FY2011: Interim Results Presentation August 2011 · 4 Main Achievements in 1H 2011Main Achievements...

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FY2011: Interim Results PresentationFY2011: Interim Results Presentation

August 2011August 2011

Stock Ticker: 2299Stock Ticker: 2299

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DisclaimerDisclaimer

This document has been compiled by Billion Industrial Holdings Limited. All persons are prohibited to copy or forward this document onward. In other jurisdictions, the distribution of this document may be subject to local laws and restrictions; the person who possesses this document must understand and comply with such legal restrictions. The information contained in this document has not been independently verified. No representation or warranty, expressed or implied is made as to the fairness, accuracy, completeness or correctness of the information and opinions contained in this document. This document is not aimed to be a complete or comprehensive analysis of the financial or trading positions or prospects, any person who possesses this document should note that the contents should not be unduly relied upon. Information and opinions contained in this document are subject to change withoutnotice. Nothing in this document should be considered a solicitation, offer or invitation to buy, subscribe for or sell the Company's securities. None of Billion Industrial, its directors, employees or agents or any other persons accepts any liability for any loss whatsoever arising from any use of this document or its contents, or otherwise arising in connection therewith (regardless if they are negligent or otherwise).

This document is based on public information and compiled information previously disclosed by the Company. This document may contain forward-looking statements involving risks and uncertainties. Forward-looking statements are related to expectations, estimates, plans, projections, objectives, opportunities, or other possibly forward-looking terminology that express the Company's expectations or results of possible future actions or related actions’ results. Forward-looking statements are based on the Company's own data and other sources believed to be reliable, but should not be unduly relied upon or over trusted. The Company's actual results may differ from those described in forward-looking statements, so that the Company's stock price fluctuates.

Warning: The contents of this document have not been reviewed by the regulatory authorities in Hong Kong. You should exercise caution in respect to the offer. If you have any doubts of the contents of this document, you should seek independent professional advice.

This document has been compiled by Billion Industrial Holdings Limited. All persons are prohibited to copy or forward this document onward. In other jurisdictions, the distribution of this document may be subject to local laws and restrictions; the person who possesses this document must understand and comply with such legal restrictions. The information contained in this document has not been independently verified. No representation or warranty, expressed or implied is made as to the fairness, accuracy, completeness or correctness of the information and opinions contained in this document. This document is not aimed to be a complete or comprehensive analysis of the financial or trading positions or prospects, any person who possesses this document should note that the contents should not be unduly relied upon. Information and opinions contained in this document are subject to change withoutnotice. Nothing in this document should be considered a solicitation, offer or invitation to buy, subscribe for or sell the Company's securities. None of Billion Industrial, its directors, employees or agents or any other persons accepts any liability for any loss whatsoever arising from any use of this document or its contents, or otherwise arising in connection therewith (regardless if they are negligent or otherwise).

This document is based on public information and compiled information previously disclosed by the Company. This document may contain forward-looking statements involving risks and uncertainties. Forward-looking statements are related to expectations, estimates, plans, projections, objectives, opportunities, or other possibly forward-looking terminology that express the Company's expectations or results of possible future actions or related actions’ results. Forward-looking statements are based on the Company's own data and other sources believed to be reliable, but should not be unduly relied upon or over trusted. The Company's actual results may differ from those described in forward-looking statements, so that the Company's stock price fluctuates.

Warning: The contents of this document have not been reviewed by the regulatory authorities in Hong Kong. You should exercise caution in respect to the offer. If you have any doubts of the contents of this document, you should seek independent professional advice.

I. 1H2011 Results Overview

II. Company Overview

III. Competitive Strengths

IV. Financial Highlights

V. Corporate Strategies

4

Main Achievements in 1H 2011Main Achievements in 1H 2011

2011 - New Era for Billion

1. Listing Billion Industrial Holding Limited (ticker: 2299) was successfully listed on the main board of Hong Kong

Stock Exchange on 18 May 2011

2. Sales Total revenue reached RMB2,969.2 mm, a 65.7% increase from 1H 2010 Sales volume amounted to 193,400 tons, 13.3% increase from 1H 2010

