2011 • OTCQB: YHGG • XETRA: YSF.DE
Safe Harbor Statement
Any statements in this summary about YaSheng Group’s expectations, beliefs, plans, objectives,
assumptions or future events or performance are not historical facts and are forward-looking
statements for purposes of the Private Securities Litigation Reform Act of 1995 (the “Act”). These
statements are often, but not always, made through the use of words or phrases such as “believe”,
“will”, “expect”, “anticipate”, “estimate”, “intend”, “plan”, “forecast”, “could”, and “would”. YHGG bases
these forward-looking statements on current expectations about future events. They involve known
and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity,
performance or achievements to differ materially from those expressed or implied by any forwardlooking statement.
Some of the risks, uncertainties and assumptions that could cause actual results to differ materially
from estimates or projections in the forward-looking statement include, but are not limited to, the risk
that we might not achieve our anticipated development milestones, the market for our products will
not grow as expected, and the risk that our products will not achieve expectations. For additional
information about risks and uncertainties YHGG faces, see documents YHGG files with the SEC. YHGG
claims the protection of the safe harbor for forward-looking statements under the Act and each assume
no obligation and expressly disclaim any duty to update any forward-looking statement to reflect events
or circumstances after the date of this presentation or to reflect the occurrence of subsequent events.
2
Company Overview
LARGEST AGRICULTURE COMPANY IN NORTHWEST CHINA
 Operated through 7 wholly-owned subsidiary ‘Agro Bases’
 Nationwide distribution covering 18 provinces and over 100 cities
 30-year history
PRODUCTS: Large portfolio of premium specialty agriculture products
MISSION: Feed China and the world in a natural, sustainable and harmonious way
LEADERSHIP:
– Contributed to industrialization and transformation of China’s traditional agricultural
sector into modern operations
– Investment in R&D-based agricultural innovation
– Premium on quality control and food safety
– High-tech agricultural technology (drip irrigation for water efficiency, pesticide reduction)
LOCATION:
– Headquartered in Lanzhou, China; executive offices in Redwood City, CA
– Over 15,000 employees
– Established in 2004 by GanSu Yasheng Salt Industrial Group
3
Market Data at a Glance
YHGG (OTCQB) (as of 12/31/10)
Price
$2.74
Shares Outstanding
155.1 M
Market Cap
$425 M
Cash
$10.1 M
Total Assets
$1.87 B
LT Debt
$2.4 M
Revenue
Net Income
EPS
FY 2011 Revenue Guidance
4
FYE: December 31
$849.5 M
$99.2 M
$0.64
$976 M
Investment Highlights
Profitable Business Model with Strong Track Record
 30 years of successful operations in Northwest China
 Agricultural leader in China: Over 30 major products
 History of strong sales and earnings growth
Assets
 Highly qualified management team, experienced workforce
 Over 250,000 acres of land, beneficial climatic/soil conditions
 Ongoing R&D investment in advanced technologies
 Diverse portfolio of award-winning premium specialty agriculture products
Large Market Opportunity & Favorable Environment
 Strong product demand driven by China’s GDP and population growth and limited arable land
 Favorable government policies (tax-free agro sector)
 Long-term high-growth domestic and global market opportunity
Growth Plan
 Capitalize on longstanding market leadership in Chinese agricultural industry
 Expand into global market through organic growth and M&A while keeping up with expanding
domestic demands
 Access to global capital market through dual-listing of U.S. and Deutsche Börse exchange
5
Market Trends − Domestic
Growth in
commodity market
Growth in domestic
consumer demand for
– Demand for wholesome foods,
which drives need for organic
fertilizers and healthy
processing practices
– Safe, high-quality foods
– Organic all natural foods
– Protein-based foods
(meats, milk)
– Convenience, specialty
processed foods
– High-end luxury foods
6
drives
– Demand for meats and dairy,
which increases need for animal
feeds
– Urbanization reduces land for
cultivation driving need for
fertilizers and efficient farming
techniques
Market Trend − Global
Rising demand for food and agro commodities presents global long-term
growth opportunity. Yasheng expanding to meet this demand.
World Population Growth Forecast
(Billion)
Agro product prices still near all time records.
10.0
9.5
8.9
14% / 10 years
8.3
8.0
- Expected world population growth
7.6
- Worldwide robust economic growth
6.8
- Increasing per capita income driving trend towards
more diverse, higher calorie diets (with fruits,
vegetables and meat) away from staple diets
6.0
6.0
5.2
- Impact of developing world’s increasingly diverse diet
on global agro demand compounded by rapid
population growth there (nearly double the rate of
developed countries)
4.4
4.0
Agro demand forecast to increase:
3.6
3.0
Source: Economic research service, USDA
2.0
1959
7
1969
1979
1989
1999
Source: US Census Bureau
2009
2019
2029
2039
2049
Less Arable Land for Cultivation
3.5 B acres arable land in 2005
Worldwide average loss of 24.7 M acres p.a.
