03-10-10 cxdc ppt final
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Investor Presentation
March 2010
Improve the World with Technology
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This presentation may contain forward-looking statements and management may make additional
forward-looking statements in response to your questions. Such written and oral disclosures are
made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.
All statements other than statements of historical fact in this presentation are forward-looking
statements, including but not limited to, the Companys ability to raise additional capital to finance
the Companys activities; the effectiveness, profitability, and the marketability of its products; the
period of time for which its current liquidity will enable the Company to fund its operations; the
Companys ability to protect its proprietary information; the Companys ability to secure raw
material supplies to support its production plans; the Companys ability to operate its plants
efficiently; general economic and business conditions; the volatility of the Companys operating
results and financial condition; the Companys ability to execute is expansion plans; the
Companys ability to attract or retain qualified senior management personnel and research and
development staff; and other risks detailed in the Companys fi lings with the Securities and
Exchange Commission. Although we believe our expectations expressed in such forward looking
statements are reasonable, we cannot assure you that they will be realized. Investors are
cautioned that such forward-looking statements involve risks and uncertainties that could cause
actual results to differ material ly from the anticipated results, and therefore we refer you to a
more detailed discussion of the risks and uncertainties in the Companys filings with the Securities
& Exchange Commission.
The forward-looking statements contained in this presentation are made only of this date, and
China XD Plastics is under no obligation to revise or update these forward-looking statements.
Safe Harbor StatementSafe Harbor StatementSafe Harbor StatementSafe Harbor Statement
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Who We AreWho We AreWho We AreWho We Are
Oil Refineries
Plastic ResinSuppliers
Modified PlasticsManufacturers
Plastic Auto PartsManufacturers
Auto Makers
Develops, manufactures, and
distributes modified plastics, primarily
for the use in the exterior and interior
trim and in the functional components
of more than 30 automobile models.
China XDValue Creator of the Supply Chain
China XDValue Creator of the Supply Chain
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Corporate OverviewCorporate OverviewCorporate OverviewCorporate Overview
Key Facts Headquartered in Harbin, China Total usable area of 336,400 square feet Annual Production Capacity of 100,000 tons with
31 operating production lines 396 full time employees
Products Modified Polypropylene, modified ABS, modifiedNylon, alloy plastic, engineering plastics andenvironment friendly plastics, 145* of which arecertified by auto makers
Applications and Customers Mainly used in automotive exterior and interior
trim and functional components, as well asindustrial plastic parts and components used in
large-scale oil fields, mining machinery, vesselpropulsion system, high-speed trains, aerospaceetc.
End users include China FAW, the largest automaker in China, Brilliance Auto, Hafei Auto,Shanghai Volkswagen , Shanghai GM and among othercar manufacturers in China.
Largest Chinese Manufacturer ofModified Plastics for automobile
applications in China
* as of December 31, 2009
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Over 90% of Productsare Modified Plasticsfor Automobiles
Interior parts and components(Such as Instrument board, glovebox, etc.)
Exterior parts and components(Such as door mirror, front and rearbumpers, etc.)
Function components (Such as airconditioners shell, engine cover , etc.)
