feeding china & the world in a natural, sustainable, & harmonious way otc market symbol:...

FeedingFeedingChina & The World China & The World

in a Natural, in a Natural, Sustainable, Sustainable,

& Harmonious Way& Harmonious Way

OTC Market Symbol: YHGG.QB

Corporate PresentationCorporate PresentationAugust 2010


Safe HarborSafe Harbor


Statements in this release that relate to future plans, events or performance are forward-looking statements reflecting management's current expectations, assumptions and estimates of future performance and economic conditions. All forward-looking statements are made in reliance on the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The company cautions investors that forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed or implied in such statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

The estimates and statements contained in this presentation were prepared on the basis of assumptions and hypotheses which the Company believes to be reasonable but which are subject to substantial risks, uncertainties and contingencies, some of which are difficult to predict and beyond the control of the Company, and which may result in substantial modifications. No assurance can be given as to the availability of any of the potential benefits described in this presentation and such information should not be construed as a representation or prediction that the Company will achieve or is likely to achieve any particular results.

The assumptions and projections have neither been compiled, reviewed, nor audited by the Company’s independent certified public accountants and do not constitute a “Financial Forecast” or a “Projection” as defined by the American Institute of Certified Public Accountants.

Logos and trademarks are the properties of their respective owners. Nothing in this presentation is intended to convey participation, association or approval by the owners of the logos and trademarks.

Contact Information:

Investor & Public Relations Address: 805 Veterans Blvd, Redwood City, CA 94063 U.S.A.

General Business ContactsU.S. Office TEL: 650-363-8345U.S. FAX: 650-363-8365MAIL: [email protected]

• Yasheng Group (“YHGG”) operates through seven subsidiaries with twenty operating entities making up a group of leading producers of premium specialty agriculture products in China

• Specializing in developing, processing, marketing, and distributing a variety of food and agro products primarily from premium specialty agriculture products grown in North West China

• 8 agricultural segments: Field crops, vegetables, fruits, specialty crops, seeds, poultry, agro buss, & Bio Friendly Products

• Operating in hi-tech agriculture with advantages in rich land, advanced irrigation technology, strong R&D, agro and biotechnology capabilities, as well as a vast experienced workforce

• Producing premium specialty agriculture products for over 20 years with some of our entities over 40 years, to become the largest agriculture company in North West China

• With total assets of approximately $1.7 billion USD and over 15,000 employees, Yasheng Group has 155,097,355 shares issued and outstanding as of December 31, 2009


• 7 Agro Bases, 6 Agro segments, over 100 “Green Food” and other agro products• Geo Agriculture advantages; vast land, long sunny days, clean water & natural environment• Exceeding 15 Thousand Employees• Full scale agriculture enterprise with R&D and High Tech Agriculture abilities• Over 250 Thousand Acres of Arable agriculture Land• Strong Financials within a sound industry “Agro Commodities”• 2009 $ 739.6M Sales, $ 79M Net Income • Experienced Management Team with track record of achievement• Favorable PRC Government Policies & Support• Transforming into a Global Organization, opening doors to high end markets, keeping up with expanding domestic demands


Audited 2006 2007 2008 2009

Revenue $603M $656M $736M $739M Net Income $66M $71M $75M $79M EPS $0.43 $0.46 $0.49 $0.51 (EPS calculation doesn’t include foreign exchange gains or losses)

OTC: YHGG.QB

Net Income (12/31/09) $79MPrice (06/02/10)

$2.35Market Cap

$364M Shares Outstanding 155.1MBook Value (FY09)

$10.37


Cash FlowsCash FlowsYear End 12/31Year End 12/31 2007 2008 2009 2007 2008 2009

Revenue $655.7 $736.2 $739.6Revenue $655.7 $736.2 $739.6 Annual Growth 8.8% 12.3% 0.46%Annual Growth 8.8% 12.3% 0.46%EBITDA $80.5 $85.5 $88.7EBITDA $80.5 $85.5 $88.7 Margin 12.3% 11.6% 12.0%Margin 12.3% 11.6% 12.0%EBIT 72.1 76.8 79.9EBIT 72.1 76.8 79.9 Margin 11.0% 10.4% 10.0%Margin 11.0% 10.4% 10.0%Adjusted Taxes 0.0 0.0 0.0Adjusted Taxes 0.0 0.0 0.0

