September 2010
Forward-Looking Statements
Statements in this presentation may be "forward-looking statements" within the meaning of federal securities
laws. The words “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “projects,” “should,” and similar
expressions, or the negatives of such terms, identify forward-looking statements. The matters discussed herein
that are forward-looking statements are based on current management expectations that involve risks and
uncertainties that may result in such expectations not being realized. Forward-looking statements involve risks
and uncertainties that may cause actual results, performance or financial condition to be materially different
from the expectations of future results, performance or financial condition expressed or implied in any forwardlooking statements. Such risks include, but are not limited to, competition in the dairy markets, vulnerability of
our business to general economic downturn, changes in consumer preferences, our ability to maintain or
increase our market share, changes in governmental policies, negative publicity from contamination of milk
powder products produced in China in 2008, changes to management or key personnel, risks associated with
conducting business in China and other risks detailed in the Company’s filings with the Securities and
Exchange Commission. Actual outcomes and results may differ materially from what is expressed or forecasted
in such forward-looking statements due to numerous potential risks and uncertainties. Forward-looking
statements made during this presentation speak only as of the date on which they are made, and we do not
undertake any obligation to update any forward-looking statement to reflect events or circumstances after the
date of this presentation. Because forward-looking statements are subject to risks and uncertainties, we caution
you not to place undue reliance on any forward-looking statements. All written or oral forward-looking
statements by the Company or persons acting on its behalf are qualified by these cautionary statements.
2
Investment Highlights
1
The leading producer of goat milk products in China with
significant first-mover advantage
2
An inflection point this year for explosive growth with marketing,
distribution and capacity expansion initiatives
3
Long-term industry growth drivers intact within China’s $29
billion dairy market
4
Favorable post-melamine scandal regulatory environment and
increased awareness of the benefits of goat milk
3
Company Overview





First mover: started goat milk business in
China since 2000
China’s largest producer and distributor of
goat milk products
One of the 3 goat milk players in China’s
major raw goat milk base
High quality control - ISO9001 and HACCP
Investment from SAIF Partners
4
Our Mission Statement
We operate under
strict ethical
standards and are
focused on
maximizing the
wellbeing of our
customers,
employees, and
shareholders
Corporate
We take pride in the
quality of our product,
which we drink
ourselves every day
Culture
BRAND
Our “Milk Goat” brand represents a healthy
lifestyle and dedication to quality
5
China’s Infant Formula Market
China’s Total Infant Formula Consumption
16
30%
13.4
14
11.8
10.5
12
7.8
8
6.6
5.1
6
3.4
2.6 3
2.3
2
5.6 5.4
4.1
70%
61%
60%
20%
48%
50%
9.2
10
4
25%
China’s Infant Formula Feeding Rate
15%
40%
36%
10%
5%
2
0%
0
-5%
30%
20%
10%
0%
Consumption ($ bn)
2003
2007
2012E
Growth (%)
CAGR (2001-2007) 17%
Consumption dropped drastically in 2009
following the melamine scandal
China’s infant formula market potentially
larger than the U.S. market by 2010
Number of women in the workforce has
increased especially in urban areas
Sources: AC Nielsen, trade data and Oppenheimer & Co.
research
6
Catalysts for Growth

Growing per
capita dairy
consumption



Goat milk
properties


Favorable
demographics


Recent
quality
scandals


China’s per capita dairy consumption* was 6.8kg in 1999, and grew to
18.3 kg in 2008, 1/7 of U.S. consumption
Expected to reach 27 kg by 2015 and 36 kg by 2020
Goat milk can potentially account for 3% of China’s $29 billion dairy
market, according to China Dairy Association
Chinese people have been used to drinking goat milk since ancient
times
Goat milk is more easily digested than cow milk because of molecular
make up and nutritonal properties
Goat milk is closer to human milk in terms of protein composition,
making it a suitable substitute for infants
Chinese parents are more inclined to spend on their childrens nutrition
due to the one-child policy enforced since the 1980s
The 2008 melamine scandal increased scrutiny of quality control
procedures
Recent cases where cow milk formula has been linked to alleged
premature onset of puberty in children
Uncertainty expected to benefit established vertically integrated players
and encourage consumers to switch to goat milk
*Source: Household Income and Expenditure Survey (HIES), State Statistical Bureau of China
7
Benefits of Goat Milk as a
Substitute
Easier Digestion



