LUZHOU BIO-CHEM TECHNOLOGY LIMITED

Corporate Presentation

and 3QFY19 Results

13 November, 2019

A Mouth-Watering China Consumption Story

2

Business Overview

Financial Highlights

Growth Strategies

Contents

3

Business Overview

4

Operating Climate

China economy has been slowing down rather significantly, affected

by the weakening of the domestic economy and the external trade

tensions with the United States and overall global slowdown.

The Group continues to face with poor domestic demand of its

products, coupled with the increase in the average raw corn material

prices, the Group’s revenue and gross profit margin have been

affected.

The Group has resumed the production of its Liaoning plant since

early Nov 2019 because of recent favorable local market conditions.

Due to the uncertainty of the market, the Group is of the opinion that

it will continue to face with challenging conditions moving forward.

High price of cane sugar has resulted in food & beverage

manufacturers turning to alternative sweeteners

For comparison, the prices of sweetener products supplied by Luzhou

(as at September 2019) are as follows:

Fructose: RMB 2,601 /tonne

Dextrose: RMB 2,359/tonne

High Maltose Syrup: RMB 2,228/tonne 5

Price Comparisons to Cane Sugar

Source: Company, 中国昆商糖网

RMB/tonnes

2,000

3,500

5,000

6,500

8,000

Jul-

09

Oct

-09

Jan-1

0

Apr-

10

Jul-

10

Oct

-10

Jan-1

1

Apr-

11

Jul-

11

Oct

-11

Jan-1

2

Apr-

12

Jul-

12

Oct

-12

Jan-1

3

Apr-

13

Jul-

13

Oct

-13

Jan-1

4

Apr-

14

Jul-

14

Oct

-14

Jan-1

5

Apr-

15

Jul-

15

Oct

-15

Jan-1

6

Apr-

16

Jul-

16

Oct

-16

Jan-1

7

Apr-

17

Jul-

17

Oct

-17

Jan-1

8

Apr-

18

Jul-

18

Oct

-18

Jan-1

9

Apr-

19

Jul-

19

Cane sugar pricing in Nanning City, China

2,384

1,577 1,756

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

2,800

3,000

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

Jan-19

Feb-19

Mar-19

Apr-19

May-19

Jun-19

Jul-19

Aug-19

Sep-19

Corn Sweetener Corn Starch By-Products Corn

6

RMB/tonnes (excluding taxes)

Price Trends

Source: Company

7

Financial Highlights

8

9MFY19 Financial Highlights

Group revenue decreased by 10.7% y-o-y

Gross profit margin of 7.5%, 23.5% lower y-o-y;

Net loss of RMB 68.6 million, decreased by 241.6% compared

with net loss of RMB 20.1 million in 9MFY18

Net loss margin of 4.6%, increased by 283.3% compared with

net loss margin of 1.2% in 9MFY18

Cash and cash equivalents of RMB 129.1 million as at

30 September, 2019 (RMB 163.7 million as at 31 December,

2018)

9

RMB’mil 3QFY19 3QFY18y-o-y

Chg (%)9MFY19 9MFY18

y-o-yChg (%)

Revenue 489.4 600.3 (18.5) 1,484.0 1,662.4 (10.7)

Gross Profit 41.0 49.5 (17.3) 111.7 163.2 (31.5)

(Loss) Before Tax (11.8) (11.9) (0.7) (60.4) (17.3) 248.8

Net (Loss) (12.5) (12.6) (0.8) (68.6) (20.1) 241.6

Gross Profit Margin 8.4% 8.2% 2.4 7.5% 9.8% (23.5)

Net (Loss) Margin (2.5%) (2.1%) 19.0 (4.6%) (1.2%) 283.3

Income Statement Highlights

3Q: Three months ended September 30

9M: Nine months ended September 30

FY: Twelve months ended December 31

10

RMB’mil

Revenue

0

500

1000

1500

2000

2500

3000

3500

4000

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

647 873 809 798

605 571 445 488 517 533

695

1034 901 842

565 684

430 508 545 462

767

935 880

751

442 656

509 513

600 489

940

1063

810

618

463

520

538 529

561

1Q Revenue 2Q Revenue 3Q Revenue 4Q Revenue

11

Revenue by Industry

Total Revenue: RMB 1,662.4 mil

Food, 35.0%

Beverage, 16.4%

Fermentation, 19.1%

Others, 29.5%

9MFY19

Total Revenue: RMB 1,484.0 mil

Food, 29.4%

Beverage, 14.9%

Fermentation, 23.0%

Others, 32.7%

9MFY18

12

RMB’mil

Net Profit/EBITDA

(400.0)

