YOUBISHENG Greenpaper AG€¦ · 2013e 101.3 26.5 24.6 24.6 18.5 1.8 24.3% 18.2% 2014e 104.3 27.5 25.6 25.6 19.2 1.9 24.6% 18.4% 2015e 107.3 28.7 26.7 26.7 20.0 2.0 24.9% 18.7% 2016e

PLEASE CONSIDER IMPORTANT INFORMATION, DISCLOSURES AND THE DISCLAIMER AT THE END OF THIS DOCUMENT!

This document has been prepared due to a service agreement with the respective issuer. BankM – Repräsentanz der biw AG was Sole Bookrunner and Sole Lead Manager for the recent IPO, and is the designated sponsor of the company´s stock and in its function as a designated sponsor regularly holds a trading stock or long or short positions in the company´s stock. For the public offering, a prospectus has been prepared as the only offering document. This prospectus is available at www.youbisheng-greenpaper.de. Potential investors are strongly recommended to read the prospectus before buying shares of the company. Equity investments generally involve high risks. Potential investors should take into account that share prices may fall and rise and that income from an investment may fluctuate considerably. Investors may lose some or all of the money invested. Investors make their decisions at their own risk. biw Bank für Investments und Wertpapiere AG, Willich, is responsible for the preparation of this document.

YOUBISHENG Green Paper AG September 27, 2013

50

60

70

80

90

100

110

120

130

140

Sep. 12 Nov. 12 Jan. 13 Mrz. 13 Mai. 13 Jul. 13 Sep. 13

YOUBISHENG Green Paper AG (red/grey), Performance 1y vs. SDAX (black)

Source: Bloomberg

On the profitable Side of Paper Production

YOUBISHENG Green Paper AG, listed in the Prime Standard of Deutsche Boerse since July 2011, is a Chinese Clean-Tech leader of environment- friendly produced linerboard (essential component of cardboard) from up to 100% recovered fibers. YOUBISHENG focuses on high quality packaging paper products which achieve higher margins than average. With a strong emphasis on innovation and a portfolio of commodity products in strong demand, the Company continues to strengthen its position in the Chinese market.

Very stringent governmental regulations regarding environmental requirements force many smaller competitors to shut down production. Since YOUBISHENG complies with all standards, the Company benefits from this ongoing consolidation process.

The operating results achieved during the first six months of 2013 reflect the continuation of the Company´s high-margin strategy. Being faced with capacity restraints, production has continuously been shifted from lower- to higher margin, value-added products. Consistently, margins on all operating levels improved.

Demand for packaging solutions and related intermediate products - such as paperboard - is a linear function of consumer goods demand. In the first half of FY 2013, the retail sector showed a growth of 12.7% which we consider a suitable approximation for the growth of the packaging products´ output. The tremendous growth of the internet as a sales channel for consumer good, will substantially contribute to the demand for cardboard packaging and hence Linerboard.

Given full capacity utilization, the Company adheres to its plan to triple production capacity from currently 150 to 450 thousand tons p.a. which will require a total investment of € 60-70 mln. Since we have to await the strategic decisions regarding financing and timing we do not consider this investment and its impact on operations in our quantitative valuation.

Our DCF and multiple analysis returns a fair value of € 15.82 and we continue to rate the stock as “Buy”. We expect a short to mid-term “trading target” of € 5.75.

Key data / Earnings

Year

Sales

(€ mln)

EBITDA

(€ mln)

EBIT

(€ mln)

EBT

(€ mln)

Net Profit

(€ mln)

EPS

(€)

EBIT-

Margin

Net-

Margin

2012a 98.6 25.6 23.8 23.9 17.7 1.7 24.1% 18.0%

2013e 101.3 26.5 24.6 24.6 18.5 1.8 24.3% 18.2%

2014e 104.3 27.5 25.6 25.6 19.2 1.9 24.6% 18.4%

2015e 107.3 28.7 26.7 26.7 20.0 2.0 24.9% 18.7%

2016e 110.5 29.9 27.9 27.9 20.9 2.0 25.2% 18.9% Source: BankM Research

Basic Report Evaluation result Fair value

Analysts

Dr. Roger Becker, CEFA David Szabadvari +49 69 71 91 838-46, -48 [email protected], [email protected]

BUY € 15.82

(prev.: BUY) (prev.: € 14.04)

Sector

WKN

ISIN

Bloomberg/Reuters

Accounting standard

Financial year

Financial reporting Q3 Nov. 28, 2013

Market segment

Transparency standard

Financial ratios 2013e 2014e 2015e

EV/Sales 0.0 0.0 0.0

EV/EBITDA 0.1 0.1 0.1

EV/EBIT 0.1 0.1 0.1

P/E adj. 2.3 2.2 2.1

Price/Bookvalue 0.5 0.4 0.4

Price/FCF 2.2 2.1 2.0

ROE (in %) 25.2 20.9 17.9

Dividend yield (in %) 0.0 0.0 0.0

Number of shares outs. (in ths) 10,218

MarketCap / EV (in € mln)

Free float (in %)

Ø daily trading vol. (3M, in €)

12M high / low (in €; XETRA-close) 5.99 / 3.48

Price Sep 25, 2013 (in €; XETRA-close) 4.02

Performance 1M 6M 12M

absolute (in %) 4.7 -18.8 -32.4

relative (in %) 2.1 -25.3 -46.6

Benchmark index

Forest & Paper

A1KRLR

DE000A1KRLR0

YB1 GY/YB1.XE

IFRS

Prime Standard

42.91 / 2.26

Dec 31

Regulated Market

11.4

7,318

SDAX


YOUBISHENG Green Paper AG - 2/38 - Content September 27, 2013

Content

RECENT DEVELOPMENTS AND OUTLOOK 3

INVESTMENT CRITERIA 4

COMPANY PROFILE 5

Company Description 5

Business Model 5

Group Structure 6

Products and Production Process 7

Marketing and Distribution 10

Competitive advantages 10

Strategy 12

Company History 13

Management 14

SWOT - ANALYSIS 16

MARKET AND COMPETITION 17

Chinese Economic Outlook 17

Testliner Market in China 21

Testliner Market in Fujian and Guangdong Provinces 22

FINANCIAL ANALYSIS 24

Profit & Loss Account 24

Cash Flow Statement 25

Balance Sheet 26

Specific Features of Market Mechanics 27

VALUATION 29

DCF-Model 29

Peer Group Valuation 32

Valuation Summary 35

IMPORTANT INFORMATION, DISCLOSURES AND DISCLAIMER 36


YOUBISHENG Green Paper AG September 27, 2013 Recent Developments and Outlook - 3/38 -

Recent Developments and Outlook

1. Financial results 1H/2013

In the first half of 2013 the Company picked up the success of the previous fiscal year. The gradually increasing fraction of innovative and higher margin products resulted in higher profitability. This is in line with the Company´s strategy, to margin-optimize its product mix in face of the prevailing capacity limitation.

Analyzing the segment reporting, the sales volume for the value-added products “Double-sided Testliner” and “Anti-counterfeit” increased by 17% and 44%, respectively. On the contrary, the lower-margin product “Single-sided Testliner (in-house)” decreased by 8% and “Single-sided Testliner (outsourced)” remained almost stable (+1%).

During the reporting period, the Company booked revenues of € 47 mln, 3% less than in 1H12 [-4%, constant currency (cc)]. The slight decline is due to deterioration of raw material prices which was passed-on to customers. Margins on all operating levels increased between 0.5 - 0.9 ppts.

For full fiscal year, management guides sales revenues of € 110 mln and an EBIT margin of at least 24.0%.

2. Strategic outlook

In order to secure its market share and to maintain profitability in the long-term, YOUBISHENG is continuously advancing its product portfolio. Beside the double-sided and the anti-counterfeit Testliner, which were launched in 2010 and 2012, respectively, additional Testliner of various grades and purposes have been developed. Through intelligent outsourcing, the Company keeps the production of the higher-margin products in-house while commissioning the production of lower-margin products to third parties. It is noteworthy, that the Company sends its own staff to the outsourced production site in order to protect proprietary know-how. Outsourcing remains an important option given the Company´s limited capacity. In order to repatriate all production and to satisfy the increasing demand, YOUBISHENG plans to triple its production capacity from currently 150.000 to 450.000 tons per year. However, the capital needed for the investment, which amounts to ca. € 70 mln, is not fundable without external financing, be it equity or debt; currently, the Company strives to raise ca. RMB 700 mln by the placement of an RMB-denominated corporate bond.


YOUBISHENG Green Paper AG - 4/38 - Investment Criteria September 27, 2013

Investment Criteria

In the recent years, YOUBISHENG has proven to successfully improve the intrinsic value of its sales. This improvement is largely driven by innovations and the subsequent introduction of higher-margin products into the market. One of the most important determinants of success - in our view - is the expertise and entrepreneurial charisma of the founder and CEO, who enjoys a profound reputation within the industry sector.

Following, we highlight the investment criteria, which we consider as relevant for the investor:

Competitive edge due to a production process relying on up to 100% recycled paper instead of using wood pulp

Chinese GDP is substantially driven by domestic consumption; hence, demand for packaging remains high and will grow in sync with the consumer goods market

Internet sales will significantly increase the demand for cardboard packaging and related intermediate products such as Linerboard

Continuous product development to secure and improve margins, to provide a higher level of competitiveness, and to capture market share of related sub-sectors

Pricing mechanism within the Linerboard industry supports sustainable profitability

YOUBISHENG´s Linerboard is used for packaging of the products of leading Chinese consumer brands like Anta, Erke and Xtep

Environmental Management System - the Company´s production process is certified under ISO9001 QMS as well as ISO14001 EMS since 2002 and hence complies with governmental requirements; all products and byproducts are recycled for further industrial use

According to the 5-year plan, Government´s environmental policy supports clean-tech production processes

The high dependency on water and energy resources is currently backed by unlimited access to water for no charge and the Company enjoys competitive energy prices entailing positive effects on margins

Profitable since inception; 2012 net profit of € 17.7 mln resulting in a 17.9% net margin

Currently, the Company´s output is stretched to the limit; in the mid-term, YOUBISHENG plans to extend its production capacity which will allow to satisfy increasing demand in the future and to repatriate outsourced production entailing higher margins

Experienced Management team; long-term expertise in the paper industry


YOUBISHENG Green Paper AG September 27, 2013 - 5/38 -

Company profile

Company Description

YOUBISHENG PRC is a Testliner manufacturing and distribution company in the People’s Republic of China (PRC). The Company is active in the Chinese Linerboard market for 13 years and has built a reliable network of customers and suppliers. YOUBISHENG is strategically located in the West Economic Zone of the Taiwan Straits and operates mainly in Fujian and Guangdong Provinces; since 2011, the Company has been extending its distribution activities towards other Provinces. The Company produces premium grade Testliner by using up to 100% of recovered fibres. Being a supplier of a key component for the production of packaging material, the Company serves its customers with a tailored range of Testliner. YOUBISHENG´s Testliner, branded “贵格 (Guige)”, is offered in various weights and colors, thereby meeting the customer´s various demand. They are used to produce corrugated boards and boxes, paper bags as well as apparel labels and tags.

