Investor Presentation
March 2009
2
Safe Harbor Statement
This presentation contains forward-looking statements within the meaning of the safe-
harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements
involve known and unknown risks, uncertainties and other factors that could cause the
actual results of the Company to differ materially from the results expressed or implied by
such statements, including changes from anticipated levels of sales, future national or
regional economic and competitive conditions, changes in relationships with customers,
access to capital, difficulties in developing and marketing new products, marketing
existing products, customer acceptance of existing and new products, and other factors.
Accordingly, although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, there can be no assurance that such
expectations will prove to be correct. The Company has no obligation to update the
forward-looking information contained in this presentation.
3
Disclosure Statement
This presentation and the information herein contained are confidential. By your
attendance at this presentation (if you attended in person) or your receipt of a copy of
this presentation, you agree to hold in strict confidence the existence and contents of this
presentation, including without limitation the potential offering. This presentation is being
made solely to a limited number of institutional and other sophisticated investors who
meet the definition of “accredited investor” under the U.S. Federal Securities laws. The
offering described herein is being made on a private basis and all investors will be
required to confirm their status as an “accredited investor” and agree not to resell any
securities they purchase except pursuant to an effective registration statement to be filled
with the Securities and Exchange Commission.
4
Company Snapshot
Symbol
OTCBB: YGYB
Price (3/23/09)
$1.50
Basic Shares Outstanding
26.7 mm
Market Cap (3/23/09)
$40.1 mm
Total Debt (3/23/09)
$0.4 mm
Revenue (FY08 Dec)
$48.1 mm
Net Income (FY08 Dec)
$11.2 mm
EPS (Basic)
$0.66
EPS (Fully Diluted)
$0.64
# of Employees
153
5
Investment Highlights
Yongye is engaged in the sale of fulvic acid-based plant and animal nutrients in the
People’s Republic of China
Plant nutrients products developed with Yongye patented research
Fulvic acid-based nutrients yield better results when complementing traditional fertilizer
products
Greater economies to be achieved by bringing manufacturing in-house
Growing market penetration with franchised stores (not owned)
Strong management team led by Mr. Wu Zishen, a leader in the PRC agriculture sector
6
2001
Products
conceptualized
2003
Inner Mongolia
Yongye Biotech
Intl established
2004
Inner Mongolia
Yongye factory
opened
2005
First product
sale
2006
$3 mm in
revenue
2007
$13 mm in revenue
Filed patents
2008
U.S. Listing
$19.4 mm PIPE
$48 mm in revenue
Patent product research and acquired market intelligence has positioned
YGYB for accelerated growth
Corporate History
7
Listco registered in NV, USA
Headquarters in Beijing
Contracted production facility in Hohhot, Inner
Mongolia
CJV established to distribute and sell products
* CJV established January 4, 2008
Corporate Structure
Yongye Biotechnology
International, Inc. (Nevada)
Fullmax Pacific Ltd. (BVI)
Asia Standard Oil Ltd. (HK)
Yongye Nonfeng
Biotechnology Company, Ltd.
(Cooperative Joint Venture –
PRC)
Inner Mongolia Yongye
Biotechnology Co., Ltd.
