This presentation by China XD Plastics Company discusses improving the world with technology through investing in their company. It includes a safe harbor statement, an overview of the company as the largest Chinese manufacturer of modified plastics for automobiles. It highlights the company's competitive advantages including their geographic location, large customer base, proprietary technology, and focused growth strategy to expand into new regions of China. Financial highlights show increasing revenue, gross profit, and net income over time.
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China XD Plastics
1. Improve the World with Technology
Investor Presentation
September 2009
2. Safe Harbor Statement
This presentation may contain forward-looking statements and management may make additional
forward-looking statements in response to your questions. Such written and oral disclosures are
made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.
All statements other than statements of historical fact in this presentation are forward-looking
statements, including but not limited to, the Company’s ability to raise additional capital to finance
the Company’s activities; the effectiveness, profitability, and the marketability of its products; the
period of time for which its current liquidity will enable the Company to fund its operations; the
Company’s ability to protect its proprietary information; the Company’s ability to secure raw
material supplies to support its production plans; the Company’s ability to operate its plants
efficiently; general economic and business conditions; the volatility of the Company’s operating
results and financial condition; the Company’s ability to execute is expansion plans; the
Company’s ability to attract or retain qualified senior management personnel and research and
development staff; and other risks detailed in the Company’s filings with the Securities and
Exchange Commission. Although we believe our expectations expressed in such forward looking
statements are reasonable, we cannot assure you that they will be realized. Investors are
cautioned that such forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from the anticipated results, and therefore we refer you to a
more detailed discussion of the risks and uncertainties in the Company’s filings with the Securities
& Exchange Commission.
The forward-looking statements contained in this presentation are made only of this date, and
China XD Plastics is under no obligation to revise or update these forward-looking statements.
2
3. Who We Are
China XD
China XD
Value Creator of the Supply Chain
Value Creator of the Supply Chain
Develops, manufactures, and
distributes modified plastics, primarily
Oil Refineries
for the use in the exterior and interior
trim and in the functional components
of more than 30 automobile models.
Plastic Resin
Suppliers
Modified Plastics
Manufacturers
Auto Makers
Plastic Auto Parts
Manufacturers
3
4. Corporate Overview
Key Facts
Largest Chinese Manufacturer of Headquartered in Harbin, China
Modified Plastics for automobile Total usable area of 336,400 square feet
applications in China Annual production capacity of 70,000 tons with 19
operating production lines
396 full time employees
Products
Modified Polypropylene, modified ABS, modified
Nylon, alloy plastic, engineering plastics and
environment friendly plastics, 129* of which are
certified by auto makers
Applications and Customers
Mainly used in automotive exterior and interior
trim and functional components, as well as
industrial plastic parts and components used in
large-scale oil fields, mining machinery, vessel
propulsion system, high-speed trains, aerospace
etc.
End users include China FAW, the largest auto
maker in China, Brilliance Auto, Hafei Auto, and
among other car manufacturers in China.
* as of June 2009
4
5. Products and Applications
End Applications
Over 90% of Products
Product Portfolio Divided into
are Modified Plastics 6 Categories
for Automobiles
• Modified Polypropylene
• Modified ABS
• Modified Nylon
• Alloy Plastics
• Environment-friendly plastics
• Engineering Plastics
Interior parts and components • Special engineering plastics
(Such as Instrument board, glove
box, etc.) (under development)
Exterior parts and components Function components (Such as air
(Such as door mirror, front and rear conditioner’s shell, engine cover , etc.)
bumpers, etc.)
