EX-99.1 2 v140180_ex99-1.htm

Investor Presentation

February 2009

 

2

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 of the Company to differ materially from the results
expressed or implied by such statements, including changes from anticipated levels of
sales, future national or regional economic and competitive conditions, changes in
relationships with customers, access to capital, difficulties in developing and marketing new
products, marketing existing products, customer acceptance of existing and new products,
and other factors.

Accordingly, although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, there can be no assurance that such
expectations will prove to be correct. The Company has no obligation to update the
forward-looking information contained in this presentation.

 

3

Equity Snapshot

.83x

P/S

2.0x  

P/E

$0.22

EPS (Diluted – MRQ 9/30/08)

$0.80

EPS (Diluted – TTM 9/30/08)

$12 Million  

Net Income (TTM– 9/30/08)

$47.5 Million  

Revenues (TTM – 9/30/08)

$39.6 Million  

Market Cap (2/5/08)

27.0 Million  

Basic Shares Outstanding

$1.45

Price (2/9/08)

OTCBB: YGYB  

Symbol

 

4

Investment  Highlights

Yongye Biotechnology International, Inc. contracts the production of highly effective plant and animal nutrient
products using fulvic acid which are then distributed throughout the People’s Republic of China

Superior plant and animal nutrient products

Tremendous demand exists among plant and
animal farmers for products that increase
productivity

Growing scalable distribution – deeper market
penetration and wider geographic reach

Rapidly growing revenue and net income with a
pipeline of new products

Strong management team with proven ability to
scale-up the business

 

5

Yongye Biotechnology
Company Overview

Yongye Biotechnology International, Inc. has its headquarters in Beijing and its current contracted production
facility in Inner Mongolia.

Asia Standard Oil, Ltd., a subsidiary of Yongye Biotechnology Intl, and Inner Mongolia Yongye have
established a cooperative joint venture, Yongye Nongfeng, to manufacture, distribute and sell products.

Yongye Biotechnology

International, Inc. (Nevada)

100%

Fullmax Pacific Ltd. (BVI)

100%

Asia Standard Oil Ltd. (HK)

99.40%

Yongye Nongfeng Biotechnology

Company, Ltd. (Cooperative

Joint Venture - PRC)

0.60%

Inner Mongolia Yongye

Biotechnology Company, Ltd.

(PRC)

 

6

A Growing Domestic Market

China has more than 20 percent of the world’s population but only 7 percent of the world’s
arable land (FAO)

Every hectare of arable farmland in China must support 10.3 people, versus 5.1 people in
the European Union and 1.6 people in the United States (FAO)

Rapid urbanization means that food production and distribution is increasingly focused on
supplying cities

Rapid economic growth has led to pressure to use arable land for industrial purposes

Food security, quantity and quality, is a government priority

USDA studies show farmers spend 20% of annual income on fertilizer and they apply
fertilizers at 200% levels in an attempt to “double” overall yield

Increased output will come only from increased productivity

 

7

Fulvic Acid – A Key Nutrient

Fulvic acid is a complex, acidic, biochemical
polymer which is produced naturally by the
decomposition of plant and animal material
over a long period of time - contains many
essential nutrients for health and growth

Fulvic acid is a light weight molecule which
provides effective chelation of metal ions for
uptake into cells - increases natural strength
and ability of cells to fight off sickness and
disease

Extracted from humic acid, which is available
in Leonardite coal - China has 12% of the
world’s Leonardite coal reserves

Fulvic acid is used in many high-end
pharmaceutical, cosmetic, agricultural and
food products

Our pending patents cover the mixture of the
base formulas for the plant and animal
nutrient products - soon to be transferred to
the CJV

 

8

Advanced Scalable Production   

Company technology allows for efficient extraction of
fulvic acid from humic acid on an industrial scale

Our proprietary extraction process leads to a high
quality fulvic acid with one of the smallest possible
average molecular weight and one of the highest
possible bio-activity coefficients

The Company uses their proprietary method to stabilize
the extract and mix it with micro-nutrients

The pending patents cover the mixture of the base
formulas for the plant and animal nutrient products on
which the manufacturing process is built