Product Portfolio Divided into6 Categories
Modified Polypropylene Modified ABS Modified Nylon Plastics Alloy Environment-friendly plastics Engineering Plastics
Products and ApplicationsProducts and ApplicationsProducts and ApplicationsProducts and Applications
End Applications
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Sample ofEndSample ofEnd--UsersUsersSample ofEndSample ofEnd--UsersUsers
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NASDAQ Global Market CXDC
Share Price (Previously closed on 3/10/2010 $6.80
Market Capitalization $308.7 MM
Shares Outstanding (fully diluted)** 45.4 MM
Net Revenues (TTM) $114.5 MM
Gross Profit (TTM) $24.3 MM
Net Income (TTM)* $18.4 MM
Earnings per Common Share (Fully diluted)* $0.41
P/E (TTM)** 16.6x
Fiscal Year End December 31
Capital Market SummaryCapital Market SummaryCapital Market SummaryCapital Market Summary
* Excluding $3.2 million non-cash stock compensation expense
**Diluted Shares Outstanding (As of December 31, 2009); EPS and PE (TTM ended September 30, 2009)
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Key MilestonesKey MilestonesKey MilestonesKey Milestones
19 production lines in use, annualcapacity reached 70,000 tons
Listed on the Nasdaq Global Market
Jul 19851
Sep 20042
Jan 20053
Jan 20064
Nov 20075
Jan 2009
6
Nov 2009
7
Capacity more than tripled andreached 25,000 tons
Xinda Macromolecule MaterialResearch Institute was established
Harbin Xinda Macromolecule MaterialInc. was founded
First 2 production lines were launchedwith annual capacity of7,000 tons
Harbin Xinda Nylon Factory, thepredecessor of the Company was
founded
Listed on the OTCBB
31 production lines in use, annualcapacity reached 100,000 tons
Dec 2008
Mar 2010
8
9
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Source: National Bureau of Statistics of China
Key Drivers:
Rising income and growing affluence of middle class in China
Growing Consumption of automobiles in China
Economic Policy stimulating the consumption of automobiles in China
China Automobile Sold (in million)China Automobile Production ( in million)
Market OpportunityMarket OpportunityAutomobilesAutomobiles
Market OpportunityMarket OpportunityAutomobilesAutomobiles
old
7. 8..6
.8
7. %. %. %
0.0
5.0
10.0
15.0
2006 2007 2008 2009E
0%
10%
20%
30%
40%
Produ on
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
20 06 2 00 7 20 08 2 00 9E
0%
5%
10%
15%
20%
25%
30%
35%
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Market OpportunityMarket OpportunityAutomotive Modified PlasticsAutomotive Modified Plastics
Market OpportunityMarket OpportunityAutomotive Modified PlasticsAutomotive Modified Plastics
Domestic vs. ImportsChina Automotive Plastics Demand
Source: National Bureau of Statistics of China, Chinese markets for Automotive Plastics from
Research and Markets, and China XDs estimate
2009 E
(1.4mm tons)
Vo
m
s ("000 m
t
tons)
0
9 1 0 0
1 414
23%
31%
11%
33%
-
200
400
600800
1,000
1,200
1,400
1,600
2006 2007 2008 2009E
0%
5%
10%
15%20%
25%
30%
35%
40%
Sales ($ billion)
$1.01$1.36
$1.96
$2.86
29% 35%
44%46%
$-
$1.00
$2.00
$3.00
$4.00
2006 2007 2008 2009E
0%
10%
20%
30%
40%
50%
2004
(0.7mmtons)
69%
31%
35%
65%
Domestic Im orted
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Favorable GovernmentPolicies
Policies 2009 2010Reduction of sales taxon smaller passengercars
Sales tax reduced from 10% to 5% oncars with engines
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Largecustomerbase
AttractiveROI
Competitive AdvantagesCompetitive AdvantagesCompetitive AdvantagesCompetitive Advantages
Lower costproduction
Customizedproducts
Highbarrierto entry
Strong Competitive Position
Geographic Advantage
Adjacent to Chinas largest automobilecenter
The northern region of the PRC is arelatively low cost resource center
University-educated local workforceavailable
Strong Government Support
Extended tax benefits: 15% tax ratethrough 2011
Superior credit profile at local banks overyears
Leading National R&D Center
Proprietary formulas developed by ourown research create a high barrier ofentry
Excellent Customized Service
Long history of excellent customizedservice to auto OEMs in China
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Manufacturing ProcessManufacturing ProcessManufacturing ProcessManufacturing Process
State of the Art Manufacturing Facilities
Measuringand Blending
Plasticizing andExtrusion
Cooling andCutting
Homogenizingand Packing
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Technology InnovationTechnology InnovationTechnology InnovationTechnology Innovation
Wu, Zhongwen: Chief Scientist, Jilin University.
Zheng, Kai: Secretary General, China's Plastics Engineering Industry Association.
Li, Bin: Eastern Forest Industry University.
Xing, Yuqing: Harbin Industrial University
ZhangHuixuan:Changchun Technology University
Jiang, Zhenhua: Jilin University
Industry Leading Modified Plastic Research Institute
Panel of Consultants: Top Scientists and Experts in Modified Plastics
Talents at The Research Institution
77 researchers with average working experiences over ten years in modified plasticsresearch and development
90% with PhD. Master or bachelor degrees in macromolecule field
The most advanced auto-specific polymer research institutionin China,
Nearly 80 sets of state of the art equipments in macromoleculeindustry.