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7. Capital Market Summary
OTC BB Symbol CXDC
Share Price (previously closed on 09/01/09) $5.85
Market Capitalization $231.4 MM
Shares Outstanding (fully diluted)* 39.6 MM
Net Revenues (TTM) $100.6 MM
Gross Profit (TTM) $21.6MM
Net Income (TTM) $15.5 MM
Earnings per Common Share (fully diluted) $0.39
P/E (TTM) 14.9X
Fiscal Year End December 31
* Revenue, Gross Profit, Net income and P/E(TTM) / Shares Outstanding and EPS (As of June 30, 2009)
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8. Key Milestones
19 production lines in use, annual
capacity reached 70,000 tons
7 Jan 2009
Listed in the US Capital Market 6 Dec 2008
Xinda Macromolecule Material
5 Nov 2007
Research Institute was established
Capacity more than tripled and 4 Jan 2006
reached 25,000 tons
First 2 production lines were launched
with annual capacity of 7,000 tons
3 Jan 2005
Harbin Xinda Macromolecule Material
Inc. was founded
2 Sep 2004
Harbin Xinda Nylon factory, the
predecessor of the Company was
1 Jul 1985
founded
8
9. Market Opportunity
Automobiles
Automobiles
China Automobile Production ( in million) China Automobile Sold (in million)
Production Sold
12.0
11.4 35% 14.0 12.4 40%
9.4 30% 12.0 35%
10.0 8.5 8.9 9.6 30%
8.0 7.3 25% 10.0 29.2%
8.0
7.3 25%
21.3% 20%
6.0 23.3% 20%
16.4%
15% 6.0 23.3% 21.9%
4.0 15%
10.6% 10% 4.0
7.9% 10%
2.0 5% 2.0 5%
0.0 0% 0.0 0%
2006 2007 2008 2009E 2006 2007 2008 2009E
Key Drivers:
• Rising income and growing affluence of middle class in China
• Growing Consumption of automobiles in China
• Economic Policy stimulating the consumption of automobiles in China
Source: National Bureau of Statistics of China
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10. Market Opportunity
Modified Plastics for Automobiles
Modified Plastics for Automobiles
China Automotive Plastics Demand Domestic vs. Imports
Volumes ("000 metric tons)
1,600 1,414 40%
1,400 31% 33% 35% 2004 2009 E
1,200 1,060 30%
23% 955
1,000
730
25%
(0.7mm tons) (1.4mm tons)
800 20%
600 15%
400 11% 10%
35%
200 5%
- 0%
31%
2006 2007 2008 2009E
Sales ($ billion) 69% 65%
46%
$3.50 50%
44% $2.86
$3.00 40%
29% 35%
$2.50 $1.96 Domestic Imported
$2.00 30%
$1.36
$1.50 $1.01 20%
$1.00
10%
$0.50
$- 0%
2006 2007 2008 2009E
Source: National Bureau of Statistics of China, “Chinese markets for Automotive Plastics” from
Research and Markets, and China XD’s estimate
10
11. Cash For Clunkers
vs. Cars Go Villages
Cash For Clunkers Cars Go Villages
• Borrowing from future sales? • Creating a new market for automobiles,
most buyers are first time and potentially
repeating buyers
• Has ended on Aug. 24, 2009 • Will last until the end of this year
• Enough for 650,000 to 850,000 cars* • Enough for 1-1.7MM cars**
*: Based on $3,500 or $4,500 rebate per car
**: Based on RMB 3,000 or 5,000 rebate per car 11
12. Competitive Advantages
Strong Competitive Position
•Customized
products • Geographic Advantage
Adjacent to China’s largest automobile
center
The northern region of the PRC is a
relatively low cost resource center
University-educated local workforce
available
•High •Large
barrier Attractive customer • Strong Government Support
of entry ROI base Extended tax benefits: 15% tax rate
through 2011
Superior credit profile at local banks over
years
• Leading National R&D Center
Proprietary formulas developed by our
own research institute
•Lower cost • Excellent Customized Service
production Long history of excellent customized
service to auto OEMs in China
12
13. Manufacturing Process
Measuring and Plasticizing and Cooling and Homogenizing
Blending Extrusion Cutting and Packing
State-of-the-Art Manufacturing Facilities
13
14. Technology Innovation
Panel of Consultants: Top Scientists and Experts in Modified Plastics
Wu, Zhongwen: Chief Scientist, Jilin University
Zheng, Kai: Secretary General, China's Plastics Engineering Industry Association
Huang, Yudong: Harbin Industrial University
Li, Bin: Eastern Forest Industry University
Xing, Yuqing: Harbin Industrial University
Jiang, Zhenhua: Jilin University
Talents at The Research Institution
66 researchers with average working experiences over ten years in modified plastics
research and development
90% with PhD. Master or bachelor degrees
Industry Leading Modified Plastic Research Institute
Industry Leading Modified Plastic Research Institute
The most advanced auto-specific polymer research institution
in China
Has 102 sets of state of the art equipments in macromolecule
industry
14
15. Strategic Location
Daqing
Currently, the Harbin
company is focusing
mainly on coverage of the Changchun
Northeast China
Shenyang
Beijing
By 2013, the
company plans to cover Tianjing
North China markets and
becomes one of the major Qingdao
suppliers in this region
Nanjing
Shanghai
Wuhan
By 2015, the Chongqing
company plans to cover Chengdu Zhejiang
East China markets and
becomes one of the major Fuzhou
suppliers in this region
Guangzhou
Shenzhen
● Represents the main targeted market in Northeast China
● Represents the main targeted market in North China
● Represents the main targeted market in East China
15
16. Focused Growth Strategy
Geographic Expansion Targeting Major Strategic Rationale
Automotive Manufacturing Regions
The Northeast base to achieve sales
output of 100,000 tones by 2010.
