China Modern Dairy Holdings Ltd. · HKEX:1117
China Modern Dairy — H1 2012 Earnings Presentation
27 slides from China Modern Dairy's earnings presentation, Feb 21, 2012
Slide 1: 2012 Interim Results Announcement
China Modern Dairy Holdings Ltd. 中国现代牧业控股有限公司 (Incorporated in Cayman Islands with limited liability) (Stock Code: 1117) 2012 Interim Results Announcement 21 February 2012
Slide 2: Disclaimer
Disclaimer This presentation material is prepared by China Modern Dairy Holdings Ltd. (the ―Company‖) solely for your information only. All or any part of this presentation material may not be taken away, reproduced, redistributed, or retransmitted in any manner. You agree to be bound by the above c
Slide 3: Company Overview
Company Overview ek Fan $ vy: FRC BL
Slide 4: Company Overview
Company Overview The largest dairy farming company in China ► Product safety crisis ► Environmental protection crisis Crises ► Disease prevention and Industrialized free-stall dairy farming business model and standardized operational procedures and farm design control crisis A solution to the
Slide 5: Our Development History and Corporate Vision
Our Development History and Corporate Vision China Modern Dairy‘s Mission and Vision To become the world‘s most advanced farm operator while remaining environmentally friendly To produce the highest-quality milk in the world with scientific breeding and feeding To provide the most trusted and safest
Slide 6: Company Status Update
Company Status Update The Largest Dairy Farming Company in China Nationwide Strategic Presence Number of Number of Number of Farms in Operation Company farms Dairy Cows Milkable Cows Shanghzhi Farm (1) Farms Under Construction 20 128,759 54,338 Helin Farm Tongliao Farm Saibei Farms I,II & III (2) He
Slide 7: Results Overview
Results Overview ek Fan $ vy: FRC BL
Slide 8: 2012 Interim Results Highlights
2012 Interim Results Highlights 2012 Interim Net Profit increased by 87.9% Dec 2011 Dec 2010 Increase/ Interim Interim (Decrease) RMB‘000 RMB‘000 % Sales of raw milk produced 735,640 457,220 60.9% Gains or loss from changes in fair value 63,508 43,149 47.2% EBITDA 234,104 145,750 60.6% EBITDA margin
Slide 9: Strong Track Record of Growth (continued)
Strong Track Record of Growth (continued) Raw milk sales volume（‘000 ton） Average milk yield（ton/ year） 7.80 195.3 117.3 7.55 2011 Interim 2012 Interim 2011 Interim 2012 Interim 9
Slide 10: Achieved Targets on Farm Development and Growth of Milkable Cows
Achieved Targets on Farm Development and Growth of Milkable Cows Farms in Operation Shanghzhi Farm Farms Under Construction Number of milkable cows (heads) Helin Farm Tongliao Farm Hengsheng Farm 128,759 Saibei Farms I ,II & III Baoji Farms I &II 107,576 Chabei Farm I Chabei Farms II & III 74,421 61
Slide 11: Key Financials
Key Financials ek Fan $ vy: FRC BL
Slide 12: Operational Efficiency Improvement
Operational Efficiency Improvement Increase Milk Yield and Reduce Cost Per Ton Breakdown of 2012 Interim Cost Structure 2012 Interim Cost Structure Cash Cost (RMB/ ton) 2,967 2,854 7% 3% Feed sosts 7% Employee benefits 9% Depreciation Other farm operating costs 74% Others 2011 Interim 2012 Interim N
Slide 13: Driver of Margin Expansion: Illustrative Economics of a Dairy Farm
Driver of Margin Expansion: Illustrative Economics of a Dairy Farm Number of Cows (‗000s) Milk Yield (ton / annum) 12 10 9 10 Milk Yield (tons / annum) 8 Number of cows ('000s) 8 7 6 6 4 Breeding – Herd Expansion At Capacity – Breeding – Rapid Yield Gradual Yield Heifers Self-Sustaining 5 No Milk Im
Slide 14: Rapid Expansion of Assets
Rapid Expansion of Assets Increase/ 31 Dec 2011 30 Jun 2011 (Decrease) RMB‘000 RMB‘000 % Biological assets 3,285,400 2,651,407 23.9% Fixed assets 2,660,073 2,221,265 19.8% Total assets 7,916,258 6,906,933 14.6% Total liabilities 3,027,611 2,184,225 38.6% Total borrowing 2,203,353 1,522,934 44.7% Lev
