China Green Energy Industries, Inc. OTCBB: CGRE Investor - - PowerPoint PPT Presentation

China Green Energy Industries, Inc.

OTCBB: CGRE Investor Presentation – February 2011

• www. chinagei.com

This presentation may contain forward-looking statements. Such statements include, among others, those concerning the company's expected financial performance and strategic and operational plans, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and that a number of risks and uncertainties could cause actual results of the Company to differ materially from those anticipated, expressed or implied in the forward-looking statements. The words "believe," "expect," "anticipate," "project," "targets," "optimistic," "intend," "aim," "will" or similar expressions are intended to identify forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Risks and uncertainties that could cause actual results to differ materially from those anticipated include risks related to the company's ability to overcome competition in its market; the impact that a downturn or negative changes in the price of the company's products could have on its business and profitability; the company's ability to simultaneously fund the implementation of its business plan and invest in new projects; economic, political, regulatory, legal and foreign exchange risks associated with international expansion; or the loss of key members of the company's senior management; any of the factors and risks mentioned in the "Risk Factors" sections of the Company's amended current report on Form 10K/A filed on April 30, 2010. The Company assumes no

• bligation, and does not intend, to update any forward-looking statements, except as required by law.

SAFE HARBOR

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INVESTMENT HIGHLIGHTS

 Growing end-markets and strong government support for environmentally friendly consumer

products

 Newly-launched LEV business growing rapidly – to sustain revenue CAGR of more than 50%  Proven LEV brand of NICONIA with existing annual sales of over 200,000 units

 Premier customer base and long-term relationships with major OEMs and Fortune 500

companies

 Rapid organic revenue growth and profitability

 9 Mo. 2010 sales rose 152.8% to $23.9 million; net income increased 213.1% to $4.8 million  Projected 2010 sales of $30 million; plan to achieve > $100M in 1-2 and $200M in 3-5 years

 Highly-scalable operations and ability to gain operating leverage through increased utilization  Clean capital structure (no preferred shares, warrants or options outstanding)  Proven management team with established track records

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ABOUT CHINA GREEN ENERGY

 China Green Energy is a manufacturer and distributor of

high tech and environmentally-friendly consumer products

 Headquartered Changzhou, China

 Fortune 500 client base

 Wal-Mart, Carrefour, Home Depot, Ford, Pepsi, Coca-Cola,

Carlsberg, Disney, etc.

 Products include:

 Light electric vehicles (“LEV”)  Cryogen-free refrigerators  HDMI cables

 46,800 sq. meters manufacturing and office space

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DEVELOPMENT

 1993

Began operations of network cable

 2001

Entered cryogen free refrigerator market

 2003

Commenced sales of HDMI cables

 2008

Launched LEV division

 6/2010 Entered U.S. public capital markets  1/2011 Acquired NICONIA LEV brand

* Real pictures of China Green Energy Industries, Inc. 5

BUSINESS TERRITORY

By September 30, 2010, 27.1% of sales revenue contributed by overseas customers. Our major overseas customers are located in the USA, UK, Germany, the Netherlands, Taiwan, etc.

Changzhou PRC USA Australia Europe 6

IMPROVING PRODUCT MIX

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Cryogen-free Refrigerator Light Electric Vehicle Cryogen-free Refrigerator Cable & Wire Light Electric Vehicle

2009 2011 (E)

38% 61% 1%

15% 31% 54%

2011

LIGHT WEIGHT ELECTRIC VEHICLES (LEV)

 Entered LEV market in 2008  Acquired NICONIA brand in Jan. 2011  LEV advantages vs. motorbikes:

 Less fossil fuel consumption  Lower cost  More convenient to park inside cities  Less air and noise pollution