Industry Leading Modified Plastic Research Institute
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By 2015, thecompany plans to coverEast China markets and to
become one of th
e majorsuppliers in this region
By 2013, thecompany plans to coverNorthChina markets andto become one of themajor suppliers in thisregion
Currently, thecompany is focusingmainly on coverage of theNortheast China
Strategic LocationStrategic LocationStrategic LocationStrategic Location
Represents the main targeted market in Northeast China Represents the main targeted market in NorthChina Represents the main targeted market in East China
Harbin
Changchun
Nanjing
Shenyang
Beijing
Tianjing
Shanghai
Zhejiang
Chongqing
Guangzhou
Shenzhen
Wuhan
Daqing
Qingdao
Fuzhou
Chengdu
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Achieve economy of scale
Sustain investment in researchand development to ensure theleading edge technology anddevelop more number of highvalue-added products
Increase market share throughgeographic expansion of sales
network and selectedacquisition
Focused Growth StrategyFocused Growth StrategyFocused Growth StrategyFocused Growth Strategy
Strategic RationaleGeographic Expansion Targeting MajorAutomotive Manufacturing Regions
Harbin
Changchun
Nanjing
Shenyang
Beijing
Tianjing
Shanghai
Zhejiang
Chongqing
Guangzhou
Shenzhen
Wuhan
Daqing
Qingdao
Fuzhou
Chengdu
300,000 tons
200,000 tons
100,000 tons
The Northeast base to achieve sales outputof 100,000 tones by Q2 2010
The NorthChina base to achieve sales outputof 100,000 tons by 2011, together adding thetotal production up to 200,000 tons.
The East China base to achieve salesoutput of 100,000 tons by 2013, with thetotal production up to 300,000 tons.
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$2.2
$5.3
$13.7
$11.4
$1 .2
2006 2007 2008 9Mon
2008
9Mon
2009
$2.8
$ .3
$17.3
$13.9
$20.8
2 0 0 6 2 0 0 7 2 0 0 8 9 Mo n
2 0 0 8
9Mon
2 0 0 9
Financial HighlightsFinancial HighlightsFinancial HighlightsFinancial Highlights
$13.
$34.
$75.
$55.
$94.5
2006 2007 2008 9Mon
2008
9Mon
2009
Revenues ($ Millions)Net Income ($ Millions)
Gross Profit ($ Millions)
*Net income for 9Mon 2009 is adjusted by excluding non-cash stock compensation of $3,191,430
*
$13.0
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Financial HighlightsFinancial HighlightsRevenue and Margin PerformanceRevenue and Margin Performance
Financial HighlightsFinancial HighlightsRevenue and Margin PerformanceRevenue and Margin Performance
*Operating margins for 2Q2009 and 3Q2009 are adjusted by excluding non-cash stock compensation of$434,093 and $2,757,337, respectively
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Financial HighlightsFinancial HighlightsThird Quarter 2009Third Quarter 2009
Financial HighlightsFinancial HighlightsThird Quarter 2009Third Quarter 2009
Revenue was $36.2 million, 62.1% increase from the Q3 2008
Gross profit was $8.4 mill ion, 45.9% increase from the Q3 2008
Gross profit margin was 23.3%, compared to 25.8% in the Q3 2008
BITDA was $7.6 million, 57.1% increase from the Q3 2008
Net income was $4.0 mill ion, while non-GAAP net income excluding the non-cash charges of $2.7 was $6.7
million, 58.2% increase from the Q3 2008 Diluted earnings per share was $0.10 and non-GAAP diluted earnings per share was $0.17, up from diluted
earnings per share of $0.13 for the Q2 2009
$ in millions
2009 2008 2009 2008
Revenue $36.2 $22.3 69.3%$94.5 $55.8Gross Margin 23.3%Op Income (Loss) $4.3 $4.7 16.3%$14.0 $12.0Depreciation & Amortization $0.6EBITDA $7.6 $4.9 47.9%$18.7 $12.6
Net Income (Loss) $4.0 $4.2 13.4%$13.0 $11.4
Third Quarter ended YoYChanges
YoYChanges
First 9 Months ended
25.8%
$0.3 112.6%
22.1% 24.9%62.1%
-7.7%
57.1%-6.8%
100.8% $1.5 $0.7
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Financial HighlightsFinancial HighlightsFinancial RatiosFinancial Ratios
Financial HighlightsFinancial HighlightsFinancial RatiosFinancial Ratios
