Boyuan Construction Investor Presentation


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Boyuan Construction Investor Presentation

  1. 1. Investor Presentation January 2010 1
  2. 2. Forward-Looking Statements In addition to historical information, the statements set forth throughout this presentation include forward-looking statements that may involve risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, uncertainty of contract negotiations and payments under existing contracts, the Company’s dependence on government contracts, changes in the laws of the PRC that affect the Company’s operations, fluctuation and unpredictability in foreign exchange prices, fluctuation and unpredictability of costs related to the Company’s products and services, reduction or reversal of the Company’s recorded revenue or profits due to “percentage of completion” method of accounting and expenses and costs associated with the issuance of securities. The forward-looking statements are also identified through use of the words “believe,” “enable,” “may,” “will,” “could,” “intends,” “estimate,” “anticipate,” “plan,” “predict,” “probable,” “potential,” “possible,” “should,” “continue,” and other words of similar meaning. Actual results could differ materially from the expectations contained in forward-looking statements as a result of several factors, including regulatory approval requirements and competitive conditions. These and other factors that may result in differences are discussed in greater detail in the Company’s reports and other public filings. 2
  3. 3. Company Snapshot • Boyuan is the first pure-play construction company listed in North America • Focused on fast-growing Yangtze River Delta, City of Sanya, and the Shandong province • Success driven by history of quality projects delivered on time and budget • Introduced unique make good provision to investment landscape 3
  4. 4. Financial Overview US$ FY 2007 FY 2008 FY 2009 FY 2010E Revenue $49,112,775 $56,175,070 $101,664,080 $139,800,500 Adjusted Net Income $4,665,720 $6,180,219 $9,610,867 $12,400,000 Adjusted EPS (Diluted) N/A N/A $0.39 $0.42 Adj. EPS (C$, diluted) N/A N/A $0.42 $0.45 Y/Y ATNI Growth 79% 33% 55% 30% P/E Ratio N/A N/A 6.3x 5.8x Net Income $16,000,000 $12,000,000 $8,000,000 $4,000,000 $0 FY 2007 FY 2008 FY 2009 FY 2010E Note: Adjusted net income is net income before deduction of the made good charge. 4
  5. 5. Q1 2010 Financial Review US$ Q1 2010 Q1 2009 Change Revenue $35.0M $21.3M +64.5% Gross Profit $5.7M $3.1M +83.8 Adjusted net $3.0M $2.0M +48.7% income Adjusted EPS $0.12 $0.08 50% (diluted) Total assets $71.8M $57.5M 24.8% Note: Adjusted net income is net income before deduction of the made good charge. 5
  6. 6. Peer Group Comparison Company Exchange Share price* Market Cap P/E Boyuan TSX-V $3.10 $79.79M 7.56 Aecon TSX $15.60 $851.10M 16.29 Bird TSX $34.40 $483.36M 8.27 SNC- TSX $53.99 $8.15B 24.41 Lavalin *At December 31, 2009 6
  7. 7. Construction Industry Overview • 62,074 construction companies in 2007. • Industry is highly fragmented and competitive. • Distribution of construction companies very much like a “pyramid”. • Technical capabilities still short of western standards. 7
  8. 8. Construction Industry Overview • One of the key economic pillars in China. • Experienced significant growth over the past decade. CAGR of 22% from the year 2000 to 2007. Growth rate 24.6% 25.7% US$ (in billions) 22.8% 20.6% 19.1% 20.3% 800 747.7 700 608.7 600 506.1 500 425.1 400 338.1 271.4 300 225.0 200 100 0 2001 2002 2003 2004 2005 2006 2007 Total Output Value of Construction Source: China Statistical Yearbook 2008, National Bureau of Statistics of China 8
  9. 9. Growth of construction Industry in China • China will overtake the United States as the world’s largest construction market by 2018* • By 2018, China’s already massive construction market will be worth almost US$2.4 trillion represent 19.1% of global construction output. (2008: global market is 7.5 trillion US$)** * Source: Global Construction Perspectives & Oxford Economics **Source: IHS Global Insight Construction Services 9
  10. 10. Growth factors of Construction Industry • China continues to be in a rapid phase of its economic development cycle. • Rapid rural migrations to urban centers. • Accelerated growth of middle class. • Stimulus Plan- US$586 billion. 10
  11. 11. Boyuan’s Core Market The Yangtze River Delta Consists of triangle of Shanghai, Southern Jiangsu Province and Northern Zhejiang Province • 21% of the national economy • Home to over 80 million people in 2007 GDP US$2 trillion 11
  12. 12. Boyuan’s Secondary Market Sanya, Hainan Island • Major tourist destination • 20.6 million tourists and US$2.64 billion spent in 2008 • China’s largest “special economic zone” 12
  13. 13. Boyuan’s Latest Market • Shandong • One of the richest provinces in China . GDP of US$446 billion in 2008 (2nd in China) • Biggest producer of cotton and wheat • Largest deposits in petroleum and precious metals • Home of the two most recognized brand names in China: Tsingtao beer and Haier 13
  14. 14. Boyuan’s Operations & Revenue Streams 5% Government 27% Industrial Projects Projects 55% Commercial 13% Residential Projects Projects Based on 2010 Revenue 14
  15. 15. FY2010 Project Backlog Current Projects Location Revenue Net Income New Jinhu International Jiangsu $7.18 $0.57 Phoenix Water City Sec A,C Sanya $13.14 $1.58 Pinghu Donghu Huayuan Zhejiang $1.69 $0.14 Misc. Projects Hangzhou $6.86 $0.55 Fuyue Grand Hotel Zhejiang $22.18 $2.66 Xinhui Rubber Corp. Zhejiang $5.86 $0.47 Xingcheng Silicon Corp. Zhejiang $4.39 $0.35 Barley Factory Zhejiang $12.57 $1.01 Residential Development Jiangxi $16.86 $1.35 Business School Zhejiang $5.00 $0.40 Qingshan Nuclear Plant Security Building Zhejiang $1.68 $0.13 Jiangsu Eco Farm Jiangsu $10.35 $0.83 Blue Star Commercial Building Shandong $14.60 $1.61 Pheonix Hotel Sanya $11.70 $1.34 Subtotal $134.06 $12.99 15