The Company began with an annual production capacity of 50,000 tons in 2001. In response to an increasing demand for Testliner, a second production line was installed in January 2006. Accordingly, the combined annual production capacity increased gradually to 150,000 tons in 2010.

Owing to the limited capacity, YOUBISHENG is currently outsourcing parts of its production. In order to keep margins high, lower-margin products are preferentially being outsourced.

In order to ensure uninterrupted operations, YOUBISHENG´s production facility comprises a number of supporting facilities which include a wastewater treatment facility, an exclusive electricity supply line, raw materials storage yards as well as warehouses to store finished goods.

Business Model

YOUBISHENG PRC is a mid-sized manufacturing company within the paper and packaging industry sector. In face of an increasing recognition of eco-friendly production - driven by both, legal requirements and consumers´ awareness - every production company is obliged to meet the environmental standards. In this respect, YOUBISHENG has been continuously improving its waste water and energy management, positioning itself as a responsible and sustainable industrial company.

The exclusive usage of low-priced recycled paper for the production of Testliner allows YOUBISHENG a competitive pricing vis-à-vis local competitors, which largely rely on more expensive wood pulp. In our view, the pricing advantage substantially strengthens YOUBISHENG´s market position and contributes to the Company´s sustained growth. To further support the Company´s market position, YOUBISHENG pursues in-house R&D to improve existing and to introduce novel products, e.g. custom tailored Testliner.

YOUBISHENG is located in the Fujian and Guangdong provinces, both being part of China´s Eastern economic zone.

Linerboard is a paperboard and exists in two main types named Kraftliner and Testliner. By common definition in the paper industry, Kraftliner is a Linerboard that is being made with no less than 80% virgin pulp, whereas Testliner must be made with more than 20% recycled fiber.

Eco-friendly production is key

Strong market position through competitive pricing and innovation


YOUBISHENG Green Paper AG - 6/38 - Company profile September 27, 2013

Given the strong competition within the Testliner industry in these provinces, management is aware of the importance of customer relationship; being of strategic significance, the Company is committed to cultivate and to intensify its established relationships as well as to acquire new customers via a dedicated sales team.

It is an advantage by means of distribution and logistics that YOUBISHENG’s production sites are located in the vicinity of its customers and suppliers, which generally reside in Fujian and Guangdong Provinces. This entails reductions in costs, positively contributing to YOUBISHENG´s advantageous product pricing.

Due to the development of novel, value-added products, e.g. the Company is able to extend its operating base towards remote provinces, because distribution and transportation costs are off-set by higher gross margins.

Group Structure

The Group has recently been restructured as shown below:

YOUBISHENG Green Paper AG was founded on April 12, 2011 as the German Holding of Gui Xiang Industry Co. Ltd. Hong Kong and the operating company Quanzhou Guige Industry Co. Ltd. PRC.

Current Shareholder Structure

In the context of the IPO, the majority shareholder HUANG Haiming and the HK Investors entered into a contribution agreement in order to transfer all shares in YOUBISHENG HK to the YOUBISHENG Greenpaper AG (Group Holding) against the issue of 10 mln new no par value ordinary bearer shares. The current shareholder structure of the German Holding and the Hong Kong Holding are as follows:

German Holding Number of Shares Percentage of Share

Capital (%)

Hong Kong Kai Yuan Intl.* 9.246.000 90,49%

Others 971.705 9,51%

Total 10.217.705 100,00%

*100% owned by Mr. Haiming Huang

Source: Bloomberg


YOUBISHENG Green Paper AG September 27, 2013 Company profile - 7/38 -

Products and Production Process

The Linerboard market is divided into the two main segments Kraftliner and Testliner. The figure below shows the respective characteristics of the two products. While Kraftliner is more robust and hence primarily used in packaging of industrial products, Testliner is used for light product packaging.

Linerboard

Testliner

Paper quality: +

Environment-friendly: +

Production costs: low

Up to 80% virgin pulp

Comparatively lower strength

properties than kraftliner

Poor printability

YBS Linerboard

Paper quality: + +

Environment-friendly: + + +

Production costs: very low

0% virgin pulp

Comparable strength to testliner

High printability

Two-side printability (for double-

sided linerboard only)

Kraftliner

Paper quality: + + +

Environment-friendly: –

Production costs: high

Made from at least 80% virgin

pulp

Relatively higher strength

properties

High printability

Two-side printability

No significant domestic

production

Source: Protégé Associates (2011) / BankM Research

Linerboard from 100% recovered fibers

Testliner, also known as recycled Linerboard, is a type of Linerboard that is composed of at least 20% of recycled fiber. YOUBISHENG is currently producing its Testliner from 100% recovered fibers. Testliner have various uses and are normally deployed in the production of corrugated boards and boxes, paper bags as well as product labels and tags.

YOUBISHENG supplies its products mainly to printing and packaging companies that produce packaging solutions to the manufacturers in the rapidly growing light industries such as shoe, apparel, electronic products, toys manufacturer as well as food producer.

YOUBISHENG’s Testliner is available in a broad range of varying specifications to meet customers´ requirements and to suit industrial usage. The following table shows the range of Testliner specifications that are produced by YOUBISHENG:

Testliner for packaging solutions of light industry products



Average burst index (kPam 2 /g)

Average stacking

weight (Nm/g)

Basis weight (g/m 2 )

Recovered paper

content (%)

Color

3.0 - 3.5 9.0 - 11.5 120 - 400 94.5 – 100 natural brown,

yellow, red

(1) Burst index is the quotient of the bursting strength (kPa m2) and its weight (g). Burst strength

is the resistance of the paper when pressure is applied and distributed uniformly

(2) The average stacking weight is the quotient of the thickness of the Testliner and its weight.

The higher the quotient, the higher the quality of the Testliner.

Source: YOUBISHENG Green Paper AG

In addition, YOUBISHENG also produces Testliner in a different range of colors, namely natural brown, yellow, and red.

Double-sided Testliner

In 2010, YOUBISHENG has launched its novel product, the double-sided Testliner which has contributed 45.8% to YOUBISHENG's total revenue in 2012. The double-sided Testliner is produced from 100% recovered fibres and presents customers with a substitute to the more expensive Kraftliner that is produced from virgin wood pulp.

Unlike the normal Testliner, where only one side of the surface is calandered to enhance its printability, the double-sided Testliner is calandered on both surfaces and can therefore be printed on both sides. Due to lower raw material costs, the market price for the double-sided Testliner is significantly lower than the price for wood pulp-based Kraftliner. The burst and folding properties of the double-sided Testliner are slightly inferior compared to those manufactured from wood pulp. As a result of its weaker properties, the double-sided Testliner produced from recovered fibers is marketed to customers where burst and folding properties are of secondary importance over printability of the product.

Moreover, compared to wood pulp-based Linerboard, double-sided Testliner is highly recyclable and unlike the wood pulp, it does not need to undergo a chemical pulping process to break down the chemical structure of lignin, a major component of wood.

In FY 2012, double-sided Testliner contributed 21% to YOUBISHENG's total revenue.

Anti-counterfeit Testliner

In February 2012, YOUBISHENG launched a novel single-sided Testliner with unique characteristics that provide an additional level of protection against counterfeiting of branded products for which the packaging is used. This type of linerboard consists of four layers; the two internal layers are dyed with a specific chromatic value according to customers’ specifications. This chromatic value is unique and distinguishes the Linerboard from other packaging products, thereby providing an additional level of protection against counterfeiting / copying of the branded product. This line of products with forgery-proof characteristics is marketed as “anti-counterfeit superior class Linerboard” and is used in brand and high grade packaging materials.

Packaging materials with anti-counterfeit characteristics are not only protecting the end consumers’ interests, but also reflect the high degree of responsibility of

Innovative, double-sided Testliner is a cheaper alternative for Kraftliner

Novel product: forgery-proof Linerboard for premium packaging purposes



the brand owners in serving their customers. It is expected to increase the credibility and good reputation of YOUBISHENG’s products, enhance competitive strength and raise additional value.

In FY 2012, anti-counterfeit Testliner contributed 2.2% to YOUBISHENG's total revenue.

The following graph shows the characteristics of YOUBISHENG´s products with regard to printability, strength and environmental impact:

YOUBISHENG´s Linerboard combines the strengths of Testliner and Kraftliner

Source: YOUBISHENG Greenpaper AG / BankM Research

Production Process

YOUBISHENG’s production facilities are located at Fonei Industrial Zone, Matou Town, Nan'an City, Fujian Province, PRC. The production site is built on two parcels of land comprising a total area of approximately 174,158 square meters.

As for any paper manufacturing company, the electricity and water supply plays an important role in the Company’s operations. YOUBISHENG currently has two exclusive electricity supply lines from Shanmei Hydro Power Station which meet the power requirements of the plant and which deliver electricity at a price well below the market price. In terms of water supply, the Company is located in close proximity to a water stream and is able to tap water free of charge. Moreover YOUBISHENG also has a water treatment plant with an oxidation pool which has the capacity to treat 30,000 cubic meters of wastewater per day. 95% of the treated wastewater is being recirculated.

Outsourcing to External Contractors

Due to the fact that YOUBISHENG’s production capacity is fully utilized, the Company is increasingly outsourcing parts of its production to a cooperation partner since 2009. All products produced are then sold to YOUBISHENG at a price which is approximately 80% of the usual selling price.

