March 2013

Annual Results Presentation 2012

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The information contained in this presentation is intended solely for your personal reference.

Such information is subject to change without notice, its accuracy is not guaranteed and it may not

contain all material information concerning the Company. The Company makes no representation

regarding, and assumes no responsibility or liability for, the accuracy or completeness of, or any errors

or omissions in, any information contained herein.

In addition, the information contains projections and forward-looking statements that reflect the

Company’s current views with respect to future events and financial performance. These views are

based on current assumptions which are subject to various risks and which may change over time. No

assurance can be given that future events will occur, that projections will be achieved, or that the

Company’s assumptions are correct. It is not the intention to provide, and you may not rely on this

presentation as providing, a complete or comprehensive analysis of the Company's financial or trading

position or prospects.

This presentation does not constitute an offer or invitation to purchase or subscribe for any securities or

financial instruments or to provide any investment service or investment advice, and no part of it shall

form the basis of or be relied upon in connection with any contract, commitment or investment decision

in relation thereto.

Disclaimer

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Agenda

Results Highlights

Financial Performance

Business Review

Outlook

Open Forum

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Results Highlights

In 2012, the Group remained as the leading collagen sausage casing products manufacturer in Asia

Revenue of the Group increased by 9.8% to RMB1,648.5 million for the year ended 31 December 2012, with rapid growth of export business

Excluding foreign exchange difference, profit attributable to the owners of the Company amounted to RMB745.7 million, up by 13.4% for the year 2012

The Board of Directors recommends the payment of a final dividend and a special dividend of HK6.5 cents and HK3.3 cents per share respectively, bringing the total dividend payout for the year to HK15.3 cents per share, and payout ratio further increased to 55.2% from 40.5% in 2011

In June 2012, the Group’s Guangxi Wangfu production base was fully completed, increasing production capacity and enhancing efficiency

Cash and cash equivalents and pledged time deposit was RMB884.5 million and the Group was in a net cash position of RMB657.3 million as at 31 December 2012

Cash inflows from operating activities amounted to RMB763.2 million, up by 9.6%

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4

Financial Performance

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Financial Summary

For the year ended 31 December

(in RMB million, unless otherwise stated) 2012 2011 Change

Revenue 1,648.5 1,502.0 +9.8%

Gross profit 959.2 930.3 +3.1%

Profit attributable to owners of the Company 748.2 689.3 +8.5%

Profit attributable to owners of the Company (excluding foreign exchange differences)

745.7 657.4 +13.4%

Net margin (excluding foreign exchange differences)

45.2 43.8 +1.4p.p.

Capital expenditure — Cash outflow 334.1 235.3 +42.0%

Basic earnings per share (RMB cents) 22.5 20.7 +8.7%

Dividend per share (HK cents)

— Final

— Special

6.5

3.3

6.0

Nil

+8.3%

N/A

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Financial Ratios

For the year ended 31 December

2012 2011 Change

Total assets (RMB million) 2,882.6 2,192.4 +31.5%

Return on equity 31.9% 36.2% -4.3p.p.

Gearing ratio (Total bank borrowings / total equity)

9.7% 3.3% +6.4p.p.

Inventory turnover – Raw Material (days) 28.7 41.3 -12.6 days

Inventory turnover – FG & WIP (days) 74.0 54.9 +19.1 days

Trade receivables turnover (days) 39.0 36.9 +2.1 days

Trade payables turnover (days) 62.6 56.3 +6.3 days

Current ratio (times)

(Current assets / current liabilities) 3.0 4.6 -1.6 times

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(RMB million)

Revenue Driven by Increase in Sales Volume

The increase in sales of products was principally a result of:

The expansion of the Group’s sales and marketing network in the PRC

An increase in overall market demand for these products in the PRC resulting from rapid urbanization and continuous economic development

Sales volume from exports to Southeast Asian regions grew significantly, driving the overall growth of the export operations

Export sales grew by 56.2%, reached RMB91.5 million in 2012

0

500

1,000

1,500

2,000

2011 2012

1,502.0

1,648.5

Revenue

9.8%

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Cost of Sales Analysis

Cost of Sales Breakdown Costs of Sales Comparison (RMB ’000)

Cost of sales increased by 20.6% to RMB689.3 million in 2012 due to:

Raw material costs increased by RMB78.1 million due to increased production volume and trial run of new production lines;

