2. Disclaimer
Neither this presentation nor any of its contents are to be distributed to third parties without the prior written consent of China Health Labs & Diagnostics Ltd.
(“China Health Labs”). This presentation supersedes and replaces any and all material s which may have been provided to potential investors. There are certain
risks inherent in an investment in the securities of China Health Labs, which prospective investors should carefully consider before investing in the securities of
China Health Labs. Reference is made to the section entitled “Risk Factors” in the Filing Statement of China Health Labs dated August 20, 2010, which section is
incorporated by reference into this investor presentation, for a discussion of the risks inherent in an investment in the securities of China Health Labs. The Filing
Statement is available on SEDAR at www.sedar.com under China Health Labs’sprofile.
This presentation is not, and under no circumstances is it to be construed as, an advertisement or a public offering of these securities. This presentation is
personal to each offeree and does not constitute an offer to any other person or to the public generally to subscribe for or otherwise acquire any of the securities
referred to herein. No securities regulatory authority or similar authority has reviewed or in any way passed upon the presentation or the merits of these securities
and any representation to the contrary is an offence. This presentation has been prepared for information purposes only in order to assist prospective investors in
evaluating an investment in China Health Labs.
Except for the statements of historical fact, the information contained herein may be of a forward-looking nature. Such forward-looking information involves
known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of China Health Labs to be materially
different from any future results, performance or achievements expressed or implied by statements containing forward-looking information. Although China
Health Labs has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be
as anticipated, estimated or intended. There can be no assurance that statements containing forward looking information will prove to be accurate as actual
results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on statements
containing forward looking information.
The information contained herein includes market and industry data that has been obtained from third party sources, including industry publications, as well as
industry data prepared by China Health Labs management on the basis of its knowledge of and experience in the industry in which China Health Labs operates.
Third party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance as to
the accuracy or completeness of included data. China Health Labs believes that its industry data is accurate and that its estimates and assumptions are reasonable,
but there is no assurance as to the accuracy or completeness of this included data. Although the data is believed to be reliable, China Health Labs has not
independently verified any of the information from third party sources referred to in this presentation or ascertained the underlying economic assumptions relied
upon by such sources.
2
3. Company Overview
Leading provider of total lab solutions for medical
diagnostic and food safety in China
• We develop and sell proprietary total lab solutions to targeted sectors
and sell diagnostic equipment & reagents to large urban hospitals
• We generate revenues from the sale of solutions and equipment, and
recurring revenues from reagents and service
• We manufacture our own propriety equipment and reagents in our
Beijing facility
• 2011 revenue growth of 35% to $45.6m
• 2011 net income growth of 53% to $8.1m
3
4. China: Growing Healthcare Demand
China’s GDP per Capita (in US$)
• Rapid economic growth
• Large population
• Increasing Chinese wealth
• Growing middle class
• Decreasing birth rates
• Increasing older population
Source: The World Bank
4
5. Transitioning into Universal Healthcare
Market Oriented Healthcare China’s Healthcare Expenditure
per Capita (in US$)
• High cost of medical services
• Low government funding
• Large investment gap between urban
and rural areas
• Insufficient healthcare services in rural
areas
Out of Pocket Expenditure
(% of private health spending)
• Proactive government policies
• Government spending support
• Diversified medical insurance system
• Development of local clinics in urban
and rural areas
Universal Healthcare Source: The World Bank
5
6. Large and Growing Healthcare Market
Chinese Medical Equipment Chinese Healthcare China’s healthcare investment
Expenditure (in US$ Billions) Expenditure (in US$ Billions) over next 3 years
$125B
6
7. Competitive Advantage
• First mover in providing total lab solutions instead of individual
products
• Patented hardware and software: lab management system (LMS) is
key technology for all total lab solutions
• Extensive experience in managing labs
• Strong relations with Chinese government and customers
7
8. Chinese government policy support
Chinese government budget support
Target
Areas
Large market potential
Limited competition
8
9. Business Units
Traditional
New Business Units
Business Unit
Military &
Rural Hospitals Large Urban
Emergency Food Safety
& Clinics Hospitals & Labs
Services
• Established in 2007 • Established in 2008 • Established in 2008 • Established in 1993
• Strong revenue • Strong revenue • Strong revenue • Steady revenue
stream potential potential stream
• High margins • High margins • High margins • Low margins
• No direct • No competition • Low competition in • High competition
competition Beijing
• Dominant market • Strong market
• Dominant market position • Strong market position
position position
9
10. Rural Hospitals & Labs
• Proprietary total diagnostic lab solution
• Initial revenue from testing equipment,
800
hardware, lab management system (LMS),
installation and training
• Recurring revenue from reagents, service and