Significant Ratios 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3
Selling Expenses 0.1% 0.9% 0.4% 0.2% 0.2% 0.3%
G&A Expenses 0.9% 2.9% 3.2% 4.0% 3.5% 10.0%
R&D Expenses 1.09% 1.1% 1.1% 1.1% 0.7% 1.0%
Current Ratio 1.1 1.2 1.1 1.3 1.4 1.9
Inventory Turnover 2.3 1.7 2.1 1.5 1.7 1.8
Days SalesOutstanding
70.0 67.0 50.6 20.0 27.4 29.8
Return on Assets 9.9% 7.1% 3.5% 6.9% 7.7% 6.3%
Return on Equity 29.2% 19.4% 9.3% 14.3% 14.9% 9.8%
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($ '000 )Sept. 30,
2009
Dec. 31,
2008
Cash and cash equivalents 5,065 3,869
Accounts receivable 11,977 11,235
Inventory 15,277 12,439
Total Current Assets 43,282 44,755
Property, plant and equipment, net 19,676 19,333
Total Assets 63,202 64,714
Accounts payable 627 113
Sh
ortTerm Debt 20,216 20,520
Total Liabilities 23,026 40,653
Total Shareholders' Equity40,176 24,061
Total Liabilities and Shareholders Equity 63,202 64,714
Financial HighlightsFinancial HighlightsBalance SheetBalance Sheet
Financial HighlightsFinancial HighlightsBalance SheetBalance Sheet
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ManagementManagementManagementManagement
Jie Han, Chairman and ChiefExecutive Officer Mr. Han founded Harbin Xinda Nylon Factory in 1985 and co-
founded Xinda in 2004. With 26 years of industry experience, Mr. Han is an expert in the modified plastic industry. He
currently serves as executive director of China Plastic Processing Industry Association, as an outstanding entrepreneur
at the industry of modified plastics, and as director of the Heilongjiang Industry Commerce Association. In addition, Mr.
Han serves as a deputy to the Harbin Municipal Peoples Congress.
Taylor Zhang - Chief Financial Officer Mr. Zhang is a native of Harbin and has over seven years of experience in
finance and operation in a broad range of industries. Prior joining China XD, Mr. Zhang served as CFO of AdvancedBattery Technologies, Inc (Nasdaq: ABAT). From 2007 to 2008, he served as Executive Vice President of Finance in
China Natural Gas (Nasdaq: CHNG). From 2005 to 2007, Mr. Zhang worked as a research analyst in New York Private
Equity . He holds a MBA from University of Florida.
Qingwei Ma, Chief Operating Officer Appointed as Chief Operating Officer in 2008, Mr. Ma had been serving the
company and was General Manager of Xinda Macromolecule from 2004 to 2008, during which Mr. Ma led the
successful establishment of sales network, building a comprehensive system ensuring effective and efficient purchase,
production, marketing and other functions. Prior to joining Xinda, Mr. Ma worked for Harbin Xinda Nylon Factory, the
Companys predecessor, for 6 years. Mr. Ma has 13 years of experience in the modified plastics industry.
Junjie Ma, ChiefTechnology Officer Mr. Ma has over 13 years of experience in the modified plastic industry. He
successfully established the research institute and helped the Company to gain more than 100 certifications from
Chinese auto makers, the largest number of certifications among Chinese companies. He has organized and formed a
top class science advisory team and maintains close collaboration relationship with Chinese macromolecule well-known
science R&D institutes and universities. As a result, Mr. Ma is effectively taking full advantage of state-of-the-art R&D
devices and top technique talents to keep the institutes leading position in China.
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LawrenceW. Leighton Chairman of Audit CommitteeMr. Leighton has had an extensive 40 year international investment banking career. Mr. Leighton received his BSEdegree in engineering from Princeton University and an MBA degree from Harvard Business School. His previouspositions includes Co-Head of the Corporate Finance Department at Clark, Dodge & Co. , Limited Partner of BearStearns, Managing Director of JPMorgan Chase Bank and CEO of the U.S. investment bank of Credit Agricole, themajor French Bank.