Operations secured by low-priced electricity supply and water supply free of charge

Current need of outsourcing due to full utilization of capacity



Marketing and Distribution

The Company´s sales and marketing department's objective is to maintain and to strengthen the business relationship with its current customers and to attract new customers. Its sales and marketing personnel conducts monthly visits to the customers' sites to discuss the market trends, pricing as well as the customers' business by means of maintaining a close business relation. In addition, YOUBISHENG's sales and marketing department has established an after-sales system to collect feedback on various aspects of its products and services. During these periodic visits, its customers can relay their concerns and operational requirements as well as any complaints pertaining to YOUBISHENG's products. If there are any product quality issues, YOUBISHENG's protocol requires the sales personnel to conduct an on-site investigation which includes the collection of samples and product details.

The sales and marketing department directly contacts new potential customers based on market research and market knowledge.

YOUBISHENG focuses its sales and marketing efforts on customers based around the region, particularly customers based in Fujian Province as well as in Guangdong Province, where a large number of manufacturing enterprises are located. The Company supplies its products mainly to printing and packaging companies that produce packaging solutions to the manufacturers in the rapidly growing light industries such as shoe, apparel, electronic products, toys manufacturers as well as food producers. The close proximity to the extensive road system to the targeted areas allows YOUBISHENG to deliver its products on time and at rather low transportation costs. While distribution of the conventional Testliner beyond the current operating radius is economically not meaningful regarding logistic costs, distribution of the novel products (double-sided and anti-counterfeit Testliner) justify radius expansion due to the higher margin of such products.

Competitive advantages

1. Strategically located in close proximity to its customers and suppliers

Source: Beijing Axis, China Business Solutions

Efficient after-sales monitoring for the maintenance and expansion of relation



According to GaveKal Research (2011) 90% of China’s total trade depends on

nine provinces, where ca. two-third of the 90% are concentrated in four of the

nine provinces (Guangdong, Shanghai, Beijing and Jiangsu). Numerous service

and manufacturing sectors are located in this so called West Economic Zone of

the Taiwan Strait.

Both YOUBISHENG and its customers, who provide the manufacturing

companies with packaging products, are located in this Special Economic Zone.

Furthermore, YOUBISHENG’s plant being located next to the road network

systems enables the Company’s suppliers to deliver recovered paper fast and at

low costs as well as the company itself to distribute its products in a short time

and at rather low transportation costs. This in turn allows YOUBISHENG to price

its products more competitively and to enjoy a higher profit margin. Therefore,

YOUBISHENG’s location in the Fujian province can be considered as one of the

major advantages of the Company.

2. Environmentally friendly production

Within the Linerboard market in China, Testliner generally competes with Kraftliner to be the material of choice as the outer layer of corrugated board. However, the narrowing gap in performance between the two products and the usage of more recovered fibers in the production of Testliner are expected to drive the demand for more Testliner at the expense of Kraftliner.

On a broader scale, as the growth of the Testliner market is correlated with the growth in the corrugated board market, Testliner faces the threat from corrugated board’s substitutes such as packaging materials that utilize plastic, wood and metal. Nevertheless, corrugated board offers advantages in terms of environmental friendliness, lightweight, and higher sustainability.

As a result of the growing environmental awareness in the PRC and the establishment of environmental legislation, the demand for YOUBISHENG’s products is expected to rise due to increasing substitution of Kraftliner with Testliner. In order to keep up with the globally increasing awareness of environmental protection, YOUBISHENG places strong emphasis on environmentally responsible practices in all aspects of its operations. The Company has put in place an Environmental Management System (“EMS”) which has been accredited with the ISO 14001 certification. In addition, YOUBISHENG has developed a series of new production processes which allows to produce Testliner from 100% recovered paper.

3. Product Development and Innovation

YOUBISHENG focuses on the development of novel products. The Company believes this to entail a competitive edge and also to being able to keep abreast with the latest developments in technology related to the packaging paper manufacturing industry.

Innovation has played an important role in YOUBISHENG's advancement in terms of product development as well as technical know-how over the years. The increase in utilization of recovered paper is not only due to its eco-friendliness but also to its relative cheaper costs compared to wood pulp.

In 2010, the Company has recently developed and launched the double sided Testliner in the market. The double sided Testliner features additional characteristics such as two-sided enhanced printability and superior visual appearance, tear resistance and moisture repellent, usually found only in Kraftliner. In 2012, YOUBISHENG has also developed a technology to produce

China’s trade activity is clustered

High quality in tandem with eco-friendly production is a key for YOUBISHENG’s economic success

Advancement of product features and technical know-how plays an important role



customer-tailored Testliner in order to protect the customer’s products from counterfeiting and copying. To the knowledge of the Company this kind of product, named “anti-counterfeit Testliner” is not available in the Testliner market so far.

Strategy

The primary goal of YOUBISHENG is to expand its market share in the Linerboard market by focusing on the development and distribution of novel, value-added products. Therefore, the Company has established “Guige” as a brand to be recognized as an ecologically responsible and innovative producer of high-quality Linerboard. We perceive innovation as key in the rather mature industry, since it helps to improve margins, to provide a higher level of competitiveness, and to capture share of related sub-sectors, e.g. the Kraftliner market. Accordingly, the Company has introduced a series of different product solutions which provide its customers with valuable options within their sub-sequent production and marketing choices. For example, in 2010, YOUBISHENG has introduced a double-sided Testliner to the market, which is produced of 100% recovered paper and is printable on both sides. It is marketed as a substitute to the more expensive Kraftliner that is usually made from 80 - 100% virgin wood pulp, and therefore entails higher raw material and ecological costs compared to products made from recovered paper. As the sole producer, the Company also commenced to market a novel anti-counterfeit Testliner in February 2012 to support costumers in the prevention of product piracy. The product is being used as a packaging solution for high-end branded products, packaging boxes as well as paper bags and labels. In our opinion, the continuous strive to improve product quality and to introduce value-added features positions the Company as a potential standard-setter in the industry. The success of its products allowed YOUBISHENG to extend its operations from its home-regions Fujian and Quangdong to other provinces in China. It is expected that the high future demand will enable the Company to expand even further and to increase the sales volume per existing customer. Also, the closing down of several smaller packaging paper companies which do not meet required ecologic standards opens additional expansion opportunities. In this respect, the Chinese government consequently enforces stricter environmental regulations and promotes the usage of environmental-friendly production techniques. Currently, the Company is not able to satisfy the demand for its range of Testliner and is therefore obliged to outsource ca. 70.000 tons, annually. As a central motif, the Company retains the production of higher-margin double-sided Testliner and anti-counterfeit Testliner series in-house and assigns parts of the lower-margin single-sided Testliner production to third party producers. In the mid-term, YOUBISHENG plans to install a new production line with an additional capacity of 300.000 tons p.a.

The chart below shows a matrix for the PRC Linerboard market, depicting YOUBISHENG´s marketing and pricing strategy: the increasing grade of innovation in tandem with the eco-friendliness entails higher selling prices than competitors´ conventional Testliner.

Innovation and brand building as key factors

Growth opportunity through regional expansion

Intelligent outsourcing policy



Source: BankM Research/YOUBISHENG Green Paper AG

Company History

Important milestones in the history of YOUBISHENG are shown below:

2012 Launch of the anti-counterfeit Testliner in February 2011 YOUBISHENG Green Paper AG was incorporated in Cologne,

Germany and listed in the Prime Standard of Deutsche Boerse Launch of a high-quality single-sided Testliner (400g/m

2)

2010 Introduction of the double-sided Testliner to the market

2008 Start of the Linerboard production with 100% recycled paper

2006 YOUBISHENG was awarded as “Green environmental friendly

Enterprise” by Environmental Protection Bureau of Quanzhou City

YOUBISHENG opened its second production line in Fonei Industrial Zone, Matou Town, Nan’an City, Quanzhou City, Fujian Province, PRC, with an additional capacity of 100,000 tons per annum and thereby reached a total capacity of 150,000 tons per annum

2005 YOUBISHENG was awarded as “Outstanding Enterprise for the

comprehensive Treatment on industrial Pollution Source of two rivers“ by People’s Government of Quanzhou

2003 to 2011 YOUBISHENG was awarded each year as „100 Key industrial

Enterprises of Quanzhou” City by People’s Government of Quanzhou



YOUBISHENG was awarded each year as „Star Enterprise of Nan’an City” by Nanan Municipal Party Committe & People’s Government of Nan’an City

2002 to 2011 YOUBISHENG received ISO9001 International Standard Quality

Certificate (ISO9001 is a standard for quality management systems set by the International Organization for Standardization) and ISO 14001:2004 environmental management standard (ISO 14001 is a standard designed to assist companies in reducing their negative impact on the environment). In 2005, 2008 and 2010 YOUBISHENG renewed both certificates correspondingly

2001 YOUBISHENG opened its first production line in Fonei Industrial

Zone, Matou Town, Nan’an City, Quanzhou City, Fujian Province, PRC, for the production of packaging paper with a capacity of 50,000 tons per annum

YOUBISHENG established a water treatment facility to meet governmental requirements

2000 YOUBISHENG was founded in Quanzhou, Fujian, China as a

wholly foreign owned enterprise of YOUBISHENG HK

Management

Mr. HUANG Haiming, CEO

Mr. HUANG Haiming is the chairman and CEO of YOUBISHEHNG and has 23 years of working experience. In July 1987, Mr. HUANG Haiming graduated in Food engineering from Fuzhou University and started working as technician in a food factory (PRC). In 1993 he established two food companies in the PRC. In July 2000 he founded YOUBISHENG. Mr. HUANG Haiming is a permanent member of the Fujian Paper Manufacturing Industry Association and Vice Chairman of the Fujian Paper Manufacturing Academy. In December 2007 he obtained the National Light Industry Model worker award.

LIN Xiangqing, Vice CEO

LIN Xiangqing graduated in business management from Huaqiao University in July 1987. After having worked in a food company in the human resources and Marketing department, he joined as Vice-CEO one of the food companies established by Mr. HUANG Haiming in 1995. Since its establishment in 2001 he works as the vice CEO of YOUBISHENG.

