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NASDAQ: CHOP
China Gerui Investor Presentation
May 2014
This presentation includes or incorporates by reference
statements that constitute "forward-looking statements"
within the meaning and protections of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended, or the
Exchange Act. Forward-looking statements include
statements with respect to our beliefs, plans, objectives, goals,
expectations, anticipations, assumptions, estimates,
intentions, and future performance, and involve known and
unknown risks, uncertainties and other factors, which may be
beyond our control, and which may cause the actual results,
performance, capital, ownership or achievements of the
Company to be materially different from future results,
performance or achievements expressed or implied by such
forward-looking statements. All statements other than
statements of historical fact are statements that could be
forward-looking statements. You can identify these forward-
looking statements through our use of words such as "may,"
"will," "anticipate," "assume," "should," "indicate," "would,"
"believe," "contemplate," "expect," "estimate," "continue,"
"plan," "point to," "project," "could," "intend," "target" and
other similar words and expressions of the future. All written
or oral forward-looking statements attributable to us are
expressly qualified in their entirety by this cautionary notice,
including, without limitation, those risks and uncertainties
described in our annual report on Form 20-F for the year
ended December 31, 2013 and otherwise in our SEC reports
and filings. Such reports are available upon request from the
Company, or from the Securities and Exchange Commission,
including through the SEC's Internet website at
http://www.sec.gov. We have no obligation and do not
undertake to update, revise or correct any of the forward-
looking statements after the date hereof, or after the
respective dates on which any such statements otherwise are
made.
Safe Harbor
Capital Markets Summary
LTM = last twelve months
Price (5/29/14) 0.90
2013 Revenues 165.83 MM
2013 Net Income/(Loss)(LTM) (14.14) MM2013
Diluted EPS/(LPS) (LTM) (0.24)
Market Capitalization 53.75 MM
Price/Book Value 0.19
Book Value Per Share 4.81
Net Cash Per Share 1.14
China Gerui is a leading niche and high-value
added metal processing company that utilizes
advanced technology to produce specialty,
cold-rolled steel products
๏‚ง Headquartered in Zhengzhou, Henan
Province, China.
๏‚ง Approximately 1,100 employees as of
December 2013.
๏‚ง Annual capacity of 500K tons including 50%
chromium plating capacity and 30K tons
laminating capabilities.
๏‚ง Serves over 200 customers in China in
consumer spending and construction
industries.
๏‚ง Began export of products to customers in
Turkey and India in 2012 with additional
customers expected in the U.S. and other
emerging markets.
Company Overview
Raw
Materials
Hot Rolled
Steel
Cold Rolled Steel
Processing
(Narrow + Wide Strip)
Manufacturers
End
Applications
Investment Highlights
1 Focus on customized, high value-added, high-margin steel production
2 Leading position in robust niche market in China
3 Unique business model with defendable barriers to entry
4 Positive cash flow despite challenging macroeconomic conditions
5 Defined long-term growth strategy
7
Seasoned management with local market knowledge
Diversification of revenue stream via new technologies and exports
6
In-House Value Chain
Hot
Rolled
Coil
Initial
Cutting
Acid
Pickling
Cold
Rolling
Annealing
Temper
Rolling/
Stretching
Cold Rolled Steel
Strips
(Narrow + Wide)
Chromium Plated
and Laminated
Steel
Production Process
LevelofComplexity
Finished Product
Input
Factor
Value
Creators
๏‚ง China Gerui specializes in ultra-thin, high-
precision products with thicknesses
mostly from 0.05mm to 0.5mm, widths up
to 1200mm, tolerance +/- 0.003mm.
๏‚ง For CRS products, the thickness can range
between 0.05mm up to 7.5mm.
๏‚ง Typical thickness of China Gerui raw
material HRC: 3mm.
๏‚ง Five series and over twenty types of high-
precision strip steel products.
Defining Our Market
0.05mm 0.5mm 7.5 mm
China
Gerui
Commodity-type producers
Food and Industrial
Packaging
53%
Construction and
Household
Decoration
40%
Electrical
Appliances
4%
Telecom Wire &
Cable
3%
2013
Revenue by Industry Application
China Gerui produces high-precision steel products tailored to meet exact customer specifications
Food and Industrial
Packaging
51%
Construction and
Household
Decoration
23%
Electrical
Appliances
17%
Telecom
Wire &
Cable
9%
2012
๏‚ง Not a commodity business: focus on customized high-margin steel production.