3. Profit Gross margin increased to 21.4% from 8.7% (1H 2010) and 14.6% (full year 2010) Achieved net profit of RMB448.9 mm, 424.6% increase from 1H 2010

4. New business Billion announced the establishment of Billion High-Tech Material Industry Co. Ltd in August. The

Company is also investing RMB350mm in the development of the polyester thin film business, which involves mainly the manufacture and sale of multi-functional BOPET. The new manufacturing facilities for the polyester thin film business are expected to commence commercial production by May 2012

This new investment echoed the PRC government’s recent policies to encourage the development of high-technology and environmentally friendly industries. Raw material used in the production of polyester thin films can be recycled and reused, hence generating a lower production cost and higher profile margin; meanwhile, the polyester thin film market is expanding and Billion may capture the growing market demand to generate sound financial returns

5

2,969.2

1,791.8

2010上半年 2011上半年

Strong 1H 2011 Results despite Market VolatilityStrong 1H 2011 Results despite Market Volatility

8.7%

21.4%


156.2

636.2

85.6

435.2

14.7%

4.8%


121.5

560.0

6.8%

18.9%


Operating profit and margin Net profit and marginGross profit and marginRevenue

Growth rate: 307.3%

Growth rate: 65.7%

Growth rate: 361.0%

Growth rate: 424.6%

(RMB mm)

448.9

(RMB mm) (RMB mm) (RMB mm)

1H2010 1H2011 1H2010 1H2011 1H2010 1H2011 1H20111H2010

15.1%

7

Establishment

2003-2005 Co-founded by Mr. Sze Tin Yau

and Mr. Wu Jinbiao in 2003 (each owns 50% interest), the Company commenced construction of production lines within the same year with designed capacity of approximately 200,000 tpa of polyester filament yarns

Commenced manufacturing of polyester filament yarns in June 2005

Product Differentiation & Capacity Expansion

2006-2009 Increased designed capacity for

polyester filament yarns through organic growth

Partnered with Donghua University and obtained exclusive rights for 5 types of differentiated polyester filament yarns and to commercialize the products

Recognized jointly by various government bureau of Fujian Province as a High and New Technology Enterprise

History and DevelopmentHistory and Development

Today

2010 Our designed capacity of FDY and

POY will increase by ~25,000 tpa to ~475,000 tpa and our designed capacity of DTY will increase by ~45,000 tpa to ~305,000 tpa by June 2011 at our existing site

Of the independently developed differentiated polyester filament yarns, 18 types had obtained patents and the remaining 7 types is in the process of patent applications

Recognized by China Textile Product Development Center as the National Development Site for Differentiated Polyester Filament Yarns

Will establish new indirectly fully-owned Fujian Billion Hi-Tech Material Industry Co. Ltd, plan to invest RMB 350 mm in the development of the polyester thin film business

Future Expansion

2011-2013 Plan to construct a new

production site, which is 2 km away from the existing site

Part of the new production line will commence operations in November 2011 and it is expected to be in full operation by the end of 2013

Upon completion of the new production site, our designed capacity of FDY and POY will further increase to ~785,000 tpaand our designed capacity of DTY will further increase to ~493,000 tpa

2003 – 2005

2006 – 2009

2010

2011– 2013

8

Company OverviewCompany Overview

Leading Polyester Filament Yarn Manufacturer in China

Main Beneficiary of the Rapidly Growing Apparel / Consumer Market in China

Key Achievements Advanced Production Facilities

We are one of the largest developers and manufacturers of polyesWe are one of the largest developers and manufacturers of polyester filament yarns in Chinater filament yarns in China

We are the largest manufacturer of DTY and FDY in south China and the second largest manufacturer of DTY in China

Our current designed capacity of FDY and POY is ~475,000 tpa and current designed capacity of DTY is ~305,000 tpa. In order to meet increasing demand from the rapidly growing consumer market in China, we have a clear expansion plan to further increase designed capacity of FDY and POY to ~785,000 tpa and designed capacity of DTY to ~493,000 tpa by December 2013

Sell to more than 2,100 customers throughout China and overseas,majority of which are based in Fujian Province and Guangdong Province

Supported by our experienced R&D team, we have independently developed 25 types of differentiated polyester filament yarns

Top production machineries imported from Germany (Barmag) and Japan (TMT)

