China Bio Energy Holdings
(CBEH.OB)
Company Presentation
Safe Harbor Statements
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Any
statements that are not historical facts are forward looking statements that involve risks
and uncertainties that could cause actual results to differ materially from those in the
forward-looking statements, which may include, but not limited to, factors related to the
CBEH’s anticipated growth strategies, future business development, ability to attract and
retain new clients, ability to develop new products, expand to other related industries or
markets in other geographical locations, and other information detailed from time to time in
the filings and future filings with the United States Securities and Exchange Commission.
Readers are advised that this information is intended for the use of investment
professionals. Anyone interested in obtaining information on CBEH should contact CBEH ,
as set forth above, to receive the CBEH’s most recent financial reports. This presentation
was developed by CBEH and is intended solely for informational purposes and is not to be
construed as an offer to sell or the solicitation of an offer to buy the Company’s stock. This
profile is based upon information available to the public, as well as other information from
sources which management believes to be reliable, but is not guaranteed by the Company
as being accurate nor does it purport to be complete. Opinions expressed herein are those
of management as of the date of publication and are subject to change without notice.
Agenda
Business Overview
Investment Highlights
Product and Industry Landscape
Management Team
Financial Snapshot
Capital Markets Summary
Investment Highlights Recap
Top 3 non-state owned oil distributor in Shaanxi province and commands 30% market share
Mainly obtained from refineries located in Shaanxi province
Delivered via rail and road through the Company’s 4 rail-linked distribution depots
Sold to retail service stations, other distributors who sell to retail service stations, as well as other petroleum
users and distributors throughout China.
Owns five retail gas stations currently and plans to expand retail business
Business Overview
One of the only two bio-diesel manufacturers in China with output capacity exceeding 100,000 ton per year
Oil is extracted from a variety of high oil-content plant seeds that grow abundantly in Shaanxi province
Manufactured via a proprietary production process
Leverages the same distribution network to sell to existing customers and acquire new customers
Processing and Wholesale of Heavy Oil and Finished Oil Products
Research and Development, Production and Distribution of Bio-diesel
Headquartered in Xian City, Shaanxi Province. 165 employees as of May 2008
Investment Highlights
Ten percent economic growth per annum requires a tremendous amount of fuel
China is now the second largest oil consumer in the world behind the United States, consuming
approximately seven million barrels of oil per day
According to "2007 Report on China Oil Market Analysis and Forecast", oil demand in China will
outstrip domestic supply by 210MM ton in 2010.
Proven track record of profitable growth: 73% top line growth since 2005; almost 385% bottom-line
growth Q107 to Q108
The bio-diesel market poised to explode as part of green/clean energy movement
Shaanxi Province accounts for 11% of China’s petroleum production
Oil output, sales and exports to rest of China doubled over the last five years
Heavily forested by seed-producing vegetation supported by the government for CBEH bio-diesel
production
Local raw material supply enough for CBEH to expand production by 600%
Energy in China: A Critical and High Growth Sector
Gas & Bio-diesel: Stability and Growth Combined
Strategic Location: Abundant Oil Supply and Bio-diesel Raw Material Supply in Shaanxi
Investment Highlights
Compatible with existing engines, better performance, cost competitive and highly profitable
CBEH uses non-edible seeds and waste oil; no conflict with food supply or prices
Top 3 non-state owned oil distributor in Shaanxi province by sales and top 2 by storage capacity
One of only two companies in China who have become operational in China with 100,000 ton bio-
diesel capacity
Total contracts of $125 million vs. $65 million in 2007, of which bio-diesel constitutes approximately
34%
Bio-diesel: Proven technology in the clean energy movement
Industry Leader: Early-mover advantage
Tremendous backlog in 2008
Agenda
Business Overview
Investment Highlights
Product and Industry Landscape
Management Team
Financial Snapshot
Investment Highlights Recap
Distribution
Oil in Shaanxi
Province
Shaanxi supplies the
rest of China
Shaanxi refiners need
distributors
CBEH leadership
position in
distribution
11% of China’s oil production
Production doubled in the last 5 years
Expected 20% annual growth to 2015
Exports to remainder of China doubled over the last five years
Shaanxi Yanchang Oil Company, the fourth largest petroleum company in China,
is CBEH’s largest supplier
Yanchang’s output doubled over the last three years, from 5 million tons to 10, all
of which is distributed via independent distributors
Top 3 by sales and top 2 by storage capacity
Rail access advantage: Only distributor in Shaanxi with access to rail that can
ship to certain locations (Yunnan, Guizhou, and Sichuan)
License as barrier to entry: One of only ten companies in Shaanxi licensed to
distribute finished oil; one of only three companies licensed to distribute both
finished oil and heavy oil
Retail Distribution
CBEH has acquired five retail filling stations to date
Plans to acquire more gradually
Enhances control of distribution chain; guaranties outlet for supply
Retail Distribution is another Key Growth Opportunity in the Long Run
Bio-diesel
Compatible with existing engines; already accepted by market
Bio-fuel used extensively in many countries
Can be blended in any ratio with petroleum-based diesel
Cost competitive
Unlike other alternative energy sources, bio-diesel has proven to be a profitable and
viable energy source
does not need government incentive to induce usage
A clean energy source
Bio-diesel releases 25% less carbon into the atmosphere than premium gasoline
does and 78% less than regular diesel does
Compared to petro-diesel, lower sulfur and arene, higher oxygen, decreasing
emission by 14%, total oxidation of coal by 13% and CO2 by over 70%
Renewable
Bio-diesel can be made from various renewable plants including prickly ash, cornel,
pistacia chinensis, castor, jatropha curcas, oil cypress and xanthoceras sorbifolia,
etc.
