GreatviewGreatview Aseptic Packaging Aseptic … - Jan 2011.pdf · Corppporate presentation 0....
Transcript of GreatviewGreatview Aseptic Packaging Aseptic … - Jan 2011.pdf · Corppporate presentation 0....
GreatviewGreatview Aseptic PackagingAseptic PackagingCorporate presentationCorporate presentationp pp p
000
ContentContent
Company OverviewCompany Overview
Industry OverviewIndustry Overview
Investment HighlightsInvestment Highlights
Financial InformationFinancial Information
AppendixAppendix
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Company OverviewCompany OverviewCompany OverviewCompany Overview
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Public Offering SummaryPublic Offering Summary
CompanyCompanyGreatviewGreatview Aseptic Packaging Company Limited Aseptic Packaging Company Limited
Incorporated and registered in the Incorporated and registered in the Cayman IslandsCayman Islands
Listing VenueListing Venue Hong Kong Stock Exchange Main Board (Stock Code: 0468)Hong Kong Stock Exchange Main Board (Stock Code: 0468)
SharesShares Public offering shares 383.41 millionPublic offering shares 383.41 million
Listing dayListing day December 9, 2010December 9, 2010
Issue priceIssue price HK$ 4.30 per shareHK$ 4.30 per share
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Our Products and Support ServicesOur Products and Support ServicesWh t i A ti P k i ?Wh t i A ti P k i ?What is Aseptic Packaging?What is Aseptic Packaging?
We are the leading alternative supplier of aseptic packaging in the PRC and the second largest We are the leading alternative supplier of aseptic packaging in the PRC and the second largest li f llli f ll f d ti k i l b llf d ti k i l b ll
Customised, high-quality and competitively priced aseptic packs for dairy and non-carbonated soft drink (NCSD) producers
Our Aseptic PacksOur Aseptic Packs
supplier of rollsupplier of roll--fed aseptic packaging globallyfed aseptic packaging globally
Maintain a sterile environment and allow for transport and storage without refrigerationSuitable for storing perishable foods and beverages for up to 12 months before consumption
Carton Form: “Tralin Pilo”Carton Form: “Tralin Pilo”Carton Form: “Tralin Brick”Carton Form: “Tralin Brick”
Filling Machine Support ServicesFilling Machine Support Services CustomersCustomers
Approximately 4,000 kinds of filing machines spare parts at competitive pricesOnsite technical support services team to assist
Filling Machine Support ServicesFilling Machine Support Services CustomersCustomers
Leading dairy and NCSD producers in the PRC including Mengniu, Yili, and HuierkangLeading international producers including MUH and a
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customers to resolve technical problems global dairy conglomerate based in France
Key Milestones
O 7 f i i ti k i ith l ti d ti 10 billi kO 7 f i i ti k i ith l ti d ti 10 billi kOver 7 years of experience in aseptic packaging with cumulative production over 10 billion packsOver 7 years of experience in aseptic packaging with cumulative production over 10 billion packs
Customer base grows First order from Mengniu. Market share Incorporated Shandong
First substantial international sales.
Bain Capital becomes a major
Custo e base g o sto over 100. Market share reaches 9.6%
First order from Mengniu. CDH Investments becomes a major investor
New management team re-establishes the company
a et s a eby volume reaches 5.8%1
Incorporated Shandong Tralin Pak, our major operating subsidiary
Company rebrand from Tralin Pak to GA
Market share reaches 7.4%
jinvestor. Annual production volume reaches one billion packs
p yas a manufacturer of aseptic packs
PACK and listed on the main board of Hong Kong Stock Exchange
20022002 20032003 20042004 20072007 20082008 2010201020062006 200920092005200520012001
55
1. Annual market share figures are by volume and per Frost and Sullivan.1. Annual market share figures are by volume and per Frost and Sullivan.
