Transcript Fuwei Films (Holdings) Co., Ltd. (NASDAQ: FFHL) Presentation December 2012 Safe Harbor Statement This presentation contains "forward-looking statements" within the meaning of the “safe-harbor” provisions.

Fuwei Films (Holdings) Co., Ltd.
(NASDAQ: FFHL)
Presentation
December 2012
Safe Harbor Statement
This presentation contains "forward-looking statements" within the meaning of
the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995.
Such statements involve known and unknown risks, uncertainties and other factors
that could cause the actual results of the Company to differ materially from the
results expressed or implied by such statements, including changes from
anticipated levels of sales, future national or regional economic and competitive
conditions, changes in relationships with customers, access to capital, difficulties
in developing and marketing new products, marketing existing products, customer
acceptance of existing and new products, and other factors. Accordingly, although
the Company believes that the expectations reflected in such forward-looking
statements are reasonable, there can be no assurance that such expectations will
prove to be correct. The Company has no obligation to update the forward-looking
information contained in this presentation.
Additional information regarding the risks faced by the company may be found in
its filings from time to time with the Securities and Exchange Commission
including in its Annual Report on Form 20-F.
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Equity Market Data
Public Company
NASDAQ Global Market*
Trading Symbol
FFHL
Revenues
Q3 2012’: $14.1M; First Nine Months of 2012:
$43.3M
Cash on Hand
$2.5M (as of 9/30/2012)
Market Cap
$18.03M
Shares Outstanding
13.06M
Float
4.5M
IPO Underwriters
Maxim Group LLC (Lead Manager);
WR Hambrecht + Co.; Chardan Capital Markets, LLC
(closing price of $1.37 on December 4, 2012)
* Listed on NASDAQ Global Market on December 22, 2006
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Company Highlights
Leading producer of high-quality and specialty BOPET film
•
•
•
•
Main producer of laser transfer film
The only heat shrinkage film producer in China
The only local dry film manufacturer in China
Well-known reputation in quality and service
Well-positioned to benefit from China’s ever-expanding consumer market
• BOPET market*:$1.99 billion in China with about 20% growth and $6.24 billion globally in 2010
• Shares in the Global market of Chinese BOPET industry : #1 in the world, design production capacity is
1,003,000 tons and accounts for about 30 % of major economies by 2010
Excellent R&D strength
• Solid IP portfolio with further patents and products in pipeline
• Commitment to R&D investment, own the only Pilot production line in China
• Expanding R&D team
Notable News
• Signed letter of intent on PETG heat shrinkable label film supply with China Bottlers Procurement
Consortium, the authorized procurement service provider for the Coca-Cola Bottling system in China
• Signed supplementary agreement with Lindauer Dornier GmbH on new production line, to be delivered 3
months ahead of schedule.
*Management Estimate
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Company Introduction
•The Company develops, manufactures and distributes BOPET films and is one of the main
manufacturers in China’s BOPET industry.
•Sales in the first nine months of 2012 is about 20,378 tons,
accounting for about 3% of domestic markets
•National High-tech enterprise in China
•Approximately 260 employees
•Facilities are located in No.387, Dongming Road,
Weifang, Shandong, PRC
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Company Highlights
Focused growth strategy
• Enhance Research & Development, increase proportion of high value-added products
• Enter high-margin, fast growing thick-film market
• Continue developing overseas market by optimizing products structure and adjusting
overseas sales area
• Seek suitable acquisition target
Financial results for Third Quarter 2012
• Revenues for the third quarter ended September 30, 2012 were RMB88.8 million
(US$14.1 million), compared with RMB117.0 million in the same period of 2011
• Overseas sales during the third quarter ended September 30, 2012 were RMB19.5
million (US$3.1 million,) or 22.0% of total revenues, compared with RMB22.4 million
or 19.2% of total revenues in the same period of 2011
• Basic and diluted net loss per share was RMB1.14 (US$0.18), compared with basic
and diluted net loss per share of RMB0.38 in the third quarter of 2011.
