Dongyue Group Limited(Stock code: 189)

2

1. Company overview

3

Company Overview

Leading new materials & fine chemicals enterprise

Well-known, market-recognized brand

High-quality, long-term customer base Fast-growing, high-return business model

• Dongyue Group was established in 1987, headquartered in Huantai Shandong, and was listed on the Hong Kong Stock Exchange in December 2007

• Over 20 years, it has developed a hi-tech fluorine silicon industrial chain with environmentally friendly new materials and new energy products, to become Asia’s largest fluorine silicon materials production base and China’s leading fluorine silicon enterprise.

• The company persists in innovation, owning many IP rights in environmentally friendly new materials and new energy. It has broken foreign monopolies in new environmentally friendly refrigerants, fluorine silicon materials, and chlor-alkali ion `s, replacing them with localized production.

• Excellent supplier for well-known enterprises such as Dupont, Daikin, Solvay, Haier, Hisense, Glee, Midea, Changhong and Chunlan

• Top Chinese brand, well-known Chinese trademark

• National Labor Award

• National Enterprise Technological Center

• Key National New Hi-Tech Enterprise

• First fluorine silicon new materials industrial park in China

• National post-doctorate workstations, occupied by Taishan academics

• National new materials industrial base and key enterprise

• One of the nation’s first batch of 18 technology export innovation bases

• National 863 Plan, National Fire Torch Project Certificate/Implementation Enterprise for 11th Five Year Technology Support Plan

Net profit growth Return on equity

6.4% 6.9%

27.3%

2008 2009 2010

138 154

781

2008 2009 2010

RMB million

4

Development history

July 1, 1987Jinan Chemical Plant Huantai Branch established. Two furnaces totaling 1.2ktpy commence operation

1993Renamed as “Zibo Dongyue Fluor-chemical Co., Ltd.”, Dongyue starts to operate independently from Jinan Chemical Plant

October 1995Established import export company and entered into the global market

1998Start of cooperation with Tsinghua University and independently developed environmentally friendly refrigerant product series , beginning Dongyue’s history of self driven R&D

May 16, 20013ktpy polytetrafluoroethylene project commences production, ending China’s history of limited small-scale production

April 20023ktpa PTFE project enters production

2006Received state approval for Dongyue fluorine silicon industrial park, the first specialized fluorine silicon industrial park nationally

2007Phase I of 300ktpa organic silicone project enters production. The Company has 180ktpa capacity as of 2010

March 2007CDM project jointly developed by the Group, Mitsubishi and Nippon Steel formally commences production December 10, 2007

Listed on the Hong Kong Stock Exchange

March 22, 2008

Following the “China Top Brand” award in 2006, the Group’s “Dongyue Federation” trademark was recognized as a “Well-know Chinese Trademark” becoming the first in the industry to win both awards

September 22, 2009Chlor-alkali ion membrane production commenced, marking the end of China’s dependence on foreign technology and the start of localized production

30 June, 2010Dongyue’s chlor-alkali ion membrane successfully applied in a 10ktpy chlor-alkali production line, marking the beginning of localized chlor-alkali ion membrane production and application, ending the chlor-alkali industry’s dependence on foreign technology

Early Stage Establishing a comprehensive product platform

Rapid development through superior technology

5

Product overview

End applications

Air conditioning

Refrigerator/ freezer

Central air conditioning

Automobiles Tubing Bearing Insulation materials

Aerospace Building materials

Electronics Clothing additives

Cosmetics

Environmentally-friendly refrigerants

Organic SiliconePolymer Membranes

Dongyue is the world largest producer and seller of environmentally-friendly refrigerants, independently developing over 20 types of environmentally-friendly refrigerant products for use in industrial, commercial, household air-conditioning systems

New environmentally-friendly refrigerants, jointly and independently developed by Dongyue and Tsinghua University, received the State Technological Invention Award, and are far more environmentally friendly and energy saving compared to traditional refrigerants

Dongyue’s environmentally-friendly refrigerants received China’ Top Brand, Well-know Chinese Trademark, and were used in major national projects such as the Beijing Olympic stadium

Dongyue’s key fluoro-polymer

product is PTFE With its excellent heat-resistant,

corrosion-resistant, aging-resistant and abrasion-resistant properties, PTFE is may be used in the lining of chemical equipment and tubing, mechanical seals, various high-pressure engine pipelines, wire and cable insulation materials, advanced coatings, and human medical products