Daqing Achieve economy of scale
Harbin
100,000 tons
Sustain investment in research
Changchun
The North China base to achieve sales output
Shenyang
and development to ensure the
of 100,000 tons by 2011, together adding the
total production up to 200,000 tons. Beijing leading edge technology and
200,000 tons
Tianjing develop more number of high
Qingdao
value-added products
The East China base to achieve sales
output of 100,000 tons by 2013, with the
total production up to 300,000 tons. Nanjing Increase market share through
300,000 tons Chongqing Wuhan
Shanghai geographic expansion of sales
Chengdu Zhejiang network and selected
Fuzhou acquisition
Guangzhou
Shenzhen
16
17. Financial Highlights
Revenues ($ Millions) Gross Profit ($ Millions) Net Income ($ Millions)
%
74
%
%
51
25
≈
$75.8 $13.7
≈
≈
h
$17.3
t
ow
h
h
t
t
ow
ow
Gr
Gr
Gr
$58.3
Y
Yo
Y
Y
$12.4
Yo
Yo
8% $9.0
13
0%
≈ 9%
14
15
R $7.2
≈
G $34.2 R
A $33.5 G $8.2
GR
C A
C $5.3
CA
$6.3
$13.4 $2.2
$2.8
2006 2007 2008 1H2008 1H2009
2006 2007 2008 1H2008 1H2009 2006 2007 2008 1H2008 1H2009
17
19. Financial Highlights
Second Quarter 2009
Second Quarter 2009
• Revenue was $31.9 million, 38.2% increase from the Q2 2008
• Gross profit was $6.7 million, 15.1% increase from the Q2 2008
• Gross profit margin was 20.9%, compared to 25.1% in the Q2 2008
• EBITDA was $6.2 million, 12.5% increase from the Q2 2008
• Net income was $5.0 million, while non-GAAP net income excluding the non-cash charge was $5.4
million, 6.5% increase from the Q2 2008
• Diluted earnings per share was $0.13 and non-GAAP diluted earnings per share was $0.14, up
22.7% and 35.9%, respectively, from the Q1 2009
Three Months Ended Six Months Ended
$ in millions Change Change
Q2 Q2 vs.Q2 H1 H1 vs.H1
2009 2008 2008 2009 2008 2008
Revenue $31.9 $23.1 38.2 % $58.3 $33.5 74.2 %
Gross Margin 20.9 % 25.1 % -4.2 % 21.3 % 24.3 % -3.0 %
Op Income (Loss) $5.3 $5.3 -$0.2 % $9.7 $7.3 31.7 %
Depreciation & Amortization $0.5 $0.2 89.5 % $0.9 $0.4 120.6 %
Net Income $5.0 $5.1 -2.0 % $9.0 $7.2 25.3 %
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21. Financial Highlights
Balance Sheet
Balance Sheet
June. 30, Dec. 31,
($ '000 )
2009 2008
Cash and cash equivalents 1,467 3,869
Accounts receivable 9,732 11,235
Inventory 14,874 12,439
Total Current Assets 44,883 44,755
Property, plant and equipment, net 19,124 19,333
Total Assets 64,677 64,714
Accounts payable 17 113
Short Term Debt 20,203 20,520
Total Liabilities 31,196 40,653
Total Shareholders' Equity 33,481 24,061
Total Liabilities and Shareholders’ Equity 64,677 64,714
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22. Management
Jie Han, Chairman and Chief Executive Officer – Mr. Han founded Harbin Xinda Nylon Factory in 1985 and co-
founded Xinda in 2004. With 25 years of industry experience, Mr. Han is an expert in the modified plastic industry. He
currently serves as executive director of China Plastic Processing Industry Association, as an outstanding entrepreneur
at the industry of modified plastics, and as director of the Heilongjiang Industry Commerce Association. In addition, Mr.
Han serves as a deputy to the Harbin Municipal People’s Congress.
Taylor Zhang - Chief Financial Officer – Mr. Zhang is a native of Harbin and has over seven years of experience in
finance and operation in a broad range of industries. Prior joining China XD, Mr. Zhang served as CFO of Advanced
Battery Technologies, Inc (Nasdaq: ABAT). From 2007 to 2008, he served as Executive Vice President of Finance in
China Natural Gas (Nasdaq: CHNG). From 2005 to 2007, Mr. Zhang worked as a research analyst in New York Private
Equity . He holds a MBA from University of Florida.