Factors: Urbanization, soil overuse /
Arable land acreage per capita
degradation, climate shifts, cost of land
0.60
Land allocated to growth of bio mass for
0.50
biofuel production
0.50
0.42
0.40
0.35
0.30
0.30
YASHENG:
– Vast land resources in Northwest China
– Strategic geological location with
favorable natural conditions
0.25
0.20
0.10
2009
2019
2029
Source: United Nations
8
2039
2049
7 Large-scale Agro Production Bases
•
Focus on agriculture, biotech, and chemical industries with originally over 126
operating divisions and R&D capabilities
•
Over past 30 years transformed family plot style farm into industrial agro
operations with infrastructure to support long-term growth
Jinta
Lanzhou
Headquarters
Jiuquan
Xiaheqing
Gansu Province
9
Tiaoshan
Major Products in 8 Segments
•
•
•
•
•
•
•
•
Field Crops:
Vegetables:
Fruits:
Specialty Crops:
Seeds:
Husbandry:
Agro Products:
Bio Friendly :
Cotton, Soybean, Alfalfa, Barley, Wheat
Onions, Potatoes, Beets, Peas/Corn
Fuji Apples, Chinese Pears, Apricots
Hops, Chinese Wolfberry, Cumin, Flax Seeds
Black Melon, Sunflower, Corn
Poultry, Eggs
Fertilizers, Animal Feed
Bio Energy, Biomaterials
Revenues by crop type (2010)
10
Sales into Various Markets
 Strategic Commodities
 Institutional Contract Growing
 Consumer Direct Wholesale Markets
 Domestic & Export Food Distribution
 Animal Husbandry
 Agro Business
 Medical & Biotech
 Alternative Energy Products
11
Competitive Advantage − Land
Yaheng’s Agro Bases strategically placed in geological locations with
natural environmental benefits:
 Long sunny days with short nights during growing seasons produce larger yields than other
areas in China
 Very hot days / very cold nights allow agro products with more sugar and richer flavor
 Dry air with limited humidity reduces threat from pests, leading to lower pesticide needs
 Very aerated soil and its chemical balance provide favorable conditions for growing without
heavy use of artificial fertilizers
 Land is abundant and manufacturing industry is low reducing exposure to pollution
 Majority of Agro Bases are fed by the glacier waters from the Qilian Mountains and the
upper reaches of the Yellow River, which are very clean compared to other parts of China
and the world
12
Advanced R&D Capabilities




Maintains strong R&D relationships / capabilities in agro industry
R&D investment to develop hybrid strains (higher yields, drought, pest, & disease resistance)
Focus on bio non-food feedstocks & biomass waste (alternative energy production)
Association with GanSu Yasheng Salt Industrial Group provides strategic advantages in
training and research
 Research results of Yasheng Group Science Academy’s applied in company’s operations
GanSu Yasheng Salt Industrial Group’s
AGRO R&D Park
Yasheng Group Science Academy
Post-Doctoral Degree Center
Biology Research Institute
Trans-Genetic Research Institute
Chinese Medicine Research Institute
Information Technology Research Institute
New Biology Material Research Institute
 High-tech agro park fully operational after
strategic investments since 2000
 Focus on high-tech agro R&D in bioengineering, soil-less culture, propagation,
other modern industrial agro techniques
 High-tech agro advantages resulted from
intellectual advancements by Yasheng
Academy of Science
13
Operational Excellence − Example
WATER CONSERVATION SOLUTIONS
Company-wide Modern Drip Irrigation Technology Projects
 The technology controls both biochemical and physical
indices for crop and flower growth and allow precise
adjustment of water, fertilizer and insecticide usage
 It moderates the extreme cooling effects sometimes
produced by flood-type irrigation
Introduced the most advanced water-efficient drip
irrigation techniques from Israel to ensure efficient water
use on large-scale intensive agricultural projects in the
fertile, but water-scarce Hexi Corridor
 Over 20 years of industrial agro experience turning harsh
lands into major food base oasis
14
Institutional Contracts Growing
 Contracts growing for institutional food and beverage companies
 Established long-term relationships with institutions and large food and beverage