Organic silicone is widely used in military, aviation, automotive, electronic, construction and other industries, mainly in the form of additives, treatment chemicals, stabilizers, lubricants, sealants, etc, and are an important ingredient in industrial processes

Organic silicone can be used to insulate buildings, airport runways, roads and windows, can be used as electric insulation material, automotive sealants and in keypads. It can also be used in high end cosmetics, baby utensils and other day to day uses

On Aug 20, 2010, the Company’s fluoralkali membrane was successfully implemented at China Salt Changzhou Chemical, and has been in stable operation for over a year, with major parameters reaching world class levels. The company published an article in this year’s fluoralkali technology summit, highly praising the domestic development of membrane products in China

In the first half of this year, the Company has undergone intensive R&D to facilitate large scale commercial production. We have planned for two batches of large scale production for testing and sale purposes in order to realise revenue while further intensifying product development efforts

Chemicals Textiles PesticidesPetroleum

6

2. Company value chain and product overview

7

Vertically integrated value chain

After 20 years of development, the Group has established an vertically integrated value chain

Fluorite

AHF

R22

TFE

Industrial Salt

Chlor-AlkaliCMS

Silicone monomer

Silica flour

Fluoro-monomer

Organic silicone:

Crude rubber

Silicone rubber

Rubber compounds

White carbon black, combustion method

Other

HFP

R134a

R439A

R125

R142b

R32

Aqueous dispersion

Molding particles

Molding micropowder

Presinter materials

Granulation material

Concentrates

Fluoropolymer

Ion-membrane used in chlor-alkali

R152

Fluoro-silicone material

8

Refrigerants

Overview

• Dongyue’s current refrigerant products include R22, R134a,

R439a, R152a, R125, R142b, R32, etc, used in industrial,

commercial and residential climate control systems

• Dongyue has developed independently and in collaboration with

Tsinghua University refrigerant products such as R439a, R415b,

R418a, R425a, DYR-1, DYR-2, DYR-5, DYR-6, DYR-7, DYR-406, DYR-

413, LXR2a, etc, some of which have been awarded national level

awards, and are more environmentally friendly than comparable

products

• Dongyue’s independently developed refrigerants such as R439 have

seen widespread application in the market, and are being used by

Haier, Hisense, Gree, Midea, etc

Main applications

29.8%

8.7%

3.1%

14.9%1.9%

Refrigerants41.6%

Timetable for global phase out of HCFCs

• A global solution for the phase out of HCFCs was reached at the September 2007 19th Meeting of the Parties to the Montreal Protocol

201075% reduction in use of HCFCs

201590% reduction in use of HCFCs

2020Complete phase out of HCFCs

2020-30Retain 0.5% for maintenance purposesAdvanced

economies

Developingeconomies

2013Growth in use of HCFCs frozen

201510% reduction in production and use of HCFCs

202567.5% reduction in production and use of HCFCs

2030Complete phase out of HCFCs

2030-40Retain 2.5% for maintenance purposes

202035% reduction in production and use of HCFCs

18%

6% 7%11%

F22 134 439 R125

9

Fluoropolymer

Overview

• Fluoro-polymers are a high end polymer product which will see an

increasingly wide range of applications following construction of

China’s high speed rail and gas transportation infrastructure as

well as Li-ion batteries increasing use of fluoro-polymers. The

Group’s main fluoro-polymer products include PTFE

• PTFE excels when used in chemical equipment, pipe linings,

sealants, pressurized engine oil pipes, cable insulation, high

performance coatings, medical materials thanks to its high

resistance to heat, corrosion, aging and abrasion

Main applications Fluoro-polymer industry overview

• Markets for fluoro-rubber, fluoro resins, fluoro membranes and other

products are still in relatively early stages in China

• Fluoride fine chemicals generate the highest value amongst the entire

fluoro-polymers value chain

• Fluoride fine chemicals are at the pinnacle of the fluoro-polymer

industry

41.6%

8.7%

3.1%

14.9%1.9%

Fluoropolymer29.8%

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Fluoropolymer

Mainly used inMain products Examples of excellent performance

Suspension resin

Dispersion resin

Further-processed products

Suspension medium grain

-DF101, DF102

Suspension fine powder

- DF16D, DF-17A, DF-16A-30, DF-17A-30

Medium grained resin for electrics

General-purpose resin

- DF-201, DF-203, DF-204, DF-205

Dispersion concentrate

- DF-301, DF-302

Modified resin

- DF-2040, DF-2046

Pre-sintering material

- DF-22, DF-22A

Additive-free granulation material

DF-101 resin: low packing density, soft particles

DF-102 resin: high packing density, hard particles, clean, uniform and smooth film, high yield, supplied to Samsung to create CD liquid crystal film, which accounts for 40% of total supply