 LEV sales expected to account for 54%

• f revenue in 2011 vs. 1% in 2009

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NICONIA LEV

 Acquired NICONIA LEV brand

and sales network of approx. 350 retail stores in China

 Purchase price was approx. $3M  NICONIA sells over 200,000 LEVs

annually

 Projected sales for 2011 exceed $45M  Estimated gross margins of 25%

 Economies of scale to be achieved through leveraging of production

capacity

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GLOBAL LEV MARKET OVERVIEW

 Shift in consumers preferences toward more energy efficient and lower emission vehicles  Worldwide sales of electric two-wheel vehicles are expected to increase at a 9.4% CAGR

through 2016 (Pike Research Report)

 China is the largest consumer and manufacturer of LEVs; Chinese market for LEVs grew at 29%

CAGR 2004-2009

 The fastest growth of LEVs will occur in the

Middle East (54% CAGR), Latin America (30%), and North America (24%)

 Europe and the U.S. have started to provide

government aid for LEV purchases  Highly-fragmented market with no

established leader

Source: China Electronic Components Association

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CRYOGEN-FREE REFRIGERATORS

 Entered appliance market in 2001  Cryogen-free refrigerators use less electricity

at a lower price

 Contain zero cryogen (CFC/Freon); do not

cause pollution during the manufacturing process

 Long-term OEM Fortune 500 customer base

 Includes global companies such as Ford, Pepsi, Coca-Cola, Disney, etc

 Extending product line to include portable refrigerators, wine cabinets, etc

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SMALL HOME APPLIANCE MARKET

 Global home appliance sales increased to $85.9B in 2008 from $77.9B in 2007

 China accounted for 18% of this market in 2008  Small electrical appliance demand in China grew at 16.5% CAGR between 2006 and 2008; faster

than other export markets

 The kitchen sector is the largest and fastest growing segment of the small appliance market in

China representing $12.4 billion in sales and 18.5% growth in 2008  China is the leading manufacturer of

small home appliances

 Produced 1.6 billion units in 2008  Exports accounted for 74.3% of

manufacturing output  Cryogen-free refrigerator market

highly fragmented with no major manufacturers

Source: CCID Consulting, 2008-2009 Annual Report of Chinese Small Home Appliance Industry 12

HDMI AND NETWORK CABLE

 Commenced operations in 1993  High quality and competitively priced products  Excellent customer services  World-class customer base includes:

 Wal-Mart  Carrefour  Home Depot

 ISO9001, ISO14001, UL Certified

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HDMI AND NETWORK CABLE MARKET

 HDMI Cable

 HDMI cable market projected to grow at ~250% CAGR to $1.7 billion in 2010 from

$140 million in 2009

 Increased HDTV installations in China and abroad driving demand  Entry of 20 Gigabit/s HDMI 2.0 in 2010 with higher avg. selling prices

 Network Cable

 China’s cable industry has surpassed U.S.; projected 7-8% annual growth rate  U.S. demand for insulated wire and cable is expected to grow 4.3% annually to $21.5

billion in 2010

 Product innovations will help boost demand, although pricing competition will

remain intense

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GROWTH STRATEGY

 Rapidly expand LEV sales through new OEM relationships and international

sales channels

 Deepen penetration of Fortune 500 customer base and multinational retailers  Expand product offering, focusing on environmentally friendly consumer

products

 Extend cryogen-free product line to include new products such as thermostatic wine

cabinets and thermostatic cosmetics cases

 Plan to launch solar-powered water heaters

 Increase sales of higher-margin, own-brand products  Expand international sales force  Strategic and highly accretive acquisitions

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SALES & MARKETING

 Light Electric Vehicles (LEVs)

 Utilize overseas agents and direct OEM arrangements  Primary focus on expanding OEM sales channels in Europe  Identifying OEM customers in Australia, the U.S. and Asia

 Cryogen-free Refrigerator

 Utilize overseas agents and direct OEM arrangements  Strategy to establish strategic alliances with additional multinational companies

 Network cable and HDMI cable

 Direct sales to multinational retailers including Wal-Mart, Carrefour and Home Depot  Focus on adding new retailers and expanding within existing retail channels