Net Income $72.1 $76.8 $79.9Net Income $72.1 $76.8 $79.9 Margin 11.0% 10.4% 10.0%Margin 11.0% 10.4% 10.0%D& A 8.4 8.7 8.8D& A 8.4 8.7 8.8Capital Expenditures (8.4) (8.7) (8.8)Capital Expenditures (8.4) (8.7) (8.8)Increase in Working Capital (0.4) (9.8) (22.9)Increase in Working Capital (0.4) (9.8) (22.9)

Free Cash Flow $71.4 $67.1 $57.0Free Cash Flow $71.4 $67.1 $57.0Annual Growth 6.5% (6.5%) (15.1%)Annual Growth 6.5% (6.5%) (15.1%)


On a historic timescale, agriculture products are still near all time record prices.

Demand is forecast to increase due to several key factors;

• World population is expected to increase by approximately 1.2 billion people by the year 2020

• Worldwide robust economic growth has and will continue to increase demand for agricultural products.

• Increasing per capita incomes lead to a movement away from staple diets such as rice to more diverse, higher calorie diets which include fruits, vegetables and meat.

• The developing world’s increasingly diverse diet impact on global agriculture demand is compounded by the fact that population growth rates in developing countries are nearly double those of developed countries (economic research service, USDA)

Global Industry with Long Time Growth OpportunitiesGlobal Industry with Long Time Growth Opportunities

Agriculture A Vast and Agriculture A Vast and Expanding Global MarketExpanding Global Market

14% / 10 years

Source: US Census BureauOTC Market Symbol: YHGG.QB

Rising Global Demands for Rising Global Demands for Food Food

& Agro Commodities& Agro Commodities On a historic timescale, agriculture products are still near all time record prices.

Demand is forecast to increase due to several key factors;

World population is expected to increase by approximately 1.2billion people by the year 2020

Worldwide robust economic growth has and will continue to increase demand for agricultural products.

Increasing per capita incomes lead to a movement away from staple diets such as rice to more diverse, higher calorie diets which include fruits, vegetables and meat.

The developing world’s increasingly diverse diet impact on global agriculture demand is compounded by the fact that population growth rates in developing countries are nearly double those of developed countries (economic research service, USDA)

Global Industry with Long Time Global Industry with Long Time Growth OpportunitiesGrowth Opportunities

In 2005 there was 3.5 Billion acresarable land. The world is losing average 24.7 million acres per year

Factors: Urbanization, over use soil degradation, climate shifts, & cost of

land

Land allocated to the growth of Bio Mass for the processing of bio-fuels

Yasheng has access to vast land resources in North West China

Favorable natural conditions, long day sunlight, hot days/cold nights, dry climate, low diseases, insects and pests, & far away from pollution centers

Source: United Nations

Diminishing Available Arable Diminishing Available Arable Land for CultivationLand for Cultivation


- China has 6% of the worlds arable land

- China has 22% of the Worlds

population

- Rising Food Prices and Agriculture

Policy has become a major concern

of the PRC

- PRC Government Policy directives

are being put into place mechanisms to

grow and protect the domestic agro industry long term.


Yasheng is position to continue to feed the growing needs of China and the World!

China’s Global Share of Agricultural Production

Source: USDA, China Statistical Year BookSource: USDA, China Statistical Year Book

11th 5-Year Plan for Agriculture Economic Development

(2006-2010)

PRC Beneficial Policies for key high tech Agriculture Industries

Income Tax Free to Agro Buss and Preferential land Policy

Favorable Policies towards Eco-Friendly Agro Products & Energy

China’s Agriculture China’s Agriculture OverviewOverview

Green Food Exports Growth


Key China Agriculture Key China Agriculture and Food Industry and Food Industry

StatisticsStatistics

China Vegetable Exports (MT)

China Green Food Export Trends

(In $mn)

- 100%

- 80%

- 60%

- 40%

- 20%

China is the worlds largest Agriculture producer

The PRC 11th 5-Year Plan for Agro Economic Development (2006 –2010)

Government Beneficial Policies for key high tech Agriculture Industries

Income Tax Free for Agro Buss w/ Preferential land policies

China is a Agro Import & Export Global leaderChina is a Agro Import & Export Global leader

China is a Major Global Consumer of Agro China is a Major Global Consumer of Agro Commodities Commodities


The Modern Chinese The Modern Chinese ConsumerConsumer

The Demand for The Demand for Agriculture Commodities Agriculture Commodities

in China in China

China Green Food Domestic Sales Trend

(in RMBmn)