100%
100%
99.4%
0.6%
8
Growing Domestic Market for
Plant Nutrients
Growing scarcity of arable land in PRC
20 percent of the world’s population; 7 percent of the world’s arable land*
Situation worsening as more land used for industrial production
Every fertile hectare must support 10.3 people (vs. 5.1 in Europe; 1.6 in the US)*
Rapid urbanization
Food production and distribution is increasingly focused on supplying cities
Food security, quantity and quality, is a government priority
Over-dependence on fertilizer
Farmers spend 20% of annual income on fertilizer**
Fertilizers applied at 200% levels in an attempt to “double” overall yield**
* Source: FAO; ** USDA studies
Widely accepted need to increase food production efficiency
9
YGYB Plant Nutrients:
Complimentary to Fertilizer
Biotechnology
(Targets the Seed)
YGYB Plant Nutrients
(Targets the Plant)
Fertilizer
(Targets the Soil)
Best via Foliar (direct) application
Immediate effect on plant (< 8 hrs)
Corrects micronutrient deficiencies
Increases Uptake of Soil Nutrients
Adds own Macro & Micro Nutrients
Crossbreeding, hybridization and
genetic modification techniques
Limited by soil condition
Limited by farming practices
Slow uptake of nutrients – over days
Over-use damages the soil
Poor soil condition weakens plants ability to
uptake nutrients by 20% - 30%
Organic fertilizer has slow uptake (time released)
10
Our Flagship Product:
Shengmingsu for Plants
Nutrient-rich liquid made up of a highly
concentrated fulvic acid base
Supplements the absorption of fertilizer and soil
minerals
Enhances plant’s natural resistance against disease
and pests
Increases water and nutrient holding capacity,
especially in adverse soil and weather conditions
Produces reliable, predictable quality and
quantity results
Improved appearance, nutritional value
11
Measurable Improvements for
Farmers
* Source: Yongye internal studies; broadly supported by academic research
Carrots
Increased yield up to 25%*
Celery
Increased yield up to 25%*
Cucumbers
Increased yield up to 22%, earlier to market by 11 days*
Grapes
Increased weight of 18%, increased sugar content of 37%*
Potatoes
Increased yield up to 17.3%, blooms 7-10 days earlier*
Watermelon
Increased yield up to 17%, increased sugar content 1-2%*
Increased yields
Shorter harvest times
Extended life-cycles
(stronger & larger leaves/roots)
Enhanced crop taste, nutrition and
appearance
Superior financial return for
farmers
12
Fulvic Acid: The Key Nutrient
Fulvic Acid: complex, acidic, biochemical polymer
Produced naturally by the decomposition of plant
and animal material
Extracted from humic acid, which is available in
Leonardite coal
China has 12% of the world’s Leonardite coal
reserves
Increases natural strength and ability of cells to
fight off sickness and disease
Used in many high-end pharmaceutical, cosmetic,
agricultural and food products
Yongye has patents that cover the mixture of the
base formulas for the plant and animal nutrient
products
13
A Boost to the Fertilizer Industry
Fertilizers with Fulvic Acid
164 Products
Combination of
nitrogen,
phosphorus
and potassium
16 Products
Combination of
mineral ions
1 Product
5
Products
1 product
with most
minerals:
Yongye
PRC uses 50 million tons of
traditional nitrogen fertilizer
Roughly $50bn in 2008
(1/3 of global production)
Over-use leads to
decline in
effectiveness
Soil replenishment
Yongye’s fulvic acid plant nutrient products have the most complete
combination of nutritional elements available in the market
14
Advanced Scalable Production
YGYB proprietary extraction process of fulvic acid
from humic acid
Produces high quality fulvic acid
Smallest possible molecular weight
Higher possible bio-activity coefficients
Final process stabilizes the extract and mixes it with
micro-nutrients (patented)
10,000TPA contracted industrial scale facility in Inner
Mongolia
Will complete acquisition by Sept 2009 as part of