Well-known leading apparel and footwear manufacturers, fabrics and textile manufacturers as well as several leading zipper manufacturers in China have specifically required their suppliers to supply fabrics and textiles made from our polyester filament yarns

2010 – Fujian Province Innovative Pioneer Enterprise

2010 – Fujian Province Intellectual Property Experiment Enterprise

2009 – High and New Technology Enterprise

2009 – Top 100 Enterprises in Fujian Province

2009 – Advanced Enterprise in Equipment Innovation

2009 – Top 100 Key Industrial Enterprises in Fujian Province

2010 – National Development Site for Differentiated Polyester Filament Yarns

2008 – Fujian Provincial Enterprise Technology Center

9

Mainly used for customer products that requires a “cotton-like” feel

Used to produce fabrics and textiles for high-end apparel, high-end sports shoes, home furnishings and zipper tapes

Properties: Highly Elasticity, highly fluffy, comfortable hand

feel, sheeny and gentle Warm, readily washable with quick drying function Anti-wrinkle and anti-wear

Offer DTY with a filament count of 24f to 576f, a linear density of 30D to 1200D and a denier per filament of 0.28dpf to 6.25dpf

DTY accounted for ~68% of the total consumption of polyester filament yarns for textile purposes in China in 2009

Mainly for consumer products that require a “silk-like” or “leather-like” feel

Used to produce fabrics and textiles for high-end undergarments, high-end sportswear and home furnishings

Properties: High strength, high density, smooth and lubricating

hand feel and sheeny Warm, readily washable with quick drying function Anti-wear

Offer FDY with a filament count of 18f to 192f, a linear density of 30D to 600D and a denier per filament of 0.5dpf to 6.25dpf

FDY accounted for ~32% of the total consumption of polyester filament yarns for textile purposes in China in 2009

Comprehensive Product PortfolioComprehensive Product Portfolio

Used as raw materials for the production of polyester filament yarns

Properties: Dried particles of polyester melt We produce small samount of

PET chips and maintain the quality of our products

Also, we occasionally sell PET chips to FDY and POY manufacturers

Primarily used as a main raw material for DTY

Properties: Low strength, smooth,

shiny and sheeny Can be further drawn High extensibility Offer POY with a filament

count of 24f to 288f, a linear density of 50D to 1000D and a denier per filament of 0.34dpf to 6.25dpf

DTY (Drawn Textured Yarn) FDY (Fully Drawn Yarn) POY (Partially Oriented Yarn)

PET Chips

We We offer a diversified product portfolio of differentiated polyesteoffer a diversified product portfolio of differentiated polyester filament yarn r filament yarn with special physical features and functionalitieswith special physical features and functionalities

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Polyester Filament Yarn Production ProcessPolyester Filament Yarn Production Process

We use a technologically advanced polyester melt direct spinningWe use a technologically advanced polyester melt direct spinning method to produce polyester filament yarns, method to produce polyester filament yarns, which enables us to improve production efficiency and at a lowerwhich enables us to improve production efficiency and at a lower costcost

Mixes PTA and MEG together under high temperature and high pressure to produce polyester melt

After the polymerizing process, polyester melt is cooled, dried, cut into small pieces, packed and then stored in our warehouse

POY is partially drawn processed through a pre-orientation process

Polyester melt is first pushed through the spinning holes on the spinneret into polyester filaments which are then drawn and combined into polyester filament yarns

FDY is fully drawn through a heated drawing process

By applying various methods during the production process of our polyester filament yarns, we can achieve special features and functionalities of differentiated polyester filament yarns

► Add special chemical additives during the polymerizing process to achieve special features such as ultraviolet resistant and ultra-white

► Change the number, size and shape of spinning holes on the spinneret to create various shapes of cross-sections of filaments in order to achieve special features such as water-absorbing, sweat-discharging and ultra-soft

► Adjust the various parameters and processing measures in the spinning and texturing processes to achieve different textures and feels

MEG

PTA

Polymerizing Process

Polyester Melt

FDY

PET Chips

WarehouseQuality Control Packaging

POY / FDYSpinning POY DTY

POY is processed through a texturing process to become DTY

9

11

Value ChainValue Chain

Polyester filament yarns, which are man-made synthetic fibers, are mainly used in the production of various consumer products such as apparels, footwear and home furnishings. As a result, the increased demand for consumer products are driving the demand for polyester filament yarn PTA MEG