Do not have to use edible crops
Bio-diesel is the Mainstream Component of Clean Energy Movement
Superior engine performance
Better lubrication: Decreases wear and tear of the engine block and connecting rod
Higher flashpoint: Safer during transport, storage and usage
Better burning performance: Cetane number is more than 49
Government enforcement and advocate
China’s Renewable Energy Law, passed in 2005, mandates that fuel retail business must begin to include
“biological liquid fuel” in their sales or they will suffer imposed fines
The government has established a series of economic incentives and supervisory measures that promote the
use of renewable energies
Compelling demand and high growth
According to China bio-diesel industry prospects report, the country’s bio-diesel consumption will grow from
312,000 tons in 2007 to 2 million tons in 2010 and 20 million tons in 2020 (2007-2010 CAGR of 86%; 2010-
2020 CAGR of 26%)
Bio-diesel
Bio-diesel is the Mainstream Component of Clean Energy Movement
Source: 2007-2008 Report on China Diesel Industry
2005-2010 Report on China Bio-diesel Industry Prospects and Market Forecast.
Supply and Demand for Bio-Diesel
(MM ton)
Bio-diesel Supply
Diesel Demand
Bio-diesel Demand (5% diesel)
Bio-diesel Shortage
Bio-diesel Demand (10% diesel)
Bio-diesel Shortage
2007
0.3
125
6.3
6.0
12.5
12.2
2008
0.6
130
6.5
5.9
13.0
12.4
2010
2.0
220
11.0
9.0
22.0
20.0
2020
20.0
335
16.8
(3.2)
34.0
14.0
CBEH Bio-diesel Production
Bio-diesel growth accelerating
Bio-diesel facility completed in September 2007
Capacity of 100,000 tons per year; expected output 80,000 tons in 2008
Bio-diesel Processing Plant
Output capacity: 100,000 ton capacity plant already
operational
80,000 ton output in 2008 generating sales of $74 million
Oil Extraction
70% of raw material produced from 3 oil extraction plants
and 2 waste oil disposition centers in CBEH
25% is processed by CBEH suppliers who have long-term
agreement with the Company
5% is purchased from the other channels
Manufacturing
Bio-diesel Manufacturing Process
Well-established
Distribution
Channel
Low Cost
Structure and
Abundant
Resources
Bio-diesel can leverage CBEH’s existing distribution network to provide greater
return on existing assets
Most other bio-diesel manufacturers in China don’t have a license authorized by
Ministry of Commerce to distribute fuel and therefore have to sacrifice margin to sell
through distributors
Raw material costs accounts for 75% of bio-diesel’s total production cost.