๏‚ง Products meet stringent performance and specification requirements.
๏‚ง Supplier of choice when our existing customers develop new products.
Economics of China Geruiโ€™s Business Model
Made-to-Order Production
High Inventory Turnover
Low A/R
No Long-Term Debt
Customer
Survey/Order
Secure Raw
Material
Receive 30%
Down Payment
Processing
70% Balance
Collected Upon
Delivery
China
Gerui
International
Companies
Domestic
Companies
Strategic
Focus
First Mover
Advantage
Brand
Recognition
Nationwide
Distribution
Local Market
Knowledge
High Product
Quality
Financial
Resources
๏‚ง Limited domestic supply because PRC
manufacturers lack the equipment and
expertise to produce high-end specialty
cold rolled steel.
๏‚ง Steel industry is highly capital intensive:
Capital requirements prevent newcomers
or smaller players without sufficient funds
from entering the market.
Strategic Advantages
Financial Performance
FYE 2014
Guidance
Revenue
$175 MM
to
$180 MM
USD million
Total Revenue
Net Profit/Loss Adjusted EBITDA
USD million USD million
USD million
Gross Profit
Note: EBITDA is adjusted for one-time warrant expenses of $570,000 in 2011 and, stock-based compensation
expense of $3.7mm in 2012, stock-based compensation expense of $32,891 in 2013
253.9
341.8
265.5
165.8
0
50
100
150
200
250
300
350
400
2010 2011 2012 2013
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
-20
-10
0
10
20
30
40
50
60
70
2010 2011 2012 2013
Net Profit Net Margin
70.6
98.2
57.6
7.0
0
20
40
60
80
100
120
2010 2011 2012 2013
47.1
63.2
26.1
-14.1
18.6%
9.8%
(8.5%)
18.5%
76
101.6
56.9
4.1
-8.0%
-3.0%
2.0%
7.0%
12.0%
17.0%
22.0%
27.0%
32.0%
0
20
40
60
80
100
120
2010 2011 2012 2013
Gross Profit Gross Margin
29.9%
29.7%
21.4%
2.5%
Healthy Balance Sheet
Condensed Balance Sheet
(USD 000โ€™s) Dec.30, 2013 Dec.31, 2012
Cash 237,060 228,861
Certificates of Deposit 24,200 16,372
Restricted cash 114,804 145,414
Accounts receivable 2,694 2,276
Inventories 17,497 22,763
Current assets 454,062 495,040
Total assets 626,558 673,370
Notes Payable 225,812 259,546
Term Loans 50,300 57,463
Current liabilities 314,404 343,302
Total liabilities 327,430 343,302
Total stockholdersโ€™ equity 299,129 330,067
Working capital 139,658 151,738
Inventory turnover per year 9.25 9.16
Days sales in inventory 39.46 39.84
China Cold Rolled Steel Industry
๏‚ง From January to November 2013, Chinaโ€™s
total cold-rolled sheet production was
26.942 million tons, an increase of 12.8%
compared with 2012.
๏‚ง Cold-rolled products suffered low pricing.
๏‚ง Most demand for China cold-rolled
products are from the automobile and
appliance industries.
๏‚ง Since early 2013 , steel mills have put
more resources to the end of supply
chain, causing the middle partsโ€™ demand
being digested, resulting in demand for
cold rolled steel being squeezed.
Source: IBIS World
Challenges & Opportunities in the Next 5 Years
2012 Global Outlook on Steel Consumption and Capacity
Over Capacity
Slower Industry
Development
Increasing
Industry
Consolidation
Out-dated
Technology in
Small Steel Mills
Pollution Issues
Slow New
Technology
Adoption
โ€ข Develop disciplined acquisition strategy
and pursue strategic partnership with
industry leaders.
โ€ข Expand sales channels and product
offerings to replace imported steel
products.
โ€ข Expand technical expertise and control
cost.
โ€ข Broaden product portfolio and mix by
expanding into plated and laminated steel
production.