  16. 16. Boyuan’s Competitive Advantages 1. Reputation for high quality projects 2. Track record of completing projects on time and on budget 3. Class I General Contracting Qualification • Projects up to 40-storeys 4. Experienced management team 16
  17. 17. Boyuan’s Growth Strategies 1. Solidify our existing markets 2. Focus on projects with higher technical elements to leverage on our technical capabilities 3. Geographic expansion into other provinces in China 4. Increase our scope of construction activities with a special class qualification 5. Vertical integration in the long term 17
  18. 18. Management and Directors Zhejiang University of Technology graduate Mr. Cai Liang Shou Senior Engineer with 22 years of real estate project management - Founder and Chairman experience Owns over 55% of Boyuan's share capital Over 20 years experience in the accounting and finance industry Mr. Paul Law Held senior positions at Citibank, National Australia Bank, and - Chief Financial Officer Prudential Bache Securities (HK) Graduate of McGill University and MBA (Finance) from UBC Mr. Qian Feng Holds Senior Engineer designation. - Vice General Manager More than 25 years of engineering, project execution and management Ms. Ren Shu Received Masters degree in Law from Zhejiang University. - Corporate Secretary Qualified as Lawyer since 2000 Mr. Wang Hao Graduated from Dongbei University of Finance and Economics - Vice President Over 11 years of experience in financial practice and management 18
  19. 19. Management and Directors Founder, chairman and chief economist of VCChina Ltd. Ms. Mannie Liu Holds doctorate degree in Economics from Cornell University, and is currently professor at Renmin University in Beijing - Independent Director Financial Advisor to the Beijing Municipal Government, Director of the Boston China Finance Research Center in the U.S. Professor of Law at the Zhejiang University. Board member of the Zhejiang Real Estate Association, Legislative Dr. Fang Lixin Advisory of Hangzhou People’s Congress and the Hangzhou Municipal - Independent Director People’s Government. Holds a Doctoral degree from East Asia University of Politics and Law. Principal of Sungai River Inc., an international financial consulting company Mr. Francis Leong Serves as a Director on the boards of ENMAX and Grand Power - Independent Director Logistics Holds a BComm Degree and a Masters of Public Administration Senior VP & CFO at Sino-Forest Corporation (TSX:TRE) Mr. David J. Horsley Previously held position of Senior Vice President and CFO at Cygnal - Independent Director Technologies Corporation and Senior Vice President and Corporate Secretary at Canadian General Capital Limited 19
  20. 20. Capital Structure Boyuan Construction Group, Inc Capital Structure • Boyuan has a face value of $7,930,500 in Convertible Common Shares 13,749,178 Debentures outstanding, Preferred Shares* 11,990,072 convertible into 3,965,250 Common Shares @ $2.00/Share Shares O/S (Basic) 25,739,250 • Boyuan’s Warrants are Debenture Shares 3,965,250 exercisable at $2.00/Share for a Warrants 3,172,200 period of four years Options 140,000 Shares O/S (Diluted) 33,016,700 * Boyuan Preferred Shares rank equally with the Common Shares and are convertible into Common Shares on a 1:1 basis, subject to TSX approval 20
  21. 21. Market Facts Ticker Symbol: BOY-V Listing: TSX-Venture Recent Share Price*: $3.10 Shares Outstanding ~ 25.74 million Market Capitalization $79.79M 52-Week Price Range $1.25 - $3.4 Fiscal Year-End June 30 * At December 31 Market Close 21
  22. 22. Contacts Company Contacts Paul Law Ms. Ren Shu Chief Financial Officer Corporate Secretary Tel: +852 9329 5088 Tel: +86573-85583126 Investor Relations Joe Racanelli Senior Account Executive The Equicom Group Inc. TSX-V:BOY | BOY.DB Tel: 416 815-0700 x 243 22
  23. 23. Appendix January, 2010 23
  24. 24. Residential Projects Pinghu Xingzhou, Donghu Park • Three phases with 13, 16 and 12 buildings in each phase • Total construction area of 750,000 sq feet • Currently building the third Phase of 12 buildings • September 2009 targeted completion 24
  25. 25. Industrial Projects Cargill Corporation’s High-fructose factory for Coca-Cola • Cargill is the largest private company in the U.S. • Project included roadways, warehouses and offices • Phase #1 has total area of 55,000 sq feet • Completed in August 2008 25
  26. 26. Commercial/Mixed Use Projects Jinhu International Plaza • High-end residential and office buildings in Nanjing, capital of Jiangsu province • 28-story residential building 21-story office building • Total construction area is 670,000 sq feet • December 2009 completion 26
  27. 27. Public Infrastructure Projects Hangzhou Municipal School for the Chinese Communist Party Committee • 7-storey building • Total construction area of 464,570 sq feet • Student apartment complex • High profile building for the CCP Committee in Hangzhou, capital of Zhejiang Province • Completed in August 2008 27
  28. 28. Hotel Projects • Fuyue Grand Hotel • A 5-star hotel in Jiaxing, Zhejiang • 20-storey with a gross construction area of 1 million square feet • Due to complete in 2010
  29. 29. Commercial Projects • Blue Star Commercial Building • Located at the city of Weifang, Shandong • 19-story with a gross construction area of 300,000 square feet • Due to complete by 2011