processors to grow products that meet their needs and standards
 Yasheng Group works closely with processors to establish demands and assure
quality for consistency and long-term market stability
 Long-term hops supplier for Beijing Yanjing Group, Tsingtao Brewery Group, Beijing
Huarun Snowflake Group, Shanghai Yingbo Group, Harbin Beer, Henan Jinxing, and
Chongqing Beer
 Potato supplier to YUM Brands (KFC) & McDonald’s
 Liquorices root base supplier to Traditional Chinese Medicine market
 Black melon, sunflower seeds, National Chinese Wolfberry
 Award winning fruits and vegetables
15
Sales & Marketing
 Extensive domestic sales and distribution
network in 18 provinces:
•
•
Direct clients (30)
Distributors (200), 70% of sales
 Diverse customer base (food processors,
supermarkets and wholesale stores)
 Stable long-term group of distributors selling
products nationally and internationally
 Long-term contracts
 Cooperative relationships
 Preferred Supplier in the strategic commodities
distribution network
 Export qualification and license
 Low customer concentration
16
Global Market Presence 2010
Recognition for Quality & Leadership
Industrial and Technology Awards:
 “China AAA Image Enterprise”
 “National Key Hi-Tech Enterprise”
 “Leading Enterprise” for National Agriculture
Industrialization
 “Organic Food“ certification for many products by the
National Organic Food Development Center
 “Tiaoshan Fruits” national and provincial awards
 “Green Food” recognition by China National Green
Food Development Center
Premium on Quality
 National model as AAA green food base
 Model for sustainable pollution free farm
 ISO 9000, ISO 14000 International Quality recognition
 HACCP (Hazard Analysis & Critical Control Point)
standard food processing
17
Growth Plan: Market Focus & Product Innovation
 Maintain and expand existing domestic market position in premium
products with a focus on customer satisfaction
 Continue strategic consolidation and segmentation of Yasheng products.
Emphasis on high margin and high growth product segments
 Continue to increase brand awareness for Yasheng Products
 Expand product line with new by-products by utilizing modern deep
processing food technology meeting the increased domestic demand for
quality products
 Develop by-products; fruit and vegetable concentrates, food extracts,
nutritional beverages, edible and bio oils, organic and environmentally
friendly products, frozen and fresh vegetables with uniform packaging
18
Growth Plan: Expand Know How
 Continue to acquire and develop new hybrid strains for agro
products that improve quality, yield, and overall cultivation methods
 Expand cultivation area by using more high-tech irrigation systems
and other modern agriculture techniques
 Expand seeding and propagation technologies to consistently supply
growers
 Expand animal husbandry division, agriculture chemicals, fertilizers,
animal feed, and environmental product segment
 Continue to implement the vision as leading company in sustainable
agricultural practices
 Implement business plans for the development of bio friendly
products (bioplastics, biomass molding techniques, biofuels etc.)
19
Growth Plan: Diversify Market
 Expand domestic and international business development and sales
departments to enter new markets
 Strategic product development to meet demands of specialized markets
(institutions, organic niche markets, and retail volume outlets)
 Continue to establish long-term relationships with industrial scale agro
contracting to food and beverage processors and distributors
 Strengthen global and domestic logistics and distribution network
 Internal and external acquisitions that bring added value in technology,
management, production capabilities, and open up new markets and
distribution points
20
Competitive Advantages








21
Scale advantage over local competitors: Largest competitor in fragmented domestic market
More diversified products
Economies of scale through higher production capacity, greater resources
Successfully set up modern agricultural operating model (further advanced than others in
China) regarding policy arrangements, institutional design, coverage, cooperation with
farms etc.
