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Disclaimer
This presentation has been prepared by China Huishan Dairy Holdings Company Limited ("Huishan" or the
"Company") and is solely for the purpose of corporate communication and general reference only. The presentation
is not intended as an invitation, offer, recommendation or solicitation for you to buy or sell securities or to engage in
any investment activities whatsoever, or to form any basis of investment decision for any securities (whether or not in
relation to the Company) in any jurisdiction. All such information should not be used or relied on without professional
advice. The presentation is a brief summary in nature and do not purport to be a complete description of the
Company, its business, its current or historical operating results or its future business prospects.
This presentation material may contain forward-looking statements. These forward-looking statements are based on
a number of assumptions about the future, some of which are beyond the Company’s control. The Company does
not undertake any obligation to update any information contained in this presentation (including but not limited to the
forward-looking statements) to reflect events that occur or circumstances that arises after the date of this
presentation. Potential investors should bear in mind that actual financial results may differ materially from the
forward-looking statements contained herein.
The information contained in this presentation is not verified by any independent third party. No warranty or
representation of any kind, whether express or implied, is made as to, and no reliance should be placed on, the
fairness, accuracy, completeness or correctness of the information contained herein. The information contained in
this presentation should be interpreted under the prevailing circumstances. There will be no update of matters in the
presentation to reflect any significant change in the development. The Company, its directors, management,
employees, agents or advisers specifically disclaim all responsibilities in respect of any use or reliance of any
information, whether financial or otherwise, contained in this presentation, and shall not be liable for any and all
losses incurred (whether directly or indirectly, financial or otherwise) by any person in reliance on any information
contained in this presentation.
1
Company Overview
Outlook and Strategies
Financials
Update on Operation
Industry Overview
Contents
Index
#5
#4
#3
2
#6
Company Update
#2
#1
Company Update
5
Opportunity to capture additional value along value chain – acquiring a cow slaughtering business
Signed contracts to import 32,000 heifers over next 12 months with potential to upsize further
Secured additional c. 190,000 mu of land for feeds growing
In order to maintain our cost competitiveness in raw milk production, we continue to increase the size of our land bank for feeds
growing in preparation for the needs of our ever-expanding herd size. We recently finalised securing 190,000 mu of land for corn
silage growing in addition to our existing feed materials plantation field of 240,000 mu
Consistent with our strategy to speed up development of
upstream business, we have signed contracts with our
supplier partners to import 32,000 heifers over next 12
months with potential to upsize even further
Beef prices in China have been on a strong upward trend.
Growth rate of beef price outpaced that of the raw milk
price over the last two years as a result of changing dietary
habits of the Chinese
We are evaluating an opportunity to acquired a cow
slaughtering business with an annual capacity of 50,000
heads to capture additional value in beef products
processing and distribution as our population of culled
dairy cows and male calves continue to expand along with
the size of our ever-expanding herd
―…When choosing the best regional deals of the year, Asia Money requests
Asia’s leading banks to submit the detailed pitches about the transactions they
consider most worthy of being awarded…The editorial team then conducts a
great deal of internal research about these and all other notable deals in the year
and picks the deal we feel to be the most impressive…The winning transaction
needs to display a mixture of innovation, the ability to be either a trailblazer or
demonstrate a strong influence on the market, and strong relative market
performance…‖
---- Asia Money
―Winning the Best Regional IPO category is a badge of honor for the issuer and
the intermediaries and advisers involved…the company that did it is an important
entrant into the equity markets and one of the most important issuers from their
country…‖
---Asia Money
Company Update
6
Unique grass to glass business model: most innovative, quality
assurance
Endorsement by China Dairy Industry Association
— Recognition, assistance & long-term benefits
— Winner in IMF industry consolidation process (from 300+
brands to 50)
Selected brand by China Dairy Industry Association
Huishan Deal Polled as the Best IPO of 2013 by Asia Money Magazine
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
Apr-09 Oct-09 Apr-10 Nov-10 May-11 Dec-11 Jun-12 Dec-12 Jul-13
Raw
milk
AS
P (
RM
B/k
g)
China avg YST CMD Huishan
Raw milk ASP continue to increase Fueled by increasing gap between supply and demand
Beef price has been rising faster than raw milk Smaller farms slaughtered cows to sell beef
Raw milk prices are expected to continue to rise
Note:
