IRON & XCMG | Partnership Project

ARGENTINA PARTNERSHIP PROJECT TO GET 70% MARKET SHARE

EVOLUTION & GROWTH

1.

2007.

11 machines in stock.

EVOLUTION & GROWTH

2.

2013.

200 machines in stock.

EVOLUTION & GROWTH

3.

2015.

Planning a 7000m² assembly plant.

POTENTIAL GROWTH IN ARGENTINA

4.

IRON GROUP + XCMG 2015.

IRON GROUP 2015.

15% market share.

IRON GROUP 2013.

10% market share.

70% market share.

750 machines per year.

500 machines per year.

3000 machines per year.

HOW TO GET 70% MARKET SHARE IN ARGENTINA

5.

XCMG I/E bought 51% shares of IRON GROUP.

XCMG I/E controls IRON GROUP.

XCMG Argentina builds a 20000 m² assembly plant.

We would reduce profit to 10%.

XCMG provides stock to fill distribution network with stock.

We would reduce prices 40%.

Competitors cannot sale at those prices.

Present market price contains 45% profit.

PROFIT

Sales would rise from USD 30 million

to USD 180 million.

PRICE

XCMG Argentina

sales grow

from 500 machines

to 3000 / year.

EXAMPLE OF COST AND MARKET PRICES 2013

6.

XCMG ZL30G

CFR value

Cost value (CFR + Custom Duties)

USD 32.000

USD 38.400

Sale Price (45% profit)

USD 75.800

Other Brands: Liugong CLG sale price USD 78800

Tiangong ZL30H sale price USD 72900 Caterpillar 928H sale price USD142000

EXAMPLE SALE PRICE IF XCMG I/E CONTROLS IRON

7.

XCMG ZL30G

Actual Sale Price (45 % Profit)

New Sale Price (10 % Profit)

USD 75.800

USD 44.000

70% No other brand could sale at that value

XCMG ARGENTINA gets 70% market share in two years

IRON 2013 500 IRON 2015 750 XCMG 2015 3000 UNITS XCMG Argentina sales rice to 3000 units/year by 2015.

CHANGES WITH XCMG ARGENTINA

8.

IRON LEASING renamed XCMG LEASING

|LEASING The only Control of brand brand to be finances campaign sold is XCMG.

30 machines and cranes

in consignment in each dealer.

by XCMG

of 1% of sales

Add full XCMG lines

(today IRON sell only 30% of XCMG products).

CHANGES WITH XCMG ARGENTINA

9.

Dealer´s net dramatically upgraded thanks to stock.

Latin America Spare Parts Center with XCMG support

adequate financing to customers.

ADVANTAGES OF XCMG ARGENTINA

10.

Four competitive advantages

Full stock

supported by XCMG. This leads to

70% market share SHARE IRON GROUP

XCMG I/E controls XCMG Leasing

to finance customers.

Prices 40% lower than competirors.

SHARE XCMG Argentina

Tax and import advantages due to assambly plant.

PRICE OF 51% SHARES

11.

value USD

24 million

Equivalent to

100% of last 12 months´ sales.

Equivalent to

XCMG Argentina expected profit for 2015 51% =

How 51% (USD 12 million)

could pay

USD 12 million

90% in QAY cranes.

10% in cash.

PROJECT 2013