- 50%

- 40%

- 30%

- 20%

- 10%

Green Food Exports Y-o-Y Growth

China Land China Land DistributionDistribution

by Eco-Typeby Eco-Type

Economic Growth in China increasing Demands for Economic Growth in China increasing Demands for Basic Food & Commodities: Animal Feeds, Fertilizers, & Basic Food & Commodities: Animal Feeds, Fertilizers, & Fuels, & PesticidesFuels, & Pesticides

Increased Incomes & Middle Class demanding higher Increased Incomes & Middle Class demanding higher end foods such as meat & dairy products end foods such as meat & dairy products

Natural Disasters shifting demand & supplyNatural Disasters shifting demand & supply

Food Safety & Quality Concerns Food Safety & Quality Concerns

Awareness towards Organic & All Natural Awareness towards Organic & All Natural Products Products ““High Growth SectorHigh Growth Sector””

Trusted Name Brands and authentic products Trusted Name Brands and authentic products for healthy consumptionfor healthy consumption


A Diverse Conglomerate A Diverse Conglomerate Rooted Deeply Rooted Deeply

within the evolution of the within the evolution of the Agriculture, Biotechnology, Agriculture, Biotechnology,

& Chemicals Industry& Chemicals Industry

Foods For Life!Foods For Life!


Corporate Structure 7 Major Agro Corporate Structure 7 Major Agro BasesBases

Yasheng Group “YHGG”

Tiaoshan Agricultural Group

Yongsheng Agricultural Co.

Hongtai Agricultural Co.

Yuantai Agricultural Co.

Hengsheng Agricultural Development Co.

Xingsheng Agricultural Co.

Xiaheqing Agricultural Co.

YHGG was established in 2004 by GanSu Yasheng Salt Industrial Group which was founded YHGG was established in 2004 by GanSu Yasheng Salt Industrial Group which was founded in November 1992, a super conglomerate with major operations in North West Chinain November 1992, a super conglomerate with major operations in North West China

Focusing within the Agriculture, Biotech, and Chemical Industries with originally over 126 Focusing within the Agriculture, Biotech, and Chemical Industries with originally over 126 operating divisions and R&D Capabilities operating divisions and R&D Capabilities

Industry & Product Industry & Product

SegmentsSegments

Eight (8) Industry Production Markets

• Strategic Commodities • Institutional Contract Growing • Consumer Direct Wholesale Markets• Domestic & Export Food Distribution• Animal Husbandry • Agro Business • Medical & Biotech • Alternative Energy products

Eight (8) Product Segments Eight (8) Product Segments

Field Crops, Vegetables, Fruit, Specialty Crops, Seeds, Poultry, Bio Friendly Products , & Agro Buss


8 Agro Industry Segments & 8 Agro Industry Segments & Major ProductsMajor Products

Field Crops

Cotton

Soybean

Alfalfa

Barley

Wheat

Fruits

Fuji Apples

Chinese Pear

Apricots

Vegetables

Onions

Potatoes

Beets

Peas/Corn

Seeds

Black Melon

Sunflower

Corn

Specialty Crops

Hops

Chinese

Wolfberry

Cuminum

Flax Seeds

Husbandry

Poultry

Eggs

Bio Friendly

Bio Energy

Bio Materials

Agro Buss

Fertilizers

Animal Feed


Yasheng Group Yasheng Group

Agro BasesAgro Bases

in Chinain China

Gansu ProvinceGansu Province

XiaheqingXiaheqingJiuquanJiuquan

JintaJinta

TiaoshanTiaoshan

Lanzhou Lanzhou Headquarters Headquarters


“Yasheng Group’s Agro Bases” Prime Geological Advantages

• Long Sunny Days with short nights during the growing seasons allowing larger yields then other areas in China

• Days become very hot and the difference of night very cold allowing the agro products a more sugars with rich flavor

• The air is dry with limited humidity, greatly reducing the threat from pest and reducing the need for pesticides.

• The soil is very aerated and the chemical balance is suitable making it very favorable for growing without heavy uses of artificial fertilizers

• Land is abundant and manufacturing industry is low reducing exposure to pollution

• Majority of Yasheng’s Agro bases are fed by the glaciers of the Qilian Mountains and the upper reaches of the Yellow River. The water from these sources is very clean from pollution compared to other parts of China and the world.