1. Raw milk only represents cow milk and excludes other types of milk;
2. Raw milk supply is represented by annual raw milk production;
3. Raw milk demand is estimated based on dairy products production.
Source: Raw milk supply from 2007 to 2012 is sourced from National Bureau of Statistics of China, Frost&Sullivan
Source: Euromonitor, Macquarie Research, November 2013
Source: Company data, Wind, Macquarie Research, November 2013
Source: National Bureau of Statistics, Macquarie Research, November 2013
2.7 3.1
5.36.7
8.29.1
10.011.2
12.313.6
15.1
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
0
20
40
60
80
2007
2008
2009
2010
2011
2012
2013E
2014E
2015E
2016E
2017E
Raw
Milk
Supply
and D
em
and
(Mill
ion tonne)
Raw Milk supply Raw Milk demand Gap between Supply and Demand
94%
92%
87%
85%
84%
78%
80%
82%
84%
86%
88%
90%
92%
94%
96%
1.9
2.0
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2008 2009 2010 2011 2012
(% o
f tota
l raw
milk
pro
ductio
n)
(Mill
ion farm
s)
% of total raw milk production No of small farms (<1k head)
80%
100%
120%
140%
160%
180%
200%
Mar-09 May-10 Jul-11 Sep-12 Oct-13
Cum
ula
tive c
hange (
base =
Mar
2009)
Raw milk Beef
Huishan
Huishan
Jan-14
8
High-end milk brands driving premium growth
Premium milk sales as a percentage of total liquid milk rose from 0.5% in
2005 to 15% by 2012
Euromonitor estimates the premium segment could further rise to 21 % by
2017, implying a premium sales CAGR of 19%, far outpacing 8% for
regular milk
9
Premium liquid milk sales to rise above 20% Powder market to double in 4 years, led by premium
Premiumization trend in dairy consumer products
Consumers willingness to pay a premium for quality for their children,
particularly for the younger generation of Chinese parents (those that are
born after 1980)
One-child policy further relaxed
Government toughened policies and supervision on imported dairy products
Source: National Bureau of Statistics, Euromonitor
0%
5%
10%
15%
20%
25%
0
50
100
150
200
250
300
350
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
% p
rem
ium
Industr
y s
ale
s (
RM
B b
n)
Premium milk Regular milk Premium %
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
20
40
60
80
100
120
140
160
180
200
2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
% p
rem
ium
Industr
y s
ale
s (
RM
B b
n)
Premium milk Regular milk Premium %
Golden Corn Belt
11
Business OverviewGrass to Glass
Suitable weather,
particularly precipitation
Dairy cow farm
Alfalfa/other feeds plantation
Liquid milk/milk powder
production facility
Largest commercial alfalfa fields in China (140,000
mu1 of land, approximately the size of Hong Kong
Island)
Rapidly expanding plantation base. 100,000 mu of
land for supplementary feeds and in the advance stage
of securing another 200,000 mu of land
Significant cost benefits and feeds with higher
nutritional value
Scaled plantations with fixed rents and
strategically located in the Golden Corn Belt
No.1 Market Share in
Northeastern China
Only major dairy company in China
using solely self-produced raw
milk for production
#1 player and #1 brand
satisfaction in Northeastern China
Brand well known in Northeastern
China for its quality and safety
assurance
Only IMF brand in China using solely
self-produced raw milk for production
Only company in China with official
approval for production and sales of
D90 whey powder
Faku milk powder facility GMP certified.
