China Clean Energy Inc (for Facebook page) Apr. 27, 2011

China Clean Energy Inc. (OTC QB: CCGY)

(VIEW IN FULLSCREEN MODE)A US-listed, developer, manufacturer, and distributor of specialty chemicals and biodiesel, made

from renewable resources, doing business in the People’s Republic of China (“PRC”).

A well-known, public, US-based company in the same business: DOW Chemical (NYSE: DOW)

Website: http://www.ChinaCleanEnergyInc.com

CFO Contact: [email protected]

IR and Media Contact: [email protected]

Facebook: http://www.facebook.com/ChinaCleanEnergyInc.CCGY

Presentation By: William C. Steppacher. Jr.

Last Updated: April 27, 2011

http://www.chinacleanenergyinc.com/

mailto:[email protected]


http://www.facebook.com/ChinaCleanEnergyInc.CCGY


What does China Clean Energy (CCE) do? What do they sell? How do they make money?

CCE is a specialty chemicals company, similar to DOW Chemical, except that they are based in China and sell most of their products in China, and they develop their products through proprietary and patented processes using

clean, renewable resources. Their products such as monomer acid, dimer acid, polyamide resins, and polyamide hot melt adhesive are vital to many industrial and manufacturing processes. They also sell biodiesel, another type

of specialty chemical.

Otherwise known as the feedstock, the types of renewable resources that can be used to produce the chemicals are numerous. They include waste vegetable oil, waste grease, palm oil waste, cotton seed waste, and many

others. The company makes use of waste that otherwise would be discarded.

Unlike many clean tech companies, CCE, which was founded in 1995, is profitable and enjoys robust margins, real assets, and little debt.


•Revenue totaled $18.1 million, up 271% from $4.9 million for the fourth quarter in 2009

•Gross profit totaled $4.3 million, up 378% from $0.9 million in the fourth quarter of 2009

•Gross margin increased to 23.7%

•Operating income was $3.8 million, compared to $0.3 million in the fourth quarter 2009

•Adjusted net income (Non-GAAP) was $2.9 million, or $0.09 per fully-diluted share for Q4

Fourth Quarter 2010 Highlights

•Total revenue increased to $59.0 million, up 270% from $15.9 million for the full year 2009

•Gross profit totaled $12.2 million, up 260% from $2.9 million for the full year 2009

•Gross margin was 20.7%, up from 18.5% for the full year 2009

•Operating income was $10.2 million, up from $0.9 million for the full year 2009

•Adjusted net income (Non-GAAP) was $7.8 million, or $0.25 per fully-diluted share

•Cash and cash equivalents totaled $13.6 million at year end

Fiscal Year 2010 Highlights


•Stock Price as of 4/18/2011: $0.75

•P/E Ratio, based on the last four quarters EPS ($0.25): 3

•Forward P/E Ratio, based on FY 2011 EPS company-issued guidance ($0.36): ~2


•Stock Price as of 4/18/2011: $37

•P/E Ratio, based on the last four quarters EPS ($1.72): 21.52

•Forward P/E Ratio, based on FY 2011 EPS analyst expectations ($2.57): ~15

Dow Chemical (NYSE: DOW)

China Clean Energy Inc. (OTC QB: CCGY)•1. Q1 2011 Results will be BETTER than the $0.09 reported for Q4

•2. They will acquire a feedstock supplier or suppliers in the second half of 2011 w/ CASH ON HAND and this will increase operating margins by 3-5%

•3. They expect 2011 EPS of $0.36...this doesn't take into account a feedstock supplier acquisition or an increase in production capacity

•4. They plan on uplisting to the Amex or NASDAQ

•5. They are actively seeking and interviewing new independent directors which are required in order to list on senior exchange

•6. Because they are a clean tech company, they will likely receive a tax rate reduction from 25% to 15% for 2011 (this isn't included in the EPS forecast either)