Long-term established relationships on local, regional and national level: Honored as a top
industrial company in China
Contracts with major institutions: Designated national strategic supplier of commodities
Lower labor and raw materials cost than elsewhere in China or world
Significant barriers to entry: Over past 30 years acquired vast land resources, leases and
land use rights; built relationships with local and provincial government agencies and land
tenants
2008 to 2010 Quarterly Comparison (unaudited)
Q1
2008
Net Sales
2009
Q2
2010
2008
2009
Q3
2010
2008
2009
2010
161.81
168.08
168.32
191.17
190.12
191.29
181.99
181.59
235.59
Gross Profit
18.98
18.41
18.44
19.79
20.99
21.12
25.33
25.25
33.79
Net income
17.96
17.11
17.14
18.26
19.69
19.82
24.06
24.01
31.65
0.12
0.11
0.11
0.12
0.13
0.13
0.16
0.15
0.20
Net Margin
11.1%
10.2%
10.2%
9.6%
10.4%
10.4%
13.2%
13.2%
13.4%
Total Assets
1670.46
1730.62
1756.55
1715.25
1732.76
1783.50
1723.99
1733.78
1822.25
239.22
186.52
131.16
232.39
168.07
129.81
208.19
144.42
114.75
1431.24
1544.10
1622.40
1482.86
1564.69
1653.69
1515.80
1589.36
1707.50
$9.23
$9.96
$10.46
$9.56
$10.09
$10.66
$9.77
$10.25
$11.01
EPS
Total Liabilities
Shareholder Equity
Book Value
In US$ Million (except EPS)
22
Consolidated Balance Sheet
Year Ended December 31,
2010
2009
Year Ended December 31,
2008
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net
Inventories
Prepaid and other current assets
10,116,750
76,240,589
103,588,885
4,538,059
8,010,017
71,216,566
75,332,668
4,673,279
7,880,338
64,616,646
70,357,148
4,762,327
Total current assets
194,484,282
159,232,530
147,616,459
193,974
190,402
190,509
Property, plant and equipment, net
404,385,526
393,776,831
403,954,071
Construction in progress
Intangible assets, net
Other long term assets
6,664,773
985,004,893
276,361,639
5,446,595
958,065,063
232,711,379
5,823,620
945,931,378
224,002,445
1,867,095,086
1,749,422,800
1,727,518,481
Current liabilities:
Accounts payable and accrued expenses
Short term loans
VAT Tax payable
Current portion of long term debt
Other current liabilities
44,593,435
15,099,582
988,429
7,518,868
801,140
55,031,294
19,606,983
1,142,638
9,796,158
1,170,455
65,925,273
25,761,947
1,205,555
25,228,661
1,365,609
Total current liabilities
69,001,454
86,747,529
119,487,044
Long term debt
Long term payable
2,441,364
37,359,986
3,220,335
51,643,382
3,579,453
77,168,451
108,802,804
141,611,245
200,234,948
155,097,355
155,097,355
155,097,355
Total liabilities
Equity and other investments
Stockholders’ equity:
Total assets
23
Common stock, US$1.00 par value
800,000,000 shares authorized
155,097,355 shares issued and
outstanding
Accumulated other comprehensive
income
Retained earnings
291,678,383
240,383,631
238,919,350
1,311,516,545
1,212,330,569
1,133,266,828
Total stockholders’ equity
1,758,292,283
1,607,811,555
1,527,283,533
Total liabilities & stockholders' equity
1,867,095,086
1,749,422,800
1,727,518,481
Experienced Management Team
Mr. Zhou Changsheng, Chairman & CEO
Founder and Chairman of Yasheng Group, Mr. Zhou leads the overall operation and management of the Company. He is also a standing
council member of International Hops Grower Association and holds many other positions in industrial and agricultural trade associations.
From May 1987 to May 1997, Mr. Zhou served as Chairman of Gansu Yasheng Salt Industry (Group) Co., Ltd. Subsequently, he served as
Chairman of the Board of Gansu Yasheng Industrial (Group) Co., Ltd. from June 1997 to May 2006. Mr. Zhou holds a Ph.D. in Business
Administration. Mr. Zhou, a Senior Economist, have over 40-year experience in several fields: agriculture, chemicals, biotechnology,
management, and finance.
Ms. Wu Meiping, President
Ms. Wu is President of YaSheng Group and sits on the Board of Directors. She is also holds an honorary PhD in Architecture and a master of
Business Administration. Ms. Wu practiced architecture for many years and designed dozens of significant buildings throughout
Northwestern China. She is an accomplished and published artist. Ms. Wu works for YaSheng Group for over seven years and has been an
active business leader in the bay area of California for eight years. She has accumulated extensive experience in operation and
management. Ms. Wu is also Honorary Principal of Silk Road Fine Art Research Institution.
Mr. Zhuang Haiyun, CFO
Mr. Zhuang has served as both the Chief Financial Officer and Director of the Company since March 2007. Between February 2005 and May
2006, Mr. Zhuang was the Chief Financial Officer of Gansu Salt Industrial Group. From December 2003 to March 2007, he served as the
Chief Financial Officer of Yasheng Group. Mr. Zhuang was the General Accountant of Gansu Salt Industrial Group from June 1998 to
November 2003. Mr. Zhuang holds a bachelor degree in Accounting. Mr. Zhuang, a Senior Accountant, has over 15-year experience in
business administration and finance of agriculture industry.
24
Independent Board Directors
Mr. Wei Tingwu
Since March 2009 Mr. Wei has served as General Manager and Engineering Technical Director for Lanzhou Jiaoda Engineering Consulting Co., Ltd.,
where he has overseen the development and construction of many large projects throughout China. Previously, from 1997 to 2009, he was Technical
Director with Jiuquan City Project Construction Inspection Center. He is a Senior Engineer with over 20 years of experience in engineering supervision and
administrative management. Mr. Wei is currently both an independent director of the Board and a member of the Audit Committee.