FDY

DTY

Upstream oil and gas Refining Petrochemicals

Fabric and textile End products

Polyester polymer

Billion holds a key position in the value chain of the consumer Billion holds a key position in the value chain of the consumer retail industryretail industry

13

Competitive StrengthsCompetitive Strengths

1

3

2

4

5

6

A Leader in the Domestic Polyester Filament Yarn Industry in China, the Largest Polyester Filament Yarn Market in the World

Strong Research and Development and Commercialization Capabilities Allowing Us to Offer a Comprehensive Portfolio of Differentiated Polyester Filament Yarns with Higher Profit Margins

Well-positioned to Benefit from the Rapid Growth of China’s Consumer Product Market

Strategically Located in an Area with Developed Upstream and Downstream Industries as well as Convenient Transportation Networks

Expansion Plan That Aims to Capture the Market Opportunity of Demand Growth and Supply Shortage of Polyester Filament Yarns in South China

Providing High-quality Products and Timely Services which Help Us Build Brand Awareness and Customer Loyalty

14

China66%

China32%

1

Global Share of China’s Polyester Filament Yarn Production

Designed Capacity of FDY and POY of the Top Five Manufactures in South China (2010)

Designed Capacity of Top Five DTY Manufacturers in China (2010)

According to CMAI, China’s share of global polyester filament yarn production has increased from 32% in 2000 to 66% in 2009

By 2015, China’s share of global polyester filament yarn production is expected to be 72%, maintaining its leadership position

In south China, the top five polyester filament yarn manufacturers collectively have a total designed capacity of approximately 1.2mtpa, accounting for over 92.0% of the total designed capacity in the area. Billion has the largest designed capacity among the five

As a leading producer of polyester filament yarn in China, the largest polyester filament yarn market in the world, Billion is well-positioned to benefit from the development of this market

Source: CMAI

2000 2009 2015

China72%

A Leader in the Polyester Filament Yarn Industry in China, the Largest Polyester Filament Yarn Market in the WorldA Leader in the Polyester Filament Yarn Industry in China, the Largest Polyester Filament Yarn Market in the World

(ktpa)

335

450

785

215 180 160 150

0

200

400

600

800

1,000

Billion Jinlun Xianglu Jinxing Kaiping

Expected designed capacity by 2013

Current designed capacity

(ktpa)

260

233300

493

250220 200

0

100

200

300

400

500

Hengyi Billion Rongsheng Shenghong Hengli

Expected designed capacity by 2013

Current designed capacity

493

15

Strong Research and Development and Commercialization CapabilitiesStrong Research and Development and Commercialization Capabilities

2

Benefitting from our R&D team of 505 professionals, Billion’s sales in differentiated products achieved RMB 1.89 bn in 2011H1, accounting for 64% of total sales. With our differentiated products catering to the evolving market demand, we

have managed to achieve higher market recognition, market share and ASP as well as gross margins

EvolvingMarket Demand

Strong R&D Team

Advanced Production Machineries

Differentiated Products with High Market Recognition

Close Communication with Customers

Strong R&D Team Major Awards and Recognition

Increasingly diversified requirements in the functions and features of the textile consumer products

Strong demand for differentiated polyester filament yarns

Differentiated polyester filament yarns with high market recognition and higher profit margins– ultraviolet resistant– water absorbing and sweat

discharging– flame resistant– anti-abrasion– ultra-soft– ultra-white– ultra-bright– anti-bacterial

Revenue from differentiated products achieved RMB1.89bn in the first half of 2011, representing 64% of total revenue

Close and frequent communication with customers to gain a better understanding of their needs

505 dedicated R&D professionals Already developed 25 types of differentiated

products with 18 patents Partnered with Donghua University and

obtained exclusive rights for 5 types of patented differentiated polyester filament yarns and to commercialize the products through 2013

Expect to develop 5 new types of differentiated products in each of 2012 and 2013

Has applied for the certification as a National Standard Laboratory

Advanced production machineries ensure high production efficiency and constant product quality