โ€ข Double capacity to 500K tons with 50%
chromium plating capabilities and added
30K tons laminating capacity.
Disciplined Growth Strategy
๏‚ง Pursue Acquisitions & Strategic
Partnership
๏‚ง Expand Market Share
๏‚ง Improve Efficiency
๏‚ง Broaden Product Portfolio
๏‚ง Double Capacity
50 50
250
200
0
50
100
150
200
250
300
2010 2011 2012Tons(000)
250 250 250
150
250
0
100
200
300
400
500
600
2010 2011 2012
Tons(000)
โ€ข Added 30K tons of laminated production capacity in 2013
Production Capacity Doubled in 2012
250
100% Utilization
400
500
Wide Strip Narrow Strip
250 250
Chromium Plating Capacity
50
๏‚ง Mingwang Lu
Chairman of the Board and Chief
Executive Officer
๏‚ง Over 20 years of steel industry
experience.
๏‚ง CEO of the Company since 2000.
๏‚ง Held various management positions
at Zhengzhou No.2 Steel Plant from
1995 to 2000.
๏‚ง Elected as a member of the 9th,
10th and 11th National Peopleโ€™s
Congress in Henan Province.
๏‚ง Awarded Excellent Director/Manager
in Henan Province, National Excellent
Township Entrepreneur and Expert in
Steel Industry of Henan Province.
๏‚ง Edward Meng
Chief Financial Officer
๏‚ง Joined China Gerui in April 2009,
residing in Zhengzhou, China.
๏‚ง Former CFO/Director of the Board of
a number of U.S.-listed companies.
๏‚ง Former CFO of MNCs in China
(Shell/Koch/Terex).
๏‚ง Georgetown University MBA, U.S.
CPA, experienced in PRC & U.S. GAAP.
Seasoned Management Team
Company
๏‚ง Email: investors@geruigroup.com
๏‚ง Website: www.geruigroup.com
Grayling
๏‚ง Vivian Chen, Managing Director
๏‚ง Phone: 1-646-284-9427
๏‚ง Email: vivian.chen@grayling.com
Contact
This Presentation of China Gerui Advanced Materials Group Limited was developed by the Company and Grayling and is intended solely for informational purposes and is not to be construed as
an offer to sell or the solicitation of an offer to buy the Companyโ€™s stock. This presentation is based upon information available to the public, as well as other information from sources which
management believes to be reliable, but is not represented by China Gerui Advanced Materials Group Limited or Grayling as being fully accurate nor does it purport to be complete. Opinions
expressed herein are those of management as of the date of publication and are subject to change without notice.
NASDAQ: CHOP
China Gerui Investor Presentation
May 2014

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Choppir may 2014 ppt_final

  • 1. NASDAQ: CHOP China Gerui Investor Presentation May 2014
  • 2. This presentation includes or incorporates by reference statements that constitute "forward-looking statements" within the meaning and protections of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance, capital, ownership or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward- looking statements through our use of words such as "may," "will," "anticipate," "assume," "should," "indicate," "would," "believe," "contemplate," "expect," "estimate," "continue," "plan," "point to," "project," "could," "intend," "target" and other similar words and expressions of the future. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 20-F for the year ended December 31, 2013 and otherwise in our SEC reports and filings. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC's Internet website at http://www.sec.gov. We have no obligation and do not undertake to update, revise or correct any of the forward- looking statements after the date hereof, or after the respective dates on which any such statements otherwise are made. Safe Harbor
  • 3. Capital Markets Summary LTM = last twelve months Price (5/29/14) 0.90 2013 Revenues 165.83 MM 2013 Net Income/(Loss)(LTM) (14.14) MM2013 Diluted EPS/(LPS) (LTM) (0.24) Market Capitalization 53.75 MM Price/Book Value 0.19 Book Value Per Share 4.81 Net Cash Per Share 1.14
