JINPAN INTERNATIONAL LTD. (NASDAQ ) March 2012 INNOVATION FOR A LOW CARBON FUTURE
Management Presenters Mark Du Chief Financial Officer Albert Sheng Vice President of Investor Relations 2
Disclaimer Disclaimer Forward-Looking Statements This presentation and oral statements made in conjunction with it may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, among other things the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities and the effects of future regulation and competition. These statements are only our current expectations. They are based on our management s beliefs and assumptions and on information currently available to our management. Forward-looking statements involve risks, uncertainties and assumptions. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Actual results may differ materially from those expressed in these forward-looking statements due to a number of uncertainties and risks, including the risk s described in our latest annual report on Form 20-F and other risks, including: our ability to successfully implement our business strategy; uncertainties about the future growth in electricity consumption and infrastructure development in the markets in which we operate; inability to attract and retain qualified management and personnel; increases in the costs of our raw materials; the impact of existing and new competitors in the markets in which we compete, including competitors that may offer less expensive products and services, more desirable or innovative products or technological substitutes, or have more extensive resources or better financing; the effects of rapid technological changes and vigorous competition in the markets in which we operate; the effects of additional or higher taxes in the countries in which we operate; changes in competition and the pricing environments in the countries in which we operate; the failure to keep pace with technological changes in our industry; potential product liability claims; the effects of the higher degree of regulation in the markets in which we operate; general economic and political conditions in the countries in which we operate or other countries which have an impact on our business activities or investments; inability to successfully adapt our internal controls over financial reporting to changes in circumstance; the monetary and interest rate policies of the countries in which we operate; and exchange rates. You should not rely on any forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after we distribute this presentation, except as otherwise required by law. Use of Non-GAAP Financial Measures This presentation contains non-gaap financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Refer to the Appendix for a discussion of these numbers and a reconciliation to their nearest equivalent financial measures calculated in accordance with GAAP. 3 科技创新 低碳环保 绿色发展
Contents Company Highlights Products Markets Growth Drivers Management & Sales Financials Investor Relations 4
Company Highlights Jinpan is a manufacturer of specialized power distribution equipment. Leading supplier of cast resin transformers in China. Supplier of choice to leading global OEMs for innovative power distribution solutions. Jinpan is well positioned to capitalize on growth in China s electrical infrastructure market; and Global alternative energy markets. 5
Company Highlights This is a simplified organization chart. Please refer to the Company s 20F filing for JINPAN INTERNATIONAL LTD. detailed information on its legal organization structure. HAINAN JINPAN ELECTRIC CO., LTD. JINPAN ELECTRIC CHINA CO., LTD. JINPAN INT L (USA), LTD. Guilin Jun Tai Fu Construction and Development Co. Ltd.* WUHAN JINPAN ELECTRIC CO. LTD. SHANGHAI JINPAN ELECTRIC CO. LTD. * Primary assets is 38 acres of land, the site of part of a new manufacturing facility to be built in Guilin, Guangxi Province. 6
Company Milestones Shanghai Manufacturing Facility Operational US Sales Support Facility Opened UL Certification Forbes Best 200 Companies in Asia Under US$1 Billion 2008 2012 2009 2009 Construction of Guilin Manufacturing Facility China Well Known Brand & Inspection Exempt Product OHSAS18001 Certification 2004 2005 2007 Wuhan Manufacturing Facility Operatio IPO & Listing on Amex 1998 2000 2002 Best New Supplier Award from OEM custome ISO14001 Certification 1997 ISO9001 Certification 1993 Company founded in Haikou Hainan PRC 7
Products Transformer Substations MAX CUSTOMER VALUE Switchgears VPI Transformers and Reactors Cast Resin Transformers 8