Senior Management TeamSenior Management Team
Mr. Jeff BICo-founder, CEO and Executive Director
Mr. HONG GangCo-founder, Chairman and Executive DirectorCo founder, CEO and Executive Director
Industry experience: 14 years+Years with Greatview: 7 years
Mr. CHEN Guining
Co founder, Chairman and Executive DirectorIndustry experience: 22 years+Years with Greatview: 7 years
Mr. Peder BERGGRENgChief Technical OfficerIndustry experience: 20 years+Years with Greatview: 7 years
International Business DirectorIndustry experience: 25 yearsYears with Greatview: 2 years
Mr. CHANG FuquanChief Financial OfficerIndustry experience: 22 years+Years with Greatview: 5 years
Mr. Pierre GROSSENBACHERSenior Converting AdvisorIndustry experience: 30 years+Years with Greatview: 7 years
Mr. LIU JunSpecial Project AdvisorIndustry experience: 16 years+
Mr. YANG JiuxianSales DirectorIndustry experience: 12 years+
Key members of the management team possess on average 16 years of aseptic packaging industry experienceKey members have worked together for more than 10 years
Years with Greatview: 1 year Years with Greatview: 7 years
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Key members have worked together for more than 10 years
Corporate Structure Post IPOCorporate Structure Post IPO
B&GB&G FamilyTrust
SM Trust Peder Berggren
Yang Jiuxian
Chen Guining
Chang Fuquan
Hong Gang
100% 100% 100% 100% 100% 100% 100%
Parview
58.1% 41.9% 0 8% 0 8% 0 8% 0 8% 0 8% 5 8% 22 3% 29 4% 28 8%
Schwartz Wallson Hillma Goldmap PhanronCDH
PackagingLimited
Bain Capital TPHoldings,
L.P.
PublicFosingFoxing
58.1% 41.9% 0.8% 0.8% 0.8% 0.8% 0.8% 5.8% 22.3% 29.4% 28.8%
Wiseland
9.7%
Greatview Aseptic Packaging Company Limited(Cayman Islands)
Investors’ entities
SPV/Holding companies
100%
100%
Partner One Enterprises Limited(BVI)
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SPV/Holding companiesGreatview Holdings Limited
(HK)
Corporate Structure Post IPO (Cont’d)Corporate Structure Post IPO (Cont’d)
Greatview Aseptic Packaging Company Limited(Cayman Islands)
Partner One Enterprises Limited(BVI)
100%
100%
Greatview Holdings Limited(HK)
100%
100%
Shandong Tralin Packaging Co Ltd
Greatview AsepticPackaging (Inner Mongolia)
C d
Beijing Greatview TralinTrading Company Limited Tralin Pak Europe GmbHCo. Ltd
(PRC) Co., Ltd.(PRC)
Trading Company Limited(PRC) (Switzerland)
Beijing Tralin Packaging Drachenfelssee 845 V V
100% 100%
Beijing Tralin PackagingMachinery Co., Ltd.
(PRC)
Drachenfelssee 845. V V GmbH
(Germany)
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Industry OverviewIndustry OverviewIndustry OverviewIndustry Overview
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Global Market OverviewGlobal Market Overview
The fastThe fast--growing PRC aseptic packaging market is the largest single country market globally in 2009. Given its growing PRC aseptic packaging market is the largest single country market globally in 2009. Given its growth trajectory, the PRC is expected to account for 23.4% of global sales volume by 2015growth trajectory, the PRC is expected to account for 23.4% of global sales volume by 2015
Sales Volume Breakdown (%) Sales Volume Breakdown (%)
2009
Aseptic Packaging: Market Size by Sales Volume for Major MarketsAseptic Packaging: Market Size by Sales Volume for Major Markets
2005-2015ECAGR
g j y p g yg j y p g y
Billion Portion Packs 269.9 Billion Portion Packs
PRC14.2%
0.4%4.1%
7.5%
3.4%Others(1)
85.8%
2015E13.5%
359 0 Billion Portion Packs2015E
PRC23 4%
(0.1)%Others(1)
359.0 Billion Portion Packs
23.4%76.6%
Western Europe PRC Brazil Russia Mexico North America
101010101010
Source: Frost & Sullivan.
