LUZHOU BIO-CHEM TECHNOLOGY LIMITED. Corporate Presentation and 3QFY15 Results. November 13, A Mouth-Watering China Consumption Story

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1 LUZHOU BIO-CHEM TECHNOLOGY LIMITED A Mouth-Watering China Consumption Story Corporate Presentation and 3QFY15 Results November 13, 2015

2 Contents Business Overview Financial Highlights Growth Strategies 2

3 Business Overview 3

4 Operating Climate Luzhou has benefitted from favourable Chinese government policy, notably the restriction on importation of raw cane sugar in order to prop up domestic sugar producers This has resulted in domestic food & beverage producers switching to corn syrup products as a substitute Raw corn prices have also been favourable in recent years due to ample supply from government stockpiles 4

5 Operating Climate The USDA estimates that corn stockpiles in China are projected to reach 90.6 million metric tons by 2016 Source: Bloomberg, 5

6 Price Comparisons to Cane Sugar RMB/tonnes Cane sugar pricing in Nanning City, China Sep 2015: RMB 5, Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 High price of cane sugar has resulted in food & beverage manufacturers turning to alternative sweeteners For comparison, the prices of sweetener products supplied by Luzhou (as at Sep 2015) are as follows: Fructose: RMB 2,954/tonne Dextrose: RMB 2,619/tonne High Maltose Syrup: RMB 2,471/tonne Source: Company, 中国昆商糖网 6 6

7 Price Trends RMB/tonnes (excluding taxes) Corn Sweetener Corn Starch By-Products Corn 3,200 3,000 2,800 2,600 2,400 2,200 2,000 1,800 1,600 1,400 2,591 2,424 1,715 1,378 1,200 1,000 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Source: Company 7

8 Financial Highlights 8

9 9M15 Financial Highlights Group Revenue increased by 18.5% y-o-y Gross profit margin of 10.1%, 119.6% higher y-o-y; Net Profit of RMB 20.4 million, a turnaround from net loss of RMB million in 9M2014 Net Profit Margin of 1.1%, 106.6% higher y-o-y Cash and cash equivalents of RMB311.8 million as at 30 September, 2015 (RMB54.6 million as at 31 December, 2014) 9

10 Income Statement Highlights RMB mil 3QFY15 y-o-y Chg (%) q-o-q Chg (%) 9MFY15 y-o-y Chg (%) Revenue (4.2) 1, Gross Profit Profit Before Tax (13.4) Net Profit (18.2) Gross Profit Margin 10.9% % Net Profit Margin 0.8% (11.1) 1.1% Q: Three months ended September 30 9M: Nine months ended September 30 10

11 Revenue RMB mil FY10 FY11 FY12 FY13 FY14 9M15 1Q Revenue 2Q Revenue 3Q Revenue 4Q Revenue 11

12 Revenue by Product Categories Corn refining, 94.5% 9MFY15 Animal feeds, 5.4% Others, 0.1% Corn refining, 88.2% 9MFY14 Animal feeds, 11.2% Others, 0.6% Total Revenue: RMB1,910.8mil Total Revenue: RMB1,612.1 mil Y-o-y change in revenue Y-o-y change in sales volume Y-o-y change in weighted average selling price Gross profit margin Y-o-y change in gross profit margin Corn refining 26.9% 29.3% (3.9%) 10.5% 101.9% Animal feed (42.5%) (37.7%) (7.7%) 1.1% 37.5% 12

13 Revenue by Industry 9MFY15 9MFY14 Others, 31.10% Food, 30.9% Fermentation, 16.2% Beverage, 21.8% Others, 33.80% Food, 30.5% Total Revenue: RMB1,910.8mil Fermentatio n, 11.4% Beverage, 24.3% Total Revenue: RMB1,612.1 mil 13

14 Net Profit/EBITDA RMB mil FY FY FY06 FY07 FY08 FY09 FY10 FY11 FY12 9M Net Profit EBITDA 14

15 Balance Sheet Highlights RMB mil As at end 9MFY15 As at end FY14 Chg (%) Current Assets Cash & Cash Equivalents Inventories (25.3) - Trade and Other Receivables Total Assets 1, , Current Liabilities Trade and Other Payables (11.9) - Short Term Borrowings Long Term Borrowings Total Liabilities 1, ,

16 Balance Sheet Highlights RMB mil As at end 9MFY15 As at end FY14 Chg (%) Inventory Turnover Days (29.8) Receivables Turnover Days (18.2) Payables Turnover Days (15.0) Debt to Equity Ratio # (24.5) Price to Book Value* # Total interest bearing loans / Total equity * Based on share price of RMB 0.16 as at October 22,

17 Cash Flow Statement Highlights RMB mil 9MFY15 9MFY14 Chg (%) Net Cash Generated from Operating Activities Net Cash (Used in) Investing Activities (11.6) (13.5) (14.1) Net Cash Generated from/(used in) Financing Activities 27.2 (36.9) Net Increase in Cash & Bank Balances Cash & Bank Balances at Beginning of Period (23.6) Cash & Bank Balances at End of Period

18 Growth Strategies 18

19 Growth Strategies Focusing on products where the Group has pricing advantages as a high volume producer (e.g. Sorbitol), and high margin products such as fructose, high maltose syrup, maltitol, etc. Targetting sales to established customers with proven track records, including existing customers such as Coca-Cola, Pepsico, Wahaha, Tsingtao Beer, China Resources Snow Breweries, etc. Continue marketing and sales efforts to develop new customer relationships Organic growth driven by increasing consumption levels in China 19

20 Safe Harbour Statement This presentation may contain forward looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from other companies, shifts in customer demands, customers and partners, changes in operating expenses, including employee wages, benefits and training, governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. You are cautioned not to place undue reliance on this presentation and the information contain therein, which are based on current view of management on future events. Without prejudice to or derogating from the generality of the foregoing, no representation or assurance is given by Luzhou Bio-chem Technology Limited that this presentation contains all information that an investor may require. To the extent permitted by applicable law, by Luzhou Biochem Technology Limited or its related persons (and their respective directors, associates, connected persons and/or employees) shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) arising from the reliance or use of the information contain in this presentation. Investors are advised to make their own independent evaluation from this presentation, consider their own individual investment objectives, financial situation and particular needs and consult their own professional and financial advisers as the legal, business, financial, tax and other aspects as investors may regard as relevant.

21 LUZHOU BIO-CHEM TECHNOLOGY LIMITED For more information, please visit Analyst/Media Contact: NRA Capital Pte. Ltd. Evan Ong/Eruwin Sudirman Tel: THANK YOU