HUANG Shuyong, COO

HUANG Shuyong was born on 27 May 1966. In 1989 he graduated in paper technology from Fujian Forestry University. From 1989 he worked in a state owned paper mill in the PRC. Since 1993 he worked as a technician and later on as director in a state owned paper mill in the PRC. In 2001 he joined YOUBISHENG and in June 2010 assumed the function of the COO.

LIN Bingyan, Marketing

LIN Bingyan worked from 1970 until 1995 at a railroad constructing company in the PRC, from 1995 until 1998 and from 1998 until 2006 as the marketing chief in



two food companies. In 2006 he joined YOUBISHENG and became its marketing chief in 2009.

LIU Guoyi, Purchasing

LIU Guoyi worked from October 1994 until August 2000 in the marketing department of a Packaging Company in the PRC. In 2000 he graduated in Trading and Economics from Fujian Agricultural University. From September 2000 until February 2005 he was engaged in trading with recycled paper. In March 2005 he established the Xiamen Jingdu Import and Export Company (PRC), which is engaged in trading with recycled paper and paper pulp. In January 2008 he left this company and joined YOUBISHENG.


YOUBISHENG Green Paper AG - 16/38 - SWOT - Analysis September 27, 2013

SWOT - Analysis

Strengths

Leading manufacturer in the linerboard market in the West Economic Zone of the Taiwan Strait

Proprietary production process relying on 100% recycled paper

Unique characteristics (e.g. high quality and outstanding printability) usually not achievable with waste paper

Environmental friendly production process, meeting governmental requirements

The high dependency on water and energy resources is currently backed by unlimited access to water for no charge and enjoys competitive energy prices

Broad diversification of waste paper suppliers secures - to a certain extent - access to the main raw material

High degree of innovation to improve products and to maintain market position

Weaknesses

Other than in Western Countries, raising debt is an issue of long lasting and personal cultivation of relation between the company and the bank, limiting the opportunity to structure the company´s capital base in terms of financial leverage

Dependency on the continuation of third party agreement to secure the outsourced production volume and to satisfy demand

Current limitation of production capacity restrains growth potential

Management board has limited English language skills

No dividend in sight until investments into capacity extension will have been made

Very low liquidity of the stock

Opportunities

Chinese companies in general enjoy a favorable macro-economic environment, e.g. rise in middle-class income and a concomitant increase in middle class´ demand in consumer goods

The envisaged extension of production capacity will meet as yet unsatisfied demand and also repatriate so far outsourced capacity, thereby improving margins

Innovative, value-added products - to extend product portfolio - to capture market share in the Kraftliner market, an economically significant sub-segment of the liner board market through the double-sided test liner - to create a novel market niche for custom-tailored as well as forgery-proof packaging of brands - to expand market reach due to an improved product pricing / logistic costs ratio - to improve margins

Internet, as a booming sales channel for consumer goods bears high potential due to increasing demand for cardboard and its intermediate product “Linerboard”

Threats

Shortage of waste paper will entail higher price volatility and may negatively impact margins (unless markups are passed to customers)

Although being broadly diversified, potential failure to meet its customers´ demand is a threat in light of pronounced dependency on three major suppliers

Labor costs in PRC have risen significantly in recent years and may continue to rise

In general, Chinese companies are subject to governmental regulations which may interfere with entrepreneurial spirit

Strong dependency on the expertise of the founder and CEO

Uncertainty of investors regarding access to assets in case of default


YOUBISHENG Green Paper AG September 27, 2013 Market and Competition - 17/38 -

Market and Competition

Chinese Economic Outlook

China has experienced a sustained economic growth in the past thirty years which is attributable to the Chinese economic reform started in December 1978. Since the introduction of the reform, GDP has risen on average by ca. 8.3% per year (in real terms) with a CAGR of 10.4% between 2000 - 2010. According to the most recent estimate by McKinsey (“Meet the 2020 Chinese Customer”, March 2012) the economy is expected to grow until 2020 at an annual rate of about 7.9% (in real terms).

China’s outperformance during the financial crisis with a real GDP of 10.3% in 2010 was made possible through two economic stimulus packages, as well as accompanying proactive fiscal and monetary policies.

2

6

12

0

2

4

6

8

10

12

14

2000 2010 2020e

Real GDP growth of China betw. 2000 and 2020

Source: McKinsey Insights China – “Meet the 2020 Chinese Consumer”, March 2012

In contrast to the wide-spread believe that China´s growth is predominantly or even almost exclusively driven by exports, the actual figures show that GDP growth is mainly induced by public investment and domestic consumption.

With respect to the latest financial crisis and weakened global demand, the Chinese government started to promote domestic consumption as one of the key pillars to establish mid- and long-term economic growth. Also, the recent and expected increases in household income are likely to boost domestic consumption in the near future.

Up to now, China’s urban areas have been the engine of the domestic economy through their linkages with the global markets and their contribution of two thirds to China’s GDP.

The current urbanization rate (%-age of the population that lives in urban areas) is 47 percent, well below that of developed countries such as Germany (74%) or USA (82%). Since China’s adoption of economic reforms in 1978 the country experiences a mass migration to the cities located in the East and it is expected

Increase in domestic consumption is key for economic growth

Urbanization is the engine of the domestic economy


YOUBISHENG Green Paper AG - 18/38 - Market and Competition September 27, 2013

that the urbanization level will reach 61 percent by 2030 (according to United Nations).

Urban Population (as % of total)

Source: UN Population Division Estimates

The fast growing urbanization goes hand in hand with China’s emerging middle class and growing income levels, which are indicative of a Country’s consumption potential. The chart below shows the growth of the annual per capita disposable income of urban and rural households.

Annual per capita disposable income of urban and rural households

7,7038,472

9,42210,493

11,760

13,786

15,78117,175

19,109

21,810

24,565

2,476 2,622 2,936 3,255 3,587 4,1404,761 5,153

5,9196,977

7,917

0

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10,000

15,000

20,000

25,000

30,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

in R

MB

Urban Rural

Source: National Bureau of Statistics of China (China statistical Yearbook)



Over the past decade the disposable income of urban and rural households has almost tripled on average, whereby urban areas captured ca. 76% of the national disposable income in 2010. The most important aspect of the increasing income is the value of China’s emerging middle class. According to “Beijing Axis, China Business Solutions, 2010”, it is conceivable that China´s urban households with an annual disposable income of approx. $3.200 may increase to more than 350 million by 2025.

This implies that the rising economy in China will lift hundreds of millions of households out of poverty. According to Fidelity analysis (2011), ca. 9% of Chinese urban households will still live on less than $4000 by 2020, as shown in the figure below. By then, urban households will make up one of the largest consumer markets in the world, fueling various levels of growth across consumption categories.

Source: Fidelity „Konsum in China – Wachstumsmarkt der Zukunft“ (2011)

As shown in the figure below, Chinese consumers have moved beyond survival needs and are purchasing often for esteem. At this stage the consumption is based on quality of life and is quickly adopting the same characteristics that motivate Western consumers (e.g. buying based on quality rather than price, choosing status symbols etc.).

China’s middle class increases and fuels consumption



Total Retail Sales of Consumer Goods in China

39,106

43,05548,136 52,516

59,50167,177

79,145

91,572

114,830

132,678

156,998

181,248

207,167

10% 10%12%

09%

13% 13%18% 16%

25%

16% 18% 15%14%

00%

10%

20%

30%

40%

50%

60%

70%

80%

0

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100,000

150,000

200,000

250,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

in R

MB

100 m

ln

Total Retail Sales of Consumer Goods Growth of Total Retail Sales of Consumers (%)

Source: National Bureau of Statistics of China (China statistical Yearbook)

Implications for the packaging industry

Export and domestic consumer demand are the key market drivers for the packaging industry in China. Therefore, the demand for paperboard, being one of the major packaging solutions, grows accordingly and entails a proportionate growth of Linerboard.

The size of the Chinese Linerboard market has expanded on the back of sustained demand from the local manufacturing, which is connected to the increase in consumption of Chinese urban households. In addition, end-producer have also accepted Testliner as a cheaper and environmental-friendly material for their packaging taking aspects like environment and clean energy into account. On that basis, this trend is expected to continue in the future and boost the growth of the Chinese Linerboard market, which was valued at RMB 61.29 billion in 2010. According to Protégé Associates, the CAGR is estimated to be 11.2% during the period from 2010 to 2015.

Demand for packaging goes with export and domestic consump-tion



Source: China Paper Association; Protégé Associates (2011)

Conclusion: Based on the Chinese economic outlook, we perceive the growth of annual per capita disposable income of urban and rural households along with the concomitant increase in consumption as well as the strong focus of the Chinese officials on the environment as ideal conditions for the Chinese Linerboard and Testliner market to grow.

Testliner Market in China

According to Protégé Associates the Testliner market in China was valued at RMB30 billion in 2010 and its CAGR is estimated to be at 12.3% during the period from 2010 to 2015. As the Testliner market is considered to be at a late growth stage, which is very much in line with the global Testliner market, market players usually start to compete on process and quality improvements as well as cost efficiencies. Unlike the usual industry life cycle of numerous sectors, where late growth markets will move into the mature stage, the Testliner market is likely to continue to grow due to the fact that paperboard has remained one of the major packaging materials for durable and non-durable manufactured consumer goods. Growth in China is assisted by its sizeable pool of domestic demand (from a very large population base) for its manufactured consumer goods, its ability to continue attracting new investment for its manufacturing sector and its position as a global manufacturing and export hub. In addition, the growing demand for more environmental-friendly and sustainable products is expected to lead to more substitution of Kraftliner with Testliner.

China’s Testliner market is fragmented with market players ranging from small to very large. Larger market players include major national Testliner producers whose manufacturing facilities are located or whose products are sold in various municipalities or Provinces in China. Smaller market players are scattered among China’s industrial provinces, producing and selling Testliner in rather small quantities. Local Testliner manufacturers are usually located near their suppliers and customers.

Basically, the market players in the Testliner market can be divided into two tiers

based on their production capacity:

Testliner market growth in China estimated at a CAGR of 12.3%



Tier 1 market players are companies with annual capacity production of at

least 100,000 tons or more. This combines large and medium Testliner

manufacturers, which are generally well capitalized, have well equipped

facilities with access to water and electricity supply, and provide waste

management facilities. Furthermore, most of these Tier 1 market players

are likely to obtain the ISO 14001 certification which is a standard on

environmental management system.