1. Others include other regions in the world except for PRC
Global Market Overview (Cont’d)
Despite the market size, per capita consumption in the PRC is low, implying tremendous room for further growth. Despite the market size, per capita consumption in the PRC is low, implying tremendous room for further growth. According to Frost and Sullivan, per capita consumption is expected to grow at a CAGR of 13.5% between 2009 According to Frost and Sullivan, per capita consumption is expected to grow at a CAGR of 13.5% between 2009 –– 2015E2015E
20092009 2015E2015E
Global Aseptic Packaging Market: Per Capita VolumeGlobal Aseptic Packaging Market: Per Capita Volume2009 vs. 2015EPortion Pack/Person
g , p p p p gg , p p p p g
•
2009-2015E CAGR
Western Europe -0.3%
Russia 5.7%
North America -0.6%
Mexico 2.4%
Brazil 2.5%
PRC 13.5%
Source: Frost & Sullivan.
Although Chinese market is already the biggest single country market, it will be much bigger in a much faster pace.Despite the strong expected growth from 2005 to 2015, the penetration of aseptic packaging in PRC will remain low compared to other
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Despite the strong expected growth from 2005 to 2015, the penetration of aseptic packaging in PRC will remain low compared to othermajor markets, including such emerging markets like Russia, Mexico and Brazil. This implies the tremendous room for further growth inPRC.
Global Competitive Landscape
A unique, highly concentrated industry protected by barriers to industryA unique, highly concentrated industry protected by barriers to industry
Barriers to Entry for Barriers to Entry for Potential CompetitorsPotential Competitors
Barriers Against Alternative Barriers Against Alternative Packaging FormatsPackaging Formats
Extensive technical and Extensive technical and operational knowoperational know--howhow
Highly Concentrated Highly Concentrated Aseptic Packaging IndustryAseptic Packaging Industry Filling systems not Filling systems not
interchangeableinterchangeableoperational knowoperational know--howhow
Access to high quality Access to high quality raw material suppliersraw material suppliers
interchangeableinterchangeable
Optimized for market Optimized for market specific conditionsspecific conditions
Tetra Tetra PakPak
SIGSIG
ElopakElopakRigorous customer Rigorous customer
qualification programsqualification programsAbility to preserve filledAbility to preserve filledcontent for 6content for 6--12 months12 months
PRC Market Share by Sales Volume (2009)PRC Market Share by Sales Volume (2009)Global Market Share by Sales Volume (2009)Global Market Share by Sales Volume (2009)(1)(1)
G t i
SIG Combibloc10.2%
Elopak1.4%
Others7.2%
G t i
SIGCombibloc
8.2%
Others (2)
12.0%
Greatview1.5%
Tetra Pak79.7%
Greatview9.6%
Tetra Pak70.2%
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Notes1. Market shares shown are based on the middle point of the global market share range as estimated by Frost & Sullivan. Volume is based on 250mL packs.2. Players with less than 5% market share in the PRC market.
China Specific Dairy SupplyChina Specific Dairy Supply--Demand Demand DynamicsDynamicsDynamicsDynamics
Aseptic packaging is critical to China’s Liquid Dairy market given the unique distribution of Aseptic packaging is critical to China’s Liquid Dairy market given the unique distribution of China’s population compared to the location of its Liquid Dairy production regionsChina’s population compared to the location of its Liquid Dairy production regions
Liquid Dairy Production by Province, 2009Accounts for ~40% of China’spopulation and more than 70% of Chi ’ Li id D i d ti
China’s population compared to the location of its Liquid Dairy production regionsChina’s population compared to the location of its Liquid Dairy production regions
q y y ,China’s Liquid Dairy production
Inner Mongolia21.2%
Shangdong
Others26.9%
500K
M
11.5%
Hebei10.9%Beijing
3 0%
Shanxi2.6%
3,5
Heilongjiang6.8%
Henan5.4%
Liaoning3.1% Shanxi
5.2%
3.0%
Where the Company Has Production FacilitiesM j LDP P d ti P i Oth P i
Approximately 60% of China’s population with less than 30% of China’s Liquid Dairy production
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Source: Frost & Sullivan, National Bureau of Statistics of China
Major LDP Production Provinces Other Provinces
Growth in Downstream MarketsGrowth in Downstream Markets
China’s Liquid Dairy and NCSD markets has been growing rapidly, however, per capita consumption remains the China’s Liquid Dairy and NCSD markets has been growing rapidly, however, per capita consumption remains the lowest among the 12 countries surveyed by Frost and Sullivan, implying tremendous room for future growth.lowest among the 12 countries surveyed by Frost and Sullivan, implying tremendous room for future growth.