  • 4. China Gerui is a leading niche and high-value added metal processing company that utilizes advanced technology to produce specialty, cold-rolled steel products ๏‚ง Headquartered in Zhengzhou, Henan Province, China. ๏‚ง Approximately 1,100 employees as of December 2013. ๏‚ง Annual capacity of 500K tons including 50% chromium plating capacity and 30K tons laminating capabilities. ๏‚ง Serves over 200 customers in China in consumer spending and construction industries. ๏‚ง Began export of products to customers in Turkey and India in 2012 with additional customers expected in the U.S. and other emerging markets. Company Overview Raw Materials Hot Rolled Steel Cold Rolled Steel Processing (Narrow + Wide Strip) Manufacturers End Applications
  • 5. Investment Highlights 1 Focus on customized, high value-added, high-margin steel production 2 Leading position in robust niche market in China 3 Unique business model with defendable barriers to entry 4 Positive cash flow despite challenging macroeconomic conditions 5 Defined long-term growth strategy 7 Seasoned management with local market knowledge Diversification of revenue stream via new technologies and exports 6
  • 6. In-House Value Chain Hot Rolled Coil Initial Cutting Acid Pickling Cold Rolling Annealing Temper Rolling/ Stretching Cold Rolled Steel Strips (Narrow + Wide) Chromium Plated and Laminated Steel Production Process LevelofComplexity Finished Product Input Factor Value Creators
  • 7. ๏‚ง China Gerui specializes in ultra-thin, high- precision products with thicknesses mostly from 0.05mm to 0.5mm, widths up to 1200mm, tolerance +/- 0.003mm. ๏‚ง For CRS products, the thickness can range between 0.05mm up to 7.5mm. ๏‚ง Typical thickness of China Gerui raw material HRC: 3mm. ๏‚ง Five series and over twenty types of high- precision strip steel products. Defining Our Market 0.05mm 0.5mm 7.5 mm China Gerui Commodity-type producers
  • 8. Food and Industrial Packaging 53% Construction and Household Decoration 40% Electrical Appliances 4% Telecom Wire & Cable 3% 2013 Revenue by Industry Application China Gerui produces high-precision steel products tailored to meet exact customer specifications Food and Industrial Packaging 51% Construction and Household Decoration 23% Electrical Appliances 17% Telecom Wire & Cable 9% 2012
  • 9. ๏‚ง Not a commodity business: focus on customized high-margin steel production. ๏‚ง Products meet stringent performance and specification requirements. ๏‚ง Supplier of choice when our existing customers develop new products. Economics of China Geruiโ€™s Business Model Made-to-Order Production High Inventory Turnover Low A/R No Long-Term Debt Customer Survey/Order Secure Raw Material Receive 30% Down Payment Processing 70% Balance Collected Upon Delivery
  • 10. China Gerui International Companies Domestic Companies Strategic Focus First Mover Advantage Brand Recognition Nationwide Distribution Local Market Knowledge High Product Quality Financial Resources ๏‚ง Limited domestic supply because PRC manufacturers lack the equipment and expertise to produce high-end specialty cold rolled steel. ๏‚ง Steel industry is highly capital intensive: Capital requirements prevent newcomers or smaller players without sufficient funds from entering the market. Strategic Advantages
  • 11. Financial Performance FYE 2014 Guidance Revenue $175 MM to $180 MM USD million Total Revenue Net Profit/Loss Adjusted EBITDA USD million USD million USD million Gross Profit Note: EBITDA is adjusted for one-time warrant expenses of $570,000 in 2011 and, stock-based compensation expense of $3.7mm in 2012, stock-based compensation expense of $32,891 in 2013 253.9 341.8 265.5 165.8 0 50 100 150 200 250 300 350 400 2010 2011 2012 2013 -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% -20 -10 0 10 20 30 40 50 60 70 2010 2011 2012 2013 Net Profit Net Margin 70.6 98.2 57.6 7.0 0 20 40 60 80 100 120 2010 2011 2012 2013 47.1 63.2 26.1 -14.1 18.6% 9.8% (8.5%) 18.5% 76 101.6 56.9 4.1 -8.0% -3.0% 2.0% 7.0% 12.0% 17.0% 22.0% 27.0% 32.0% 0 20 40 60 80 100 120 2010 2011 2012 2013 Gross Profit Gross Margin 29.9% 29.7% 21.4% 2.5%