DF-17A: fine and uniform particle size, a good filler

DF-201: suitable molecular weight, elongation, high volume rate, a neat cross-section of raw materials

Compared to products of other domestic companies, DF-204 has stable quality between batches, which has this special property of fibers that can be pulled. Key customer Shanghai Lingqiao uses it to produce PTFE fibers, filters, achieving 100% delivery ratio

DF-2040: increased thermal stability, flexibility, resistance to stress – cracking and cleanness

DF-22: good fluidity and smooth surface finish

DF-22A: particle diameter of 300µm-900µm, excellent fluidity, smooth surface finish

Additive-free granulation material with uniform particle size, high strength, mobility, and easily integrated particles, resistance to cracking

Leveraging its rich industry experience, advanced production technology, and good customer relationships, Dongyue continues to innovate in the fluoropolymer business segment, to provide customers products with superior performance.

11

Organic silicone

Overview

• Organic silicone is widely used in military, aviation,

automotive, electronic, construction and other industries, mainly

in the form of additives, treatment chemicals, stabilizers,

lubricants, sealants, etc, and are an important ingredient in

industrial processes

• Organic silicone can be used to seal buildings, airport runways,

roads and windows, can be used as electric insulation material,

automotive sealants and in keypads. It can also be used in high

end cosmetics, baby utensils and other day to day uses

Main applications Industry overview• Between 2000 and 2010, global organic silicone consumption growth

reached approximately 6% CAGR. China’s growth in the same period

reached 21%, far higher than 3.1% and 3.3% in the US and Canada

respectively• China is the largest consumer of organic silicone globally, with total

consumption reaching 400,000 tons in 2009 (30% of total global

consumption)• Organic silicone monomers are expected to experience strong demand in

the next two years, with consumption of 1.08 million tons, 1.28 and

1.61 million tons in 2010, 2011 and 2012 respectively, representing

growth of 22.0%, 19.2% and 25.4% respectively

• Domestic producers of organic silicone have been gaining market share,

with imports accounting for 86.6% of total consumption in 2000-04 but

only 60.68% in 2005-08

41.6%

29.8%

3.1%

14.9%1.9%

Organicsilicone8.7%

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Chlor-alkali ion membranes

Overview

• Chlor-alkali ion membranes are a key component of the chlor-alkali membrane cell production process,

and have the advantages of being high purity, low pollution, low energy consumption. It is widely

used in many industries such as petrochemical, textiles, agrichemicals, and is the most advanced

chlor-alkali production technology

• Fuel cell membranes are a new business born from the development process of chlor-alkali ion

membranes. Dongyue has participated in the EU 6th

Framework Agreement, Sino-Canada Cooperative

Project, and is cooperating with leading global hydrogen fuel cell researchers, and has achieved

significant technical breakthroughs

Main applications Industry overview

• China’s annual chlor-alkali production is 30 million tons, or a third

of global production. The membrane cell production process accounts

for over 22 million tons of sodium hydroxide

• The diaphragm cell process consumes more energy and is more polluting,

and the Ministry of Industry and Information Technology has announced

that during 2011 the use of membrane cell production process shall

increase from 65% to 85% of total production. This will promote the

growth of domestic players in the industry

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Favorable government policies

Energy conservation and environmental

protection regulations

Controls on fluorspar exports by

the Chinese government

Government policies for silica powder, DMC, silicone, PVC

and chlor-alkali ion membrane

• Energy conservation and environmental protection are two key focal points

of China’s 12th Five Year Plan

• The Chinese government’s regulatory policies and measures will be

favorable towards the company’s new environmentally-friendly

refrigerant, CDM and chlor-alkali ion membrane businesses

• The Chinese government will ban the export of fluorspar and implement

tighter controls on the export of hydrofluoric acid. This will increase

the local supply and be beneficial to the development of local fluoride

production companies

• From September 29, 2009, an anti-dumping tariff was imposed by the

Ministry of Commence on PTFE imports from the US, South Korea, Japan,

Russia and Taiwan, which will benefit Dongyue

• Export restrictions on metal silicon (a material used in organic silicon

production that is highly energy consuming) will help raise the local

supply and reduce foreign procurement costs

• Anti-dumping policies directed at DMC (dimethylcylosiloxane) will also be

favorable to the price of locally-produced DMC

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3. Investment highlights

15

• Strong business growth driven by an increasingly optimized product mix

– Favourable government policies for fluoropolymer products which is expected to help the company

expand to new markets

Investment highlights

Demand for Dongyue’s products will increase significantly on the back of China’s overall economic growth

