safe harbor statement
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Safe Harbor Statement. - PowerPoint PPT PresentationTRANSCRIPT
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Any
statements set forth above that are not historical facts are forward-looking statements that
involve risks and uncertainties that could cause actual results to differ materially from
those in the forward-looking statements. Such factors include, but are not limited to, the
company’s ability to market existing and new products, ability to access to capital for
expansion, and changes from anticipated levels of sales, future national or regional
economic and competitive conditions, changes in relationships with customers,
dependence on our flagship product profits and other factors detailed from time to time in
the Company's filings with the United States Securities and Exchange Commission and
other regulatory authorities. The company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information, future
events or otherwise. This presentation was developed by the Company, is intended solely
for informational purposes and is not to be construed as an offer to sell or the solicitation
of an offer to buy the Company’s stock. This presentation is based upon information
available to the public, as well as other information from sources which management
believes to be reliable, but is not guaranteed by CHBT as being accurate nor does it purport
to be complete. Opinions expressed herein are those of management as of the date of publication and are subject to change without notice.
Safe Harbor Statement
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Equity Snapshot
Listed on the OTC Bulletin Board
Symbol: CHBT
Price (11/16/07): $9.15
Market Cap: $156.3 mil
Shares Outstanding: 17.1 mil
Revenue (ttm): $34.8 mil
Net Income (ttm): $12.0 mi
l
EPS (ttm): $0.70
P/E (ttm): 13.0
P/S (ttm): 4.5
P/B (ttm): 5.2
EV/EBITDA (ttm): 7.2Insider / Institutional Ownership: 60.2% / 35.9%
Accountant: BDO McCabe Co. Ltd.Fiscal Year End: March 31 3
• Strong revenue and profit growth with high margins
• Proprietary technology creates sustainable, decisive competitive advantages
• Strong brand with significant franchise value
• Rising demand for China’s probiotics driven by increasing wealth and consumption of dairy products
• Entry into bulk additives market further propels growth
• Attractive valuation
Investment Highlights
4
Corporate Overview
• One of the largest probiotics suppliers in China
• Shining is one of the most recognized brands in Shanghai
• Proprietary technology offers significant cost and product quality advantages
• 266 employees
• 22 retail centers in China – 18 in Shanghai and four in Changchun (9/30/2007)
• Operates in retail and bulk additive spaces
Net Income
8.410.9
2006 2007 1H2007
21.6
30.6
Revenues
($ in Millions)
1H2008
17.713.5
4.5 5.5
Mission Statement: To become the dominant supplier of naturally occurring probiotic bacteria in China
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What are Probiotics?
“Live microorganisms which, when administered in adequate amounts, confer a health benefit on the host”
– World Health Organization
• Benefits of probiotics– Improves health of G.I. tract
– Stimulates immune system
– Helps break down nutrients properly
– Reduces creation of toxins
– Reduces symptoms of lactose intolerance
– Decreases prevalence of allergy in susceptible individuals
– Reduces some risks associated with certain cancers
• 3 basic methods of delivery– Dairy products
– Dietary supplements (capsules, tablets, or powders)
– Other food and beverages Source: www.usprobiotics.org
* Sample: Bifido Bacteria, one kind of probiotic
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Projected Rapid Growth
0
1000
2000
3000
4000
5000
6000
7000
MilkProducts
Animal Feed Capsules Other
CY 2006
CY 2010
Year Milk Products
Animal Feed
Capsule Form
Other Totals (mt)
2006 2,000 1,000 100 300 3,400
2010 6,500 2,500 600 1,000 10,600
• Chinese Probiotic Usage and Growth (Metric Tons)
Source: Domestic Probiotics Market Analysis and Forecast Report by Beijing Leadership Management Consulting Co. Limited
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Market Snapshot
• Chinese affluence drives demand for health food– Demand for health food in China expected to reach $9.7B by 2010
(Source: Pacific Bridge Medical)
• Demand for milk/yogurt increasing significantly– Sales of yogurt drinks rose by 25% per year in 2005 and 2006– Chinese Bureau of Statistics forecasts tenfold increase in domestic dairy consum
ption, 2007-2015– U.S. banks investing in Chinese dairy industry
• Restricted use of antibiotics stimulates probiotic demand– Over-prescription of antibiotics in China– Chinese government is encouraging probiotics supplements to combat
antibiotics abuse
• China has limited probiotics production capacity– Current demand relies on imports from European manufacturers
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Current Key Products
Shining Essence (63% of sales)
L. acidophilus & B. bifidium
Calms digestive system, enhances G.I. health and protects / strengthens liver function
Shining Signal (15% of sales)
Monascus rice and L. acidophilus
Reduces high blood pressure, high blood sugar levels and hyperlipidemia
Shining Golden Shield (9% of sales)