16

1.9 2.3 2.8 3.3 4.0 4.9 6.1 7.5 9.4 11.7 14.64.1 4.8 6.0 7.5 9.2 11.4 14.2 17.7 22.2

27.734.7

21.5 25.4 30.135.9 39.5 44.4

51.960.9

74.0

90.0

109.5

2005 2006 2007 2008 2009 2010E 2011E 2012E 2013E 2014E 2015E

Fujian provinceGuangdong provinceChina

39.6 51.4 66.7 84.4 109.7 142.2 184.2 238.5 308.8

31.925.4 744.6 838.7968.8

1,084.31,197.7

1,341.41,509.1

1,697.71,911.6

2,160.12,440.9

2005 2006 2007 2008 2009 2010E 2011E 2012E 2013E 2014E 2015E

Sports Apparel and FootwearApparel and Footwear

Source: Frost & SullivanNote: (1) including sports apparel and footwear

Production Volume of Apparel and Footwear in China (2005 to 2015E) (1)

(Units in billion)

20.1% 24.3%

22.0% 24.9%

16.5% 19.8%

CAGR

2005 to 2009 2010E to 2015E

(RMB)

Per Capita Spending on Apparel and Footwear in China (2005 to 2015E)

CAGR

2005 to 2009 2010E to 2015E

27.3% 29.6%

12.6% 12.7%

Per capita spending on apparel and footwear in China is expected to grow at a double-digit rate in the coming few years Fujian province and Guangdong province, being two of the key regions in China’s apparel and footwear industry, have

witnessed more rapid growth in apparel and footwear production volume than the national average. This creates a vast growth potential for polyester filament yarn manufacturers in these two provinces

Well-positioned to Benefit from the Rapid Growth of China’s Consumer Product MarketWell-positioned to Benefit from the Rapid Growth of China’s Consumer Product Market

3

17



4

Rapid Economic Growth Complete Textile Industry Chain and Convenient Transportation Networks

Key statistics of Guangdong (RMB): GDP: 3,948.3 billion(1)

GDP 09-15 CAGR: 9.6%(2)

Urban disposable income per capita: 21,575(1)

Per capita consumer spending: 16,858 Production volume of apparel and

footwear: 9,186mn (23.2% of China)

Key statistics of Fujian (RMB): GDP: 1,223.7 billion(1)

GDP 09-15 CAGR: 13.2%(2)

Urban disposable income per capita: 19,577(1)

Per capita consumer spending: 13,451 Production volume of apparel and

footwear: 3,990mn (10.1% of China)

Convenient transportation networks Proximity to Shenhu Port, a national open port Proximity to Highway 308, a provincial highway, and Shenhai

Highway, a national highway Able to transport products on a timely and cost-efficient basis to

customers

Jinjiang is one of the largest apparel production bases in China A complete downstream textile production chain, composed of a

large number of textile and fabric manufacturers and apparel, footwear and home furnishing manufacturers

Able to supply customers at lower transportation costs and within a shorter period of time

Specifically required by well-known leading apparel and footwear manufacturers in China that fabrics and textile supplied to themare made from Billion’s polyester filament yarns

Located in an area with ample raw material supplies Major PTA manufactures based in Jinjiang City and its

neighboring areas where Billion is located Obtain raw material at relatively lower transportation costs and

within a shorter time period

Source: National Bureau of Statistics of China, Guangdong Bureau of Statistics, Fujian Bureau of Statistics, Frost & SullivanNote: (1) All figures in 2009

(2) Frost & Sullivan Forecasts

Guangdong

FujianJinjiang

Primarily focus sales in Fujian Province and Guangdong Province The economy and apparel manufacturing industry are developing rapidly Sales in Fujian and Guangdong accounted for 72.5% and 13.2% in 2011 H1

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5

Designed Capacity

475 475

105310

785

580475450

0

500

1,000

FY2010 FY2011E FY2012E FY2013E

Capacity of Existing Site Capacity of New Production Site

('000 tons)

305 305

188

305

18834260339

493 493

0

500

1,000

FY2010A FY2011E FY2012E FY2013E

Capacity of Existing Site Capacity of New Production Site

('000 tons)