restructuring process
Process approved and certified
PRC Ministry of Agriculture, National Scientific Institute
and ISO 9001:2000
YGYB’s proprietary extraction process
makes the difference
15
Shengmingsu for Animals
Fulvic acid for animals
Maximizes digestion for better health
Provides natural antibiotic to prevent disease
Products
Nutrients mixed into animal feed
Tested and approved for rollout
Sold in Inner Mongolia, Hebei and Shandong
Reduced seasonality going forward
Cows
Increased milk production and quality
Reduces mastitis in dairy cows
For every 1RMB spent on Yongye Products, the farmer
receives 10RMB return from increased market sales*
* Source: Yongye internal research
16
National Market Coverage
Top 4
Provinces
Hebei, Xinjiang, Inner
Mongolia and Gansu
New trial
markets
Yunnan, Hainan, Liaoning,
Jilin and Heilongjiang
New trial provinces in the agriculture rich North-East region will provide
greater distribution balance
Brand recognition based on
over 5 years of field testing,
certification, demonstration,
promotion and sales success
Demonstrations, trials
and educational programs
to create brand awareness
and sales follow
Distribution Channels
SELLER
DISTRIBUTORS
END USERS (RETAIL)
YGYB
5 Primary
distributors for 4
largest provinces
(25 in total)
Smaller
(Intra-Provincial,
County)
70%
Yongye Branded Stores
(independently operated)
30%
Larger users
(military farms; SOE farms)
17
We work with a network of large exclusive distributors who leverage
their own channels to reach end-users
Primary Distributors:
Relationship Framework
Exclusive Arrangement with YGYB: 3 year contract
Price: Fixed price for 3 years
Volumes: Declared at the end of the prior season
Orders: 1 month in advance
Payment Terms: New Distributors (100% down-payment); L-T Customers (3 months in
advance)
Distributor Responsibilities:
Reach out to new end-users; Develop relationships with local government
Encourage development of branded stores (education)
18
Collaborative relationships with distributors achieves the
best sales results
19
Branded Store Network
(Independently Owned)
1,125 branded private owned stores
(Dec 08)
YGYB’s involvement
Centralized marketing support
Technical info with computers, CD-
ROMs and TV ads
Store proprietors responsible for
inventory, collection and sales
The Yongye brand has achieved market recognition through 5 years of
testing, certification, promotion and sales success
20
Competitive Landscape
Company/Product
Inner
Mongolia
Gansu
Hebei
Hubei
Xinjiang
Others
Changsha Gaosheng
x
China Agritech (CAGC.OTC)
Humic Acid Compound Fertilizer
$39.3m & $8.5m FY08 Rev & Net Inc
x
x
x
x
China Green Agritech (CGA.AMEX)
Humic Acid Liquid Fertilizer;
$22.6m & $9.5m FY08 Rev/Net Inc
x
x
Henan Luo Xiao Wang (private)
Regional Fulvic Acid/Humic Acid
Scale comparable to YGYB
x
x
x
Qing Niu Hei Ye Fei (private)
Humic Acid based organic fertilizer
x
Qiqihar Fuer (private)
Humic Acid based fertilizer
x
Shan'xi Weinan Hongxing (private)
Aminol Acid Fertilizer
x
21
Our Business Model
Additional Capital: Translation into Additional Earnings
Working Capital Deployed
$1.00
Sale Price of Finished Goods
$2.07
Gross Margin
$1.07
Blended Plant & Animal
Incremental SG&A
$0.05
Taxes
$0.03
Also based on revenues
(Special Development Zone
Rate); Expires Dec 2009
Minority Interest
$0.01
RATIO OF ADDITIONAL INCOME TO
ADDITIONAL EQUITY CAPITAL
DEPLOYED AS WORKING CAPITAL
$0.99 per dollar
22
Growth Strategy
Improve Asset Base:
Bring manufacturing assets (10,000 TPA) on to Balance Sheet
Continue to deploy electronic & print media campaign
Infomercials on local channels targeting farmers
Develop tailored product
Targeting specific crops and develop customized and enhanced plant products
targeting specific crops with the intent to increase yields and market position
Increasing line of animal product offerings
Market is still in its infancy so potentially a very large market