• Benefitting from strong growth in end markets

– Rapid development of the Chinese economy will boost demand for refrigerants, silicone and other

products

1

• Leading market position in China

– Largest refrigerant manufacturer in China with diverse revenue streams from refrigerants, silicone

products, chlor-alkali ion-exchange membranes and carbon credit revenue

2

• Environment-friendly products with strong government support

– Supported by the Chinese government, we have accelerated development of our environment-friendly

refrigerants, expanding our market and extending our leadership in the refrigerant market

4

• Extensive sales network and high-quality, highly-stable customer base

– As the supplier for some of the most respected names in the chemical industry, Dongyue’s products

have a prominent presence in China and in the world

5

• Strong R&D capabilities

– We have a dedicated R&D team with industry leading R&D capabilities

6

• Highly experienced management

– Highly experienced senior management with a recognized track record in creating value for investors

7

3• Vertically integrated value chain and self sufficient business model

– Dongyue has been increasing its percentage of self-supply of raw materials by way of building an

vertically integrated value chain. Synergies have yielded significant economic value

8

16

Benefitting from strong growth in end markets

China’s GDP growth rate

Organic silicone monomer consumption in ChinaGrowth in Chinese demand for refrigerant end products

• China is the world’s fastest growing key economy

– 2010 GDP YoY growth of 10.3%

– Expected 2011-2013 GDP average growth rate of 8% and above, far exceeding

other major economies

• Significant increase in PRC demand for refrigerant end products

– Stimulated by strong local demand, a strong upward trend is seen in the

local sales of key end products, air-conditioning products and

refrigerants

– With the rise in consumption and export demand, the demand for

refrigerants is expected to remain strong

• Significant increase in PRC demand for organic silicon

– Dongyue’s commencement of organic silicon production in 2007 has played

a key role in the company’s growth

– China is the world’s largest organic silicon producer, with a

consumption growth far exceeding that of other regions

Strong Chinese economic trends will drive growth for refrigerants as well as its end-market products, while concurrently increasing demand for organic silicon products

1

2

3

1

Source: UBS research

10.1% 10.4%11.6%

13.0%

9.0% 8.4% 10.3% 8.7%

Mean: 10.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2004 2005 2006 2007 2008 2009 2010 2011

Year

GDP Growth ()%

Refrigerator sales volume change Air-conditioning sales volume change

120 150 193 240326

560 528610

720

885

1074

1272

1600

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010F 2011F 2012F

(000

s un

its)

消费

0

1,000

2,000

3,000

4,000

5,000

6,000

05年

1月05年

7月06年

1月06年

7月07年

1月07年

7月08年

1月08年

7月09年

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7月10年

1月10年

7月

（千单位）

0500

1,0001,5002,0002,500

3,0003,5004,0004,5005,0005,500

05年

1月05年

7月06年

1月06年

7月07年

1月07年

7月08年

1月08年

7月09年

1月09年

7月10年

1月10年

7月

（千单位）

(000s units)

(000s units)

Jan 2005

Jul 2005

Jan 2006

Jul 2006

Jan 2007

Jul 2007

Jan 2008

Jul 2008

Jan 2009

Jul 2009

Jan 2010

Jul 2010

Jan 2005

Jul 2005

Jan 2006

Jul 2006

Jan 2007

Jul 2007

Jan 2008

Jul 2008

Jan 2009

Jul 2009

Jan 2010

Jul 2010

Consumption

17

Leading market position in China

Main products and uses

Dongyue’s and peers’ HCFC-22 capacity ('000 tonnes)