Main Products
Commodity Film
Advantages
• Printing film
• High transparency
• Hot stamping film
• Excellent thermal stability
• Transfer printing film
• Unequaled mechanical strength
• Metallizing film
• Excellent dielectric properties
• Base film for other applications
• Good resistance to common solvents and gases
Advantages
Specialty Film
• Laser embossing film
• Optically brilliant
• Heat shrinkage film
• Tear-resistant and puncture-resistant
characteristics
• Heat sealable film
• Chemical treated film
• DFR film
• Windows film
• Good flatness and coefficient of friction
• Anti-counterfeiting
• Flexible, impact resistant, and tear-resistant
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High image formation
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Broad Product Applications
Fuwei Films produces BOPET films which are used in many everyday products
Packaging Applications
• Tobacco
• Processed food
• Pharmaceuticals
• Cosmetics
• Beverage & Alcohol
Industrial Applications
• Metallic yarn,
strengthened yarn
• Isolation
• DFR
• Lighting Tile
• Glasses used in
automobile and buildings
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Experienced Management Team
Xiaoan He
Chief Executive Officer, Chairman of the Board
• Over 10 years of management experience in the plastics and
packaging industries in the PRC
• Responsible for the formulation and implementation of business
strategies and management of operations
• Bachelor’s Degree in Engineering from Shanghai Jiaotong University
in 1983
• EMBA from the China Europe International Business
School in 2003
Xiuyong Zhang
Chief Financial Officer, Director
• More than 10 years of experience in accounting and financial fields
• Certified as an accounting professional by the Ministry of Finance
of the PRC in 1997
• Obtained PRC CPA Certification in 1998
• Obtained PRC Assets Assessment Appraiser and Legal Professional
Certification in 2004
• Obtained the Certificate of the Legal Profession Qualifications of
People's Republic of China in 2009
• Responsible for the day-to-day management of our financial and
taxation matters
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Production Lines
Line(s)
Designed
Annual
Capacity
(metric tons)
1
13,000
2
16,100
Description
Timeline
Used for consumer packaging; product mix (commodity
vs. specialty) is adjustable per purchase order; focus
on increasing specialty film sales
In operation
Expected to be put into
operation by the end of
2012 or Early 2013
In operation
3
23,000
High value-added thick film products for industrial
application (main products: including optical film such
as TFT-LCD film)
4
1,500
Trial Production Line: for R&D, small batches of highvalue differentiated products
Total
53,600
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R&D Enhancement Plan
One of the few BOPET producers in PRC with strong technical human resources
• 17 senior researchers & technicians
• Several foreign consultants with deep industry knowledge and expertise
Solid Intellectual Property portfolio
• 11 existing patents
• 19 pending patents
R&D plan
• R&D center is built up to develop new products.
• The trial production line:
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Research and develop new products.
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Produce small batches of high value-added specialty films.
–
Quality control and process test for cost saving prior to large scale production.
• Deepen R&D forces on thick film to be applied for LCD films.
• Develop new thick films and specialty products.
• Substantially expand technical team over the next two years.
• Continuous support from the local government.
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Growth Strategy
Enhance Research & Development
• Broader application and promotion of new materials and technologies in high-end packaging and
industrial application
Enter high-margin, thick-film market
• Gain entry into the thick film industry and replace imported high-end products
• Expand production capacity for significant revenue growth
Continue developing overseas markets and promote further the Fuwei Films
brand
• Optimize products structure and adjust overseas sales area
• A high-quality and competitively-priced Chinese replacement to the global brands
Seek suitable acquisition target
• M&A: Key growth strategy
Commodity Films
Domestic sales
Specialty Films
M&A
Exports
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Key Financials
(amount in thousands, except per share data)
Nine-Month Period
Ended September 30,
2012
RMB
Revenue
Cost of goods
sold
Gross profit
Selling, General
and
Administrative
Income tax
benefit (expense)
Net income
Earnings (Loss)
per share
FY2011
RMB
USD
USD
FY2010
RMB
272,196
43,310
537,645
85,432
501,458
(272,475)
(43,355)
(452,173)
(71,843)
(370,905)
(279)
(45)
85,472
13,580
130,553
35,943
5,719
(54,736)
(8,697)
(70,922)
(133)
(21)
3,955
(628)
(11,059)
(41,900)
(6,668)
21,081
3,349
40,976
(3.21)
(0.51)
1.61
0.26
3.12
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Balance Sheet Highlights
September 30, 2012
(amount in thousand)
RMB
USD
December 31,
2011
December 31,
2010
RMB
RMB
Cash & Cash Equivalents
15,767
2,509
44,172
171,227
Accounts Receivable, net
17,859
2,842
52,457
25,482
Current Assets
164,396
26,158
281,904
263,458
Construction in progress
277,320
44,126
179,386
197,193
Total Assets
773,236
123,033
790,174
798,152
Short-term Loans
120,000
19,094
168,501
142,000
Current Liabilities
230,487
36,674
217,303
246,402
13,323
2,120
573,669
552,544
773,236
123,033
790,174
798,152
Stockholders’ Equity
Total Liabilities and
Stockholders’ Equity
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Summary
• Leading producer of high-quality BOPET film and specialty film in
China
• Well-positioned to benefit from large consumer market
• Excellent R&D strength
• Delivering profitable results and significant profitable potential
growth
• Solid organic growth strategy
• Driven by an experienced management team
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Thank You!
www.fuweiholdings.com
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