Water, electricity and coal expenses increased by RMB28.4 million caused by increase in production scale and increase in unit cost of electricity; and

Direct labour expenses increased by RMB5.2 million, as the Group annually reviewed staff remuneration to support its operations

Included in “Other” of Cost of Sales, R&D expenses amounted to RMB5.7 million (2011: RMB5.3 million)

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

234,652

138,051 113,221

312,780

166,462

118,375

2011

2012

Raw materials & consumables

Water, electricity & coal

Salary & employee benefit

33.3%

20.6%

4.6%

234,652 41%

312,780 46%

166,462 24%

138,051 24%

Raw materials & consumables

Water, electricity & coal

85,785 15%

91,638 13%

118,375 17%

113,221 20%

Salary & employee benefit

Other

2011 2012

(RMB ’000)

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For the year ended 31 December

2012 2011

Selling & distribution costs

1.2% 1.5%

Administrative expenses

4.9% 6.8%

Finance costs -0.1% 0.0%

SG&A Expenses as a Percentage of Revenue Decreased

Selling & distribution costs as a percentage of revenue decreased mainly due to economy of scale

Administrative expenses decreased by 20.3% to RMB81.2 million, due to:

The total bonus and welfare provided for and paid to staff was decreased

The reversal of provision for obsolete stock amounted to RMB6.7 million

A net credit of finance costs was recorded, due to a grant of a government subsidy of RMB6.0 million and an interest capitalization of RMB3.5 million which offset the interest on bank loans of RMB7.3 million

Costs as Percentage of Revenue

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Net Profit and Margin

Net Profit and Margin (excluding foreign exchange difference)

For the year under review, net profit margin increased from 43.8% to 45.2%, because the slower sales growth and lower gross profit margin was offset by the improved efficiency:

1. Foreign exchange difference due to the translation of current account within the Group have already been excluded in this calculation due to its non-cash nature

2. Sales of the Group’s collagen casings was indirectly affected by the industrial gelatin incident in the PRC in May and June

3. Although gross profit margin was lower in 2012, the effect was almost offset by the improvement of SG&A expenses as a percentage of revenue

4. Excluding foreign exchange differences, other income and gains increased from RMB30.7 million in 2011 to RMB67.8 million in 2012, due to the increase in interest income, investment income and government grants

400,000

450,000

500,000

550,000

600,000

650,000

700,000

750,000

800,000

2011 2012

657,395 43.8%

745,699 45.2%

13.4%

(RMB ’000)

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Working Capital Analysis

Except trade receivable turnover days which is quite stable, raw material, FG&WIP, and trade payable turnover days are all improved as compared to 1H2012

As compared to 2011, although FG&WIP turnover days is lengthened by 19.1 days, which is caused by lower than expected sales volume, the raw materials turnover days is shortened by 12.6 days, which is caused by effective management of raw materials and adoption of our centralized procurement policy

Cash conversion cycle for the full year of 2012 is 79.1 days, as compared to 76.8 days in 2011

Trade Payables Turnover Days Trade Receivables Turnover Days

0

20

40

60

80

100

2011 1H2012 2012

56.3

80.1

62.6

(Days)

0

10

20

30

40

50

2011 1H2012 2012

36.9 37.9 39.0

(Days)

Inventory Turnover Days – Raw Materials Inventory Turnover Days – FG & WIP

0 10 20 30 40 50 60

2011 1H2012 2012

41.3 45.1

28.7

(Days)

0 20 40 60 80

100 120

2011 1H2012 2012

54.9

94.0 74.0

(Days)

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Business Review

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Domestic Consumption Remained Strong Meat Products Have Huge Market Potential

The “Twelfth Five-year Plan” in the PRC targeting to improve the overall food industry, and also support the meat product sector, particularly benefiting processed meat products

At present, hot meat still account for approximately 60% of the total raw meat in the market, while chilled meat and pouch packed cut meat each accounts for 10% and meat products accounts for only 15%, which is far below the 50% standard in developed countries

According to the “Twelfth Five-year Plan”, by 2015, the production volume of meat products will increase by 25% as compared to 2010, and proportion of western-style meat products will increase from 45% to 50%

In order to develop chilled meat and meat product in the future, according to the “Twelfth five-year plan”, the PRC will actively strengthen the establishment of cold-chain logistics

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First production base of the Group

46 production lines were all licensed for the production of Muslim sausage casings

Fudian Production Base

Third production base of the Group

Equipped with new collagen processing facilities to provide high quality collagen for the Group’s products