Mr. Yang Baoquan
From 2001 to 2010, Mr. Yang was the Chief Technology Officer for the Jiuquan Botanical Garden. From 1987 to 1999, he served as an engineer and
subsequently Technical Director for the Jiuquan City Forestry Bureau. Mr. Yang is a Senior Engineer with over 20 years of experience in the fields of
ecological protection and administrative management. He is currently both Chairman of the Compensation Committee and a member of Corporate
Governance and Nominating Committee. He received a Bachelor’s Degree from Gansu Agriculture University, majoring in Forestry and Ecological
Protection.
Mr. Zhang Xinmin
Mr. Zhang is a licensed attorney and certified public accountant in China. For the past five years Mr. Zhang has worked at the Jiuquan Yangguan Law Firm
as a senior attorney and simultaneously with the Jiuquan Hongzheng Accounting Firm as a certified public accountant. He has acted as counsel on
numerous substantial corporate transactions and is expert in the area of internal control and financial audit. He has been practicing law for over 12 years
and holds a L.L.B degree. Mr. Zhang is currently an independent director of the Board. He also serves as both Chairman of the Audit Committee and a
member of Corporate Governance and Nominating Committee.
Mr. Liu Darong
From 1995 to present, Mr. Liu has served as Chairman and legal representative with Akesai County Granite Stone Material Factory in China. During this
period, Mr. Liu took a leading role in stone material program with many large projects, including Mo Gao Grotto at Dunhuang. From 1988 to 1994, he was
Vice Major with Gansu Qingshui County. He brings over 20 years of experience in project and administrative management. Mr. Liu is currently an
independent director of the Board. He also serves as both Chairman of the Corporate Governance and Nominating Committee and a member of the
Compensation Committee.
Mr. Wang Anxue
From 2000 to 2010, Mr. Wang has served as a Senior Engineer with the Suzhou Municipal Water Affairs Bureau in China, in charge of water resources
engineering survey and design. During the period, he won a Second Prize in Science and Technology Progress at Gansu Province level. Previously, from
1986 to 2000, Mr. Wang served as the Corp Secretary for Jiuquan Dayu Co., Ltd., a listed company in China. Mr. Wang is a Senior Engineer. He holds a
Bachelor’s Degree in Engineering. Mr. Wang has over 25 years experience in survey and administrative management. Mr. Wang currently is an
independent director and he also serves as both a member of the Compensation Committee and a member of the Audit Committee.
25
Investment Recap
PROFITABLE BUSINESS MODEL WITH STRONG TRACK RECORD
• 30 years of successful operations in Northwest China
• Agricultural leader in China: Over 30 major products
• History of strong sales and earnings growth
ASSETS
•
•
•
•
Highly qualified management team, experienced workforce
Over 250,000 acres of land, beneficial climatic/soil conditions
Ongoing R&D investment in advanced technologies
Diverse portfolio of award-winning premium specialty agriculture products
LARGE MARKET OPPORTUNITY & FAVORABLE ENVIRONMENT
• Strong product demand driven by China’s GPD and population growth and limited arable land
• Favorable government policies (tax-free agro sector)
• Long-term high-growth domestic and global market opportunity
GROWTH PLAN
• Capitalize on longstanding market leadership in Chinese agricultural industry
• Expansion into global market through organic growth and M&A while keeping up with expanding
domestic demands
• Access to global capital market through dual-listing of U.S. and Deutsche Börse exchange
26
Contact
YASHENG GROUP
INVESTOR RELATIONS
805 Veterans Boulevard
Redwood City, CA 94063
www.yashenggroup.com
Jared Gulliver
(650) 363-8345 ext. 2
jared.ir@yashenggroup.com
LEGAL COUNSEL
INDEPENDENT AUDITOR
Steven M. Kaplan, Esq.
ROSENFELD & KAPLAN, LLP
535 Fifth Avenue Suite 1006
New York, New York 10017
Gansu Hongxin CPA
12nd Floor, Xingzhong Mansion
20 Gaolan Avenue
Lanzhou, China 730030
27
Facts on China’s Agro Sector
•
•
•
•
28
China has 6% of the World’s arable land and 22% of global population
Rising food prices and ago policy has become a major concern of the PRC
PRC Government Policy directives implemented to grow and protect domestic
agro industry long term
12th 5-Year Plan for Agriculture Economic Development (2011-2015):
– PRC Beneficial Policies for key high tech agriculture industries
– Income Tax Free to agro business and preferential land policy
– Favorable policies towards eco-friendly agro products and energy