In process of having all facilities GMP
certified
Feeds Growing and Processing Liquid Milk
Milk Powder and Dairy Ingredients
A leading
F&B brand
from Taiwan
A China-
based major
IMF brand
Unique “Grass to Glass”
Business Model
Shenyang
Faku
Yixian
Fushun
Zhangwu
Dairy Farming
Second largest herd in China with
128,352 dairy cows
54 dairy farms in operation and 12
under construction
Industry leading milk yield
Premium quality raw milk with high
nutritional value
Transportation cost savings from
strategic layout of production base
11
Note: Note: 1. 1 mu ≈ 666.7 m2
Our HistoryVertical Integration Journey
China‟s Most
Trusted Dairy Brand
by Consumers
Established dairy
products processing
facilities
Commenced dairy
farming operations2010
2011
“辉山 (Huishan)”
brand was first
used in
association with
dairy products
2013
Liaoning Huishan
Holdings
established
2009
1950‟s
2002
Commenced
production and sales
of infant milk
formula and D90
whey powder Commenced
operation of alfalfa
plantation
Commenced liquid
milk production and
sales
2012
Mr. YANG began to
be involved in the
dairy business and
had since
envisioned the
vertically integrated
business model
Issued US$290mm
EB to financial
investors led by
Dr. Cheng Yu-
Tung
IPO on HKSE in
September 2013
Hero Group
became a minority
shareholder
Mr. YANG
established an
infant formula JV
with Hero Group
12
Feeds Growing and Processing
Continue to secure upstream resources for expanding planation of alfalfa and supplementary feeds
(„000 mu)
June 2013 – Ministry of Agriculture of China (农业部) organized a national
alfalfa conference at Huishan‟s alfalfa plantation field in Jinzhou, Liaoning
Highly favorable remarks for Huishan‟s unique vertically-integrated dairy
business model
August 2013 – Huishan alfalfa awarded “Premium” rating and obtained the
highest score in a competition held at China‟s Alfalfa Development
Convention(中国苜蓿发展大会) organized by China Animal Agriculture
Association (中国畜牧协会)
120140
100
190
0
100
200
300
400
500
1H2012-2013 1H2013-2014
Alfalfa fields Supplementary feed fields Newly secured land
14
Dairy Farming
Average milk yield Average selling price of raw milk
Herd size Total raw milk production
62,962 71,312
49,889 57,040
0
50,000
100,000
150,000
200,000
31 March 2013 30 September 2013
Milkable cows Calves and Heifers
154,036
230,309
0
50,000
100,000
150,000
200,000
250,000
1H2012-2013 1H2013-2014
8.6 8.6
0
1
2
3
4
5
6
7
8
9
10
1H2012-2013 1H2013-2014
4,461
4,838
4,355
4,801
4,100
4,200
4,300
4,400
4,500
4,600
4,700
4,800
4,900
1H2012-2013 1H2013-2014
Internal sales External sales
(tonnes)
(tonnes) (RMB / tonne)
15
Liquid Milk
Enhancing Liquid Milk Product Mix Expanding retail network coverage
retail network coverage by Mar 31, 2013
retail network coverage by Sep 30, 2013
330 distributors and 341 supermarkets as at Sep 30, 2013
150% growth rate from customer base as at Mar 31, 2013,
approximately 100,000 households under a new initiative
“Freshness Delivery”(新鲜送)
Developing differentiated products which leveraged on our
industry-leading upstream resources
Jersey Farm series(―杰茜牧场‖) - exclusive series of
ultra-premium UHT products
Protein level at 3.6%
We have the largest Jersey
cow herd in China
Sharing Global Flavors(―全球甄享‖) - a series of premium
yoghurt products
16
Milk Powder and Dairy Ingredients
Milk Powder: Expanding distribution network Dairy Ingredients: Launching new products
Increased to 207 distributors from only 69 as at Mar 31, 2013
retail network coverage as of Mar 31, 2013
retail network coverage as of now
D90
whey
powder
Non-
dairy
creamer
Whole-
milk
powder
IMF
base
powder
Internally
used
Industrial
customers
A leading F&B
brand from
Taiwan
A China-based
major IMF brand
17
Brand Building
“New Safety Power in China‟s Dairy Industry”(中国乳业安全新力量) Advertisements on TV and other media platforms
Sole Title Sponsor of Reality Programme
“Miracle Audition”(奇迹梦工厂)
Innovative advertising campaign featuring popular
TV anchors Acting enthusiasts audition before a panel of popular actors and directors
18
Notes:
1. Operating profit before biological fair value adjustments represents profit for the period before biological fair value adjustments, share option expenses and IPO
expenses.
