China Bio Energy Holdings
(CBEH.OB)
A Leading Integrated Bio-diesel Producer & Distributor
Company Presentation
March 2009
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 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.
3
Agenda
Company Overview
Market Growth
Competitive Advantages
Financial Snapshot
Future Development
Investment Highlights
4
Company Overview
One of the largest bio-diesel manufacturers in
China with 100,000 ton annual capacity
The only integrated bio-diesel producer in China
with distribution license and distribution network
Leverages the same distribution network to sell to
existing customers and to acquire new customers
The only oil distributor in Shaanxi with access
to Sichuan, Yunnan and Guizhou provinces via
military rail
Controls five retail gas stations currently,
planning on further acquisitions
A Leading Integrated Bio-diesel Producer & Distributor
Extensive Distribution Network Covering over 640 Million Population
5
Accelerating Top-line and Bottom-line Growth
29.2
54.4
87.1
216.5
4.1
5.3
8.7
28.6*
0
50
100
150
200
250
2005
2006
2007
2008
Revenue
Net Income
Revenue
2005-2008 CAGR 95%
2007-2008 Growth 149%
Net Income
2005-2008 CAGR 91%
2007-2008 Growth 229%
*Non-GAAP – excluding $9.8 million non-cash, equity compensation expenses related to the release of shares from escrow to the founders for
meeting the 2008 “Make Good” provision.
6
Company Overview
Shandong
Xi’an
Bio-diesel production facility
with annual capacity of
100,000 tons
Headquarter - Xi’an, Shaanxi
Sole access from Shaanxi through CBEH’s
military rail
Distribution areas covering over 640 million
population
Shanxi
Hubei
Henan
Hunan
Sichuan
Yunnan
Guizhou
Beijing
Shanghai
Xinjiang
Fujian
Hebei
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Bio-diesel Growth Fueled by an Emphasis on Renewable Energy
Source: 2008 BP Statistical Review of World Energy; Merrill Lynch research report, CEIC Data Company, Ltd; 2007-2008 Report on China Diesel Industry
China’s Oil Consumption Outpaces Production and the Imbalance Keeps Growing
Net
Import
China’s Bio-diesel Demand is Expected to Grow Exponentially and is Supported by Government Mandates
2000-2007 Diesel
CAGR 10%
2008-2012
Bio-diesel
CAGR 184%
62
73
77
85
101
110
116
125
130
220
258
2
7
13
0
50
100
150
200
250
300
2000
2001
2002
2003
2004
2005
2006
2007
2008
2010E
2012E
Diesel Sales
Bio-Diesel Sales
8
Secured Abundant and Low Cost Raw Materials
Non-edible plants grow abundantly in Shaanxi Province and
have very little alternative uses. Feedstock includes
Chinese prickly ash, castor bean, Chinese pistache,
Chinese pine, and paste oil.
Following the model “Company + Local Government +
Farmers”, CBEH works closely with these key partners to
establish 3.6 million 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 annually
Wildly grown plants in Shaanxi Province can support more
than 100,000 tons of bio-diesel production annually
The local forestry bureau sets a guidance price and
therefore our feedstock costs are relatively stable
CBEH is working with governments to lease feedstock plant
base to further strengthen control
Right of First Refusal to Rich Resources of Non-edible Seeds
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Secured Abundant and Low Cost Raw Materials (Cont.)
Exclusive Access to Waste Cooking Oil in Xi’an Metro Area
Xi’an Environment Protection Bureau has set up four
Waste Oil Collecting Centers to consolidate supply from
restaurants and other establishments in Xi’an metro area.
We are the only company permitted to buy the collected
waste cooking oil from the bureau.
Xi’an metro area currently has 12 million population and
generates 150,000 tons of waste oil annually, which can
manufacture 135,000 tons of bio-diesel
The Environment Protection Bureau of Xi’an city sets a
guidance price which keeps our costs relatively stable
CBEH is working with other local governments to set up
similar arrangements of waste oil collection
CBEH Has Secured Feedstock Supply to Support 600,000 Tons Bio-diesel Production
10
One of the 10 companies in Shaanxi licensed to distribute
finished oil
One of the 3 companies in Shaanxi licensed to distribute both
finished and heavy oil
The only bio-diesel producer in China with distribution licenses
Distribution licenses are much harder to obtain now due to
increased regulation, particularly related to the environment
and safety
Synergy with Existing Distribution Network
CBEH’s bio-diesel sells through its own wholesale distribution
channel and retail gas stations
CBEH’s extensive distribution network includes a diversified,
established customer base
Other bio-diesel manufacturers have to sacrifice margin to sell
through outside distributors
Bio-diesel Sales Leverage Existing Distribution Network to Achieve Higher Margins
Distribution License Provides a High Barrier to Entry
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Stable Source of Cash for Growth
Company takes little inventory risk - Stable gross
margins despite oil price volatility
Strong cash flow to support further expansion of
bio-diesel business
Strong Distribution Business Supports Continuous Growth
The Market for Non-State-Owned Oil Distributor
PetroChina, Sinopec and CNOOC have their
own distribution network
Other oil refineries rely on third party
distributors
Large SOE refineries only supply to their own
retail stations