Suitable for individuals with cow
milk protein intolerance (CMPI)
Goat milk has smaller molecules of
lactose and fat globules than cow
milk
More medium chain triglycerides
(MCT) than cow milk
Higher Nutritional Value


Richer in iron, calcium and protein
than cow milk
Several studies1 show that goat milk
offers superior micronutrient
absorption compared with cow milk
Benefits for Infants



1 Aliaga et al (2000), Park et al (1986),
Barrionuevo et al (2002)
Milk casein profile of goat milk
closer to that of human milk
A high concentration of Epidermal
Growth Factor (EGF), a beneficial
component of human milk that is low
in cow milk
Closer to human milk in terms of fat
content, acidity, and Vitamin A
content
8
Post-Melamine Scandal Regulatory
Environment
October 2008: State Council promulgated Regulation on the Supervision and Administration of the
Quality and Safety of Dairy Products
Supply of Raw
Milk
Barriers to
Entry
Quality Control
 Dairy processors are encouraged to build their own milk source base, build
or acquire stake in scalable dairy farms and breeding communities, build
their own milk collection stations or acquire existing ones
 Only one milk processing plant is allowed on a ranch within the radius of
60 km
 New and Expansion projects have to meet rigorous thresholds in terms of
processing capacity and contribution from processor-controlled raw milk
sources
 Support the technological upgrade of dairies
 Introduce independent 3rd parties to test raw milk quality
 Implement HACCP, GAP or GMP quality certified systems
 The Food Safety Act was enacted in June 2009
Yayi has a proprietary raw goat milk base, a well established industry position, a vertically
integrated quality control system and its products have been declared free from growth hormone
by the Tianjin Municipal Supervisory Bureau for Quality and Technology
9
Competitive Landscape
International goat milk producers
Karihome: New Zealand-originated company
with goat milk based infant formula, whole milk
powders and goat milk tablets under the
Karihome brand
Other smaller New Zealand goat milk brands with
goat milk products sold in China
Other domestic goat milk producers
Shaanxi Yubao: Shaanxi-based company with
branded goat milk formula for infants, toddlers and
women
Shaanxi Guanshan: Shaanxi-based company with
branded goat milk formula for infants and toddlers
International infant formula producers
Abbott: Multinational pharmaceutical company
with Similac-branded infant formula
Danone: Multinational company Dumexbranded infant formula
Wyeth: Multinational pharmaceutical
company with S-26 branded infant formula
Domestic infant formula producers
Yili Dairy: Inner Mongolia-based company
with Yili branded formula for infants and adults
American Dairy (ADY): Heilongjiang-based
company with Firmus branded infant formula
Synutra Int’l (SYUT): Qingdao-based
company with Synutra branded infant formula
10
Price Comparison
Infant Formula Universe
Perceived Value
Premium
Price (RMB/kg)
International cow milk
International goat milk
Domestic cow milk
Domestic goat milk
Cow milk; domestically produced international brand
Yayi’s products sell at a premium of 100% compared with domestic cow milk-based
formula brands and approximately 5% compared with imported cow milk-based formula
Source: Taobao.com
11
Market Positioning
 Cooperation with Trout & Partners
Segmenting two markets in China’s dairy industry:
cow milk and goat milk
 Commercial on CCTV 1
Most valued prime-time advertising for
nationwide brand building
 Expansion of distribution channels
Further penetrating into supermarkets;
Opening online store on Taobao.com
12
Distribution Network and
Marketing
 About 3,800 retail points
across 23 provinces and
municipalities
 Supermarkets and
international hypermarkets
 Infant-maternity stores
 Drug stores
 Catalog sales
 Taobao.com
 Sales and marketing efforts
focusing on coastal cities
13
Product Offerings
10 formula products under the “Milk Goat” product brand
Three Main Consumer Segments
Infant Formula Products
 Infant formula (0-6 months)
 Infant formula (6-12 months)
Adolescents & Adults
 Milk powder products for
different target groups:
Children aged 1-7 years
 Milk powder for
toddlers
 Milk powder for
children (aged 37 years)






