Company Presentation
December 2009
“Improving the
nutrition of plants
and animals to
better meet the
health needs
of consumers”
1
Safe Harbor Statement
The market and industry information contained in this document has not been independently verified. No
representation or warranty, whether express or implied, is made as to, and no reliance should be placed on, the
fairness, accuracy, completeness or correctness of such information or opinions contained herein. Neither the
Company nor any of its affiliates, advisers or representatives shall have any liability whatsoever (in negligence or
otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in
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This presentation contains statements that reflect the Company’s beliefs and expectations about the
future, such as the Company’s anticipated growth strategies, future business development, ability to attract and retain
new clients, ability to develop new products, and ability to expand to other related industries or markets in other
geographical locations. These forward-looking statements are based on a number of assumptions about the
Company’s operations, and are subject to risks, uncertainties and other important factors, many of which are beyond
the Company’s control, and, accordingly, actual results may differ materially from the results discussed in these
forward-looking statements.
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United States without registration with the United States Securities and Exchange Commission (the “SEC”) or an
exemption from such registration. Any offering of the Company’s common stock to be made in the United States will be
made solely by means of the statutory prospectus. The prospectus will contain detailed information about the Company
and as well as the financial statements of the Company. Any decision to purchase the Company’s common stock in the
offering for sale in the United States or anywhere else should be made solely on the basis of the information contained
in the prospectus. The prospectus will be made publicly available in due course and can be obtained free of charge
from the SEC’s website at www.sec.gov <file://www.sec.gov/ >.
2
Offering Summary
Issuer:
Yongye International, Inc.
Equity Snapshot:
NASDAQ Ticker: YONG
Offering Size:
8,500,000 common shares (all primary)
Green Shoe:
15% (all primary)
Use of Proceeds:
Secure strategic raw material (lignite coal) resources
Increase production capacity
Establish demonstration sites to support market expansion
Working capital and general corporate purposes
Expected Date of Pricing:
Week of December 14th
Joint Bookrunners:
Roth Capital Partners
Oppenheimer & Co.
3
Company and Business Overview
4
Corporate Overview
We are a leading developer, manufacturer, and distributor of plant and animal nutrient
products in the People's Republic of China
Key Facts
Founded in 2003
Headquarters in Beijing
Research and production facilities in
Hohhot, Inner Mongolia
320 employees as of Sept 30, 2009
10,000 tons of total annual production
capacity for plant nutrient product
Products – “Shengmingsu”
Superior plant and animal nutrient
products
Market
Growing market coverage from primarily
four northern province to across China
Effective “branded store” model
2006-2008
CAGR 259.4%
2006-2008
CAGR 409.6%
94.7%
Growth
109.7%
Growth
Revenue
Operating Profit
($ millions)
($ millions)
Yongye Group
Yongye International
Yongye Group
Yongye International
5
Shengmingsu: Superior,
Broad-Based Plant Nutrient
Fulvic Acid
A complex, acidic, biochemical polymer
Naturally occurring substance created by the decomposition
of plant and animal materials
Chemically extracted from humic acid, which is derived
from lignite coal
Increases natural strength and ability of cells to combat
sickness and disease
Shengmingsu Liquid Plant Nutrient
Nutrient-rich liquid composed of highly concentrated fulvic
acid base
Supplements the absorption of fertilizer and soil minerals
Enhances plants’ natural resistances to diseases and pests
Increases water and nutrient holding capacity
Improves appearance and nutritional value
Shengmingsu Powder Animal Nutrient
Provides natural antibiotic-type properties to help reduce
inflammation
6
Supplements and Enhances
Traditional Fertilizers
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 – several 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)
Biotechnology
(targets the seed)
Fertilizer
(targets the soil)
Shengmingsu
(targets the plant)
7
Key Investment Highlights
Strength and experience of management team
Exceptional growth history and potential in sales and profit
Name brand recognition supported by integrated marketing campaign
Imperative to enhance agricultural yields creates strong market demand
An effective and scalable “branded store” distribution model
Compelling value proposition of return on investment for farmers
Proprietary extraction process for high quality fulvic acid backed by
strong research and development platform
5
1
3
4
6
2
7
8
Imperative to Improve Agricultural
Productivity in China
Robust demand for agricultural products and limited arable land
create strong need to increase yield
Source: National Statistics Bureau of China; Ministry of Land and Resources
China’s Arable Land and Population
Limited and shrinking arable land
Arable land per capita in China is one-third of
global average
Urbanization, desertification due to climate
change and pollution encroaches upon
farmland
Increasing wealth of Chinese population
expected to increase spending on agricultural
products
Government support for the agricultural industry
RMB 595.5 billion on agriculture, rural areas
and farmers, including RMB 102.9 billion in
direct subsidies for grain production and
purchases of agricultural materials
9
Overuse of Chemical Fertilizers
in Attempt to Boost Productivity
Demand for organic fertilizers and nutrients is expected to grow as Chinese farmers
increasingly recognize the need for alternative means to increase productivity
Source: National Statistics Bureau of China
Rising Preference for
Organic Fertilizers and Nutrients
Rapid Increase of Green Food Sales Spurs
Demand for Organic Fertilizers/Nutrients
Source: China Green Food Development Center
10
An Effective and Scalable
Distribution Model
Local Partnership
6,971 Independently Owned Branded Stores
Leverage provincial level distributor’s local knowledge to
enable quicker market entry
Branded stores at village level sell product directly to
farmers
Highly supported distributors and branded store owners
create satisfied customers and brand loyalty
Yongye’s advertising campaign helps distributors to drive
significant branded stores network growth.