Tier 2 market players consist of small sized Testliner manufacturers with annual production capacity of less than 100,000 tons.

YOUBISHENG PRC fits all the requirements of being a Tier 1 market player and

contributes to the national production and revenue generated in this industry

segment as well as to the protection of the environment by providing

comprehensive waste management facilities and environmental-friendly

technology.

Testliner Market in Fujian and Guangdong Provinces

While YOUBISHENG recently started to extend its geographical reach within China, the major part of revenues is generated still in Fujian and Guangdong provinces; therefore we focus on these regions in this chapter.

According to Protégé Associates the estimated revenue of the combined Fujian and Guangdong Provinces' Testliner markets in 2010 was RMB 6.98 billion with an annual growth of 9.4%, resulting from the sustained growth in the Chinese economy. The growth in the Testliner market in Fujian and Guangdong provinces is expected to record double digit annual growth during the 2011-2015 forecast period with regard to the expected recovery in global demands for Chinese manufactured goods as well as larger domestic consumptions for Testliner.

Considering the two markets, the Fujian Province’s Testliner market is expected to grow faster during the forecast period compared to Guangdong Province’s Testliner market reflecting the different maturity of the respective markets: while the Linerboard market in Fujian Province is considered to be in the growth stage, the Linerboard market in Guangdong Province is considered to be in the late growth stage, which is in line with the overall Chinese Linerboard market.

Double-digit growth expected in the two relevant provinces



6.987.74

8.659.73

10.9812.42

0

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4

6

8

10

12

14

2010 2011 2012 2013 2014 2015

Billio

n (

RM

B)

Estimated Market Size of Fujian and Guangdong Provinces' Testliner Markets

Estimated Market Size of Fujian and Guangdong Provinces' Test liner Markets

Market share 2010: YOUBISHENG: 9.6%

Source: Protégé Associates (2011)

From a national perspective, Fujian and Guangdong Provinces' Testliner markets are expected to be affected by the same market dynamics influencing the overall Chinese Testliner market. Moving forward, Fujian and Guangdong Provinces' Testliner markets are expected to be driven by China's rapid industrialization, as well as the nation's booming economy. On the flipside, the growth in the Fujian and Guangdong Provinces' Testliner markets could be stifled by market restraints pertaining to diminished consumer and investor sentiments on gloomy global economic outlook. However, the growth of the Testliner markets in Fujian and Guangdong Provinces is expected to remain positive during the forecast period with an anticipated CAGR of 12.2% from 2010 to 2015.


YOUBISHENG Green Paper AG - 24/38 - Financial Analysis September 27, 2013

Financial Analysis

In this chapter we discuss YOUBISHENG´s operating results, cash flow management as well as the balance sheet of the recent year and present the rationale of our forecasts until 2016. Actual data for the P&L and Cash Flow Statement [at average exchange rates) / Balance sheet (at period end rates)] are based on the historical RMB/€ exchange rates shown beneath. All forecast data in the financial sheets are on a constant currency basis.

Profit & Loss Account

During fiscal year 2012, revenues increased from € 92.2 mln to € 98.6 mln Gross profit margin and EBIT margin improved from 25% to 27% and from 23% to 24%, respectively, reflecting a stable overall cost structure with notably low operating costs. Since inception, the company was able to present a positive bottom line; during the last three years, net profit increased from € 11.4 to € 17.7 mln (+55%).

Our short-term projections - based on a 4-year horizon - imply an organic growth of 2.9% p.a. until 2016.

Profit and Loss Account

Fiscal Year 31.12 (IFRS) 2012a 2013e 2014e 2015e 2016e 12a 13e 14e 15e 16e 4y - CAGR

in T€

Total Sales 98,563 101,300 104,262 107,343 110,548 6.9 2.8 2.9 3.0 3.0 2.9

Cost of sales 71,818 73,616 75,529 77,494 79,496 3.8 2.5 2.6 2.6 2.6 2.6

Gross Profit 26,745 27,684 28,733 29,850 31,052 16.0 3.5 3.8 3.9 4.0 3.8

Gross Profit margin in % 27.1 27.3 27.6 27.8 28.1

Selling and marketing expenses 754 775 798 821 846

General and administration expenses 2,247 2,300 2,300 2,300 2,300

Net other income 29 0 0 0 0

EBIT 23,773 24,609 25,636 26,728 27,906 14.5 3.5 4.2 4.3 4.4 4.1

EBIT margin in % 24.1 24.3 24.6 24.9 25.2

Net financial result 156 0 0 0 0

EBT 23,929 24,609 25,636 26,728 27,906 14.8 2.8 4.2 4.3 4.4 3.9

EBT margin in % 24.3 24.3 24.6 24.9 25.2

Taxes on Income (Exp.+/Inc.-) 6,236 6,152 6,409 6,682 6,977

Net profit 17,693 18,457 19,227 20,046 20,930 15.6 4.3 4.2 4.3 4.4 4.3

Net Profit in % 18.0 18.2 18.4 18.7 18.9

For information purposes

Depreciation and amortization 1,870 1,890 1,910 1,930 1,950

EBITDA 25,643 26,499 27,546 28,658 29,856 13.7 3.3 3.9 4.0 4.2 3.9

No. of shares (Ø outstanding) 10,218 10,218 10,218 10,218 10,218

Net profit / share (EPS) 1.73 1.81 1.88 1.96 2.05

Adj. net profit / share (adj. EPS) 1.73 1.81 1.88 1.96 2.05

y-o-y changes in %

Source: BankM Research

RMB/€ exchange rate:

Average / Period end rates 2012: 8.1600 / 8.3472

2013ff: constant currency

Strong top and bottom line growth


YOUBISHENG Green Paper AG September 27, 2013 Financial Analysis - 25/38 -

Cash Flow Statement

As in the years before, 2012 is characterized by a strong operating and free cash flow. In our short-term projection, we do not consider significant investments. However, the Company still adheres to its plan to heavily invest in new production facilities in the foreseeable future. In our opinion, this strategic step is economically reasonable, considering both, the current capacity limitations and the growing demand for packaging solutions.

Cash Flow Statement Fiscal Year 31.12 (IFRS) 2012a 2013e 2014e 2015e 2016e 12a 13e 14e 15e 16e 4y - CAGR

in T€

Earnings before Taxes 23,929 24,609 25,636 26,728 27,906 14.8 2.8 4.2 4.3 4.4 3.9

+ Depreciation and amortization 1,870 1,890 1,910 1,930 1,950

= Cash Earnings 25,799 26,499 27,546 28,658 29,856 14.1 2.7 3.9 4.0 4.2 3.7

- Income taxes paid 6,228 6,061 6,345 6,614 6,903

+ Other cash / non-cash items (tax

provision, financial result)800 0 0 0 0

- Chg. in net working capital 1,342 353 382 397 353

= Operating Cash Flow 19,029 20,085 20,819 21,647 22,599 9.8 5.5 3.7 4.0 4.4 4.4

- Capex 1,257 200 200 200 200

= Free Cash Flow 17,772 19,885 20,619 21,447 22,399 3.2 11.9 3.7 4.0 4.4 6.0

+ Other net items 156 0 0 0 0

+ Bank loans -858 0 0 0 0

= Incr. in Cash (+)/Decr. in Cash (-) 17,070 19,885 20,619 21,447 22,399 -6.3 16.5 3.7 4.0 4.4 7.0

y-o-y changes in %




Balance Sheet

From 2011 to 2012, balance sheet total increased by 20%.

Due to strong operating cash flows, liquid funds strongly increased to € 47.2 mln. We perceive this liquidity as highly comfortable to at least partly support the envisaged investment for additional production capacity.

Equity ratio has improved from 64% in 2011 to 73% in 2012.

Balance Sheet

Fiscal Year 31.12 (IFRS) 2012a 2013e 2014e 2015e 2016e 12e 13e 14e 15e 16e

in T€

Assets

Tangible assets 12,795 11,765 10,055 8,325 6,575 14.6 11.0 7.9 5.6 3.9

Intangible assets 660 643 626 609 592 0.9 0.8 0.6 0.5 0.4

Deferred tax 43 0 0 0 0 0.0 0.0 0.0 0.0 0.0

Total Fixed Assets 13,498 12,408 10,681 8,934 7,167 15.4 11.6 8.4 6.1 4.2

Inventories 2,342 2,407 2,477 2,551 2,627 2.7 2.2 1.9 1.7 1.6

Accounts receivable 24,838 25,528 26,274 27,051 27,858 28.3 23.8 20.7 18.3 16.5

Total liquid funds 47,154 67,039 87,658 109,105 131,504 53.7 62.4 69.0 73.9 77.7

Total Current Assets 74,334 94,974 116,409 138,706 161,989 84.6 88.4 91.6 93.9 95.8

Balance Sheet Total 87,832 107,382 127,090 147,640 169,156 100.0 100.0 100.0 100.0 100.0

Shareholder's Equity / Liabilities

Subscribed capital 10,218 10,218 10,218 10,218 10,218 11.6 9.5 8.0 6.9 6.0

Share premium -5,685 -5,685 -5,685 -5,685 -5,685 -6.5 -5.3 -4.5 -3.9 -3.4

Retained earnings and other reserves 59,512 77,969 97,196 117,242 138,171 67.8 72.6 76.5 79.4 81.7

Shareholders Equity 64,045 82,502 101,728 121,775 142,704 72.9 76.8 80.0 82.5 84.4

Long term liabilities 336 936 919 902 945 0.4 0.9 0.7 0.6 0.6

t/o NPV of outstanding installments for

land use rights251 936 919 902 945 0.3 0.9 0.7 0.6 0.6

t/o Deferred tax 85 0 0 0 0 0.1 0.0 0.0 0.0 0.0

ST Liab. < 1 year 23,451 23,944 24,443 24,963 25,507 26.7 22.3 19.2 16.9 15.1

t/o Acc. payable & pre-paymts. 14,465 14,867 15,301 15,754 16,224 16.5 13.8 12.0 10.7 9.6

t/o Bank loans 5,990 5,990 5,990 5,990 5,990 6.8 5.6 4.7 4.1 3.5

t/o Tax payable 1,447 1,538 1,602 1,671 1,744 1.6 1.4 1.3 1.1 1.0

t/o other current liabilties 1,549 1,549 1,549 1,549 1,549 1.8 1.4 1.2 1.0 0.9

Total Liabilities 23,787 24,880 25,362 25,865 26,452 27.1 23.2 20.0 17.5 15.6

Balance Sheet Total 87,832 107,382 127,090 147,640 169,156 100.0 100.0 100.0 100.0 100.0

In % of Balance Sheet Total



YOUBISHENG Green Paper AG September 27, 2013 Financial Analysis - 27/38 -

Specific Features of Market Mechanics

Volatility in market price of recycled paper

Being a world commodity, procurement costs for waste paper are subject to fluctuations resulting from the balance of global demand and supply. The following chart shows the development of the price for recycled paper during the recent four years:

0

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FOEX PIX OCC Recovered Paper Index

Source: Bloomberg

Since recycled paper is YOUBISHENG´s key feed stock for the production of linerboard, the Company is faced with a risk regarding volatility in raw material prices. Waste paper is being purchased from local suppliers, which in turn buy on the world market, e.g. from Europe, Japan, and the US. According to management, fluctuations in market price are being passed on to customers and therefore we do not consider this to substantially impact our P&L forecast.