Cosimo J. Patti Chairman ofCompensation CommitteeMr. Pattis previous positions include roles as Senior Director of Strategy Management, Director of Business Strategy,and Senior Vice President of Lehman Brothers. He is an Arbitrator of SEC and National Association of Securities. Mr.
Patti has been an Independent Director of NYSE and Nasdaq listed companies.
Linyuan Zhai Chairman of Nomination CommitteeMr. Zhai worked for China FAW Group Corporation for 37 years with abundant experience in terms of technology,production, and business management. He is a Senior Expert in the auto industry. Mr. Zhai served as generalmanager of automobile manufacturing , successful ly led Four Ring Company, a subsidiary of FAW group, to gopublic in China. He is one of the pioneers and outstanding contributors of FAW groups success.
Yong Jin - Independent DirectorJin, a professor at Tsinghua University and academician of the Chinese Academy of Engineering, is an executivemember of Chemical Industry and Engineering Society of China and Chinese society of particuology, vice chairmanof China Institute of Ecological Economy, director of Industrial Ecology Economy and Technology Committee, Council
Convenor of the Chemical discipline in the State Council Academic Degrees Committee, professional advisers forBeijing Municipal Government, Lectureship Award recipient in fluidization by American Institute of ChemicalEngineers (AIChE), the world's leading organization for chemical engineering professionals, with more than 40,000members from 93 countries, consultant for the Germany magazine " Chemical engineering & technology ". Jin haspublished and presented more than 350 papers in important journals and conferences domestically andinternationally, 138 of which were included in Science. Jin also has more than 30 patent applications.
Independent DirectorsIndependent DirectorsIndependent DirectorsIndependent Directors
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InvestmentInvestment HighlightsHighlightsInvestmentInvestment HighlightsHighlights
5
1
3
4
6 Seasoned Management Team With Extensive Professional Knowledge and Years of Experience of Serving Auto OEMs
2
Well Defined Growth Strategy Balanced Organic Growth and Expansion through Acquisition
7
Industry Leading R&D Center State of the Art Equipment and Experienced Research Team
Tremendous Market Demand Driven by Large and High Growth Addressable Automobile Market in China
High Barriers to Entry Due to Strict Certification Requirements by Automotive Manufacturers
Proven Operating ModelAgency Distribution and Overall Technical Services
Largest Number ofCertification
Largest Product Portfolio Certified by Leading Auto Makers in China
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China XD Plastics Company Ltd.
Mr. Taylor Zhang, CFOPhone: +1-212-747-1118 (New York)Mr. Allan Lao, IR DirectorPhone: +86-451-84346600 (China)Email: [email protected]
Website: www.chinaxd.net
SEC Attorney
The Crone Law Group101 Montgomery Street, Suite 1950San Francisco, CA94104
Phone: (415)955-8900Fax: (415)955-8910Email: [email protected]
Investor Relations Firm:
CCG Investor Relations Inc.Mr. Crocker Coulson, [email protected]. Ed Job, CFA
Phone: +1-646-213-1914 (New York)[email protected]
Auditors
Moore Stephens Hong Kong905 Silvercord Tower 2, 30 Canton Road,Tsimshatsui, Kowloon, Hong Kong.
Tel: +852-2375-3180,Fax: +852-2375-3828web: www.ms.com.hkA member firm ofMoore StephensInternational Limited
Contact InformationContact InformationContact InformationContact Information
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Appendix:Appendix: NonNon--GAAPGAAPReconciliationReconciliation
Three Months Ended September 30, 2009
Net Income (MM) Basic EPS Diluted EPS
Adjusted Net Income - Non GAAP $6.7 $0.17 $0.17
Non-Cash Stock-based compensation (1) $2,7 $0.07 $0.07
Net Income - GAAP $4.0 $0.10 $0.10
Nine Months Ended September 30, 2009
Net Income (MM) Basic EPS Diluted EPS
Adjusted Net Income - Non GAAP $16.2 $0.68 $0.41
Non-Cash Stock-based compensation (1) $3.2 $0.14 $0.08
Net Income - GAAP $13.0 $0.54 $0.33
(1) The adjustment to Non-GAAP is related to non-cash stock compensation