Institution of North West Institution of North West ChinaChina

with Competitive with Competitive AdvantagesAdvantages Strategic Geological Position with Strategic Geological Position with

Natural Environmental BenefitsNatural Environmental Benefits

Agro Evolution Leader Agro Evolution Leader Advanced R&D CapabilitiesAdvanced R&D Capabilities

• Post-Doctoral Degree Department • Masters Department • Undergraduate Department

Broadcast & television specialist Junior College • Central Broadcast & Television university

“Distance learning”

• Investing resources into R&D departments producing hybrid strains of agro products that increase yields, and are resistant to drought, pest, or disease

• R&D focus on bio non food feed stocks & bio mass waste that can be utilized for environment energy products

• Yasheng Groups association with GanSu Yasheng Group with strategic advantages through education and research. Yasheng Group Science Academy undertakes intense research into the Agro Industry which is eventually used within the company’s operations. Also develop other resources to possess the latest high tech agriculture techniques such as bio-friendly pesticides, organic fertilizers, and water saving irrigation

• Biology Research Institute • Trans-Genetic Research Institute • Chinese Medicine Research Institute • Information Technology Research Institute • New Biology Material Research Institute

Gansu YaSheng Broadcasting & Further Education CollegeYasheng Group Science Academy

Yasheng maintains strong R&D capabilities within The Agriculture Industry


Institutional Operational Institutional Operational PerformancePerformance

Water Conservation Solutions “Company wide Modern Drip Irrigation Technology Projects “

• Controls both biochemical and physical indices for crop and flower growth and allows preciseadjustment of water, fertilizer and insecticide usage.

• Moderates the extreme cooling effects sometimes produced by flood-type irrigation• Yasheng Group has 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's

GanSu Yasheng’s AGRO R&D Park• Yasheng’s Hi-Tech Agricultural Park is in full operations after strategic investments into the company’s future that started in the year 2000

• The parks high tech agro advantages were result of intellectual advancements from Yasheng Academy of Science

• Focusing on hi-tech research and development in agricultural bio-engineering, soil-less culture, propagation, and other modern industrial agricultural techniques.



Institutions and large food and beverage processors establish long term relationships to grow products that meet the processors needs and standards

Yasheng Group works closely with processors to establish demands and assure quality for consistency and long term market stability

• Potatoes for KFC & McDonald• Liquorices Root Base for TCM• Black Melon & Sunflower Seeds• National Chinese Wolfberry• Award winning fruits and vegetables• Long Term Beer Hops Supplier for Beijing Yanjing Group, Shandong

Qingdao Group, Beijing Huarun Snowflake Group, Shanghai Yingbo Group, Harbin Beer, Henan Jinxing, and Chongqing Beer

Institutional CustomersInstitutional Customers & Contract Growing & Contract Growing

Yasheng GANSU


YASHENG China YASHENG China Distribution NetworkDistribution Network

Extensive sales and distribution network reaching a wide range of customers all over the nation.

Our products sold across 19 provinces

187 distributors and 30 direct customers in China.

Diverse customers base, including food processors, supermarkets and wholesale stores

Stable Long term group of distributors selling Yasheng Products all across China and internationally

OTC Symbol: YHGG.QB

Industrial, Technology, Quality recognitions;

• “China AAA Image Enterprise” “National Key Hi-Tech Enterprise”

• “Leading Enterprise” for National Agriculture Industrialization”

• Many of Yasheng’s products certified as “Organic Food" by the National Organic Food Development Center

• “Tiaoshan Fruits” Numerous national and provincial awards

• Recognized as :“Green Food” by China National Green Food Development Center

• National Model as AAA green food base & Model for Sustainable pollution free farm

• ISO 9000, ISO 14000 International Quality recognition system, HACCP standard food processing

• Technologically advanced facilities & operations

• Experienced international management team and advisory board with Skilled workforce and access to resources

Quality Regional Leadership & Quality Regional Leadership & National RecognitionNational Recognition

Madam Namir, The former Israeli ambassador, Inspects Yasheng Group with Yasheng Founder & Chairman Zhou ChangSheng

OTC Market Symbol: YHGG.QBOTC Market Symbol: YHGG.QB


Continuous ConsistentContinuous Consistent Growth PlanGrowth Plan

OTC Symbol: YHGG.QB

Growing Consumers Demands

Safe & Quality Foods

Organic All Natural Foods

Increase consumption of Protein based foods ‘Meats/Milk’