The ability to pass on price changes and hence to maintain margins is substantiated by the mechanics of the relevant markets presented in the chart below. It shows the fluctuations in the prices for the raw material “Wood Pulp” and “Waste Paper” as well as the fluctuations in the price indices for the finished products Kraftliner (White top) and Testliner. The graph shows that:



1. The prices of the finished products are linked to the respective underlying

raw material prices with a correlation of 0.86 for Testliner vs. recycled

paper, and 0.55 for Kraftliner vs. wood pulp. More importantly, the price of

Kraftliner correlates strongly with the price of Testliner (0.91) which

indicates that the price for Kraftliner is determined more with respect to

the development of the price of its substitute Testliner rather than to the

price of its primary input factor (wood pulp)

2. The differential between the two product indices is constant over time

Since the manufacturers for Kraftliner and Testliner largely address the same market, price increases in recovered paper might jeopardize the margins of Testliner producers like YOUBISHENG. However, from the observations above we draw the following conclusions, relevant for YOUBISHENG´s Profit & Loss Account: rising waste paper prices can readily be passed on, since the customers won´t switch to Kraftliner regarding the parallel price movement. In tandem with the stable price differential between the two products, YOUBISHENG´s margins are robust over time and not jeopardized as long as the correlation persists.

As discussed with management, the time-lag between price changes and the passing on is ca. 2-3 months and does not have a serious impact on the cash situation.

Development of raw material and finished product prices

0

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400

600

800

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1200

1400

Pri

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White-top

Wood Pulp

Testliner

Recovered Paper

Source: Bloomberg / BankM Research


YOUBISHENG Green Paper AG September 27, 2013 - 29/38 -

Valuation

In order to calculate a fair value for YOUBISHENG Green Paper AG, we applied two methods which allow for mutual validation and thus sensitize for the plausibility of each of the derived values:

1. Analysis of Free Cash Flows (DCF analysis)

2. Multiple analysis by means of peer group comparison

The derived values will be equally weighted.

DCF-Model

For the analysis of Free Cash Flows we have apply a 3-stage model:

Phase I 2013 – 2016 (short-term planning)

This phase integrates a detailed analysis of the valuation-relevant figures and margins

Phase II 2017 – 2020 (mid-term prognosis)

During phase II we gradually fade the EBIT margin each year; the rationale for is the increasing likelihood of accruing competition within YOUBISHENG´s price segment as well as a likely price increase in the feed stock “recovered paper”

Phase III Terminal Value

For the derivation of this critical valuation component, we presume a conservative “terminal EBIT margin” of 15%.

The forecasting of future cash flows used in our model is based on the following sources:

Annual report 2012, 1Q13 and 1H13 report

Discussions with YOUBISHENG Greenpaper AG´s Executive Directors and Management

Protégé Independent Market Research Report “Strategic Analysis of the Linerboard Market in China focusing on Testliner” (March 2011)

McKinsey Insights China, “Meet the 2020 Chinese Consumer”, March 2012

Analysis of the relevant markets

Time-weighted discounting of Free Cash Flows is a central element within the DCF valuation. Currently, fundamental quantitative analysis is faced with methodical problems in calculating a risk premium by means of a market portfolio proxy (a broadly diversified index). Geometric returns over longer periods (CAGR over 5 – 10 years) are still not suitable due to their sharp decline in recent years. For example, on the MSCI World and S&P 500 indices show a 10y-performance, expressed as CAGR, of 7.85% and 7.29%, respectively. Moreover, during the preceding two years, the MSCI World and the S&P 500 indices have gained


YOUBISHENG Green Paper AG - 30/38 - Valuation September 27, 2013

19.68% and 23.81%, respectively (index data as of September 23, 2013). In light of these returns and considering the historically low risk free returns, we feel comfortable with a market risk premium of 6.5%.

We routinely pay specific attention to the calculation of the Beta. We used the unlevered Beta as calculated by Damodaran for the sector “Paper and Forest products” (Betas by Sector, January, 2013) and adjusted it for the capital structure of YOUBISHENG in the respective phases.

Regarding risk, we account for the current Country Specific Risk for China with 1.05% (Damodaran, Country Default Spreads and Risk Premiums, Jan 2013); further, we apply a company-specific risk of 2% in order to reflect the small size of the Company.


YOUBISHENG Green Paper AG September 27, 2013 Valuation - 31/38 -

DCF analysis based on the future Free Cash Flows 2013-2020 + Terminal Value

Terminal Value

2012a 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e

in T€ Basis 1 2 3 4 5 6 7 8

Growth 6.9% 2.8% 2.9% 3.0% 3.0% 1.0%

Revenues 98,563 101,300 104,262 107,343 110,548 112,759 115,014 117,315 119,661 120,858

EBIT 23,773 24,609 25,636 26,728 27,906 25,765 23,923 21,996 20,394 18,129

- Tax 5,943 6,152 6,409 6,682 6,977 6,441 5,981 5,499 5,099 4,532

+ Depreciation and amortization 1,870 1,890 1,910 1,930 1,950 1,970 1,990 648 668 200

+ Change in long-term provisions 0 0 0 0 0 0 0 0 0 0

- Change in net working capital 1,342 353 382 397 353 333 291 296 302 0

- Other non-cash items 800 0 0 0 0 0 0 0 0 0

- Capex 1,257 200 200 200 200 200 200 200 200 200

= Free Cash Flow 16,301 19,794 20,555 21,379 22,326 20,761 19,441 16,648 15,461 13,596

Terminal Value 128,877

Discount factor n.a. 0.90 0.81 0.72 0.65 0.58 0.52 0.47 0.42 0.42

NPV of Free Cash Flows n.a. 17,764 16,555 15,453 14,483 12,077 10,143 7,789 6,487

NPV of Terminal Value 54,075

Valuation Proportion of EV

Result of Future Cash Flows 100,750 65%

+ Result of Terminal Value 54,075 35%

= Value of the Entity 154,825

+ Cash (as of Dec 31, 2012) 47,154

- LT Debt (as of Dec 31, 2012) 5,990

= Value of Equity 195,989

Current No. of Shares (in '000) 10,218

Price per Share 19.18


Forecast

Phase 1 Phase 2

CAGR - 2.0%


Sensitivity Analysis

9.00% 10.00% 11.00% 11.55% 12.00% 13.00% 14.00%

-1.00% 19.36 18.86 18.45 18.25 18.10 17.80 17.54

0.00% 20.03 19.42 18.91 18.68 18.50 18.14 17.84

1.00% 20.87 20.09 19.47 19.18 18.96 18.54 18.18

2.00% 21.94 20.94 20.15 19.79 19.53 19.02 18.59

3.00% 23.38 22.02 21.01 20.55 20.22 19.58 19.07

12.00% 13.00% 14.00% 15.00% 16.00% 17.00% 18.00%

-1.00% 17.38 17.67 17.96 18.25 18.54 18.83 19.12

0.00% 17.72 18.04 18.36 18.68 18.99 19.31 19.63

1.00% 18.12 18.48 18.83 19.18 19.53 19.89 20.24

2.00% 18.61 19.01 19.40 19.79 20.19 20.58 20.97

3.00% 19.22 19.66 20.10 20.55 20.99 21.44 21.88

Gro

wth

in

Te

rmin

al

Va

lue

Discount rate of Terminal Value

Gro

wth

in

Te

rmin

al

Va

lue

EBIT Margin in TV

Sensitivity Analysis of NPV Terminal Value

Our DCF analysis, returns an equity value of € 196 mln, translating into € 19.18 per share.

DCF-derived value: € 19.18

Phase I Phase II

Key Model Assumptions

Riskfree Return 2.00% 2.00%

10 Year Government Bond (GER)

Sector Beta (12M vs. MSCI World) 1.05 0.99

Beta in Terminal Value = 1

Market Risk Premium 6.50% 6.50%

Country Risk Premium 1.05% 1.05%

Damodaran

Company Specific Risk 2.00% 2.00%

Cost of Equity 11.86% 11.51%

Target Weight 90.00% 100.00%

Cost of Debt 10.00% 10.00%

Target Weight 10.00% 0.00%

Tax Shield 25.00% 25.00% TV

WACC 11.43% 11.51% 11.55%

Growth Rate Terminal Value 1.0%



Peer Group Valuation

In order to derive a valuation from a capital market perspective, we considered the following, sector-related companies as appropriate by means of sales revenues and market capitalization.

Cham Paper Group Holding AG

The Cham Paper Group produces coated specialty papers for a variety of markets such as consumer goods, industrial release and digital imaging. The Company owns one paper mill, located in Switzerland. During the financial year 2012, the Cham Paper Group Holding AG generated a turnover of approximately USD 259 million.

Cheng Loong Corp.