Process approved and certified by PRC Ministry of
Agriculture, National Scientific Institute and ISO
9001:2000

Over 200 employees including employees of its contract
manufacturer

 

9

Product Differentiation

Plant Nutrient

Targets the seed

Crossbreeding, hybridization and genetic
modification techniques

Limited by soil condition

Limited by farming practices

Targets the plant - best via Foliar (direct) application
& known to correct micronutrient deficiencies

Immediate effect on plant- within 8 hrs

Increases Uptake of Soil Nutrients

Adds own Macro & Micro Nutrients

Very effective in China’s harsh soil conditions

Targets the soil

Slow uptake of nutrients – over days

Poor use damages the soil

Poor soil condition weakens plants ability to uptake
nutrients by 20% - 30%

Organic fertilizer has slow uptake (time released)

Biotechnology

Yongye Products

Fertilizer

 

10

Shengmingsu for Plants

Nutrient-rich liquid made up of a highly
concentrated fulvic acid base along with other key
nutrients

Supplements the absorption of fertilizer and soil
minerals

Produces reliable, predictable quality and quantity
results

Enhances plant’s natural resistance against
disease and pests

Increases the quantity of yields and improves the
appearance and nutritional value of yields

Increases water and nutrient holding capacity –
especially in adverse soil and weather conditions

 

11

Great Results for Farmers

Helps increase yields 10% to 35%

Shortens harvest time by 15 to 20
days

Stronger and larger leaves and roots
extends the life cycle from 20 to 30
days

Enhances a crop’s taste, nutritional
value and appearance

Cost effective - internal studies show
returns of 10 RMB for every 1 RMB
spent on Yongye products

Carrot

Increases yield by up to 26.5%

Celery

Increases yield by up to 26.3%

Cucumbers

Increases yield by up to 21.7%, higher by 3

cm, and earlier to market by 11 days

Grapes

Increases weight of individual grape 0.4g,

18.2%, increases sugar content 37.5%

Potatoes

Increases yield  to 17.3%, thicker leaves

and blooms 7 to 10 days earlier

Watermelon

Increases yield by up to 16.9%, increases

sugar content 0.8%-1.8%.

Wheat

Increases yield up to 10.7%

 

12

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

Cows

Increased milk production and
quality

Reduces mastitis in dairy cows

For every 1RMB spent on Yongye
Products, the farmer receives
10RMB return from increased
market sales

Shengmingsu for Animals

 

13

Extensive Network of Stores

775 branded stores at the end of the third
quarter, September 30, 2008, up from 200 at
the end of 2007

Q4 2008 added 350 stores to branded
store trial process

Unique distribution model:

Separation of logistics and financing
from technical support and marketing

Independent, branded stores
responsible for inventory, collection and
sales

The Company provides centralized marketing
support to its distributors and stores

The Company provides direct  technical
support and services to farmers

The Company works closely with private and
governmental entities to promote products
and gain brand recognition

 

14

Expanded Marketing and Distribution

Geographic expansion of sales

Grew from selling plant products
in four provinces to selling plant
products in 10 provinces and
animal products in 4 provinces

Staged sales development process

Demonstrations, trials and
educational programs create
brand awareness and sales follow

Brand recognition based on over 5
years of field testing, certification,
demonstration, promotion and sales
success

 

15

Roll in a Large Fertilizer Industry

China uses an estimated 1/3 of the
world’s fertilizer production, over 50
million tons of traditional nitrogen
fertilizer

Pressure to increase productivity has led
to overuse of traditional fertilizers, and
fertilizers used alone lose 30% to 70% of
their effectiveness by overusing soil,
leading to a need to replenish soil

Yongye plant products replenish
nutrients needed for growth and work in
conjunction with traditional fertilizers

Yongye plant nutrients compliment rather
than compete against fertilizer sales

The technology required for fulvic acid
extraction is expensive and creates a
high barrier of entry for competitors

Fertilizers with Fulvic Acid
164 Products

Combination of
nitrogen,
phosphorus
and potassium

16 Products

Combination of
mineral ions



1 Product

5

Products

Yongye’s high quality fulvic acid plant nutrient
products have the most complete combination
of nutritional elements available in the market