students
seniors
women
men
pre- and post-natal
women
Gift packaging
14
Vertically Integrated
Production Process
Vertically integrated production process helps ensure quality of end products
Collection of Raw
Goat Milk
Weinan, Shaanxi
Dairy Farms
Acquired and established 10 dairy
farms so far; prohibit the use of
artificial hormones and respect the
natural lactation period of dairy goats
Collection and Extraction
Centers
Currently cooperate with 50 and own
15 milk collection centers ; own
additional 20 mechanized milk
collection stations
Raw Goat Milk
Inspection
Production Process
Spray drying facility in Shaanxi;
deep processing facility in Tianjin
Raw Goat Milk Preprocessing
Packaging and Delivery
Packaging line and
warehouse in Tianjin
Filtration
Packaging
Pasteurization
Vacuum
Concentration
Inspection
Warehouse Storage
Spray Drying
Distribution
Cooling
Fortifying with
nutritional formula
Our production facilities have ISO9001 Quality Management System Certification and HACCP
Certificate; some of our products have China Green Food Standards Certificate
15
Raw Milk Base in Shaanxi
Shaanxi Fuping Milkgoat Co., Ltd.
Goat milk powder processor
Dairy goat breeding center
Dairy goat farm
Current processing capacity:
New processing facility in Weinan
Under construction
Milk powder
New processing facility
Expected production start
Expected production
capacity
Total CapEx
~1,000 MT/year
37,000 m2
Q4 2011
4,600MT/year
$8.8 million
16
Facilities in Tianjin
Tianjin Yayi Industrial Co., Ltd.
Current processing capacity:
Milk powder
~2,100 MT/year
New production center in Tianjin
New production facility
Expected production start
28,000 m2
Q4 2010
Expected production
capacity
> 5,200 MT/year
Total CapEx for Plant
$20.9 million
17
Management Team
Ms. Li Liu
Chairwoman
and CEO
• Founded Yayi and has served as Chairwoman of the Board and CEO since
1994
• EMBA from Tsinghua University and a medical degree from Tianjin Medical
University
• Joined Yayi in February 2010
• 20 years of experience in accounting and finance
Ms. Veronica Chen
CFO
• Prior CFO to China Natural Gas (CHNG), China Valves Technology (CVVT)
and Origin Agritech (SEED)
• Senior finance positions at iKang Healthcare, eLong (LONG), and Eli Lilly
China
• CPA, Ph.D. and MBA
Mr. Jacky Shek
Executive
Director and VP
• Has served as Executive Director and Vice President since 2000,
responsible for Yayi’s sales network and market development
• Former Director of Sales for P&G Taiwan
• Graduated from University of Massachusetts Boston, USA
18
Management Team
• Joined Yayi in July 2010 with 20+ years of sales and industry experience
Ms. Meiping Li
Director of
Sales
• Previously General Manager of New Zealand-based Healtheries, National
Sales Director at New Zealand-based Fonterra Brands, Regional Sales
Director at Xi’an-Janssen Pharmaceutical (part of Johnson & Johnson), and
Sales Manager at Wyeth Pharmaceutical
• Bachelor’s degree in medicine from College of Medicine at Capital Medical
University in Beijing
• Joined Yayi in May 2010; previously served as Director of Sales Operations
and Director of Strategic Planning at Xiamen Huierkang Food Co., Ltd., a
food and beverage supplier based in Southeast China
Mr. Bao Zhou
Director of
Marketing
• Also served as Sales Director at Milopo Nutrition Shanghai, General
Manager, Milk Powder Division at American Dairy, Inc. (ADY) , and National
Sales Support Manager at Mead Johnson Guangzhou and had sales &
marketing responsibilities at Wrigley, Henkel, Pillsbury, and Nestle in China
• EMBA from Renmin University of China
Mr. Changzhong
Wang
Director of
Production
• Joined Yayi in September 2009; prior to that served as Chief Engineer for
production at Synutra International Incorporation, a PRC-based dairy
company listed on NASDAQ
• Graduated from Harbin Institute of Technology
19
Financial Summary
20
Equity Snapshot
Ticker Symbol:
YYIN.OB
Stock Price (8/13/10):
$1.60
Shares Outstanding (8/15/10):
26.4 million
Market Cap (8/13/10):
$42.2 million