Cheng Loong Corp. is a Taiwanese company which produces industrial paper, corrugated container (paper and board) and household paper. Cheng Loong Corp. sells its products to China, Thailand, Vietnam, Japan, and the United States. Nowadays the Company possesses four paper mills and six paper box plants. During the year ended December 2012, the Company generated a turnover of approximately USD 851 million.



Yuen Foong Yu Paper Manufacturing Co., Ltd.

Yuen Foong Yu Paper Manufacturing Co., Ltd. was the pioneer of private paper manufacturer in Taiwan. With its primary focus in paper manufacturing, YFY Paper has introduced a variety of different paper products to the market, including fine paper, industrial paper, paper container and household paper products. During the financial year 2012, the Company generated a turnover of approximately USD 53.9 million. [Graph not shown because historical data are not available].

The following companies are listed for information purposes, only. We explicitly exclude these companies from our closest comparable valuation given their high market capitalization and/or sales volume.

Nine Dragons Paper Holdings Ltd.

Nine Dragons Paper is the largest packaging paperboard producer in Asia (including Japan) and one of the largest in the world in terms of production capacity. The Group primarily produces Linerboard, including Kraft-Linerboard, Test-Linerboard and white top Linerboard, high performance corrugating medium and coated duplex board. The Group also participates in unbleached Kraft pulp production. The turnover during the financial year 2012 amounted to approximately USD 4,277 million.

Lee & Man Paper Manufacturing Ltd.

Established in 1994, Lee & Man Paper Manufacturing Ltd. has grown from a small company into a world leading paper and pulp manufacturer. On 26 September 2003, the Group was listed on the Main Board of the Hong Kong Stock Exchange. The Group manufactures Linerboards of various grades and corrugating medium of different specifications used for different industrial packaging purposes. Over the years, in addition to boosting production scale, the Group has been relentless in pushing to form a vertically integrated operation that covers pulp making, plantation and recovered paper collection so as to assure it has stable raw material supply. During the year ended December 31, 2012, the Company generated a turnover of approximately USD 1,892 million.

Billerudkorsnäs AB

Billerudkorsnäs AB is a leading provider of renewable packaging material. The Company owns and operates three paper mills in Sweden and one in Great Britain. The product line includes market pulp and packaging paper such as brown and white sack paper and kraft paper, as well as containerboard including



fluting and white top liners for the production of corrugated boards. During the financial year 2012, the Company generated a turnover of approximately USD 1,540 million. KapStone Paper and Packaging Corporation

KapStone Paper and Packaging Corporation is operating in the paper, packaging, forest products and related industries. The Company is the leading North American producer of containerboard, unbleached kraft paper products, and corrugated products. KapStone Paper and Packaging Corporation acquired Longview Fibre Paper and Packaging in 2013 and now operates four paper mills and 22 converting plants located throughout the United States. During the financial year 2012, the Company reached a turnover of approximately USD 1,217 million.

Sector-specific peer group Mkt Cap EV

Peer Group prev. Day prev. Day 2012a 2013e 2014e 2012a 2013e 2014e 2012a 2013e 2014e 2012a 2013e 2014e

Revenues EBITDA Net Profit Book Value

Data not available(EUR in mln.)

Cham Paper Holding AG 142.09 152.83 232.11 170.23 24.64 12.16 14.51 4.33 -1.02 2.72 4.90 83.55

Cheng Loong Corp 367.14 666.21 662.00 - 687.27 43.63 46.97 50.63 29.62 34.80 40.14 474.86

Fortress Paper Ltd 74.42 139.93 244.82 193.26 222.53 -7.94 -14.09 26.24 -16.26 74.74 1.81 174.67

YFY Inc 624.09 973.64 339.46 - - 21.01 - - 28.70 30.67 - 740.20

Youbisheng Green Paper AG 42.91 1.75 92.21 98.56 101.30 22.55 25.64 26.50 15.31 17.69 18.46 47.37 64.04 82.50

*If EV prev. day is not available, the EV current day is displayed without further notice

Mkt Cap EV


Multiples

Cham Paper Holding AG 142.09 152.83 0.48 0.90 6.20 9.20 10.53 35.30 neg. 52.18 28.98 1.09 1.60 1.56

Cheng Loong Corp 367.14 666.21 0.99 - 0.97 14.99 14.19 13.16 11.60 10.55 9.15 0.73 0.76 0.73

Fortress Paper Ltd 74.42 139.93 1.06 0.72 0.63 neg. neg. 5.33 neg. 1.00 41.02 0.51 0.30 0.30

YFY Inc 624.09 973.64 2.86 - - 46.16 - - 21.14 20.35 - 0.82 0.86 -

Median 254.62 409.52 1.02 0.81 0.97 14.99 12.36 13.16 16.37 15.45 28.98 0.77 0.81 0.73

Mean (for information purposes, only) 301.94 483.15 1.35 0.81 2.60 23.45 12.36 17.93 16.37 21.02 26.38 0.79 0.88 0.86


*Multiple based on historical price as of Dec 31 prev. year (not shown); as of publication date, some figures for 2012 may still be estimates

Enterprise Value Youbisheng n.a. 79.93 98.20 n.a. 316.92 348.67 n.a. 273.39 534.89 n.a. 51.63 59.84

-net debt n.a. -40.65 -40.65 n.a. -40.65 -40.65

Value of the Equity n.a. 120.58 138.85 n.a. 357.58 389.32 n.a. 273.39 534.89 n.a. 51.63 59.84

Year 2013 2014 2013 2014

Implicit Price 19.65 27.47

Equity value based on EV/Revenues (€ mln) 120.58 138.85

Equity value based on EV/EBITDA (€ mln) 357.58 389.32

Equity value based on P/E (€ mln) 273.39 534.89

Equity value based on P/B (€ mln) 51.63 59.84

Mean 200.79 280.72

No. of shares ('000)* 10,218 10,218

Price/share (€) 19.65 27.47

P/BEV/Revenues EV/EBITDA P/E

Data not available

Source: Bloomberg, BankM Research

In addition to our sector-specific peer group, we have extended our multiple analysis to selected Chinese Companies, listed in the Prime Standard of Deutsche Boerse. In our opinion, this best reflects the current market sentiment towards Chinese companies listed in Germany.



Sentiment-reflecting peer group (Prime Standard) Mkt Cap EV


EUR (in mln.)

Revenues EBITDA Net Profit Book value

Dat

a no

t ava

ilable

Asian Bamboo AG 42.00 56.17 72.86 70.00 77.00 -4.10 31.90 34.80 -19.81 14.70 18.40 287.98

China Specialty Glass AG 40.92 - 113.71 148.00 170.00 40.57 44.40 47.50 16.32 26.60 27.60 114.85

FAST Casualwear AG 8.77 17.82 112.98 - - - - - 14.53 - - -

Firstextile AG 113.74 93.66 179.55 209.33 288.33 43.12 50.47 75.13 32.53 35.17 48.40 95.52

Haikui Seafood AG 68.85 25.88 195.12 156.00 168.00 46.22 23.30 24.35 32.18 15.25 14.75 146.67

Joyou AG 315.65 298.56 329.61 355.00 383.50 57.98 68.20 72.35 39.67 36.05 43.40 341.55

Ming Le Sports AG 68.19 - 286.13 - - 70.39 - - 61.14 - - 155.18

Powerland AG 51.36 0.48 - 230.50 271.50 - 48.40 64.20 - 28.40 36.90 -

Ultrasonic AG 109.20 40.09 149.01 168.00 200.00 43.15 45.50 51.70 30.81 32.90 36.80 122.32

United Power Technology AG 39.96 2.50 111.05 121.00 127.00 19.77 23.50 24.60 12.67 15.30 16.00 101.54

Vtion Wireless Technology AG 49.28 - 75.57 65.00 65.00 7.45 6.20 5.90 5.35 4.50 4.30 134.80

Zhongde Waste Technology AG 27.04 - 24.76 11.20 66.70 -4.66 -1.40 2.40 -12.23 -3.50 0.20 112.76


*If EV prev. day is not available, the EV current day is displayed without further notice

Mkt Cap EV


Multiples

Asian Bamboo AG 42.00 56.17 1.24 0.80 0.73 neg. 1.76 1.61 neg. 2.86 2.28 0.28 - -

China Specialty Glass AG 40.92 - 0.02 - - 0.05 - - 2.71 1.54 1.48 0.39 0.35 0.28

FAST Casualwear AG 8.77 17.82 0.30 - - - - - 1.67 - - - - -

Firstextile AG 113.74 93.66 0.61 0.45 0.32 2.54 1.86 1.25 3.99 3.23 2.35 1.15 0.89 0.67

Haikui Seafood AG 68.85 25.88 0.22 0.17 0.15 0.94 1.11 1.06 2.68 4.51 4.67 0.59 0.42 0.39

Joyou AG 315.65 298.56 0.61 0.84 0.78 3.49 4.38 4.13 5.60 8.76 7.27 0.65 0.82 0.74

Ming Le Sports AG 68.19 - 0.04 - - 0.15 - - 1.63 - - 0.64 - -

Powerland AG 51.36 0.48 - 0.00 0.00 - 0.01 0.01 - 1.81 1.39 - - 0.30

Ultrasonic AG 109.20 40.09 0.35 0.24 0.20 1.22 0.88 0.78 3.95 3.32 2.97 0.99 - -

United Power Technology AG 39.96 2.50 0.17 0.02 0.02 0.96 0.11 0.10 4.03 2.61 2.50 0.51 0.36 0.33

Vtion Wireless Technology AG 49.28 - - - - - - - 11.28 10.95 11.46 0.41 0.35 0.35

Zhongde Waste Technology AG 27.04 - - - - - - - neg. neg. 135.20 0.20 0.25 0.25

Median 50.32 32.98 0.30 0.24 0.20 0.96 1.11 1.06 3.95 3.23 2.73 0.55 0.36 0.34

Mean (for information purposes, only) 77.91 66.89 0.40 0.36 0.32 1.34 1.44 1.28 4.17 4.40 17.16 0.58 0.49 0.41


*Multiple based on historical price as of Dec 31 prev. year (not shown); as of publication date, some figures for 2011 may still be estimates

Enterprise Value Youbisheng n.a. 23.52 20.30 n.a. 28.48 28.16 n.a. 57.22 50.43 n.a. 22.97 27.78

-net debt n.a. -40.65 -40.65 n.a. -40.65 -40.65

Value of the Equity n.a. 64.17 60.96 n.a. 69.13 68.82 n.a. 57.22 50.43 n.a. 22.97 27.78

Year 2013 2014 2013 2014

Implicit Price 5.22 5.09

Equity value based on EV/Revenues (€ mln) 64.17 60.96

Equity value based on EV/EBITDA (€ mln) 69.13 68.82

Equity value based on P/E (€ mln) 57.22 50.43

Equity value based on P/B (€ mln) 22.97 27.78

Mean 53.38 52.00

No. of shares ('000)* 10,218 10,218

Price/share (€) 5.22 5.09

P/BEV/Revenues EV/EBITDA P/E

Dat

a no

t ava

ilable

Source: Bloomberg, BankM Research

2013e 2014e

Sector-specific Peer Group 19.65 27.47

Chinese Prime Standard Peer Group 5.26 5.09

PG Mean 12.46 16.28

Valuation Summary

Our DCF analysis returns a price of € 19.18 per share; the multiple analysis, based on market multiples 2013, results in a price of € 12.46.