maintenance
million
• 63 mobile labs sold in Q1 2012 China’s rural population
• 906 installed or contracted to date (623 new
installations in 2011)
• Presence in Henan, Guizhou, Liaoning,
Chongqing, Hebei, Qinghai, Xinjiang and
Jilin provinces
• Only solution provider to have Chinese central
government approval
• Agreement with Biosino to expand into new
provinces and reduce reagent cost
• Developed Rural Emergency Rescue Solution
in March 2012
• Revenue increased by 144% to $6.3m
10
11. POCT for Defense and Rescue Agencies
• Point of Care Technology (POCT) integrated
with LMS
• Dry chemistry diagnostic system for use in
defense and rescue operations
• No electricity or clean water required
• Developed in cooperation with Chinese
Military
• 67 POCT field labs and 30 backpacks
delivered in 2011 Only supplier to Chinese
military and Chinese
• Signed 3 year R&D agreement with Chinese
military in Dec 2010 National Emergency
Rescue Team (NERT)
• Developed new products in March 2012,
including Type C POCT solution and BK-iED
• Revenue increased by 98% to $11.0m
11
12. Food Safety Labs
• Total food safety lab solutions integrated
with LMS
• Tests chemical or biochemical index of food
items
• Developed with Beijing municipal
government
• 17 large labs, 337 enterprise-labs and17
$1
mobile labs installed to date in Beijing
• Use “Beijing Model” as reference site to sell
to additional cities in China billion
Chinese market
• Developed new portable food safety solution, opportunity in
BK-iRT in March 2012 top 50 cities
• Revenue increased by 77% to $9.0m
12
13. Large Urban Hospitals
50%
• Medical diagnostic equipment and reagents
• Diagnosis of various blood, liver and kidney
related diseases and conditions
Percent of 1000
• Exclusive distributor for largest Chinese
hospitals served
• Initial revenue from testing equipment,
hardware, lab management system (LMS),
installation and training
• Recurring revenue from reagents,
maintenance and services
• Provides steady cash flow, lower growth and
margins than solutions business
• Revenue decreased by 6% to $19.4m
13
14. Growth Strategy
Focus on total Target growth New & improved Acquisitions &
lab solutions areas solutions partnerships
• Rural areas / Military & • Continue developing
• Provide premium • Acquisition or
Emergency / Food solutions in
value compared with partnership with
safety collaboration
individual products complementary
with customers
businesses
• Limited competition and
• Build customer loyalty
high margins • Joint R&D with Chinese
• Target established
military
• Multiple recurring brands
• Chinese government
revenue streams
support and budget • Collaboration with
• Businesses that
provincial and central
deliver high quality
government
services
14
15. R&D and Intellectual Property
• Significant focus on R&D
• 13 researchers at the R&D facility
• 19 patents filed in Beijing
• 6 granted patents • Five new products
• 78 registered trademarks • Type C POCT Diagnostic Field Lab
• BK-iED (BK Early diagnosis system for
• 13 registered copyrights cardio-cerebrovascular disease)
• 57 PRC government • BK-iRT (BK Food Safety Rapid Test
production licenses System)
• Stretcher – ICU
• Rural mobile lab (63 sold to date)
15
18. Location & Distribution
Beijing
HQ & Production Facility
Guangdong
Sales & Distribution Hub
Shanghai
Sales Office
18
19. Management
Shiping (Wilson) Yao
President, CEO, Chairman and Director
Founded Biochem Group in 1993. Over 20 years experience in the medical equipment industry. Member of China’s National Standardization
Technical Committee. Member of the Board of Renmin University of China
Judyanna Chen
CFO
Chartered Accountant and Certified Public Accountant. Articled and worked at an international accounting firm, and prior to joining the
Company, was a senior manager at Manning Elliott LLP.
Yuqiang Tang
COO, Director
Over 15 years of managerial, sales and marketing experience
Bill Tunbrant
VP of Marketing, Director
Wide range of experience in the medical equipment industry, as well as in international manufacturing. Director of Opcon AB (OMXS:OPCON),
former director of Nibe Industrier AB (OMX: NIBE’B)
Chao Zhang
VP of Finance
10 years financial management experience in the medical equipment and private health care industries
Stephen D. Wortley
Secretary
Currently a partner at the law firm McMillan LLP
19
20. Non-Executive (Independent) Directors
Yumin Zhuang
Deputy Dean of the School of Finance of Renmin University. Independent supervisor with china CITI Bank.
Hong Chang
Physician with the University Health Network in Toronto
Paul Haber
Managing Director of Haber and Co. Ltd. a company involved in capital markets and corporate advisory services. Former Director of Migao
Corporation (TSX: MGO) and Former Vice President, Chief Financial Officer and Corporate Secretary of QuStream Corporation (TSXV:QVC)
Kim Oishi
Director of Zongshen PEM Power Systems (TSX: ZPP), Former President and Director of Hanfeng Evergreen (TSX: HF), Senior Vice President of
Hanwei Energy (TSX: HE), Director of Cantronic Systems (TSX-V: CTS), and Grand Power Logistics (TSX-V: GPW)
20
21. Corporate Governance
• Timely disclosure of material information
• Dissemination of material information in accordance with all
applicable legal, regulatory and stock exchange requirements
• Disclosure Committee responsible for overseeing disclosure
practices
• Whistleblowing policy in place
• Majority of directors are independent
21
22. Investment Highlights
• Growth driven by proprietary total lab solutions
• Attractive margins due to value add for customer & limited competition
• Strong customer & government relationships due to track record of delivering
solutions
• Large and growing market supported by Chinese government budget and
policy
• Positive cash flow, with sufficient funding to continue growth in 2012
22
23. Corporate Information
TSX.V Symbol: CHO
52 Week Range: $0.40 - $1.20
Shares Outstanding: 65.6 Million
Market Capitalization (May 1, 2012): $38.7 Million
Employees: 310
23
