Capabilities § Consistent gross and net margins § Non GAAP recurring net income(1) FY06-09 CAGR - 123% § Non GAAP recurring net income(1) 2Q10 YoY growth - 184% Ø High Growth Visibility § Ins
Slide 20: Proven Revenue Growth
Proven Revenue Growth Revenue Growth (FY06-10E) Quarterly Revenue Growth (FY08-2Q10) 185 - US$ 215 US$ Million Million We had a proven track record of Quarterly revenue steadily grew together historical revenue growth, with a CAGR with our capacity ramp-up of 116% from 2006 to 2009
Slide 21: Enhanced Profitability and Sustainable Margins
Enhanced Profitability and Sustainable Margins Gross Profit and Margin US$ Million We have been 24% 24% 24% able to 22% 21% 23% maintain a consistent gross margin US$ Million A slight drop in 19% 20% 18% 1Q10 net 17% 17% 15% 11.4 margin is due to an increase in R&D spending (1) Non GAAP Recurring Ne
Slide 22: Strong Balance Sheet and Cash flow Statement
Strong Balance Sheet and Cash flow Statement Key Balance Sheet Items ($ in June 30, thousands) Cash & 6,851 5,128 2010 21,633 Equivalents Restricted - 8,790 8,848 Cash Accounts Receivable 8,558 14,218 18,689 Inventories 18,371 21,713 25,794 Fixed Assets 31,083 30,254 29,585 Total Assets 86,932 101,8
Slide 23: Efficient Working Capital Management
Efficient Working Capital Management Days Sales Outstanding Days Inventory Outstanding Current Ratio
Slide 24: Investment Highlights
Investment Highlights Leading Position in a Large and Fast-Growing Market High Quality Products with Lower Costs Long-Term Relationships with Reputable Customers Established Distribution Model with Broad Coverage Strong Customer-Oriented R&D Capabilities Seasoned Management Team with Strong Market K
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