Supply collagen to Wangfu and Sifu

Sifu Production Base

Second production base of the Group

Enabling the Group to become Asia’s largest collagen sausage casings manufacturer

Wangfu Production Base

Asia’s Largest Collagen Casings Manufacturer

Shenguan Holdings remained as Asia’s largest collagen sausage casing manufacturer in 2012, with a total of three production bases located in Wuzhou, Guangxi

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Core Competitive Strength – Quality Control

ISO9001:2008 Quality Management System; ISO22000:2005 Food Safety Management System 1

QS Food Production License 2

Food and Drug Administration (FDA) registration for product export

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Enabling the Group to become a trustworthy product supplier

Strict quality control over all production process

Ensures products are at optimal quality

PRC national standards (GB14967-94), Industry standards (SB/T10373-2004), Corporate standards (Q/WZSG0001S-2012)

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Reinforcing Product Quality

Consumers’ concern over the safety of collagen products arising from the industrial gelatin incident between May and June had indirectly affected the sales of the Group’s collagen sausage casings

The Group conducted various examinations recognized internationally, acknowledging that the quality of the Group’s products has passed all relevant testing and inspection

Consumers’ confidence was thus restored and sales resumed to normal level. Demand for collagen sausage products of the Group started to return in the second half of 2012

In 2012, the Group also upgraded the research center, installed new and advanced inspection and testing facilities, and expanded the technology and examination center at the same time, so as to strictly monitor the production

Strictly complied with the PRC national standards, Industry standards and Corporate standards

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Long Term Relationship with Business Partners

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The Group is committed in developing long-term relationship with its business partners

Over the years, the Group has established a closely-knit connection with an extensive network of leading manufacturers of processed meat products and sausages, not only in the PRC, but also in various overseas markets, such as South America, Southeast Asia, the United States and Europe

Our products are mainly sold in Mainland China, which accounted for 94.5% of our revenue, about 5.5% of our products are mainly for export sales

United States

S. America S.E. Asia

Europe

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Outlook

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Improving Production, Maintaining Quality & Increasing Sales

The opportunities arising from growing economy, continuous urbanization and the opportunities brought forth by The “Twelfth Five-year Plan” in the PRC targeting to improve the overall food industry, and also support the meat product sector, will continue to benefit the processed meat products, adding fuel to the growing demand of collagen casing products

The new production lines added in Sifu in the second half of 2012 will eventually put into production and the last batch

will be put into production in the second quarter of 2013, making significant contribution to production capacity expansion and also greatly enhancing efficiency during the second half of 2012

Apart from the expansion of production capacity, he Group will continue its efforts in maintaining roduct quality while increasing sales, thus in 2013, the production capacity of the Group is expected to be increased by 10% to 15%

Capex spending will be approximately RMB100 million to RMB150 million

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Satisfactory Dividend Policy

One of the Group’s major objective is to maximize shareholders’ return

By the end of 2012, all proceeds received from the IPO in 2009 were fully utilized in accordance to the prospectus

In 2011, the Group acquired 3% minority interest in its revenue generating subsidy by its surplus cash, amounted to RMB372 million, which enhanced the EPS to shareholders

In 2012, the Group’s dividend payout ratio reached a historical high of 55.2%

Looking forward in 2013, the Group will keep its track record of satisfactory dividend policy by distributing surplus cash

2009 and 2010 dividend per share were restated due to the bonus issue.

Dividend Per Share Dividend Payout Ratio

0 2 4 6 8

10 12 14 16 18

2009 (IPO) 2010 2011 2012

2.3

8.0 10.3

15.3

(HK Cents) (%)

(restated) (restated)

0

10

20

30

40

50

60

2009 (IPO) 2010 2011 2012

20.6

44.2 40.5

55.2

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Technology Driven New Cost-saving Measures and Potential New Business

Cellulose Production Line

Officially commenced trial production in January 2013 and the product quality is up to the

planned requirements

Provide more solid protection to the quality and safety of the Company’s casing products and

effectively reduce production costs

Jointly operated by the Group and Beijing Zhongkebolian

Environment Engineering Limited under the Chinese Academy of

Sciences

Makes use of the cattle’s skin fragments, residual collagen and

residual sausage casings to produce an organic fertilizer

Organic Fertilizer Production Line

Significantly reduces related environmental protection costs

in residual wastes handling

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Open Forum