Capacity (FDY & POY)

Capacity (DTY)

New Production Site and Existing Production Site

GFA / Site Area

~384,000sqm /~275,400sqm

Production Facilities

Existing: 2 polymerization production lines; 9 FDY

spinning production lines; 17 POY spinning production lines and 180 DTY texturing

production stations

Additional 25,000 tons capacity: 1 FDY spinning production lines; 1 POY

spinning production lines and 29 DTY texturing production stations

Capital Expenditure

~RMB300m for the expansion of existing

production site

2 polymerization production lines; 12 FDY

spinning production lines; 8 POY spinning

production lines and 110 DTY texturing

production stations;Polyester film production

line

~375,700sqm / ~500,000sqm

Our expansion plan is designed to meet the rapid growth of demanOur expansion plan is designed to meet the rapid growth of demand. We expect our new production equipment can improve our d. We expect our new production equipment can improve our product quality while cutting costsproduct quality while cutting costs

Existing Production Site New Production Site

~RMB3.65bn for 2011-2013

19

Physics laboratory technicians

2.0%

Chemical laboratory technicians

0.9%

Accessory materials inspectors

3.2%Appearance inspectors

61.6%

Color matching inspectors

32.3%

1,6002,100 2,100

0500

1,0001,5002,0002,500

2008 2009 2010

High-quality Products and Timely ServicesHigh-quality Products and Timely Services6

We have adopted a comprehensive set of stringent quality controlWe have adopted a comprehensive set of stringent quality control procedures at all stages of different production procedures at all stages of different production processes to ensure constant product qualityprocesses to ensure constant product quality

Conduct chemical and physical testing on raw materials PTA and MEG– to ensure they meet our quality requirement

for use in production Inspections at various stages of production

processes and also on finished products– in particular, we inspect the appearance,

color, chemical compositions and physical properties of polyester filament products

Personnel with relevant educational qualifications or work experience in quality control management

Conduct regular training sessions and administer regular assessments

Purchased various advanced testing machines– heated stretch device, Uster stretch tester,

Uster evenness tester, spin finish analyzer, etc., many of which imported from Switzerland, US, Germany and Japan

– configure and maintain testing equipment and instruments regularly to ensure the accuracy of quality testing

Stringent Quality Control Procedures Quality Control Personnel

Timely pre-sales and post-sales service to strengthen customer relationship and to sustain long-term growth

Implemented and committed to customers the performance of a strict service scheme– sales personnel are required to visit

customers within certain time limit upon customers’ request based on their geographical area

Quality control personnel: 690 in total

Timely ServicesQuality Control Facilities

Recognized by the industry and consumers

ISO14001:2004 Environnent Management System

ISO9001:2008 Quality Management System Certificate

OEKO-TEX Standard 100 Certificate Top 10 Satisfied Brands of Chinese

Consumers

Broaden customer base and enhanced customer loyalty

A majority of our customers have been with us for more than three years

Number of customers

21

110.5 115.5

33.546.75.42.721.2

28.4

1H2010 1H2011

170.7193.4

97.1

236.5 238.839.8

43.080.7

37.7

27.4

12.0

24.6

28.2

47.8

FY2008 FY2009 FY2010

199.2

335.0

379.3

1,148.9

2,207.1

2,870.6417.7

358.9

940.1

379.4

211.3

122.7

167.6

185.8

376.3

FY2008 FY2009 FY2010

2,113.6

2,963.2

4,309.7

1,212.9

1,910.0

364.7

723.0

37.0

164.0

299.2

50.2

1H2010 1H2011

1,791.8

2,969.2

Revenue Sales Volume

We managed to grow our revenue significantly through increasing We managed to grow our revenue significantly through increasing sales volume and selling pricesales volume and selling price

Robust Revenue GrowthRobust Revenue Growth

（’000 tons）（RMB mm）

(1) Others include PET chips and wasted filament

Growth: 65.7%

Growth: 13.3%

CAGR = 42.8%

CAGR = 38.0%

DTY FDY POY Others¹

2963.1

22

P TA MEG Other Raw Mate ria ls Co s ts

Manufac turing Co s ts Other Co s ts % o f Turno verDTY FDY P OY Others Gro s s pro fit margin