Slide 15: Asset Turnover Rates
Asset Turnover Rates Operating cashflow (RMB million) Turnover days 2012 FY 2011 Interim 126.8 Inventories 59 59 Trade receivables 24 29 Trade payables 49 55 • Inventories turnover for 2012 Interim was 59 days • Trade receivables turnover for 2012 Interim was 29 days; the change is related to credit
Slide 16: Investment Highlights
Investment Highlights et Fan $ vy: FRC BL
Slide 17: The Largest Dairy Farming Company in China with Significant Growth Potential
The Largest Dairy Farming Company in China with Significant Growth Potential Consumption Continues to Grow Rising milk powder import Dairy Product Consumption in China Thousand tons (RMB bn) 171.7 160 141.1 414 129.5 106.1 247 135 98 101 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Strong Gover
Slide 18: Well Established and Replicable Business Model
Well Established and Replicable Business Model Successful and Replicable Standardized and Scalable Farm Design Achieving Scientific Logistics Business Model Management of Cows, Workers and Materials Milking Hall in Close Grouping Strategies Applied ► Large-scale industrialized dairy Proximity to M
Slide 19: Comprehensive, Modern and Scientific Operations
Comprehensive, Modern and Scientific Operations Large-scale industrialized farms High Milk Yields Average Milk Yield (tons / annum) 9.0 7.8 Importing high-quality heifers 4.8 Mature Farms Modern Dairy China Average Average Average Comprehensive and modern 2012 Interim 2012 Interim insemination
Slide 20: High Quality and Safety Standards
High Quality and Safety Standards ► Centralized IT systems to constantly ► Carry out inspections at systematic intervals monitor cows Quality Control Quality Control ► Teats and equipment sanitized before use Over Milking Over Dairy Cows ► Disease detection and prevention through daily inspections a
Slide 21: Eco-Friendly Production
Eco-Friendly Production Comprehensive Waste Recycling System Improving Cost Efficiency Automatic Cow Waste Collection Reduce waste pollutants Improve work environment Anaerobic Digester Reduce operational costs Organic Bedding for Electricity Fertilizers Cows Generator Diversify revenue streams 21
Slide 22: Experienced Management Team
Experienced Management Team Highly Experienced Management Team ► Outstanding management team with an exceptional track record of building a successful business from scratch and also investing a significant portion of their personal wealth in the firm ► Senior management demonstrating leadership, str
Slide 23: Strategic Partnership with Mengniu
Strategic Partnership with Mengniu Our 10 year off-take agreement with Mengniu signed in 2008 allows us to sell up to 100% of our raw milk to Mengniu while maintaining the flexibility of selling up to 30% of our production of each farm to certain other customers Benefits for China Modern Dairy Benef
Slide 24: Business Outlook
Business Outlook ek Fan $ vy: FRC BL
Slide 25: Highly Visible and Strong Growth Prospects
Highly Visible and Strong Growth Prospects Maturing of Herds on Existing Farms New Farm Expansion ► 16 farms built since FY08 ► Established, successful business model ► More dairy cows in 3rd & 4th lactation, ► Complete site selection of 2 farms for more 2nd generation cows with gene future expansio
Slide 26: Future Strategy for Growth
Future Strategy for Growth China Modern Dairy aims to be recognized as the best dairy farm brand for raw milk in China Improve milk yield through gene improvement < > Penetrate Regions with High Demand Growth Optimise Feed Mixing < > Replicate Business Model Optimise Breeding Techniques < > Strength
Slide 27: Thank you!
Thank you! ek Fan $ vy: FRC BL
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