Qingwei Ma, Chief Operating Officer – Appointed as Chief Operating Officer in 2008, Mr. Ma had been serving the
company and was General Manager of Xinda Macromolecule from 2004 to 2008, during which Mr. Ma led the
successful establishment of sales network, building a comprehensive system ensuring effective and efficient purchase,
production, marketing and other functions. Prior to joining Xinda, Mr. Ma worked for Harbin Xinda Nylon Factory, the
Company’s predecessor, for 6 years. Mr. Ma has 12 years of experience in the modified plastics industry.
Junjie Ma, Chief Technology Officer – Mr. Ma has over 12 years of experience in the modified plastic industry. He
successfully established the research institute and helped the Company to gain 122 certifications from Chinese auto
makers, the largest number of certifications among Chinese companies. He has organized and formed a top class
science advisory team and maintains close collaboration relationship with Chinese macromolecule well-known science
R&D institutes and universities. As a result, Mr. Ma is effectively taking full advantage of state-of-the-art R&D devices
and top technique talents to keep the institute’s leading position in China.
22
23. Independent Directors
Lawrence W. Leighton – Chairman of Audit Committee
Mr. Leighton has had an extensive 40 year international investment banking career. Mr. Leighton received his BSE
degree in engineering from Princeton University and an MBA degree from Harvard Business School. His previous
positions includes Co-Head of the Corporate Finance Department at Clark, Dodge & Co. , Limited Partner of Bear
Stern, Managing Director of JPMorgan Chase Bank and CEO of the U.S. investment bank of Credit Agricole, the major
French Bank.
Cosimo J. Patti – Chairman of Compensation Committee
Mr. Patti’s previous positions include roles as Senior Director of Strategy Management, Director of Business Strategy,
and Senior Vice President of Lehman Brothers. He is an Arbitrator of SEC and National Association of Securities. Mr.
Patti has been an Independent Director of American Oriental Bioengineering Inc. (NYSE: AOB) since
2004.
Linyuan Zhai – Chairman of Nomination Committee
Mr. Zhai worked for China FAW Group Corporation for 37 years with abundant experience in terms of technology,
production, and business management. He is a Senior Expert in the auto industry. Mr. Zhai served as general
manager of automobile manufacturing , successfully led Four Ring Company, a subsidiary of FAW group, to go
public in China. He is one of the pioneers and outstanding contributors of FAW group’s success.
Yong Jin - Independent Director
Jin, a professor at Tsinghua University and academician of the Chinese Academy of Engineering, is an executive
member of Chemical Industry and Engineering Society of China and Chinese society of particuology, vice chairman of
China Institute of Ecological Economy, director of Industrial Ecology Economy and Technology Committee, Council
Convenor of the Chemical discipline in the State Council Academic Degrees Committee, professional advisers for
Beijing Municipal Government, Lectureship Award recipient in fluidization by American Institute of Chemical
Engineers (AIChE), the world's leading organization for chemical engineering professionals, with more than 40,000
members from 93 countries, consultant for the Germany magazine " Chemical engineering & technology ". Jin has
published and presented more than 350 papers in important journals and conferences domestically and
internationally, 138 of which were included in Science. Jin also has more than 30 patent applications.
23
24. Investment Highlights
1 Tremendous Market Demand
– Driven by Large and High Growth Addressable Automobile Market in China
2 High Barriers to Entry
– Due to Strict Certification Requirements by Automotive Manufacturers
3 Industry Leading R&D Center
– State of the Art Equipment and Experienced Research Team
4 Largest Number of Certification
– Largest Product Portfolio Certified by Leading Auto Makers in China
5 Proven Operating Model
– Rapidly Growing, Sustainable and Profitable Business
6 Seasoned Management Team
– With Extensive Professional Knowledge and Years of Experience of Serving Auto OEMs
7 Well Defined Growth Strategy
– Balanced Organic Growth and Expansion through Acquisition
24
25. Contact Information
China XD Plastics Company Ltd. Investor Relations Firm:
Mr. Taylor Zhang, CFO CCG Investor Relations Inc.
Phone: +1-212-747-1118 (New York) Mr. Crocker Coulson, President
Mr. Allan Lao, IR Director +1-646-213-1915
Phone: +86-451-84346600 (China) crocker.coulson@ccgir.com
Email: cxdc@chinaxd.net Mr. Ed Job, CFA
Website: www.chinaxd.net Phone: +1-646-213-1914 (New York)
ed.job@ccgir.com
SEC Attorney Auditors
Crone Rozynko LLP Bagell, Josephs, Levine & Company, LLC
101 Montgomery Street, Suite 1950 406 Lippincott Drive Suite J
San Francisco, CA94104 Marlton, NJ 08053
Phone: (415)955-8900 Phone: (856) 346-2828
Fax: (415)955-8910 Fax: (856) 396-0022
Email: mcrone@cronerozynko.com Email: info@bjlcpas.com
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