Biological fair value adjustments and share option expenses are non-cash in nature and IPO expenses are non-recurring in nature
2. After inter-segment elimination
Highlights
20
Compared with the corresponding period last year:
Turnover increased by 47.6%
Total raw milk production increased by 49.5%
Operating profit before biological fair value adjustments(1) increased by 41.8%
Liquid milk segment – 65.3% of the Company’s total turnover
Turnover increased by 40.1%
Total volume sold increased by 30.3%
ASP increased to RMB7,222 /tonne from RMB6,712 /tonne
Gross margin(2) improved to 60.9% from 52.2%
2.45x net cash generated from operating activities
20
545
890
52.4% 58.0%
0
400
800
1,200
1,600
2,000
1H2012-13 1H2013-14
Gross profit Gross margin
1,039
1,534
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1H2012-13 1H2013-14
(RMB m) (RMB m)
Consolidated Financial Performance Overview
Turnover Gross profit and gross margin
119.9
549.6
1,378.2
32.0%
41.2%
54.0%
0%
20%
40%
60%
0
400
800
1,200
1,600
2,000
FY2010-11 FY2011-12 FY2012-13
Gross profit Growth rateTurnover
406
575
0
100
200
300
400
500
600
700
1H2012-13 1H2013-14
(RMB m)
Operating Profit(1)
119.9
549.6
1,378.2
32.0%
41.2%
54.0%
0%
20%
40%
60%
0
400
800
1,200
1,600
2,000
FY2010-11 FY2011-12 FY2012-13
Gross profit Growth rateOperating Profit
Notes:
1. Operating profit before biological fair value adjustments represents profit for the period before biological fair value adjustments, share option expenses and IPO
expenses.
Biological fair value adjustments and share option expenses are non-cash in nature and IPO expenses are non-recurring in nature
2. Net cash generated from operating activities
247
605
0
100
200
300
400
500
600
700
1H2012-13 1H2013-14
(RMB m)
Operating Cashflow(2)
119.9
549.6
1,378.2
32.0%
41.2%
54.0%
0%
20%
40%
60%
0
400
800
1,200
1,600
2,000
FY2010-11 FY2011-12 FY2012-13
Gross profit Growth rateOperating Cashflow
21
(RMB m) (RMB m)
Consolidated Financial Performance By Segment
273.9
424.1
715.2
1,002.3
107.5
50.3
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1H2012-13 1H2013-14
Dairy farming Liquid milk Milk powder
168.5240.7
373.5
610.8
38.8
3.0
0
300
600
900
1,200
1,500
1H2012-13 1H2013-14
Milk powder Liquid milk Dairy farming
Turnover breakdown by segment Gross profit breakdown(1) by segment
Grain Processing and Trading Grain Processing and Trading
Note:
1. After inter-segment elimination
22
274424
383
645656
1,069
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1H2012-13 1H2013-14
Internal uses External sales
Turnover Raw milk sales volume
(RMB m) (tonnes)
Segment Overview: Dairy Farming
(RMB/tonne)
62,89388,341
85,772
133,289
0
100,000
200,000
300,000
1H2012-13 1H2013-14
Volume (internal) Volume (external)
148,665
221,630
Gross profit and gross margin(1)
(RMB m)
169241
61.5%56.7%
0
200
400
600
800
1,000
1H2012-13 1H2013-14
Gross profit Gross margin
4,355
4,801
4,461
4,838
4,100
4,200
4,300
4,400
4,500
4,600
4,700
4,800
4,900
1H2012-2013 1H2013-2014
ASP (external) ASP (internal)
Raw milk ASP
Note:
1. After inter-segment elimination
23
715
1,002
0
200
400
600
800
1,000
1,200
1H2012-13 1H2013-14
Turnover Liquid milk sales volume and ASP
(RMB m)
(RMB m)
Segment Overview: Liquid Milk
Gross profit and gross profit margin(1)
374
611
52.2%
60.9%
0
200
400
600
800
1,000
1,200
1H2012-13 1H2013-14