Highlights from the Q4 2010 and Fiscal Year

2010 Conference Call on March 30, 2011

China Clean Energy Inc. (OTC QB: CCGY)•Acquire an upstream feedstock supplier or suppliers in order to prevent supply disruptions, gain pricing power over their other feedstock suppliers, and increase gross margins 3-5%. The acquisition(s) will be funded with cash-on-hand which prevents dilution and shows management’s commitment to shareholders and their belief that the stock is significantly undervalued. (An acquisition wasn’t factored into their FY 2011 Guidance of $0.36)

Plans for 2011: Acquiring an upstream feedstock

supplier or suppliers

China Clean Energy Inc. (OTC QB: CCGY)•Uplist to a senior exchange such as the AMEX or Nasdaq. Uplisting to a senior exchange would increase awareness of the stock and open the stock up for investment by a lot of passive money and institutional investors that are prevented from owning shares in an OTC stock. This would certainly expand the P/E multiple. Management is actively seeking and interviewing persons to fill two independent director positions on their board. An independent board is one of the requirements for listing on a senior exchange. They had filled these 3 positions in January 2011, but two of the directors resigned abruptly due to factors unrelated to the company. The first resigned due to severe illness, and the second, Mr. Mudd, resigned due to the problems at ShengdaTech (NASDAQ: SDTH), a company where he is the lead independent director.

Plans for 2011: Uplist to the AMEX or Nasdaq

China Clean Energy Inc. (OTC QB: CCGY)•Expand capacity at their existing plants and/or start construction of a new plant in order to take advantage of the ever-expanding specialty chemical market growing at 15% per annum, and the growing acceptance and push for clean and renewable fuels such as biodiesel. The company won’t raise money at a stock price this undervalued, but they are generating significant cash every quarter adding to the approximately $14 Million on their balance sheet, and there are 6.2 Million warrants exercisable at $2 which would immediately inject $12.4 Million into the company and certainly help it act on its growth plans quicker.

Plans for 2011: Expand capacity at their existing

plants and/or start construction of a new

plant


A Note About the AuditorSince looking at the auditor and its reputation is one of the first things you

should do when considering investing in a small, US-listed Chinese stock, we thought it was important to point out that CCE has one of the top-rated auditors

in the world. Friedman LLP, (friedmanllp.com) is the auditor for China Clean Energy, Inc. Recently, Friedman LLP ranked number three among auditors

serving Chinese-based SEC registrant companies, according to an analysis by Audit Analytics published in the February 18, 2011 issue of Accounting News Report (ANR). The analysis was based on registrant filings. According to the

analysis, Friedman LLP precedes Big Four firms KPMG LLP and Ernst & Young LLP, and follows Deloitte & Touche and PricewaterhouseCoopers LLP. Keep in mind there are 100’s of auditors of SEC registrant companies, and many Chinese-

based companies use auditors that aren’t even ranked in the top 100.


A Note About the ValuationWe’ve shown how undervalued CCE is compared to a large cap, US-listed, well-known

company in the same business, Dow Chemical. But when you compare it to fast growing, Chinese-listed and based, small caps, it’s even more so.

The average P/E for the 500 Chinese companies that make-up the China Smallcap Index, the CSI Smallcap 500 Index (SH000905:IND) , is 28.3. CCE is trading right around a 3 P/E!

Where would the stock be trading if it had a 28 P/E? Right around $7! What if you put that multiple on their estimated FY 11 EPS of $0.36? Right around $10! The only

difference is that CCE is US-listed and not listed on an Asian exchange. Yes…small, unknown, US-listed Chinese companies have generally traded at a modest discount to

their Asian-listed peers, in recent years. But, that discount is small and decreasing, and should continue to decrease as US investors move more and more money back into

equities and look outside of the US for growth.