Dry Type Cast Resin Transformer Description: Cast Resin Transformer is a type of transformer designed to use air to cool its induction coils. Key Applications: Transmission and distribution of electricity. offers a range of medium voltage cast resin transformers for commercial & residential developments, transportation infrastructure projects, industrial applications, and wind towers. Isolation Transformer Transformer (2.5 MW (Gas Turbines) Wind Towers) Specifications: Voltage: Max 35 KV Transforming Capacity: Max 25 MVA 9
Dry Type Cast Resin Transformer Our transformer products meet the following international codes and standards: GB IEC ANSI/IEEE/NEMA CSA JEC Our transformer products have been certified by: UL (US) KEMA (Holland and US) CE (EU) GOST-R (Russia) UL&KEMA Certificates 10
VPI Transformer and Reactors Description: VPI transformers and reactors are components of converters and inverters. They are used to change voltage and filter electricity. Application: wind, solar, rail transportation. Reactor VPI Transformer (2.5MW Wind) Specification: Voltage: Max 1 KV Transforming Capacity: Max 500KVA Reactor(1.5MW Wind) Reactor (2.5MW Wind) 11
Switchgear & Unit Substation Switchgear Description: Switchgears are used to isolate electric equipment in the grid and de-energize equipment to allow technicians to perform maintenance. BLOKSET Switchgear Transformer Substation Description: Integrated assembly of low and high voltage switchgears, transformers, and monitoring and control systems in a compact fully, enclosed unit. Lowers the voltage of electricity drawn from the grid to levels that can be fed into general purpose transformers 12 Transformer Substation Gas Insulated Switchgear (Ring Main Unit 12KV)
Markets Revenue 2011: US$ 219M 2011 Revenue by End Market Jinpan s products are used in a wide range of applications: Residential and Commercial 10% Industrial (40%) Factories, refineries, ship yards, etc. Utilities and Infrastructure (50%) Utilities: power plants, wind farms, and electrical distribution networks. Infrastructure: airports, train/subway stations, and other municipal projects. Utilities and Infrastructure 50% 50% 40% 40% Industrial Residential and Commercial (10%) Office buildings, shopping centers, high rise apartments, etc. *Revenue guidance based on management s current expectations. 13
Markets 2011 Revenue by Product Switchgears 4% Transformer Substations 10% Reactors 7% 2011 Revenue China vs. International Int'l 12% 79% 88% Transformers China 14
Markets 2011 Revenue Conventional vs. Wind Energy 2011 Transformer Revenue Standard VS. Custom Wind 16% 55% Custom 84% 45% Standard Coventional 15
Growth Drivers Growth in Electricity Consumption & Infrastructure Jinpan manufactures equipment for the distribution of electrical power. Demand for our products is driven by demand for electricity. In 2011, total electricity consumption in China reach 4.69 trillion KWH. Electricity Consumption In China* Trillion kwh 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 2.4 2.8 3.2 3.4 3.6 4.2 4.7 Sales of electrical equipment is also driven by infrastructure development. The completed investment in fixed assets of the country in 2011 was 31,102.2 billion RMB, up by 23.6 percent over 2010. 1.0 0.5 0.0 2005 2006 2007 2008 2009 2010 2011 Source: China Electricity Council Electric Industry Brief (2011) released by the China Electricity Council on January 13, 2012. Source: Statistical Communiqué of the People's Republic of China on the 2011 National Economic and Social Development released by the China National Bureau of Statistics on February 22, 2012. 16
Growth Drivers Growth in the wind and solar industries continue to propel our growth. Alternative Energy Applications In 2011, sales of cast resin transformers and VPI reactors for wind energy applications reached US$ 35.7 million compared with US$ 15.8 million in 2010. In 2011, sales of cast resin transformers for polysilicon applications (transformers used by polysilicon manufacturing plants) reached US$ 27 million compared with $5 million in 2010. Source: Global Wind Report: Annual Market Update 2010, Global Wind Energy Council (April 2011) Solar PV Generation Capacity Source: Statistical Review of World Energy 2011 published by BP Energy June 2011. 17
Growth Strategy Leverage R&D and engineering capabilities to increase the sale of high margin custom transformers. Increase capacity and automation to enhance efficiency and lower the cost of standard transformers. Leverage economy of scale to compete in the market for standard products. Diversify our product offerings by through new product development. (e.g. Gas Insulated Switchgears) Increase sales by partnering with OEM customers to supply new markets. 18