Will help reduce seasonality
Penetrate new markets
Enter into unexplored provinces
Distributors’ orders indicate that our existing 10,000 TPA facility may
reach full capacity by the end of 2009. Further construction will be
planned ahead for 1-2Q 2010
23
Total PRC Plant Nutrient Market
China Market
The overall fertilizer market is estimated to be a $50B industry in China – estimated to
grow about 30% a year from 2005 to 2009
China has about 1.81B Mu of arable land – all cash and row crops benefit from the use
of Yongye’s “Shengmingsu”
China purchased 63% more agricultural materials in 2007 than 2006 - the market is
growing rapidly
Yongye’s Market: Ten Provinces
Yongye grew about 265% in 2008
Our product is applied to about 2% of all arable land and we have about 37% market
share
Plant nutrient products are applied to about 6% of all arable land
24
Experienced Management Team
Wu Zishen, Chairman and CEO
Managed approximately $1.4 billion of investments in state planed economy
Director and Chairman of several large SOE conglomerates
Zhao Qiang, VP Sales and Marketing, Director
Led marketing for several large companies and awarded top 10 in marketing in
China, written up in EMBA case at Fudan University
Sam Yu, CFO
Over 10 years experience in finance and general management for public and private
companies in China & the US
MBA from Stanford Business School
Larry Gilmore, VP Corporate Strategy
Consulted Fortune 500 companies such as Deloitte & Touché, Alcatel, Nokia
Private Equity experience in PRC
25
Financial Performance
USD mm
FY 2007A
(Dec)
FY 2008A
(Dec)
FY 2009E
(Dec)
Revenue
$13.1
$48.1
$66.0
Gross Profit
5.9
24.9
Gross Profit Margin
44.6%
51.8%
EBITDA
5.14
13.8
Net Income
$4.4
$11.2
$15.8
Net Income Margin
33.2%
23.3%
23.9%
26
Balance Sheet
USD mm
FY 2007A
(Dec)
FY 2008A
(Dec)
Cash
$0.4
$4.5
Inventory
9.9
20.7
Receivables
1.6
2.7
Total Assets
23.1
34.5
Financial Debt (S-T)
0.0
0.4
Equity
23.1
34.5
27
Use of Proceeds
Proceeds will be used to fund the additional working capital requirement
Funding gap is projected due to increased volumes during the busy quarters (Q2 and Q3)
Majority of these orders are already secured
Orders for Q2 and Q3 must be made now
Down-payments expected given suppliers need to pay for Humic Acid
Assume most of our large L-T distributors will get 3 month receivable terms
Company should achieve the make-good results based on orders already in hand
Cash shortfall will significantly reverse towards end of the year
28
Listing on NASDAQ
N
Corporate governance
N
Shareholders (round lot holders)
N
Bid price
Y
Market makers
Y
Y
Y
Y
Y
Requirement Status
NASDAQ Capital Market Initial Listing Requirements
Stockholders’ equity
Market value of publicly held shares
Operating history
Net income from continuing operations
(in the latest fiscal year or in two of the last three fiscal years)
Publicly held shares
29
Investment Highlights
Plant nutrients products developed with Yongye patented research
Fulvic acid-based nutrients yield better results when complementing traditional fertilizer
products
Greater economies to be achieved by bringing manufacturing in-house
Growing market penetration with franchised stores (not owned)
Funds raised will help YGYB realize the significant orders already secured
Strong management team led by Mr. Wu Zishen, a leader in the PRC agriculture sector
30
Contacts
Yong Ye Biotechnology Co.
Suite 608, Xueyuan International Tower
No. 1 Zhichun Road
Haidian District, Beijing, China
Phone: 86.10.8231.8626
Fax: 86.10.8231.1797
Loeb & Loeb LLP
Company Counsel
345 Park Avenue
New York, NY 10154
Phone: 212.407.4000
Fax: 212.407.4990
MSPC
Certified Public Accountants
and Advisors, P.C.
Independent Auditors
546 Fifth Avenue
New York NY 10036-5000
Phone: 212 682 1234 ext. 3586
Fax: 212 687 8846
CCG Investor Relations
Mr. Crocker Coulson, President
Phone: 646.213.1915
E-mail: crocker.coulson@ccgir.com
http://www.ccgir.com/