Gross profit Gross margin
(tonnes)
106,544138,776
6,7127,222
0
2,000
4,000
6,000
8,000
10,000
0
100,000
200,000
300,000
400,000
500,000
1 2
Volume ASP
(RMB/tonne)
119.9
549.6
1,378.2
32.0%
41.2%
54.0%
0%
20%
40%
60%
0
400
800
1,200
1,600
2,000
FY2010-11 FY2011-12 FY2012-13
Gross profit Growth rateTurnover
1H2013-141H2012-13
Note:
1. After inter-segment elimination
24
Segment Overview: Milk Powder
Note: We began to sell our milk powder products and dairy ingredients in January 2013
1. After inter-segment elimination
108
0
20
40
60
80
100
120
1H2012-13 1H2013-14
Turnover
(RMB m) (RMB m)
Gross profit and gross profit margin(1)
39
36.1%
0
20
40
60
80
100
120
1H2012-13 1H2013-14119.9
549.6
1,378.2
32.0%
41.2%
54.0%
0%
20%
40%
60%
0
400
800
1,200
1,600
2,000
FY2010-11 FY2011-12 FY2012-13
Gross profit Growth rateTurnover
Gross Margin(1)
119.9
549.6
1,378.2
32.0%
41.2%
54.0%
0%
20%
40%
60%
0
400
800
1,200
1,600
2,000
FY2010-11 FY2011-12 FY2012-13
Gross profit Growth rateGross Profit
25
Expand upstream operations and resources to
uphold highest standards of product safety and
quality
2
Strengthen brand recognition across China and
enhance consumer loyalty
4
Enhance distribution network and penetrate
additional geographical end-markets beyond
Northeastern China and expand industrial
customer base
1
Continuously expand product portfolio and offer
innovative products to improve profitability
3
Our Strategies
Most Trusted
Dairy Brand in
China
27
28
Well Positioned to Capture Future OpportunitiesFull value chain business model brings an array of opportunities
As China‟s most vertically-integrated dairy company with complete control over quality raw milk,
Huishan is uniquely best positioned to capture unprecedented market opportunities in China‟s dairy industry
Huishan is well positioned to capture the benefits
Strong demand driving raw milk base price to RMB5,000 , RMB 5,500 & RMB 6,000 per tonne
Imported additional 9,754 heifers and another 16,000 contracted this year
Rapid feeds plantation expansion Upsize heifer importation in year ahead
Quality domestic producer with safety and quality assurance – GMP certified facility
Leading F&B brand from Taiwan as customer
Leading IMF brand from China as customer
Huishan has advantage of penetrating tier 2 and tier 3 cities markets
First IMF brand in Liaoning to distribute IMF products through pharmaceutical channels
Product mix enhancement lifting ASP of products
New ultra-premium UHT products – Jersey series
New premium yoghurt products – Share global taste
Further ads to promote products
Up
stre
am
Do
wn
stre
am
Event Opportunities
Demand for dairy products growing rapidly
Supply of raw milk stagnant
Government further relaxed “One Child” policy
Consumers demand for high value-added, high quality premium dairy products that guarantee food safety
Government toughened policies & supervisions on imported dairy ingredients
Demand and supply gap for raw milk to further widen
Demand for premium raw milk rising even faster
Market space growth for IMF brands
Stronger effects expected in tier 2 and tier 3 cities
High quality premium dairy products require premium raw milk
Market opportunity for dairy players with control over quality raw milk
Prices of imported dairy ingredients surge to all time high
Game –changing opportunity for domestic dairy ingredient player
28