Convenience & Specialty Processed Foods

High End Luxury Foods

Markets & TrendsMarkets & Trends China Vegetable

Production (MTon)

CAGR=5%

Growing Commodities Needed

Demand for Meats & Dairy causing the need for more Animal Feeds

Demand for wholesome foods increasing demand for Organic Fertilizers & Healthy Processing practices

Urbanization reducing available land for Cultivation & Nutritious Soils3.683.68

4.404.40

5.655.65

7.107.10

10.0110.01

8.988.98

7.837.83

10.9610.96 - 12

- 10

- 8

- 6

- 4

- 2

China’s Overall Dairy Consumption

Average Per Capita Income (RMB) Per Capita Diary Expenditure($)

OTC Market Symbol: YHGG.QBOTC Market Symbol: YHGG.QB


Market Focus & Market Focus & Product Development Product Development

• Hold and grow existing domestic market positions with premium quality products with a focus on consistently & customer satisfaction

• Continue the strategic consolidation and segmentation of Yasheng products with a focus on products with high margins and high

potential growth rates

• 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

• Developing By-products; fruit and vegetable concentrates, food extracts, nutritional

• Beverages, edible and bio oils, organic and environmental friendly products, frozen and fresh vegetables with uniform packaging


Growth StrategyGrowth Strategy

Expanding Know How & ExperienceExpanding Know How & Experience• Continue to acquire and develop new hybrid strains agro products that improve quality, yield, and overall cultivation methods.

• Expand cultivation area by implementing more high tech irrigation systems and other modern agriculture techniques

• Expand seeding and propagation technologies to consistently supply growers and meet the demands by expanding the company’s agriculture base

• Expand animal husbandry division, agriculture chemicals, fertilizers, animal feed, and environmental product segments. Continue to implement the vision as leading company in sustainable agricultural practices

• Implement business plans for the development of bio friendly products such as Bio Plastics, Bio Mass Molding techniques, Bio Fuels & others


• Expand domestic and international business development and sales departments to open the doors to new markets

• Strategic product development to meet the demands of specialized markets such as institutions, organic niche markets, and retail volume outlets.

• Continue to establish long term relationships with industrial scale agricultural contracting to food and beverage processors and distributors

• Strengthen global and domestic logistics and distribution networks

• Internal and External acquisitions that bring added value in technology, management, production capabilities, and open up new markets and distribution points

Growth Strategy Focusing on Growth Strategy Focusing on Diversified Market ShareDiversified Market Share

OTC Symbol: YHGG.QB

Financial Performance

OTC Symbol: YHGG.QBOTC Symbol: YHGG.QB

1,607.81,527.31,363.31,203.8Shareholders’Equity

$11.28$11.13$10.40$ 9.17Book Value

141.6200.2251.1241.2Total Liabilities

1,749.41,727.51,614.41,445.0Total Assets

0.510.490.460.43EPS

79.176.071.366.3Net Income

84.381.276.270.8Gross Profit

739.6736.2655.7602.6Net Sales

2009

(audited)

2008

(audited)

2007

(audited)

2006

(audited)

(U.S.D Millions)

1,607.81,527.31,363.31,203.8Shareholders’Equity

$11.28$11.13$10.40$ 9.17Book Value

141.6200.2251.1241.2Total Liabilities

1,749.41,727.51,614.41,445.0Total Assets

0.510.490.460.43EPS

79.176.071.366.3Net Income

84.381.276.270.8Gross Profit

739.6736.2655.7602.6Net Sales

2009

(audited)

2008

(audited)

2007

(audited)

2006

(audited)

(U.S.D Millions)

Selected Financial InfoSelected Financial Info


Revenues $(M)

Gross Profit $(M)Net Income $(M)

05 $567

06 $603

07 $656

08 $736

09 $740

$500

$550

$600

$650

$700

$750

$800

05 $62

06 $66

07 $71

08 $76

09 $79

$50

$60

$70

$80

$90

05 $66

06 $71

07 $76

08 $81

09 $84

$50

$60

$70

$80

$90


Consistent Growth Consistent Growth

Balance SheetBalance Sheet



Investor & Public Relations Address: 805 Veterans Blvd,

Redwood City, CA 94063 U.S.A.U.S. Office TEL: 650-363-8345U.S. FAX: 650-363-8365

MAIL: [email protected]

Visit www.yashenggroup.com for more information

http://www.yashenggroup.com/

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