Liquid Dairy Market GrowthRevenue 2005–2015ERMB Billion
lowest among the 12 countries surveyed by Frost and Sullivan, implying tremendous room for future growth.lowest among the 12 countries surveyed by Frost and Sullivan, implying tremendous room for future growth.
PRC NCSD Market GrowthRevenue 2005–2015ERMB Billion
Per Capita Liquid Dairy Consumption2009Liters per Year
Per Capita NCSD Consumption2009Liters per Year
1414Source: Frost & Sullivan.
PRC: Rapid Growth in the World’s Largest Single Country Market
Market Drivers
Largest Single Country Market
Aseptic Packaging: Market Size Breakdown by Revenue Aseptic Packaging: Per Capita Sales Volume
2005–2015EPacks/Person
2005–2015ERMB BillionStable Demand
for Ambient Liquid Dairy
Growing Demand for NCSD
Rising Concernsfor Food Safety
More Efficient Packaging Material
Production Process
Supportive Government
PoliciesLiquid Dairy NCSD Others
1515
Source: Frost & Sullivan.
Liquid Dairy CS Ot e s
Investment HighlightsInvestment HighlightsInvestment HighlightsInvestment Highlights
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Investment HighlightsInvestment Highlights
Leading PRC alternative Leading PRC alternative supplier in a highly supplier in a highly attractive industryattractive industry
11
Trusted supplier to Trusted supplier to leading PRC and leading PRC and
international beverage international beverage producersproducers
22Experienced Experienced management team management team
with superior with superior execution capabilityexecution capability
66
3355
yy
44
Strong growth prospects Strong growth prospects in international marketsin international markets
Significant scale of Significant scale of operations and proven operations and proven expansion capabilityexpansion capability
WorldWorld--class product and class product and service offeringservice offering
17171717
Leading PRC Alternative Supplier in a Highly Leading PRC Alternative Supplier in a Highly Attractive IndustryAttractive Industry11 yy
One of a select few aseptic packaging providersOne of a select few aseptic packaging providersp p g g pp p g g p
Second largest rollSecond largest roll--fed supplier globallyfed supplier globally~30%OthersTetra
Pak
SIG
Leading PRC alternative supplierLeading PRC alternative supplier
~70%
ChinaAseptic
Packaging Market
Highly Attractive Aseptic Packaging IndustryHighly Attractive Aseptic Packaging Industry
B i t E t f Lack of Alternati es for St M i
Extensive technical and operational know-how
Barriers to Entry for Competitors
Limited supplier choice Required for ambient
Lack of Alternatives for Customers
Increasing urbanization Rising purchasing power
Strong Macroeconomic Backdrop in the PRC
p Rigorous qualification
process Access to raw materials
Required for ambient distribution of dairy
Food safety considerations
Rising purchasing power Strong growth in
downstream dairy and beverage markets
1818
Trusted Supplier to Leading PRC and Trusted Supplier to Leading PRC and International Beverage ProducersInternational Beverage Producers
22International Beverage ProducersInternational Beverage Producers
Our Value Proposition to CustomersOur Value Proposition to Customers We are trusted by leading dairy and beverage producers… We are trusted by leading dairy and beverage producers…
Global DairyGlobal DairyGlobal Dairy Global Dairy Conglomerate Conglomerate
Based in Based in FranceFrance
Perfect compatibility with Standard RollPerfect compatibility with Standard Roll--Fed Fed Filling MachinesFilling Machines
2008200820052005 20062006 2009200920072007Superior product durabilitySuperior product durability
More than 100 customers today More than 100 customers today
…which has lead to our growing market share…which has lead to our growing market share% of market share in terms of sales volume% of market share in terms of sales volume
Requisite scale to managed large and unplanned Requisite scale to managed large and unplanned orders with minimal lead timeorders with minimal lead time
% of market share in terms of sales volume% of market share in terms of sales volume
Wide range of product variationsWide range of product variations
20072007 20082008 20092009
Filling machine support services and spare partsFilling machine support services and spare parts
19191919
Strong Growth Prospects in International Strong Growth Prospects in International MarketsMarkets
33MarketsMarkets
Our Highly Experienced International Sales TeamOur Highly Experienced International Sales TeamRapid Growth in International SalesRapid Growth in International Sales
Peder BerggrenInternational Business Director
Johan Bergman Francois Hugot Gareth Foggon
Howard ChowCoert Grosse Hamberg
Oscar González Paul HachigianLuiz Magalhaes
>100 years cumulative experience
Historically, our international sales have followed an exportmodel.However, given the demand for a credible alternativesupplier of aseptic packs in Europe, as well as our growingreputation as a trusted supplier of high quality aseptic packs,
2020
p pp g q y p pa number of our customers have requested for us to enterthe market locally, which will reduce our lead time andexpand our addressable market.