• Largest manufacturer of HCFC-22 and PTFE refrigerant in China

– Annual capacity of 200,000 Mt and 30,000 Mt respectively

• Strong market share

– ~30% or more market share in F22

– ~15% market share in new green refrigerants, and this

number is still rising

– ~35% market share in fluoropolymers

• Breakthrough in chloralkali ionic membrane technology, ability to

enter into monopolistic market

• Additional income stream from CER proceeds

– Among 11 companies granted CER rights in China

– Ability to sell CER credit to generate additional revenue

2

Dongyue has a market leading position in China’s refrigerants and fluoropolymer industries

Dongyue’s and peers’ PTFE capacity('000 tonnes)

Fluoropolymers

Refrigerants

Organic silicon

• HCFC-22

• HFC-134a

• R439A

• R152

• Other new green refrigerants

• Mainly used in

– Air conditioners

– Refrigerators

– Central cooling systems

– Automobiles

• Includes PTFE and HFP

• Used in

– Pipes

– Bearings

– Insulate Casing

– Aerospace movable parts

• Mainly used in

– Architecture

– Electronics

– Clothing additives

– Cosmetics

Entering into ionic membrane sector

• First and only chloralkali ionic membrane

created with domestic self-developed

technology

• Marking end of monopoly of overseas

manufacturers in the area

• Estimated significant increases in demand for

chloralkali in China

• Strong government support for continued

production of chloralkali

• Group is actively researching and developing

other membranes: hydrogen fuel cell membrane,

membrane for seawater desalination, membrane

for waste water treatment.

200

110 100

45

Dongyue JiangsuMeilan

QuzhouJuhua

ChangshuZhonghao

30

18

85

3

Dongyue ZhonghaoChengguang

3F JaingsuMeilan

ZhejiangJusheng

18

Environmentally friendly products with strong government support

The PRC government has attached great significance to Dongyue, both for its environmentally friendly products and innovation in the ionic membrane field

4

Environmentally friendly products is a trend in consumer spending and government policy

50,000 Mtpa environmental-friendly

and energy-saving refrigerant production

plant

World’s largest CDM project for ozone

depleting gas-HCFC23 decomposition

Production of more energy saving

chloralkali ionic membrane with less

pollutants

Increasing environmental awareness results in an increasing demand for environmentally friendly products

Environmental protection is a key focus area of China in its 12th Five-year Plan

Leverage off market leading position in ‘green’ refrigerants in China and globally

Source: Dongyue, CCBIS Source: Company information

• Dongyue has great development prospects.

Wen Jiabao, Prime Minister of the People’s Republic of China

• I am encouraged and inspired after visiting Dongyue

Group; Dongyue has broken the monopoly of foreign

technologies through its independent innovation,

which has inspired the whole Chinese nation.

Li Keqiang, Vice Premier of the State Council

• Dongyue will surely become a time-honored

enterprise of the century, the Chinese DuPont, BASF

and Bayer.

• Realize value through benefits; award talents

with fortune. You have won honor for our

motherland.

The Central Government’s increasing focus on environmental protection, industry restructuring and the elimination of pollution-heavy products will create a favorable environment for the Dongyue’s growth

• You have filled the gap in this area of expertise

for our country, and broke the overseas

technological monopoly. I hope you will continue to

strive. You will not just have presence in this

area of expertise, but will also continue to strive

and become world industry leaders!

Hu Jintao, CPC Central Committee General Secretary and State President

Li Yuanchao, Member of Political Bureau of CPC Central Committee

Zhang Ping, Director of the National Development and Reform Commission

Dongyue’s new environmental-friendly products

Refrigerants series Applications

Dongyue seriesR439a Automotive air-conditioning, household air-conditioning, heat

pump systems, central air-conditioning, industrial refrigeration, heat pump water heaters

DYR-1 Automotive air-conditioning

DYR-2 Industrial refrigeration and cold storage

DYR-4 Refrigerator, freezer, automotive air-conditioning, food counters

DYR-5 Household air-conditioning, heat pump systems, central air-conditioning, industrial refrigeration, heat pump water heaters

Tsinghua series

R415,R418,R425 Air-conditioners, refrigerators and other cooling systems, commercial air-conditioning, household air-conditioning, industrial refrigeration, cold storage and transport refrigeration

19

An increasingly optimized products mix5

Core products and applications

Suspension medium grain Suspension fine powder

Medium grained resin for electrics General-purpose resin

Dispersion concentrate Modified resin

Pre-sintering Additive-free granulation material

Large turning plate, large molded plates of mid/high thickness

Molded products, and molded panels

Electrical film

Turning film, color film

Fillers

Precision filter

Waterproof products, wire coating

Sealing material, waterproof film

Low-density sealing tape

Squeezed tube, braided packing, seal tape processing

Elastic tape, two-way stretch film

impregnated glass cloth and asbestos

Anti-dropping agent, impregnated glass cloth and asbestos; anti-adhesive, anti-fouling coatings and non-stick coating