Branded stores become more prominent locally due to
Yongye’s promotional displays and technical support
Higher customer traffic increases branded stores
profitability
Yongye Branded Store
Neighboring
Competitor Store
Shanxi
Henan
Xinjiang
Hebei
Gansu
Inner Mongolia
Shandong
Jiangsu
Hubei
Liaoning
Guangdong
11
Integrated Marketing Campaign
Builds Brand Recognition
National and Local Advertising Strengthens Brand Image
CCTV-7 – China’s national
agricultural channel
Local television stations
Local newspapers
Village-Level Marketing Raises Local Awareness of Shengmingsu
12
Integrated Marketing Campaign
Builds Brand Recognition
Highly Effective Village-Specific Case Studies
Support to Distributors and Farmers
Stories that are highly relevant to farmers
Demonstrates a farmer’s incremental revenue,
original investment and harvesting time saved from
using Shengmingsu
Translates product efficacy directly into dollar terms
Product training courses
Conferences and seminars
Product demonstrations
Educational pamphlets, magazines and infomercials
Our channel development success and brand recognition create opportunity for product extensions and
agricultural-input product partnerships, which can leverage in our branded stores to further grow revenues
Crop - Radish
Expense – RMB 42
Return – RMB 2,360
Yield Increase – 100%
13
Manufacturing facility in Hohhot, Inner Mongolia with
capacity to produce:
10,000 tons per year of liquid plant product
1,000 tons per year of powder animal product
Yongye has a proprietary extraction process for
deriving fulvic acid from humic acid
Produces high quality fulvic acid compound
Small molecular weight
High bio-activity coefficient
Patented mixture process stabilizes the extract and
combines with micro-nutrients
Automated manufacturing processes
ISO 9001:2008 certification
Highly Efficient Manufacturing
14
Six modern greenhouses and one open test field in
Hohhot facility
In-house research lab with 28 research personnel
Project partnerships with top agricultural universities
and research institutes
Chinese Academy of Agricultural Sciences
Beijing University of Agriculture
Inner Mongolia Academy of Agricultural Sciences
Inner Mongolia Agriculture University
Obtained invention patent for plant nutrient product in
China for unique mixture process; animal product patent
is pending
Developing crop nutrient product extensions to fuel
market expansion over the long-term
Strong R&D Platform
15
* Source: Yongye internal studies; broadly supported by academic research ** Source: Yongye internal 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 up to 18%, increased sugar content up to 37%*
Potatoes
Increased yield up to 17%, 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 leaves/roots)
Enhanced crop taste, nutrition and appearance
Value proposition – for every 1 RMB spent, farmers will
gain 10 RMB back in increased value in marketplace
Case Study – a farmer invested 42 RMB on three
applications of Shengmingsu that resulted in improved
radish yield leading to return of 2,360 RMB
Compelling Value Proposition of
Return on Investment for Farmers
16
China Market
Highly fragmented with over 4,000 fertilizer products and 522 humic acid based products as of
November 2009
Fulvic acid based products are still high growth products in markets we serve
We believe we have the following competitive advantages versus our international, national and
regional competitors:
Strong Competitive Positioning
International
Competitors
National
Competitors
Regional
Competitors
Brand Recognition
Nationwide Distribution
Local Market Knowledge
High Product Quality
Competitive Pricing
17
Comparison with Listed Peers
(NASDAQ: YONG)
China Green
Agriculture
(NYSE: CGA)
China Agritech
(NASDAQ: CAGC)
Products
Fulvic acid-based
liquid nutrients
Humic acid-based
liquid fertilizers
Agricultural products
Humic acid-based
liquid / granular
fertilizers
Distribution Model
Distributors
Yongye branded
stores
Distributors
Third-party agents
Sales
offices/agencies
9M09 Operating Matrices in Nutrient / Fertilizer Segment
% of Total Revenue
97.7%
86.6%
100%
Revenue
$86.0
$26.5
$55.4
9M09 vs. 9M08 Rev Growth
93.0%
56.6%
50.0%
Gross Margin (%)
53.1%
63.0%
39.6%
18
Focused Growth Strategy
Pursue vertical integration
Seek to control lignite coal resources
Secure raw material resource in our high growth industry
Substantially Improve margin by addressing the most significantly cost component
Increase product capacity to meet market demand
Liquid plant product: 10,000 TPA (current) 30,000 TPA (post-expansion)
Powder animal product: 1,000 TPA (current) 10,000 TPA (post-expansion)
Geographic expansion of distribution and branded store network
Expand to central and southern China to become a national leader vs. regional leader
Replicate our proven “branded store” model across China
Add new product demonstration sites to support new sales territories.