44 WorldWorld--Class Product and Service OfferingClass Product and Service Offering
Our worldOur world--class product is made with high quality raw materials, processed with high precision class product is made with high quality raw materials, processed with high precision i d li h k d f h d ii d li h k d f h d i
Mounting of paperMounting of paper P i tiP i ti Creasing and holeCreasing and hole
equipment and quality checked at every stage of the production process equipment and quality checked at every stage of the production process
Mounting of paper Mounting of paper board onto printerboard onto printer PrintingPrinting Creasing and hole Creasing and hole
punchingpunching
AluAlu--foil in feedingfoil in feedingLamination Lamination
(paper + aluminum (paper + aluminum foil + polyethylene)foil + polyethylene)
SlittingSlitting
Doctoring Doctoring (if necessary)(if necessary)( y)( y)
Packing andPacking and
2121
Packing and Packing and palletisationpalletisation
WorldWorld--Class Product and Service OfferingClass Product and Service Offering44
CompatibilityCompatibility
Minimize filling machine
adjustments
Packaging DurabilityPackaging Durability
Retain shape and avoid spoilage
Service CapabilityService Capability
Ability to adjust packaging
ifi ti idladjustments
Minimize waste rate
Maximize product versatility
Optimize raw material inputs
Precision in production
specifications rapidly
Comprehensive pre-sale and
after-sales servicesMaximize product versatility
Keep up with new filling
machine introductions
R&D
Cost Effectiveness and Cost Effectiveness and Production EfficiencyProduction Efficiency
Zero Margin for Error in Zero Margin for Error in Food SafetyFood Safety
Value Enhancing and Quality Value Enhancing and Quality AssuranceAssurance
Unrivalled Technical KnowUnrivalled Technical Know--How and Stringent Quality AssuranceHow and Stringent Quality Assurance
2222
Significant Scale of Operations and Significant Scale of Operations and Proven Expansion CapabilityProven Expansion Capability55
We have a proven track record of implementing capacity expansion and benefit from accumulated We have a proven track record of implementing capacity expansion and benefit from accumulated experience and an accelerated learning curveexperience and an accelerated learning curve
p p yp p y
experience and an accelerated learning curve experience and an accelerated learning curve
Production CapacityProduction Capacity Annual and Cumulative ProductionAnnual and Cumulative Production
15.215s(2
) 10.312
3.0 4.5 5.19.4
0
5
10
15
Billi
on P
acks
2 63.9
6.4
3.82 04
8
ion
Pack
s(2)
2007 2008 2009 2010E 2012E
20102003 2012E2009
Gaotang Helingeer Additional Gaotang
2.61.8
1.2
2.0
0
4
2006 2007 2008 2009
Bill
i
Annual Production Cumulative Production
Offer customers meaningful cost savings through sizable ordersOffer customers meaningful cost savings through sizable orders
Scale Is a Key Component of our ValueScale Is a Key Component of our Value--Proposition Proposition
Factory(Line 2)
Factory Investments (1)Factory(Line 1)
Annual Production Cumulative Production
Offer customers meaningful cost savings through sizable ordersOffer customers meaningful cost savings through sizable orders
Satisfy unplanned orders quickly when customers experience unexpectedly high sales during peak seasonsSatisfy unplanned orders quickly when customers experience unexpectedly high sales during peak seasons
U l di hi hU l di hi h lit t i l li th t l l t l l f tlit t i l li th t l l t l l f t
Give customers confidence that we will be able to continue to serve their growing aseptic packaging requirementsGive customers confidence that we will be able to continue to serve their growing aseptic packaging requirements
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Use leading, highUse leading, high--quality raw material suppliers that only supply to large scale manufacturersquality raw material suppliers that only supply to large scale manufacturersSource: Company Prospectus1. Capacity growth from 2010 to 2012 is driven by expansion at existing factories and initial phase of European factory.2. Unless otherwise stated, all references to volume or capacity are in terms of 250ml packs.