Pipes, wire insulation

Small-diameter tube, tape for electrics

Large-diameter pipes, bars

Pipes, bars, profiles

Applications in automated processing

Major international PTFE producers are mostly market giants

Europe North America Asia

In view of a severe shortage of resources, the Chinese government will impose a complete ban on fluorine export – this will increase the supply in China and ramp up the development of domestic fluorochemical producers

In addition, the Ministry of Commerce decided that, as from 29 September 2009, PTFE importsfrom the US, South Korea, Japan, Russia and Taiwan will be subject to 10%-25% anti-dumping duties for as long as 5 years, to the benefit of Dongyue’s PTFE business

Also, the Chinese government encourages the development of emerging industries of strategic importance (e.g. new materials), and the formulation of relevant plans are now underway. High-performance fluorine materials are an important branch of the new-material industry – the production of organofluorine and high-performance inorganic fluorochemical products is listed in the Industry Restructuring Directive (2007) as an industry encouraged by the government

The State Council points out that ”(Efforts must be made to) speed up the development of high-performance fluorine resin, fluororubber, environmentally-friendly refrigerants and detergents and fluorinated membrane materials, as well as core technologies needed for fluoride fine chemical industrialization”

Favorable policies in China

Fluoropolymer development provides fresh impetus to the company’s business growth, and its products are well-supported by favourable government policies

20

Extensive sales network and high-quality, highly-stable customer base

Source: Company Data

Company’s domestic sales network covers areas including Shandong, Henan, Beijing/Tianjin, Northeastern Anhui,

Guangdong, Shanghai, Nanjing, Chengdu, Wuhan

International sales network covers areas including Japan/South Korea, SE Asia, the Middle East, Africa, South

Asia, Americas and Europe

Supplier for well-known local and international brands

2011 H1 refrigerant supply ratio for the Group’s major customers

The Company supplies products to well-known home appliance manufacturers such as DuPont and Daikin

6

Dongyue’s global distribution network

Source: Company Data

2011 H1 PTFE supply ratio for the Group’s major customers

41% 32%

80% 72%

100%

0%

20%

40%

60%

80%

100%

Gree Midea Haier Aux Changhong

OtherDongyue

89%100%

80%60%

39%

0%

20%

40%

60%

80%

100%

ZhenjiangChunhuan

ShanghaiLingqiao

YangzhongHaiteng

NingboChangqi

GuangdongSihui

OtherDongyue

21

Strong R&D Capability7

Dongyue’s R&D System

Dongyue Research Institute

Provincial Fluorine Silicon Engineering Center

State-recognized Enterprise Technology Center

Dongyue-Shanghai Jiaotong University Polymer Research Center

National Technology Research Support Program, Special Project Group

Possesses a professional technology R&D team and leads the industry in terms of R&D

• Close cooperation with 3M,

Asahi Glass, Daikin, Nippon

Steel, Mitsubishi, Tsinghua

University and Shanghai

Jiaotong University

• Highly advanced research

center that provides ideal

conditions for product

creation

• Talent retention and increased

expenditure strategy

• Successful production of

chlor-alkali ionic membrane,

marking the end of the

foreign monopoly

• Owns many IP rights and patents in

the fluorine silicon industry

• Owns 61 patents, including

patents for environmentally-

friendly refrigerants,

fluoropolymer products, and chlor-

alkali ionic membrane

Cooperation with world-class companies

Dedicated multi-disciplinary R&D

team

Successful chlor-alkali ionic membrane

experiments

Owns IP rights and patented technology

22

Highly experienced management8

Dongyue is supported by an enviable board and management team, with a proven domestic and international track record in delivering value for its investors

Mr. Zhang Jianhong

Chairman & CEO

Mr. Liu Chuanqi

Executive Director & President

Mr. Cui Tongzheng

Executive Director, Vice President, CFO

Mr. Zeng Hongzhi

GM of Shandong Dongyue Polymer Material

Mr. Pang Feng

GM of Shandong Dongyue Chemical

• Group Chairman & CEO since 2006, senior policy official, with MA in Economics

• 20 years experience in chemical industry

• also the Chairman of Shandong Dongyue Chemical Co., Ltd, Shandong Dongyue Polymer Material Co., Ltd and