B. adolescentis & lentinusedodes
Enhances the body’s immune system
Shining Energy (8% of sales)
Vitamin C, L. Arginine, and other amino acids
Facilitates brain cell development and increases alertness
Product Key Components Uses
* As of Second Quarter ended September 30, 2007 9
New Product Development
• Additives for Yogurt – Essential to yogurt-based drinks
– One of the fastest-growing food pro
duct segments in China in 2005 and
2006
• Additives for Milk Powder– Commonly added to infant formula
– Improve digestion in babies
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Distribution – Current and Planned
Supermarkets
Retailers / Pharmacies
Milk/Yogurt Products via Bulk Additives
Company-Owned Retail Centers
New Manufacturing Facility
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Strategies for Growth
Shining Retail Center
• Leverage Shining brand; introduce new and complementary products
• Expand distribution network to 300 Shining brand retail centers by end of FY 2009
• Expand customer base to include bulk additive market
• Establish 150 mt / year production facility to take advantage of growing demand for probiotics
• Leverage our cost and quality advantage; develop export business in nutraceutical and bulk additive marketsmt = metric tons
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• 60 retail centers by March 31, 2008
• 300 retail centers by March 31, 2009
• 550 square feet / center
• Initial investment about $40,000 per center
• Financed through operating cash flow
• Payback period < 1 year
Retail Expansion Strategy
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• Launch “Shining Probiotics” for bulk additives line
• Produce bulk food additives for dairy and animal feed industries
• 150 mt / year production facility to be completed in 2008 CY
• Products sold directly to major international and domestic dairy and food manufacturers
• Revenue potential of new plant = $90 MM per year
Bulk Additive Strategy
CY = Calendar Year; mt = metric tons14
New Industry-Leading Facility
• Initial revenue opportunity at Phase I capacity = $90MM / year
• Phase 1 = 150 mt / year of production capacity
• Phase 2 = scalable to 300 mt / year
• Production yield allows company to sell for as little as one-sixth
competitors’ price while maintaining 70%+ gross margin
• Projected to be online in late 2008 CY
• The only probiotics plant cur
rently in development in Chi
na that will be able to meet t
he domestic demand for bul
k additives
CY = Calendar Year; mt = metric tons15
Proprietary Production Process
• Bacteria-Based Activation
• Bacteria-Based Cultivation
• Multistage Fermentation
• Bacteria Extraction
• Granule Emulsification
• Freeze-Drying
• Micro-Encapsulation
• Double-Aluminum Packaging
Leading edge production technology
• Fermentation: Very high production yield = low production cost and high margins
• Superior probiotic strands: Better functionality and product quality
• Micro-encapsulation: Very long shelf life
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Mr. Song Jinan, Founder, Chairman and CEO• Founder and CEO since 1999; Masters degree in politics and economics f
rom Harbin Industrial University
Mr. Raymond Li, CFO• 20 years of finance experience in financial reporting, due diligence, M&A
activity, staff management and tax issues
Mr. Henry Tai, VP of Corporate Development• 20 years of experience in direct investments, corporate finance and
auditing in Australia, China, Hong Kong and the United Kingdom
Mr. Simon Yick, Non Executive Director• 20 years in corporate finance, direct investment and auditing
Dr. Chin Ji Wei, Non Executive Director• 20 years of academic experience in horticulture; authored 50+ papers;
awarded five patents, Science and Progressive AwardDr. Du Wen Min, Non Executive Director• Specialist in Study of Liver Disease; Deputy Director in charge of the Cent
re for Adverse Drug Reactions in Shanghai
Management and Director Team
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Strong Financial Performance
Net Sales ($ in M illion)
14.4
21.9
30.6
13.517.7
FY 2005 FY 2006 FY 2007 1H 2007 1H 2008
CAGR = 45.7%
31.4% Gross Profit ($ in M illion)
0.0
5.0
10.0
15.0
20.0
25.0
FY '05 FY '06 FY '07 1H '08
66.0%
68.0%
70.0%
72.0%
74.0%
Gross Profit Gross Ma rgin
* For Fiscal Years Ended March 31
Net Income ($ in M illion)
4.55.55.5
10.9
8.4
FY 2005 FY 2006 FY 2007 1H 2007 1H 2008
CAGR = 47.3%
23.6%
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Income Statement, 2006-2007
*The earnings per share figures reflect an increase in weighted-average shares related to the share
exchange transaction in March 2006.
For Fiscal Years Ended March 31
($ in thousands)
FY2007 06-07 % Change
FY2006 05-06 % Change
1H 2008
1H 2007
Net sales 30,610 40.0% 21,862 51.6% 17,700 13,470
Gross profit % 70.9% 70.5% 72.6% 70.2%
Operating income
14,931 22.5% 12,186 52.7% 7,704 6,448
Net income 10,905 30.5% 8,354 53.0% 5,510 4,457
EPS* $0.64 $4.90 $ 0.32 $ 0.26
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Balance Sheet
March 31 September 30($ in thousands) 2007 2006 2007
Cash and cash equivalents 26,992 19,841 35,222
Total assets 44,580 33,427 53,057
Total liabilities 20,670 21,090 22,748
Stockholder’s equity 23,910 12,337 30,309
Current assets 41,897 31,833 46,582
Current ratio 2.0 1.5 2.3
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