(300.0)

(200.0)

(100.0)

0.0

100.0

200.0

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

54.5

1.3 (14.3)

6.0

50.5

14.6

(113.8)

(339.8)

28.4 13.9

(33.5) (90.5)(68.6)

162.5

104.8 92.7 125.6

195.7

146.0

40.1

(80.9)

172.6 144.0

68.5 78.8

17.0

Net Profit EBITDA

FY13

13

RMB’milAs at

end 9MFY19As at

end FY18Chg (%)

Current Assets 461.4 626.7 (26.4)

- Cash & Cash Equivalents 129.1 163.7 (21.1)

- Inventories 128.2 235.0 (45.4)

- Trade and Other Receivables 204.1 228.0 (10.5)

Total Assets 1,013.4 1,217.5 (16.8)

Current Liabilities 528.6 602.2 (12.2)

- Trade and Other Payables 306.7 400.7 (23.5)

- Short Term Borrowings 211.1 192.7 9.5

Long Term Borrowings 519.2 577.4 (10.1)

Total Liabilities 1,077.1 1,212.7 (11.2)

Balance Sheet Highlights

14

RMB’milAs at

end 9MFY19As at

end FY18 Chg (%)

Inventory Turnover Days 36 39 (7.7)

Receivables Turnover Days 31 29 6.9

Payables Turnover Days 53 50 6.0

Debt to Equity Ratio# (11.5) 159.3 (107.2)

Balance Sheet Highlights

Price to Book Value* (0.3) 6.8 (104.4)

# Total interest bearing & interest-free loans / Total equity

* Based on share price of RMB 0.031 as at September 24, 2019

15

RMB’mil 9MFY19 9MFY18 Chg (%)

Net Cash Generated from Operating Activities 43.6 86.5 (49.6)

Net Cash (Used in) Investing Activities (6.7) (13.5) (50.4)

Net Cash (Used in) Financing Activities (71.6) (97.2) (26.3)

Net (Decrease) in Cash & Bank Balances (34.7) (24.2) 43.4

Cash at Bank Balances at Beginning of Period 87.3 93.0 (6.1)

Cash at Bank Balances at End of Period 52.7 68.7 (23.3)

Cash Flow Statement Highlights

16

Growth Strategies

17

Focusing on products where the Group has pricing advantages as a

high volume producer (e.g. Sorbitol), and high margin products such

as fructose, high maltose syrup, maltitol, etc.

Continue with cost savings effort with the suspension of unprofitable

products.

Resume production when the local market condition is favorable so as

to ride on the uptrend in consumption demand and capture the market

shares to improve the Group’s revenue and profit margin.

Defer capital investment where necessary to conserve cash due to the

uncertainty of the global and domestic markets.

Growth Strategies

Safe Harbour Statement

This presentation may contain forward looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from other companies, shifts in customer demands, customers and partners, changes in operating expenses, including employee wages, benefits and training, governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. You are cautioned not to place undue reliance on this presentation and the information contain therein, which are based on current view of management on future events.

Without prejudice to or derogating from the generality of the foregoing, no representation or assurance is given by Luzhou Bio-chem Technology Limited that this presentation contains all information that an investor may require. To the extent permitted by applicable law, by Luzhou Bio-chem Technology Limited or its related persons (and their respective directors, associates, connected persons and/or employees) shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) arising from the reliance or use of the information contain in this presentation.

Investors are advised to make their own independent evaluation from this presentation, consider their own individual investment objectives, financial situation and particular needs and consult their own professional and financial advisers as the legal, business, financial, tax and other aspects as investors may regard as relevant.

For more information, please visit

www.luzhou.sg

LUZHOU BIO-CHEM TECHNOLOGY LIMITED

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