84.7

431.7

170.0

26.6

54.7 6.7

8.0

10.2

8.7%

21.4%

1H2010 1H2011

156.2

636.2

80.7171.3

402.7

185.6

9.2

22.6

29.0

47.2

21.4

21.9

20.0

(6.6)

14.6%

8.4%

5.9%

FY2008 FY2009 FY2010

124.4

249.6

630.9

925.7

1,452.5341.7

479.4

90.2

68.8

277.6

326.0

0.2

6.2

78.6%

91.3%

1H2010 1H2011

1,635.6

2,333.0

1,133.7

1,640.72,086.3

473.2

472.1

668.5

70.5

91.8

225.3

311.6

508.6

696.7

0.2

0.3

1.9

94.1%91.6%

85.4%

FY2008 FY2009 FY2010

1,989.2

2,713.5

3,678.7

Effective Cost ManagementEffective Cost Management

Cost of Sales

（RMB mm）

Our cost of sales as percentage of revenue has been decreasing aOur cost of sales as percentage of revenue has been decreasing and our gross profit margin boomsnd our gross profit margin booms

Gross Profit & Gross Profit Margin

（RMB mm）

CAGR =125.2%

Growth: 307

.3%

3,678.8

0.3

124.5

23

85.6

435.2

4.8%

14.7%

1H2010 1H2011

56.7

101.0

446.0

2.7%

3.4%

10.3%

FY2008 FY2009 FY2010

121.5

560.0

6.8%

18.9%

1H2010 1H2011

135.5

569.7

168.46.4%

5.7%

13.2%

FY2008 FY2009 FY2010

Solid Margin Expansion and Superior Profitability GrowthSolid Margin Expansion and Superior Profitability Growth

With the continuous expansion of our production capacity, we belWith the continuous expansion of our production capacity, we believe that there is great potential for additional ieve that there is great potential for additional improvement in our profitability in the futureimprovement in our profitability in the future

（RMB mm）（RMB mm）

Operating Profit & Operating Profit Margin Net Profit and Net Profit Margin

CAGR =105.1%

Growth: 361.0%

CAGR =180.4%

Growth: 424

.6%

Operating Profit Operating Profit Margin Net Profit Net Profit Margin

448.9

15.1%

101.4

24

Key Ratios and Working Capital AnalysisKey Ratios and Working Capital Analysis

FY2008 FY2009 FY2010

Notes:(1) Calculated as average of end-of-period and beginning-of-period inventory divided by cost of sales and multiplied by 365 (or 181 for 1H2010 and 1H2011)(2) Calculated as average of end-of-period and beginning-of-period trade receivable divided by revenue and multiplied by 365 (or 181 for 1H2010 and 1H2011)(3) Calculated as average of end-of-period and beginning-of-period trade payable divided by cost of sales and multiplied by 365 (or 181 for 1H2010 and 1H2011)(4) Calculated as current assets divided by current liabilities(5) Net debt is defined as the sum of interest-bearing bank and other borrowings net of cash and cash equivalents as well as restricted bank deposits

Average inventory turnover days(1)

Average trade receivable days(2)

Average trade payable days(3)

Current ratio(4)

Net debt / equity(5)

Total liabilities / equity

36 53 42

94 59 25

95 122 65

0.80x 0.83x 2.17x

0.56x 0.16x Net cash

1.32x 1.20x 0.44x

1H2010 1H2011

46

35

106

1.08x

0.14x

0.93x

52

41

118

1.08x

Net cash

0.93x

26

Corporate StrategiesCorporate Strategies

We aim to maintain our position as a leading polyester filament We aim to maintain our position as a leading polyester filament yarn supplier in Chinayarn supplier in China

Further expand our production capacity and improve our production efficiency and product quality, and also optimize product mix

Continue to utilize technologically advanced equipment to produce differentiated products with strong demand, special features and

functionalities

Continue to strengthen our research and development capabilitiesand further commercialize new products

Further expand our marketing channels and strengthen our relationship with textile and fabric manufacturers and end customers to enhance our brand

awareness and reputation

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Thank you!

FY2011: Interim Results Presentation August 2011 · 4 Main Achievements in 1H 2011Main Achievements...

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