Manufacturing Facilities USA Established: 1998 [Carlstadt NJ Facility Built 2009] Products: Cast Resin Transformers* Wuhan Established: 2008 Products: Cast Resin Transformers Shanghai Established: 2009 Products: VPI Transformers & Reactors; Gas Insulated Switchgears 1 *Jinpan s Carlstadt NJ facility supports product testing, after sales service, and limited scale manufacturing on site. Guilin (Under Construction) Established: 2011 Products: Cast Resin Transformers 19 Haikou Established: 1993 Products: Cast Resin Transformers / Conventional Switchgears
Management Strict implementation of international quality, environmental, and work health and safety standards enables us to efficiently manage manufacturing on a large scale. ISO 9001 Certified ISO 14001 Certified OHSAS 18001 Certified Run Enterprise Resource Planning system (SAP) that combines management information, inventory control and cost control into a single integrated platform. 20
Engineering Jinpan Electric has more than 90 degreed engineers. State of the art CAD tools allow our engineers to build 3D models and 2D projections, to verify design constraints, and to collaborate online. Proprietary software to design the electromagnetic system in dry type cast resin transformers. 21
Sales China Market Strategy Leverage our engineering and R&D capabilities to increase sale of customized transformers for advanced industrial and alternative energy applications. Increase capacity and leverage our economy of scale to increase sales of standard distribution transformers. Direct sales network consisting 35 regional sales offices located in major cities in China. Diversified customer base Jinpan s extensive sales network is a significant barrier to entry for foreign and domestic competitors seeking to enter the China market. 22
Sales International Market Strategy Supply the international market through OEMs. Leverage the marketing reach of large international OEMs and our expertise in manufacturing power distribution equipment to expand our presence in international market. North America / Europe Millions (USD) 2 26.0 26.0 23.7 21.0 19.6 16.0 11.5 11.0 6.0 6.0 1.0 International Sales Currently, Jinpan is one of two manufacturers of UL certified cast resin transformers in the world. Established a transformer assembly and testing facility in Carlstadt NJ. In 2011, North America is our top export market followed by Europe. -4.0 2007 2008 2009 2010 2011 Number of OEMs that List as a Qualified Supplier Year 2009 2010 2011 OEM 1 3 3 23
Compelling Growth Strategy Continue to focus on China s growing electrical infrastructure market. Promote and develop high end products (transformers for alternative energy and industrial applications and complementary power control and distribution products). Invest in new, state-of-the-art facilities to increase manufacturing capacity and efficiency. Leverage the resulting economy of scale to expand market share of standard power distribution transformers. Leverage our relations with OEMs and UL certification to expand our global reach. 24
Financial Performance ($Millions) Net Sales Gross Profit & Margins $240 $210 $180 $150 $120 $90 $60 $30 $0 $219.0 $154.0 $159.0 $144.0 $119.6 $82.3 $53.6 2005 2006 2007 2008 2009 '2010 2011 (1) $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 $80.3 $67.2 $56.1 $48.9 $41.6 $22.9 $17.2 2005 2006 2007 2008 2009 2010 2011 EBITDA & Margins Net Income & Margins $40 $35 $30 $25 $20 $15 $10 $7.2 $10.5 $20.9 $24.8 $35.6 $21.2 $31.4 $30 $25 $20 $15 $10 $7.4 $16.4 $19.8 $29.0 $13.3 $23.8 $5 $0 2005 2006 2007 2008 2009 2010 2011 $5 $0 $4.5 (1) 2005 2006 2007 2008 2009 2010 2011 25
Financial Performance ($Millions, except per share data) FYE December 31 2007 2008 2009 2010 2011 Net Sales 119.6 154 158.9 144.0 218.9 % Growth 45.4% 28.8% 3% -9.4% 52.2% Gross Profit 41.6 48.9 67.2 56.0 80.3 % Margin 34.8% 31.7% 42.3% 38.8% 36.7% EBITDA 20.9 24.8 35.6 20.9 31.4 % Margin 17.4% 16.1% 22.4% 14.5% 14.3% EBIT 19.6 23.1 32.0 17.3 27.1 % Margin 16.4% 15.0% 20.1% 12.0% 12.4% Net Income 16.4 19.8 28.9 13.4 23.8 % Margin 13.7% 12.9% 18.2% 9.3% 10.9% Diluted Earnings per share 1.01 1.21 1.78 0.81 1.45 26
Financial Performance ($Millions) Balance Sheet Statement of cash flow 31-Dec-11 Cash 24.2 Current assets 183.6 Other assets 69.6 Total assets 277.4 31-Dec-11 Net Cash provided by operating activities 4.1 Net cash used in investing activities (14.7) Net cash provided by financing activities 7.3 Net decrease in Cash (3.3) Current liabilities 94.9 L/T Liability 1.6 Equity 180.9 Total liabilities & equity 277.4 27
Albert Sheng Vice President of Investor Relations Jinpan International (USA) Ltd. 390 Veterans Blvd. Carlstadt, NJ 07072 T: 201 460 8778 (x135) F: 201 460 8775 E: asheng@jstusa.net