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Experienced Management Team with Superior Execution Capability6 p p y
Mr. Jeff BICo-founder, CEO and Executive Director
Mr. HONG GangCo-founder, Chairman and Executive Director
Industry experience: 14 years+Years with Greatview: 7 years
Mr. CHEN GuiningChief Technical Officer
Industry experience: 22 years+Years with Greatview: 7 years
Mr. Peder BERGGRENInternational Business Director
Industry experience: 20 years+Years with Greatview: 7 years
Mr. CHANG FuquanChief Financial Officer
Industry experience: 25 yearsYears with Greatview: 2 years
Mr. Pierre GROSSENBACHERSenior Converting Advisor
Industry experience: 22 years+Years with Greatview: 5 years
gIndustry experience: 30 years+Years with Greatview: 7 years
Mr. LIU JunSpecial Project Advisor
Mr. YANG JiuxianSales Director
Board of Directors Senior ManagementS f fi i l h h ld
p jIndustry experience: 16 years+Years with Greatview: 1 year
Industry experience: 12 years+Years with Greatview: 7 years
Extensive experience and professional knowledgeKey members of the management team possess on average 16 years of global aseptic packaging industry experience
Sound corporate governanceStability and commitment
K b h k d t th f th 10
Strong support from financial sponsor shareholders Bain Capital and CDH Packaging
Financial and capital market insights, as well as substantial industry contacts
2424
p gIndependent Non-Executive DirectorsShare Option Schemes
Key members have worked together for more than 10 years
Financial InformationFinancial InformationFinancial InformationFinancial Information
2525
Overview of Financial Performance
Revenue Gross Profit
268.724.1% 25.6%
34.8% 32.9%34.8%
300
400
30
40
525.0
771.9
503 2600
800
1,000
RMB Million Margin %RMB Million
91.8134.4 131.8
165.7
0
100
200
0
10
20380.4525.0
378.7503.2
0
200
400
600
2007 2008 2009 1H 2009 1H 20102007 2008 2009 1H 2009 1H 2010
Operating Profit Net ProfitRMB Million
Margin %
RMB Million
Margin %
189.215.4% 15.4%
26.6% 24.6%24.5%
200
300
400
20
30
164 914.7% 16.7%
23.1% 21.7%21.4%
200
300
400
20
30
RMB Million
58.6 80.7 100.8 123.6
0
100
200
2007 2008 2009 1H 2009 1H 20100
1056.1
87.8
164.9
87.3 109.3
0
100
200
2007 2008 2009 1H 2009 1H 20100
10
2626
2007 2008 2009 1H 2009 1H 2010
Revenue ContributionRevenue Contribution
Revenue by GeographyRevenue by GeographyRevenue by Customer TypesRevenue by Customer TypesRMB MillionRMB Million
40.2mm40.2mm5.2%5.2%
RMB MillionRMB Million
256 5mm256 5mm
15.5 mm15.5 mm3.0%3.0%
5.1 mm5.1 mm1.3%1.3%
731.7mm731.7mm94.8%94.8%
13.7mm13.7mm3.6%3.6%
37.7mm37.7mm7.6%7.6%
256.5mm256.5mm33.2%33.2%
185.6 mm185.6 mm35.4%35.4%
127.4mm127.4mm25.3%25.3%
509.5 mm509.5 mm97.0%97.0%
375.3 mm375.3 mm98.7%98.7%
365.1mm365.1mm96.4%96.4%
465.5mm465.5mm92.4%92.4%
515.4mm515.4mm66.8%66.8%
339.4 mm339.4 mm64.6%64.6%
136.2 mm136.2 mm35.8%35.8%
244.2 mm244.2 mm64.2%64.2%
135.9mm135.9mm35.9%35.9%
242.8mm242.8mm64.1%64.1%
375.9mm375.9mm74.7%74.7%
The PRC market is and will continue to be ourprimary focus. However, we have also rapidlypenetrated to international market.