Shandong Dongyue Organosilicon Material Co., Ltd; ex-Chairman of Shandong Dongyue Fluorine Silicone

Materials Company Limited

• President and executive director of the company

• Joined Dongyue Group and its former organization since Oct 1986

• Ex-GM of Shandong Dongyue Chemical

• Almost 20 years experience in chemical industry, director at several Group subsidiaries

• Executive Director, Vice President and CFO of the company since Jul 2006

• Joined Dongyue Group and its former organization since Nov 1988

• Ex- Deputy GM of Shandong Dongyue Chemical

• BA from the Institute of Statistics of China and MBA from Shanghai Jiaotong University

• Director and GM of Shandong Dongyue Polymer Material, with Bachelor's degree.

• Joined Dongyue Group in 2003, he has worked as head of Environmental Protection Division, Dongyue Group,

head of Corporate Management Division, Dongyue Group, Executive Deputy GM of Shandong Dongyue Polymer

Material and Director and GM of Shandong Dongyue Polymer Material consecutively

• Joined Dongyue Group in Mar 1988, now GM of Shandong Dongyue Chemical Company Limited, and before that he

has worked as Workshop Team Lead, Workshop Vice Supervisor, Workshop Supervisor, Deputy GM Production,

Executive Deputy GM and GM consecutively

• MBA, Shanghai Jiaotong University

• Awards received include Excellent Individual, Top 10 Youth, Labor Model, Excellent Party Member and

Excellent Individual for Tapping the Potential etc.

23

4. Financial highlights

24

Strong growth in revenue and profit

Revenue Gross profit

Profit before tax Net profit

Growth = 115.3%

Growth = 273.0%

Growth = 414.0%Growth = 412.1%

2,591

5,579

2010 H1 2011 H1

RMB million

659

2,458

2010 H1 2011 H1

RMB million

400

2,056

2010 H1 2011 H1

RMB million

290

1,485

2010 H1 2011 H1

RMB million

25

Rising profitability levels

Gross profit margin Operating margin1

Profit before tax margin Net profit margin

1 Operating profit = profit before tax + finance expenses – interest income

25.4%

44.1%

2010 H1 2011 H1

17.2%

38.0%

2010 H1 2011 H1

15.4%

36.8%

2010 H1 2011 H1

11.2%

26.6%

2010 H1 2011 H1

26

Business segment analysis

Product segment revenue

Product segment results

2010 H1 2011 H11

2010 H1 2011 H1

41.6%

29.8%

8.7%

3.1%

14.9%1.9%

60.6%

26.5%

5.7%6.5%

0.7%

1 Excluding loss of RMB8.2 million in organic silicon

39.8%

21.7%

9.9%

1.5%

25.5%

1.6%

69.7%

14.7%

0.7%

7.3%6.5% 1.1%

Refrigerants Polymers Organic Silicone CER Dichloromethane, PVC and liquid alkali Other

27

Excellent returns on investments

Return on equity1 Return on assets2 Return on invested capital3

1 Annualised et income divided by total equity

2 Annualised net income divided by total assets

3 Annualised et income divided by the sum of total equity and total interest

bearing debt

23.2%

70.7%

2010 H1 2011 H1

9.3%

33.1%

2010 H1 2011 H1

14.7%

53.0%

2010 H1 2011 H1

28

Superior operating efficiency

Accounts receivable days Inventory days Accounts payable days

54

57

2010 H1 2011 H1

46

32

2010 H1 2011 H1

73 74

2010 H1 2011 H1

29

5. Development strategy

30

Development strategy

• Continue to strengthen R&D for new refrigerant, new materials, organic silicone processing,

membrane products in order to bolster the Group’s core advantage

• Strengthen the Dongyue brand, improve product quality and increase brand recognition

• Continue to develop human resources, laying a solid foundation for the company’s new product

R&D and business development

• Accelerate the construction of raw material production facilities, securing stable supplies of

raw materials for the development of the Group

• Continue to improve environmental management and ensuring production safety

• Continue to build an integrated business model and fluoro-silicone product value chain

• Through development of membrane products, the Group has gained access to a variety of new core

technologies relating to new refrigerants and polymers. The Group will take advantage of such

new technologies to improve its products and accelerate growth