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COMPETITIVE ADVANTAGES

 Growing brand awareness for own brand products  World-class OEM customer base and global distribution channels  Reputation for high quality products and customer service  Ability to rapidly launch new products into market  Low-cost manufacturer with excess capacity and stable supply of raw materials

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NINE MONTHS 2010 HIGHLIGHTS

 Sales revenue increased 152.8% to $23.9 million  Gross profit increased by 174.5% to $8.2 million  Net income increased 213.1% to $4.8 million  Diluted EPS of $0.22 versus $0.07 for the same period last year  $2.1 million of cash and no long-term debt as of September 30, 2010  Clean capital structure with no preferred, warrants, or options outstanding

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IMPROVING OPERATING RESULTS

Growth Rate 2010 2009 Revenues $ 23,850,636 $ 9,434,283 152.8% Gross profit 8,186,827 2,982,014 174.5% Gross Margin 34.33% 31.61% Operating Income 6,509,002 2,123,371 206.5% Operating Margin 27.29% 22.51% Net income $ 4,847,132 $ 1,547,906 213.1% Net Profit Margin 20.32% 16.41% Earnings per share (diluted) $ 0.22 $ 0.07 214.3% Weighted avg. shares (diluted) 21,859,639 20,734,531 Nine months ended September 30, (Unaudited)

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September 30, December 31, 2010 2009 (Unaudited) ASSETS Cash and cash equivalents $ 2,133,460 $ 757,742 Total current assets 27,324,514 13,594,203 TOTAL ASSETS $ 34,986,637 $ 19,057,338 LIABILTIES Total current liabilities 28,647,740 17,689,822 TOTAL LIABILITIES 28,647,740 17,689,822 TOTAL STOCKHOLDERS’ EQUITY $ 6,338,897 $ 1,367,516

BALANCE SHEET HIGHLIGHTS

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TARGET BUSINESS MODEL

2008 2009 2010EST 1-2 Years 3-5 Years Revenue Gross Margin Operating Margin Net Profit Margin $12.5M 17% 5% 3% $12.1M 29% 19% 13% $30M 33% 26% 19% $100M 27% 20% 15% $200M 26% 19% 15%

 Goal to achieve $100M of sales in 1-2 years; and $200M in 3-5 years  Maintain clean capital structure with no preferred, warrants or options  Plans to list on a senior exchange H1 2011

 Completed 5 seat board appointments with 3 independent directors  Plan to become SOX 404-compliant by year-end

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PUBLIC COMPS

 Higher revenue and net income growth versus comparable US listed Chinese

companies (based on relevant industries and recent U.S. IPOs of China-based companies)

 Trading at an attractive price-to-sales, price-to-book, and price-to-earnings

relative to peers

 Currently trading at 5X 2011 projected net income

22 CGRE ATV KNDI SFUN CCSC CCIH MY MCOX Market Cap (USD, mm) 83.5 124.7 130.0 1400.0 647.8 112.4 1060.0 206.2 Price/Sales (ttm) 3.2 0.4 3.3 8.8 7.3 2.5 1.7 1.0 Price/Book (mrq) 13.2 0.6 5.0 31.8 27.3 N/A 6.7 33.8 Trailing P/E (ttm) 17.0 N/A 3.0 27.0 64.2 N/A 18.4 60.5 Enterprise Value/Sales (ttm) 3.2 0.0 3.8 7.9 7.2 2.2 1.6 0.9 Enterprise Value/EBITDA (ttm 13.1 0.9 22.1 22.6 54.8 12.1 13.4 16.9 YOY Revenue Growth (mrq) 58%

• 1%

9% 85% N/A N/A N/A N/A

MANAGEMENT TEAM

 Jianliang Shi – Chairman of the board of directors and Chief Executive Officer

Founded the company in 1990 and has served as Chairman and Chief Executive Officer since 1990. He is currently an executive member of Wujin Light Industry Chamber of Commerce. He has been named a Top 10 Entrepreneur by the local government each year from 2002 to 2009.

 Zhenxing Shangguan – Director and Executive Vice President Has served as a Director and Executive Vice President since 1996. He has more than 10 years of

experience in management positions as a production and sales manager in the consumer products industry.