Revenue (TTM)
$22.5 million
Net Income (TTM)1
$0.4 million
EPS (TTM)1,2
$0.01
P/S (TTM) 2
3.1X
P/B (MRQ)
2
Fiscal Year End 3
6.3X
March 31
1) Not adjusted for non-cash expenses
2) Calculated using weighted average diluted share count of 43,303,480 as of June 30, 2010
3) Fiscal year end recently changed from October 31 to March 31
21
Revenue Analysis
Revenue Breakdown by
Consumer Group
June 2010
$ million
58.6 - 65.9
24.0%
43.9%
16.0%
16.1%
Infants (0-1 year)
Toddlers (1-3 years)
Young children (3-7 years)
Twelve months ended March 31
Adolescents and adults
22
Profitability Profile
Improving Gross Profit Margin
17
67.3%
66.5%
16.4
68%
2.25
66%
2.20
64%
2.15
16
15.0
15
Improving Net Income Margin
9.6%
2.2
9.6%
9.4%
9.0%
2.10
2.1
60%
2009
2010
9.2%
9.0%
62%
14
9.8%
2.05
8.8%
2.00
8.6%
2009*
2010
Twelve months ended March 31, 2010
Excluding slotting fees paid to hypermarkets
and supermarkets and giveaway costs,
gross margin for Q1 FY2011 improved 740
basis points to 73.3% from 65.9% a year ago
*Including merger expenses for FY 2009
23
Summary Income Statement
3 months ended
June 30,
2010
(unaudited)
2009
(unaudited)
3 months ended
March 31,
2010
(unaudited)
12 months ended
March 31,
2010
(unaudited)
2009
(unaudited)
Net Sales
7,610,266
7,382,779
4,597,455
22,243,723
24,697,548
Gross Profit
4,930,029
4,864,097
2,944,060
14,975,916
16,423,092
Sales & Marketing
Expenses
3,559,166
1,459,324
3,216,777
7,689,499
5,399,221
General & Administration
1,031,526
Expenses
724,501
953,633
2,726,964
1,753,174
Total Operating
Expenses
4,590,692
2,183,825
4,170,410
10,416,463
7,152,396
Operating Profit (Loss)
339,337
2,680,272
(1,226,350)
4,559,451
9,270,696
Other Income (Expense)
(170,262)
(298,566)
(149,259)
(1,219,092)
(4,959,780)*
Net Income (Loss)
Attributable to Common
Shares
32,898
1,783,012
(1,375,609)
2,167,041
2,085,888*
*Figures include $3.5 million in merger expenses
24
Summary Balance Sheet
June 30, 2010
(unaudited)
March 31, 2010
(audited)
Cash and Cash Equivalents
4,647,800
4,727,677
Accounts Receivable
5,825,903
3,530,938
Inventory
3,423,453
2,561,265
Total Current Assets
18,410,344
14,028,447
Property, Plant and Equipment
4,514,132
3,734,552
Total Assets
45,527,618
40,463,839
Short-term Loans
Current portion of long term
liabilities
Total Current Liabilities
10,465,359
6,704,406
40,987
40,823
15,811,419
10,189,367
6,831
17,009
Total Liabilities
20,289,906
15,519,177
Preferred Stock
14,264,871
14,264,871
Shareholders' Equity
10,972,841
10,679,791
Long-term Liabilities
25
Investment Highlights
1
The leading producer of goat milk products in China with
significant first-mover advantage
2
An inflection point this year for explosive growth with marketing,
distribution and capacity expansion initiatives
3
Long-term industry growth drivers intact within China’s $29
billion dairy market
4
Favorable post-melamine scandal regulatory environment and
increased awareness of the benefits of goat milk
26
Contact Us
Yayi International, Inc.
Investor Relations
No.9, Xingguang Road,
Northern Industrial Park of Zhongbei Town,
Xiqing District,
Tianjin 300384, China
CCG Investor Relations
Crocker Coulson, President
Tel: (646) 213-1915
Email: crocker.coulson@ccgir.com
Website: http://www.ccgirasia.com
Veronica Chen, CFO
Tel: +86-22-2798 4169
Email: veronica.chen@milkgoat.com.cn
Website: http://www.milkgoat.com.cn
http://www.ccgasiair.com/content/yayiinternational-inc
Auditor
Morison Cogen LLP
Legal Counsel
Pillsbury Winthrop
Shaw Pittman LLP
27
Appendix: Capital Structure
Common stock outstanding as of June 30, 2010
26,432,839
Series A Preferred Stock*
15,306,120
Warrants issued:
Series A Warrants
561,387
Series B Warrants
2,148,148
Series C Warrants
100,000
Series D Warrants
25,279
Series E Warrants
250,000
3,084,814
Balance as of June 30, 2010
44,823,773
* Referring to 1,530,612 preferred shares with a conversion rate of 1:10
Warrants have a weighted average contractual life of 0.94 years and exercise prices ranging between
$0.98 and $1.35
28