Dairy producers accounted for approximatelytwo-thirds of our revenues while beverageproducers accounted for around one-third. p
We have seen very strong demand for ourproducts from the international customers andexpect to grow this business as our reputationgrows.
producers accounted for around one third.A strong focus on dairy producers because thissegment has the highest entry barriers and themargins are higher.Will continue to focus on dairy segment whilealso increasing sales to high growth beverage
2727
also increasing sales to high growth beveragecustomers.
Effective Cost ControlEffective Cost Control
LPB is the largest component of raw material costs LPB is the largest component of raw material costs ––its price has historically been stableits price has historically been stable
OverheadOverhead costs have decreased as a percentage of costs have decreased as a percentage of revenue due to effective cost managementrevenue due to effective cost management
Raw MaterialsRaw MaterialsRMB MillionRMB Million Raw materials as % of revenueRaw materials as % of revenue
OverheadOverheadRMB MillionRMB Million OverheadOverhead as % of revenueas % of revenue
its price has historically been stableits price has historically been stable revenue due to effective cost managementrevenue due to effective cost management
67.0%64.6%
57.8% 56.7% 55.9%
600
700
60%
80%
76.9
8.4%9.4%10.0%
12.1%13.5%
75
100 15%
84.4
135.8
254 8
339.0
446.2
281.4300
400
500
40%
60%
51.3
42.235 6
63.3
50
75
0%
140.3111.1
231.4163.8
115.7
75.1
84.4
66.1
76.3254.8
214.7
100
20020%
35.6
25
(15.0%)
90.7 78.937.5 64.864.0
02007 2008 2009 1H 2009 1H 2010
0%
Polyethylene LPBOther Raw Materials TotalRaw Materials as % of Revenue
(1)
02007 2008 2009 1H 2009 1H 2010
(30.0%)
Overhead Cost Overhead % of Revenue
28
Raw Materials as % of Revenue
28
Notes1. Other raw materials include aluminum foil, product packaging materials and ink.
Operating Expenses AnalysisOperating Expenses Analysis
Distrib tion CostsDistrib tion Costs Administrati e E pensesAdministrati e E pensesDistribution CostsDistribution Costs Administrative ExpensesAdministrative Expenses
5.1% 4.2% 4.8%4.6%5.2%50 10%
RMB MillionRMB Million % of Total Revenue% of Total Revenue RMB MillionRMB Million % of Total Revenue% of Total Revenue
8.7%7.2%4.1%4.4%5.6%60 10%
3.2
7.1
0.31
24.4
39.8
30
40
(10)%
0%
3 2
12.2 10.3
45.443.4
40
50
(10)%
0%
21.9
3.62.5
1.7
1.9
3.23.5
7.3
2.64.3
4.7
2.6
2.62.1
0.040.01
0.05
17.3
22.219.6
10
20
(40)%
(30)%
(20)%
2.4
3.2 3.8
1.8 2.44.96.6
0 5
7.0
6.96.72.1
9.03.7
5.3
27.5
16.520.6
10
20
30
(40)%
(30)%
(20)%
10.7 13.710.4
13.6
02007 2008 2009 1H 2009 1H 2010
(50)%
(40)%
Freight Expenses Sales Personnel Out of
11.0 14.018.5
7.511.70.53.5
(1.2) (0.7)0
10
2007 2008 2009 1H 2009 1H 2010(50)%
(40)%
Salaries and Social Amortization and Freight Expenses Pocket Expenses
Salaries and Social Security Expenses
Others(1)
Advertising and Promotional Expenses
Distribution as % of Revenue
Security Expenses DepreciationProvision for Impairment of Accounts Receivables and Inventory
Others(2)
Travel and Office Expenses
Administrative Expenses as % of Revenue
2929
Notes1. Exporting fees and technical support fees2. Including (i) office and lodging rental expenses; (ii) third party service charges; (iii) research and development expenses related to the opening of
our R&D Centers; (iv) local tax and governmental fees; and (v) miscellaneous expenses
Working Capital ManagementWorking Capital Management
Effective Working Capital Management Ensures Healthy Cash FlowEffective Working Capital Management Ensures Healthy Cash Flow
Inventory Turnover DaysInventory Turnover Days(3)(3)Trade Receivable DaysTrade Receivable Days(1)(1) Trade Payable DaysTrade Payable Days(2)(2)
DaysDays DaysDays DaysDays
Trade receivable days decreasedbetween 2007 and 2009 mainly dueto tightened credit management.