Baorun collaborates closely with local governments and farmers to access stable
and cheap sources of raw materials
Baorun has rich resources of feedstock such as castor bean, Chinese pistache,
Chinese prickly ash, Chinese pine, paste oil and etc. These non-agricultural
resources can avoid impact of possible backlash against higher food prices
Positioning CBEH’s Bio-diesel
Leading
Manufacturing
Capacity
Baorun is the one of the only two bio-diesel manufacturers in China with output
capacity over 100,000 tons/year
Plans to acquire and/or build or expand or rebuild capacity to maintain leadership
position
Positioning CBEH’s Bio-diesel
Proprietary
Technology and
Quality
Assurance
Baorun has 5 patents related to bio-diesel production and collaborative R&D
partnerships with Northwest University of Agriculture and Forestry and Xian
Petroleum University
Baorun’s proprietary processing technology has the advantage of lower operating
temperature, better and more efficient separation
Testing report from National Authority Testing Center certifies that CBEH bio-diesel
meets standards enforced in the US and Germany
Low Cost
Structure and
Abundant
Resources
Following the model “Company + Local Government + Farmers”, Baorun works
closely with local governments and farmers to establish 3,610,000 acres of bio-
diesel feedstock plant base. Each acre of feedstock can produce 0.12 ton bio-
diesel which translates to 430,000 tons of bio-diesel. Baorun has set up 5 collection
centers in the province to harvest the plants
Wildly grown plants in Shaanxi Province can support more than 100,000 tons of bio-
diesel production annually
Xi’an Waste Oil Disposition Center established jointly with Xi’an Environment
Protection Bureau, which has an exclusive license to collect waste oil from
restaurants and other establishments in Xi’an metro area that has approximately
12MM population; A new oil disposition center established near bio-diesel facility
Shaanxi Province generates 150,000 tons of waste oil annually which can
manufacture 135,000 tons of bio-diesel
Management Team
Joined Baorun in 2005, in charge of research and development of bio-diesel
Specializes in oil extraction, trans-esterification and separation technologies for bio-diesel
production
Led key alternative energy projects in multiple chemical companies and has several
projects funded by Chinese National Academy of Science
Ph.D. in chemical engineering from Sichuan University
He, Nengde
Chief Technology Officer
Appointed as CFO in September 2005
Served as CFO of Xi’an Dongfang Oil Group Co., Ltd., a Chinese petroleum producer,
from 2000 to 2005
B.S. in Accounting from Xi’an Northwest University in 1997; currently pursuing MBA from
Xi’an Jiaotong University
Li, Gaihong
Chief Financial Officer
Joined Baorun in 2005
Served as Manager of Sinopec, Hubei from 2000 to 2005
Established the Company’s sales system and led Baorun’s transition from sale of fuel oil to
sale of finished oil products
Chen, Jun
Chief Operating Officer
Extensive experience in the research and marketing of oil products
Founded predecessor company to Baorun in 1996; founded Baorun in 1999
Prior to founding the Company, Mr. Gao worked in the Oil and Chemical Department of
Shaaxi Province and Zhongtian Oil and Chemical Group, responsible for R&D and
marketing
BS degree in mechanical engineering from Xi’an Technology University and MBA from
Xi’an Communication University
Gao, Xincheng
Founder and CEO
Agenda
Business Overview
Investment Highlights
Product and Industry Landscape
Management Team
Financial Snapshot
Investment Highlights Recap
Summary Income Statement
($MM)
Revenue
Gross Profit
Operating Profit
Net Income
Comprehensive Income
Revenue Growth
Net Income Growth
Gross Margin
Operating Margin
Net Margin
12/31/2005
29.2
4.4
4.2
4.1
4.3
15%
14%
14%
12/31/2006
54.4
5.8
5.4
5.3
5.8
86%
29%
11%
10%
10%
12/312007
87.1
10.1
8.4
8.6
10.3
60%
61%
12%
10%
10%
1Q07
11.6
1.1
1.0
1.0
1.1
10%
9%
8%
1Q08
35.6
5.0
4.7
4.7
5.8
208%
384%
14%
13%
13%
Financial Performance
Financial Performance
Capital Markets Summary
Ticker Symbol
CBEH
Share Price (05/21/2008)
$8.50
Shares Outstanding (Treasury)
33.3mm
Market Capitalization
$255mm
TTM Revenue (03/31/2008)
$111.1mm
TTM Net Income (03/31/2008)
$12.3mm
TTM EPS (03/31/2008) (Treasury)
$0.37
Investment Highlight Recap
Energy in China: A Critical and High Growth Sector
Gas & Bio-diesel: Stability and Growth Combined
Strategic Location: Abundant local Oil Supply and Supply of Bio-diesel Raw
Materials
Bio-diesel: Proven technology in the clean energy movement
Industry Leader: Early-mover Advantage
Tremendous backlog entering 2008
Thank you!
http://www.chinabaorun.com/