A Note About Their Listing on the OTC QBThere has been some confusion regarding their listing status due to the change in the suffix from CCGY.OB to CCGY.PK. They are

NOT listed on the Pink Sheets. They are listed on the OTC QB exchange which is a market tier for U.S. listed companies that are in compliance with their SEC reporting obligations. This change was made on Feb. 23, 2011. For years, .PK was a sign of a

speculative, non-compliant company, or maybe a company that had just been delisted, but now there are three different tiers that companies can be in with a .PK suffix. So, in order to prevent the negative reaction usually associated with a change to a .PK suffix, the company issued a press release on March 2, 2011 to try and prevent any misunderstandings. Because new investors may still

automatically think it’s a Pink Sheet stock when they see a .PK suffix, I thought it was best to point this out. The entire press release can be found on their website (ChinaCleanEnergyInc.com). An excerpt is below:

“China Clean Energy Inc. (OTC QB: CCGY)…announced today that the Company began trading on the OTCQB, a marketplace developed by the OTC Markets Group, as of February 23, 2011 under the ticker symbol CCGY.

The OTC Markets Group is a leader in using technology to bring positive changes to the OTC market, and many broker-dealers are now exclusively using its platform to quote OTC securities. In the past week certain market makers have stopped issuing quotes on the OTC Bulletin Board in favor of the OTCQB. As a result of the lack of quotation activity on the OTCBB, China Clean Energy is now quoted on the OTCQB. The OTCQB is a market tier for U.S. listed companies that are in compliance with

their SEC reporting obligations. The Company wishes to confirm that China Clean Energy remains current with the Securities and Exchange Commission reporting requirements and that its fillings can

be found at http://www.sec.gov.”

For accurate price and volume information regarding China Clean Energy on the OTCQB marketplace please visit: http://www.otcmarkets.com/stock/CCGY/quote

http://www.sec.gov/

http://www.otcmarkets.com/stock/CCGY/quote


Why Invest in this Company for the Long-Term?

This is an opportunity to purchase shares in a vastly undervalued, quickly growing, proven and highly profitable company that benefits from high oil prices and the push towards clean and renewable

products. (And they will even benefit from a strengthening Yuan)

Everyone knows that the 21st century will belong to China, and this stock gives you an opportunity to invest in China and its rapid growth yet still be protected by the strict regulations and reporting

requirements of the US markets. Quarter after quarter they continue to prove themselves and exceed expectations. The growth has been fast and stable and there is no reason to expect that to change in the near future. The chemicals market in China is expanding rapidly as industrial and manufacturing growth continues at a breakneck pace. This company is perfectly positioned to take advantage of it. The stock is off-the-radar, but that will certainly change when they move to a senior exchange, if not

sooner.


Investment Thesis:

Tremendous Growth Potential

Vastly Undervalued

Top-Rated Auditor

Plans to List on the Nasdaq or AMEX

Benefits from China’s Robust Domestic Growth

Benefits from High Oil

Benefits from a Strengthening Yuan and Even Inflation

Benefits from a Push Towards Clean Energy and Products

Sound Expansion and Growth Plans

Numerous Catalysts for Stock Price Appreciation

Invest in China’s Growth with the Peace of Mind of Buying a US Security

Little Debt, Strong Balance Sheet

Trading Well Below Book Value


You have questions…we have answers!

Join the discussion on our Facebook page. Feel free to post your questions or comments on our “Wall” or on the newly created “Discussion Board” found amongst the other tabs

in the upper left of our page.

You can also contact management directly by emailing the CFO at [email protected]. Unlike the CFOs of many US-listed Chinese

stocks, he is very accessible and is quick to respond to any questions. He is NY-based, so large and institutional investors would be well-served to contact him and schedule a

face-to-face meeting.

This brief presentation was put together by William C. Steppacher, Jr. a shareholder in the company. You can also view the company’s corporate presentation by visiting their

website at ChinaCleanEnergyInc.com.


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China Clean Energy Inc (for Facebook page) Apr. 27, 2011