Trade payable days decreasedsignificantly between 2007 and 2009due to increased purchases of imported
As production volumes increasedbetween 2007 and 2009, inventoryturnover days increased as weto tightened credit management.
It increased in 1H 2010 due toincreased credit periods extended toseveral key customers.
p praw materials which require advancepayment .It increased in 1H 2010 due to our newHelingeer factory, as we needed to buildour stock of raw materials extended toseveral key customers.
yprepared for business expansion.It decreased in 1H 2010 due to furtherimprovements in stock and inventorymanagement.
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Notes1. Net trade receivable days = (365 for full year or 182 for half year) x (average of the period beginning and ending net trade receivable balances)/revenue2. Net payable days = (365 for full year or 182 for half year) x (average of the period beginning and ending net trade payable balances)/cost of sales3. Inventory turnover days = (365 for full year or 182 for half year) x (average of the period beginning and ending inventory balances)/cost of sales
y
Capex and Use of ProceedsCapex and Use of Proceeds
Historical Capital ExpendituresHistorical Capital Expenditures Use of ProceedsUse of ProceedsRMB MillionRMB Million
Domestic Capacity
Expansion Repayment of p(Gaotang or New
Facility)25%
p yBank
Borrowings30%
Domestic Capacity E i
European Capacity
ExpansionPotential Future
Acquisitions
Expansion(Helingeer)
15%
p20% 10%
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AppendixAppendix
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Glossary
Aseptic packaging: Sealed, sterile containers filled by sterile food and beverage products under an aseptic environmentenvironment.
Aseptic packs: Reels of packaging materials for aseptic packaging of dairy products or NCSD
LPB: Liquid packaging board, one of the core raw materials used in aseptic packs
LDP: Liquid Dairy Products includes UHT fresh milk and yogurtLDP: Liquid Dairy Products, includes UHT, fresh milk, and yogurt
NCSD: Non-carbonated soft drinks
RTD: Ready-to-drink
Roll: Cylindrical spool of aseptic packs, before slittingy p p p , g
Reel: Smaller division of a roll, after slitting
Standard roll-fed filling machines: industry standard roll-fed filling machines commonly used among dairy and NCSD customers
Shelf stable: Products that remains sterile for longer than 6 months without refrigeration and preservatives
Former and New Company Logos:
Our original brandNew trademark for products manufactured at
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Helingeer factory
Aseptic Packaging SystemsAseptic Packaging SystemsBlankBlank--FedFedRollRoll--FedFed
At aseptic packaging material manufacturer’s site At aseptic packaging material manufacturer’s site At aseptic packaging material manufacturer’s site At aseptic packaging material manufacturer’s site
The aseptic packaging material is produced at the materialmanufacturer site as rolls. Then it’s shipped to dairy andb d ’ it
Blank material is produced at the material manufacturer siteas individual flattened cartons. Then it’s shipped to dairy andb d ’ itbeverage producer’s site.
At dairy and beverage producer’s site At dairy and beverage producer’s site
beverage producers’ site.
At dairy and beverage producer’s site At dairy and beverage producer’s site
Material rolls are fed into filling machines and go throughcertain functional process, such as tension control, stripapplication and sterilization.The material is then made into a moving vertical cylindricaltube after sterilization. Simultaneously, already sterilized milkor beverage is filled into the tube
The flattened cartons are fed into filling machineFirst the cartons are expanded and erected on the fillingmachine. After the bottom is sealed, inner surfaces of thecarton will be sterilized.After the sterilization, milk or beverage is filled from the open
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or beverage is filled into the tube.It’s sealed horizontally below the liquid level to make intoindividual packaging and formed into desired shapes.
top.At last, the top is sealed and made into desired shapes.
Thank you!Thank you!Thank you!Thank you!
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