  • 12. Healthy Balance Sheet Condensed Balance Sheet (USD 000โ€™s) Dec.30, 2013 Dec.31, 2012 Cash 237,060 228,861 Certificates of Deposit 24,200 16,372 Restricted cash 114,804 145,414 Accounts receivable 2,694 2,276 Inventories 17,497 22,763 Current assets 454,062 495,040 Total assets 626,558 673,370 Notes Payable 225,812 259,546 Term Loans 50,300 57,463 Current liabilities 314,404 343,302 Total liabilities 327,430 343,302 Total stockholdersโ€™ equity 299,129 330,067 Working capital 139,658 151,738 Inventory turnover per year 9.25 9.16 Days sales in inventory 39.46 39.84
  • 13. China Cold Rolled Steel Industry ๏‚ง From January to November 2013, Chinaโ€™s total cold-rolled sheet production was 26.942 million tons, an increase of 12.8% compared with 2012. ๏‚ง Cold-rolled products suffered low pricing. ๏‚ง Most demand for China cold-rolled products are from the automobile and appliance industries. ๏‚ง Since early 2013 , steel mills have put more resources to the end of supply chain, causing the middle partsโ€™ demand being digested, resulting in demand for cold rolled steel being squeezed. Source: IBIS World
  • 14. Challenges & Opportunities in the Next 5 Years 2012 Global Outlook on Steel Consumption and Capacity Over Capacity Slower Industry Development Increasing Industry Consolidation Out-dated Technology in Small Steel Mills Pollution Issues Slow New Technology Adoption
  • 15. โ€ข Develop disciplined acquisition strategy and pursue strategic partnership with industry leaders. โ€ข Expand sales channels and product offerings to replace imported steel products. โ€ข Expand technical expertise and control cost. โ€ข Broaden product portfolio and mix by expanding into plated and laminated steel production. โ€ข Double capacity to 500K tons with 50% chromium plating capabilities and added 30K tons laminating capacity. Disciplined Growth Strategy ๏‚ง Pursue Acquisitions & Strategic Partnership ๏‚ง Expand Market Share ๏‚ง Improve Efficiency ๏‚ง Broaden Product Portfolio ๏‚ง Double Capacity
  • 16. 50 50 250 200 0 50 100 150 200 250 300 2010 2011 2012Tons(000) 250 250 250 150 250 0 100 200 300 400 500 600 2010 2011 2012 Tons(000) โ€ข Added 30K tons of laminated production capacity in 2013 Production Capacity Doubled in 2012 250 100% Utilization 400 500 Wide Strip Narrow Strip 250 250 Chromium Plating Capacity 50
  • 17. ๏‚ง Mingwang Lu Chairman of the Board and Chief Executive Officer ๏‚ง Over 20 years of steel industry experience. ๏‚ง CEO of the Company since 2000. ๏‚ง Held various management positions at Zhengzhou No.2 Steel Plant from 1995 to 2000. ๏‚ง Elected as a member of the 9th, 10th and 11th National Peopleโ€™s Congress in Henan Province. ๏‚ง Awarded Excellent Director/Manager in Henan Province, National Excellent Township Entrepreneur and Expert in Steel Industry of Henan Province. ๏‚ง Edward Meng Chief Financial Officer ๏‚ง Joined China Gerui in April 2009, residing in Zhengzhou, China. ๏‚ง Former CFO/Director of the Board of a number of U.S.-listed companies. ๏‚ง Former CFO of MNCs in China (Shell/Koch/Terex). ๏‚ง Georgetown University MBA, U.S. CPA, experienced in PRC & U.S. GAAP. Seasoned Management Team
  • 18. Company ๏‚ง Email: investors@geruigroup.com ๏‚ง Website: www.geruigroup.com Grayling ๏‚ง Vivian Chen, Managing Director ๏‚ง Phone: 1-646-284-9427 ๏‚ง Email: vivian.chen@grayling.com Contact This Presentation of China Gerui Advanced Materials Group Limited was developed by the Company and Grayling and is intended solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy the Companyโ€™s stock. This presentation is based upon information available to the public, as well as other information from sources which management believes to be reliable, but is not represented by China Gerui Advanced Materials Group Limited or Grayling as being fully accurate nor does it purport to be complete. Opinions expressed herein are those of management as of the date of publication and are subject to change without notice.
  • 19. NASDAQ: CHOP China Gerui Investor Presentation May 2014