1 Product

With most

Minerals

Yongye

 

16

Our Competitive Landscape

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 purchased 63% more agricultural materials in 2007 than 2006 - the market is growing
rapidly

Yongye’s Market: Ten Provinces

Yongye grew about 265% in 2008 and expects to grow and additional 50% in 2009

Our product is applied to about 2% of all arable land and we have about 37% market share

Plant nutrient products are applied to about 6% of all arable land

Competitors in Our Provinces

Company/Product

Inner
Mongolia

Gansu

Hebei

Hubei

Xinjiang

Others

Ai Duo Shou

 

 

x

 

 

 

Changsha Gaosheng

 

 

 

 

x

 

China Agritech

x

 

x

 

x

x

China Green

 

 

 

 

x

x

Henan Luo Xiao Wang

x

 

x

x

 

 

Qing Niu Hei Ye Fei

 

 

x

 

 

 

Qiqihar Fuer

 

 

 

 

x

 

Shan'xi Weinan Hongxing

 

 

 

 

x

 

Shi Quan Da Bu

 

 

 

x

 

 

Tian Feng Su

 

 

 

x

 

 

 

17

Growth Strategy

Acquired predecessor’s 2,000 TPA equipment in October 2008 and completed
construction on a new 8,000 TPA processing facility in October 2008, which
increased the production to 10,000 tonnes per annum.

Have employed strategic television and print advertising to support sales throughout
2008 -
infomercial campaign launched on local channels to educate farmers and to
help them alter usage patterns

Developing customized and enhanced plant products targeting specific crops with
the intent to increase yields and market position

Increasing our line of animal product offerings to capture wide open market –
revenue from these products should have the effect of reducing the seasonal sales
swings in slower quarters

We will build our revenue base via increased sales coverage in current provinces
and increase market penetration via increased support staff coverage.

 

18

Management Team

Wu Zishen: Chairman and CEO

Director and Chairman of large SOE conglomerates and started 13 companies

Managed approximately $1.4 billion of investments in state planed economy

Sun Taoran: Co-Founder & Director

Built approximately $27.8 million media business and guru of PDA marketing in China

Zhao Qiang: VP Sales and Marketing & Director

Led marketing for several large companies and awarded Top Ten in Marketing in China,
written up in EMBA case at Fudan University

Larry Gilmore: VP Corporate Strategy, Principal Financial Officer

Consulted and led strategic corporate initiatives for Fortune 500 companies in USA such
as Deloitte & Touché, Alcatel, Nokia and HP. Raised foreign PE for companies in China.

Gao Jing: Chief Scientist

Renowned professor with 40 years of research, development and industry experience

 

19

Financials

 

20

Rapid Revenue Growth

 

21

Solid Gross Profit and Margins

 

22

Growing Net Income

 

23

Income Statement

The predecessor

Inner Mongolia

Yongye

Yongye

Biotechnology

International, Inc.      

and Subsidiaries

The predecessor

Inner Mongolia

Yongye

Yongye

Biotechnology

International, Inc.      

and Subsidiaries

Year Ended

December 31,

Year Ended

December 31,

9 Months Ended

September 30,

9 Months Ended

September 30,

3 Months Ended

September 30,

3 Months Ended

September 30,

2006

2007

2007

2008

2007

2008

Sales

3,722,640

$         

13,137,406

$        

10,752,855

$        

45,189,579

$        

2,625,137

$         

18,202,940

$        

Cost of Goods Sold

2,710,840

7,274,710

5,368,480

           

21,697,964

         

1,021,719

           

9,278,944

Gross Profit

1,011,800

5,862,696

5,384,375

23,491,615

1,603,418

8,923,996

Gross Margin

27.2%

44.6%

50.1%

52.0%

61.1%

49.0%

Operating / Selling, General and Admin

484,796

              

925,996

              

581,963

              

8,703,321

           

355,784

              

3,893,719

           

Income from Operations

527,004

              

4,936,700

           

4,802,412

           

14,788,294

         

1,247,634

           

5,030,277

           