60% of China’s retail gas sales comes from
non state-owned retail gas stations which rely
on third party distributors for supply
Shaanxi Yanchang Oil, the fourth largest oil
producer in China, accounts for 11% of
China’s oil production
Shaanxi production and shipments to the rest
of China are expected to grow 20% annually
in the next 7 years
Established long-term relationship with
Yanchang Oil
Strategic Partnership with Leading Oil Producer
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Experienced Management Team
Gao, Xincheng
Founder and CEO
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
Li, Gaihong
Chief Financial 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
Chen, Jun
Chief Operating 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
He, Nengde
Chief Technology Officer
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
Pu, Albert
Vice President of Finance
Joined CBEH in February 2009
Global Controller of Amphenol Corporation industrial Operations (NYSE: APH), a U.S. based multinational
manufacturing company, from 2005 to 2009
18 years of accounting/management experience in the US and China
Public accounting/auditing experience with international firm (PwC) and regional firm
New York State Certified Public Accountant (CPA)
B.S. in Accounting from State University of New York Institute of Technology in 1990
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Summary Income Statement
($ in millions)
Revenue
Gross Profit
Gross Margin
Operating Income
Operating Margin
Net Income
Net Income(Non-GAAP)
Net Margin
Comprehensive Income
FY2005
29.2
4.4
15.0%
4.2
14.2%
4.1
4.1
14.2%
4.3
FY2006
54.4
5.8
10.6%
5.4
9.9%
5.3
5.3
9.8%
5.8
FY2007
87.1
10.4
11.6%
8.4
9.7%
8.7
8.7
9.8%
10.3
FY2008
216.5
33.1
15.3%
29.4
13.6%
18.7
28.6 *
13.2%
31.6
Q4 2008
59.2
10.0
16.9%
7.3
12.3%
-3.3
6.5*
11.0%
6.3
Q4 2007
22.6
3.0
13.3%
2.2
9.7%
2.1
2.1
9.3%
3.3
*Non-GAAP – excluding $9.8 million non-cash, equity compensation expenses related to the release of shares from escrow
to the founders for meeting the 2008 “Make Good” provision.
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Biodiesel Fuels Accelerating Revenues
15
Improving Profitability
2007 Revenue Breakdown
2008 Revenue Breakdown
2005-2008 Net
Income CAGR
91%
*Non-GAAP – excluding $9.8 million non-cash, equity compensation expenses related to the release of shares from escrow to the
founders for meeting the 2008 “Make Good” provision.
16
Strong Balance Sheet
($ in thousands)
Cash & Equivalents
Accounts Receivable
Inventory
Total Current Assets
Total Assets
Accounts Payable
Total Current Liabilities
Total Liabilities
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity
12/31/2008
23,119
8,164
22,269
78,288
94,694
1
10,795
10,795
83,899
94,694
12/31/2007
1,382
289
12,083
35,539
43,706
180
5,476
5,510
38,196
43,706
12/31/2006
631
5,745
7,304
19,096
20,316
2,267
6,014
6,076
14,240
20,316
17
Capital Markets Summary
Ticker Symbol (OTCBB)
Fiscal Year End
Share Price (3/19/2009)
Shares Outstanding
Shares Outstanding (Fully Diluted)
Market Capitalization
Management Ownership (Fully Diluted)
FY08 Revenue
FY08 Net Income
FY08 EPS (Basic)
CBEH
December 31
$4.15
34.2M
38.1M*
$142 M
66%
$216.5 M
$28.6 M**
$1.07**
$ #$$
FY08 EPS (Fully Diluted) $0.84**
*Includes 1.7M warrants @ $3.00 and 2.3M warrants @ $4.40
**Non-GAAP – excluding $9.8 million non-cash, equity compensation expenses related to the release of shares from escrow
to the founders for meeting the 2008 “Make Good” provision.
Current Market Conditions
China’s Oil Pricing Reform Policy
Impact on China Bio Energy
China’s fuel prices have been controlled by the NDRC for the last 9 years
Effective Jan. 1, 2009, China implemented a new pricing regime for refined oil
products aimed to link domestic oil prices more closely to global crude oil prices
In Jan. 2009, Average Sale Price for China Bio Energy’s oil products decreased
22.3% compared to 2008, substantially less than the drop in world crude oil prices
Pressure on revenues, but will maintain stable margins due to lower raw material
costs – waste cooking oil down 50% and non-edible seeds down 20%
Company’s patented technology allows the manufacturing process to utilize different
proportions of waste oil and/or non edible seeds, which enables China Bio Energy to
optimize gross margins based on input prices
Growth Strategy
Expand Bio-diesel Annual Production Capacity to 150,000 tons in 2009
Strengthen Control of Feedstock for Bio-diesel Production
Expand Distribution Network - Acquire Retail Gas Stations
Strengthen Outreach in Certain Key Distribution Areas
Move to NASDAQ or a Higher Exchange by June 30th, 2009
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20
Investment Highlight
Bio-diesel Growth Driven by Focus on Renewable Energy and Pollution Control
The Only Integrated Bio-diesel Producer and Distributor in China
Solid Cash Management and Working Capital Position
Synergy with Existing Distribution Network that Expands Margins
Secured Abundant and Low-Cost Bio-diesel Feedstock Protects Margins
Low Valuation Relative to Key Financial Metrics and Growth Trajectory
21
Contact Information
Alex Gong
VP of Capital Markets
China Bio Energy Holding Co.
Email: alexgong08@gmail.com
Phone: 011-86-13601279912
Website: www.cbeh.net.cn
Ted Haberfield
Investor Relations
HC International, Inc.
Email: Ted Haberfield
Phone: 760-755-2716
Website: www.hcinternational.net