 Jianfeng Xu – Chief Financial Officer Has served as the Chief Financial Officer since 2000. Prior to joining the company, she handled accounting for Wujin Dyeing Machine Company from 1993 to 1999. Ms. Xu received a bachelor’s degree

in accounting from Changzhou Institute of Technology in 2003.

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INDEPENDENT DIRECTORS

 Jinrong Shen - Served as technology director of Hohai University, Changzhou School since 2002. From

1994 to 2002, served as faculty member of Hohai University. Received Master’s degree in Engineering from Hohai University, majoring in electronics and mechanical engineering.

 Haoru Tao - Served as a Sr. Manager at Shanghai ThinkBridge Certified Public Accountants, a member of

HLB Int’l since 2010. Previously served as Asia Pacific Financial Controller for Ascend Performance Materials, a chemical manufacturing company. From 2002-2009, held various senior finance, accounting and internal audit positions in the U.S. at Levi Strauss & Co., New York Times Co. and Analog Devices Inc. Former Sr. Auditor at Arthur Andersen LLP Shanghai Office from 1999-2002. CPA in both USA and China. Certified Internal Auditor. Master’s degree in Accounting from Boston College and a Bachelor’s degree in Finance from Fudan University, China.

 Ying Wang - Served as director of Changzhou Tsinghua New Energy Vehicle Engineering and Technology

Research Institute since 2009. From 2006-2009, worked in a postdoctoral program in new energy vehicle research of China National 863 Program at Tsinghua University. Received her Doctor’s degree in engineering from Southwest Jiaotong University in 2006. Holds 25 patents in fuel cell and new energy vehicles.

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TRANSPARENCY AND GOVERNANCE

 Auditor: PKF Certified Public Accountants (PKF California)

 PKF ranks 11th largest accounting firm worldwide, with 440 locations in 125

• countries. PKF California has 10 directors and over 70 from its three offices

in San Diego, Los Angeles, and San Francisco

 Legal Counsel: Pillsbury Winthrop Shaw Pittman LLP

 Pillsbury ranks 62nd largest law firms worldwide with more than 200 lawyers

from 14 offices. It is also named "Best Investor Counsel of the Year" for Chinese companies in 2010

 Corporate Governance:

 A 5 seat board with 3 independent directors specialized in financial, engineering and

new energy, respectively

 Established audit committee, compensation committee, governance and nominating

committee

INVESTMENT HIGHLIGHTS

 Growing end-markets and strong government support for environmentally friendly consumer

products

 Newly-launched LEV business growing rapidly – to sustain revenue CAGR of more than 50%  Proved LEV brand of NICONIA with existing annual sales of over 200,000 units

 Premier customer base and long-term relationships with major OEMs and Fortune 500

companies

 Rapid organic revenue growth and profitability

 9 Mo. 2010 sales rose 152.8% to $23.9 million; net income increased 213.1% to $4.8 million  Projected 2010 sales of $40 million; plan to achieve > $100M in 1-2 and $200M in 3-5 years

 Highly-scalable operations and ability to gain operating leverage through increased utilization  Clean capital structure (no preferred shares, warrants or options outstanding)  Proven management team with established track records

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 Ticker:

CGRE

 Exchange:

OTCBB

 Share price (as of 1/4/11):

$2.95

 Common share outstanding:

23.5 M

 Market Capitalization:

$69.3 M

 Revenue (2011 Est.)

$90.0 M

 Net Income (2011 Est.)

$14.0 M

 Price-to-Earnings (2011 Est.)

5.0x

 Cash (9/30/2010)

$2.1 M

 Total shareholder’s equity (9/30/2010):

$6.3 M

 Fiscal year-end:

December 31

 Insider ownership:

88.1%

KEY STATISTICS

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Thank you!

http://www.chinagei.com For additional information: David Waldman/Vivian Huo/Klea Theoharis Crescendo Communications, LLC (212) 671-1021

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