Equally weighted we calculate € 15.82 as the fair value of YOUBISHENG AG´s share implying an implicit P/E of 8.7. Considering the current median P/E of the other Chinese companies listed in the Prime Standard of ca. 3.3, we expect that the share price of YOUBISHENG AG is going to converge towards this P/E in the short to mid-term translating into a “trading target” of € 5.75. We continue to rate the stock as “BUY”.

Fair value of the stock: € 15.82


YOUBISHENG Green Paper AG - 36/38 - Important information, disclosures and disclaimer September 27, 2013

Important information, disclosures and disclaimer

A. Important information

Equity investments generally involve high risks. Investors may lose some or all of the money invested. Potential investors should take into account that share prices may fall and rise and that income from an investment may fluctuate considerably. Past performance is no guarantee for future results. Investors make their decisions at their own risk.

B. Disclosures according to Section 34b of the German Securities Trading Act (WpHG) and the Ordinance on the Analysis of Financial Instruments (FinAnV):

I. Information about author, company held accountable, regulatory authority:

Responsible for the content of this document: biw Bank für Investments und Wertpapiere AG, Willich, Germany.

Authors: Dr. Roger Becker, CEFA and David Szabadvari, Analysts

Regulatory authority for biw Bank für Investments und Wertpapiere AG is the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), Graurheindorfer Straße 108, 53117 Bonn, Germany and Lurgiallee 12, 60439 Frankfurt am Main, Germany.

Issuer of the analyzed instruments is YOUBISHENG Green Paper AG.

Notice according to sec. 4 §. 4 No 4 FinAnV (previous publications regarding the issuer within the last 12 months):

Analysts Date Evaluation result Fair value

Dr. Roger Becker June 16, 2011 Buy € 12.30

Dr. Roger Becker November 21. 2011 Buy € 15.75

Dr. Roger Becker, David Szabadvari June 12, 2012 Buy € 14.85

Dr. Roger Becker, David Szabadvari September 18, 2012 Buy € 14.60

Dr. Roger Becker, David Szabadvari December 6, 2012 Buy € 14.04

II. Additional Information:

1. Sources of information:

Main sources of information for the compilation of this document are publications in national and international media and information services (e.g. Reuters, VWD, Bloomberg, dpa-AFX and others), financial newspapers and magazines (e.g. Börsenzeitung, Handelsblatt, Frankfurter Allgemeine Zeitung, Financial Times and others), specialist media, published statistics, rating agencies as well as publications by peer group companies and the company itself. Furthermore talks with the management of the issuer have been held. This document was made available to the issuer before publication to ensure the accuracy of the information provided. This resulted in no/some textual changes.

2. Summary of the valuation principles and methods used to prepare this document:

BankM – Repräsentanz der biw Bank für Investments und Wertpapiere AG uses a 3-tier absolute rating model. The ratings are the evaluation results and refer to a fair value pricing reflecting a time-horizon of up to 12 months.

BUY: The calculated fair value of the company’s stock is at least 15 % higher than the current market price at the time of the compilation of this document.

NEUTRAL: The calculated fair value of the company’s stock lies between –15% and +15 % of the current market price at the time of the compilation of this document.

SELL: The calculated fair value of the company’s stock is at least 15 % lower than the current market price at the time of the compilation of this document.

The following valuation methods are being used: Multiple-based models (Price/Earnings, Price/Cash-flow, Price/Book value, EV/Sales, EV/EBIT, EV/EBITA, EV/EBITDA), peer-group comparisons, historical valuation approaches, discount models (DCF, DDM), break-up value and sum-of-the-parts-approaches, asset-based evaluation methods or a combination of the above. The used valuation models depend on macroeconomic factors, such as interest rates, exchange rates, raw materials and on basic assumptions about the economy. Additionally, market sentiment affects the valuation of companies. The valuation is also based on expectations that might change rapidly and without notice, depending on developments specific to individual industries. Rendered evaluation results and fair values derived from the models might therefore change respectively. The evaluation results in general relate to a 12-month horizon. However, evaluation results are subject to changing market conditions and represent only the situation at a given point of time. The evaluation results and fair value prices may in fact be achieved more quickly or slowly than expected by the analysts. Also, the evaluation results and fair value prices might need to be revised upward or downward.

3. Date of first publication of this document:

September 27, 2013

4. Date and time of prices of the instruments quoted in this document:

Closing prices of September 25, 2013

5. Updates:

A specific date or time for an update of this document has not been set. The information given in this document reflects the author’s judgement on the date of this publication and is subject to change without notice; it may be incomplete or condensed and it may not contain all material information concerning the company covered. It is in the sole responsibility of BankM – Repräsentanz der biw Bank für Investments und Wertpapiere AG to decide on a potential update of this document.


YOUBISHENG Green Paper AG September 27, 2013 Important information, disclosures and disclaimer - 37/38 -

III. Disclosures about potential conflicts of interest:

1. BankM – Repräsentanz der biw Bank für Investments und Wertpapiere AG´s business model is based on economic relationships with issuers and equity transactions to be performed relating to the issuer´s stock. BankM – Repräsentanz der biw Bank für Investments und Wertpapiere AG has entered into an agreement about the preparation of this document with the issuer that is, or whose financial instruments are, the subject of this document.

BankM – Repräsentanz der biw Bank für Investments und Wertpapiere AG was Sole Bookrunner and Sole Lead Manager for the IPO of the issuer and, in this connection, is party to an agreement on the provision of investment banking services with the issuer and receives services or a promise to perform under the terms of such an agreement.

BankM – Repräsentanz der biw Bank für Investments und Wertpapiere AG (incl. subsidiaries and affiliates) as well as tied agents of biw Bank für Investments und Wertpapiere AG in connection with the activities of BankM – Repräsentanz der biw Bank für Investments und Wertpapiere AG, the authors of this document as well as other persons that were involved in the compilation of this document or affiliated parties:

do not have a major shareholding (shareholding exceeding 5%) of the share capital of the issuer,

have not, within the past twelve months, participated in leading a consortium for the issue via public offer of the financial instruments that are, or whose issuers are, the subject of this document,

have not, within the past twelve months, been party to an agreement on the provision of investment banking services with the issuer that is, or whose financial instruments are, the subject of this document, or have received services or a promise to perform under the terms of such an agreement during the same period,

have no other significant economic interests relating to the issuer that is, or whose financial instruments are, the subject of this analysis.

2. In the function as a designated sponsor, BankM – Repräsentanz der biw Bank für Investments und Wertpapiere AG manages the financial instruments that are, or whose issuers are, the subject of the financial analysis on a market by placing buy or sell orders and will regularly hold a trading stock or long or short positions in the issuer´s stock.

3. BankM – Repräsentanz der biw Bank für Investments und Wertpapiere AG´s internal organization is aligned with the prevention of conflict of interests in producing and distributing research reports. Possible conflicts of interests will be treated adequately. In particular, physical and non-physical boundaries were installed to keep analysts from gaining access to information that possibly could constitute a conflict of interest for the bank. biw Bank für Investments und Wertpapiere AG keeps insider registers according to sec. 15 WpHG for employees and assignees that normally have access to inside information. These registers will be transmitted to BaFin on request. Insiders´ dealings according to sec. 14 WpHG categorically are prohibited. Staff members that fill a specific position and have access to inside information categorically have to disclose all dealings in financial instruments to the internal compliance department. The compliance of legal requirements and supervisory regulations is subject to continuous supervision and control of the compliance department of biw Bank für Investments und Wertpapiere AG. In this regard, the right to restrict employees´ dealings in financial instruments is reserved.

4. The remuneration of the analysts mentioned above is not dependent on any investment banking transactions of BankM – Repräsentanz der biw Bank für Investments und Wertpapiere AG or its affiliates. The analysts that compiled this document did not receive or acquire shares in the issuer that is, or whose financial instruments are, the subject of this document at any time. The analysts mentioned above herby certify that all of the views expressed accurately reflect his or her personal views about the issuer and that no part of his or her compensation was, is or will be, directly or indirectly, related to the specific evaluation result or views expressed by the analyst in this document.

5. Updated information according to sec. 5 para. 4 No. 3 FinAnV is available at: http://www.bankm.de/webdyn/138_cs_Gesetzliche+Angaben.html.

C. Disclaimer

This document was compiled by BankM – Repräsentanz der biw Bank für Investments und Wertpapiere AG solely for informational purposes and for the personal use by persons in Germany that are interested in the company and who purchase or sell transferable securities for their own account or the account of others in the context of their trade, profession or occupation. This document neither constitutes a contract nor any kind of obligation.

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http://dict.leo.org/ende?lp=ende&p=eL4jU.&search=continuous


YOUBISHENG Green Paper AG - 38/38 - Important information, disclosures and disclaimer September 27, 2013

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Documents

YOUBISHENG Greenpaper AG€¦ · 2013e 101.3 26.5 24.6 24.6 18.5 1.8 24.3% 18.2% 2014e 104.3 27.5 25.6 25.6 19.2 1.9 24.6% 18.4% 2015e 107.3 28.7 26.7 26.7 20.0 2.0 24.9% 18.7% 2016e