Enhance brand recognition on national and local levels
Conduct premium branding program on national media
Continue provincial and village level marketing campaigns to drive high visibility at local
markets
19
Experienced Management Team
Zishen Wu
Chairman / CEO
Managed ~$1.4 billion of investments in state planned economy
Served as director and chairman of several SOE conglomerates
Zhao Qiang
VP of Marketing,
Director
Led marketing for large companies, including Galanz Group
Recognized as one of the top ten marketing professionals in China
by industry magazine
Baosheng Tong
Chief Scientist
Over 20 years experience in China’s agriculture industry
Masters degree in animal nutrition and BA degree in animal
husbandry from China Agricultural University
Sam Yu
CFO
Over 10 years experience in finance and general management in
both China & the United States
MBA degree from Stanford Business School
Larry Gilmore
VP of Corporate
Strategy
Consulted with Fortune 500 companies such as Deloitte & Touché,
Nokia, & HP
Private-equity experience in PRC
20
Commitment to
Public Company Excellence
Built an independent board of directors
Sean Shao, independent director - Chairman of audit committees for several U.S.
listed companies, with prior Deloitte experience.
Xiaochuan Guo, independent director - Dean of the College of Economics &
Management, Inner Mongolia University
Xindan Li, independent director - Dean and Professor of Finance at the Graduate
School of Management Science and Engineering at Nanjing University
Rijun Zhang, independent director - Professor in animal nutrition and feed
biotechnology at China Agricultural University (Beijing)
Appointed well-qualified, English-speaking Chief Financial Officer
Sam Yu joined Yongye in April 2009
Selected a “big 4” independent audit firm
Appointed KPMG Huazhen as independent auditor in May 2009
Listed common shares on major United States stock exchange
Began trading on the NASDAQ Global Select Market on September 3, 2009
21
Financial & Operational Overview
22
Rapid Revenue Increase Driven by
Highly Scalable Distribution Network
Sales
Number of Yongye Branded Stores
Revenue in 9M09 surged 94.7% vs. 9M08 due to rapid expansion of our distribution
network and an increased footprint in each community via our branded stores
2006-2008
CAGR 259.4%
94.7%
Growth
Yongye Group
Yongye International
Yongye Group
Yongye International
23
Solid Gross Profit and Margin
Gross Profit
Net Income
(1) Excluding charge s associated with the increase in fair value of warrants
($US million)
($US million)
Yongye Group
Yongye International
(1)
(1)
(1)
12.0%
Yongye Group
Yongye International
33.2%
23.3%
27.0%
26.4%
27.2%
44.6%
51.8%
52.0%
53.1%
2006-2008
CAGR 396.3%
98.8%
Growth
2006-2008
CAGR 400%
90.1%
Growth
Margin
Margin
24
Balance Sheet Highlights
($ in millions)
Sept. 2009
Dec. 2008
Dec. 2007
Cash and equivalents
$3.5
$4.5
$0.4
Accounts receivable
43.3
2.7
1.6
Inventories
31.0
20.7
9.9
Total current assets
78.6
29.0
12.9
Total assets
87.6
34.5
23.1
Derivative liabilities – fair value of warrants
22.3
2.1
Nil
Total current liabilities
47.1
5.6
10.2
Long term loans
0.3
0.4
Nil
Total shareholders’ equity
40.1
28.5
12.9
Total liabilities and shareholders’ equity
87.6
34.5
23.1
Yongye Group
Yongye International
25
Key Investment Highlights
Strength and experience of management team
Name brand recognition supported by integrated marketing campaign
Imperative to enhance agricultural yields creates strong market demand
An effective and scalable “branded store” distribution model
Compelling value proposition of return on investment for farmers
Proprietary extraction process for high quality fulvic acid backed by strong
research and development platform
5
1
3
4
6
2
7
Exceptional growth history and potential in sales and profit
26
Thank You
“Improving the
nutrition of plants
and animals to
better meet
consumers’
health needs”
27