Operating Margin

14.2%

37.6%

44.7%

32.7%

47.5%

27.6%

Other Income (Expense)

     Interest Income (Expense)

(76,819)

               

(212,239)

            

1,291

                  

66,563

               

65,785

               

     Other Income (Expense)

(2,446)

                 

(365,907)

            

(279,468)

            

(726,927)

            

(81,827)

               

(340,087)

            

Total Other Income (Expense)

(79,265)

               

(578,146)

            

(278,177)

            

(660,364)

            

(81,827)

               

(274,302)

            

Income Before Provision for Income Taxes

447,739

              

4,358,554

           

4,524,235

           

14,127,930

         

1,165,807

           

4,755,975

           

Provision for Income Taxes

-

                     

-

                     

-

                     

822,302

              

-

                     

227,537

              

Net Income Before Minority Interest

447,739

              

4,358,554

           

4,524,235

           

13,305,628

         

1,165,807

           

4,528,438

           

Provision for Minority Interest

1,092,426

           

57,421

               

Net Income

447,739

              

4,358,554

           

4,524,235

           

12,213,202

         

1,165,807

           

4,471,017

           

Net Margin

12.0%

33.2%

42.1%

27.0%

44.4%

24.6%

Other Comprehensive Income

Foreign Currency Translation Adjustment

250,911

              

723,298

              

344,228

              

419,970

              

170,033

              

5,199

                  

Comprehensive Income

698,650

$            

5,081,852

$         

4,868,463

$         

12,633,172

$        

1,335,840

$         

4,476,216

$         

Net Income per Share

     Basic

0.40

$                  

0.75

$                  

0.10

$                  

0.22

$                  

     Diluted

0.40

$                  

0.72

$                  

0.10

$                  

0.20

$                  

1

 

24

Balance Sheet Highlights

The predecessor Inner

Mongolia Yongye

Yongye Biotechnology

International, Inc.      

and Subsidiaries

December 31, 2007

September 30, 2008

Current Assets

12,863,821

32,063,039

Property and Equipment, Net

2,486,487

3,386,463

Intangible Assets, Net

3,665,584

114,817

Long-Term Investments

4,115,764

0

Total Assets

23,131,656

$               

35,564,319

$               

Current Liabilities

10,208,031

3,650,270

Long Term Liabilities

12,153

204,962

Minority Interest

1,192,426

                    

Total Liabilities

10,220,184

$               

5,047,658

$                  

Stockholders' Equity

Capital Stock: 26,760,258 shares authorized and

issued par value $.001 as of September 30,

2008

26,760

                        

     Capital contribution

7,260,000

     Additional Paid-in Capital

17,887,832

                  

     Retained earnings

4,024,111

10,918,386

                  

     Statutary reserve

480,629

1,263,713

                    

     Accumulated other comprehensive income

1,146,732

419,970

                       

Total Stockholders' Equity

12,911,472

$               

30,516,661

$               

Total Liabilities and Stockholders' Equity

23,131,656

$               

35,564,319

$               

 

25

Investment Highlights

Superior plant and animal nutrient products

Tremendous demand exists among plant
and animal farmers for products that
increase productivity

Growing scalable distribution – geographic
expansion and greater market penetration

Rapidly growing revenue and net income
with a pipeline of new products

Strong management team with proven
ability to scale-up the business

 

26

Contacts

Yong Ye Biotechnology Co.

Suite 608, Xueyuan International Tower

No. 1 Zhichun Road

Haidian District, Beijing, China

Phone: 86.10.8231.8626

Fax: 86.10.8231.1797

Loeb & Loeb, LLP

Company Counsel

345 Park Avenue

New York, NY 10154

Phone: 212.407.4000

Fax: 212.407.4990

MSPC

Certified Public Accountants

and Advisors, P.C.

Independent Auditors

546 Fifth Avenue

New York NY 10036-5000

 Phone: 212 682 1234 ext. 3586

Fax: 212 687 8846  

CCG Investor Relations

Mr. Crocker Coulson, President

Phone: 646.213.1915

E-mail: crocker.coulson@ccgir.com

http://www.ccgir.com/

 

27

Thank You