3. Synergy Value Evaluation Background Equity Value VS

4. Coca-Cola re-entered the Chinese market in 1979. Established 23 bottling plants and 27 production locations. Total investment adds up to more than 1.1 billion U.S. dollars Local employment reached 15,000. Synergy Value Evaluation Background Equity Value

5. 2008 Total Market Size: Chinese Fruit, Vegetable, and Soft Drink Market 2008 Total Market Size: Chinese Fruit, Vegetable, and Soft Drink Market Synergy Value Evaluation Background Equity Value Following Google and Microsoft, Coca-Cola, with $67.6 billion Brand Name Market Share Rank Coca-Cola52.8%1 Pepsi32.8%2 Daneng1.7%3 China Softdrink Market Share (2008) Brand Name Value (2008) Cash Reserve (Sep 26, 2008) cash and cash equivalents: USD 7.8 billion

6. Built in 1992 and benefited from China’s growing soft drink market NO. 2 in China’s broad beverage market NO. 1 in leading China’ s vegetable and fruit juice market China’s most famous brand name of juice production Synergy Value Evaluation Background Equity Value

7. CompetitiveStrengthsCompetitiveStrengths Bottle-neck of long-term development Synergy Value Evaluation Background Equity Value

8. Coca-Cola’s Intention to Acquire HUIYUAN Synergy Value Evaluation Background Equity Value

9. USD 2.5 Billion by Cash HKD 12.2 per share USD 2.5 Billion by Cash HKD 12.2 per share Synergy Value Evaluation Background Equity Value Evaluation of HUIYUAN Synergy Value Divided by total NO. of shares WACC ?

10. Background Synergy Value Evaluation Equity Value Cost of Capital Calculation – WACC components Cost of equity Cost of debt D/E ratio Tax rate

11. Background Synergy Value Evaluation Equity Value Cost of Capital Calculation – Cost of Equity Cost of equity components – Beta: 2.60 (From Quamnet.com) – Risk-free rate: 2.96% – Market return: 15.19% Cost of equity calculation – CAPM = Risk free rate + Beta × (Market return – Risk-free rate) – 34.75%

12. Background Synergy Value Evaluation Equity Value Cost of Capital Calculation – Cost of Equity Risk-free rate: Exchange Fund Notes during 15 years on September, 2008

13. Background Synergy Value Evaluation Equity Value Cost of Capital Calculation – Cost of Equity Market return: Daily geometric average growth rate of Hang Seng Index of the last 30 years, then obtain effective annual growth rate DateAdjusted CloseGrowth Rate 9/3/200820585.197.83%Geometric Growth rate (daily)0.03874% 9/2/200821042.5100.65%Geometric Growth rate (annual)15.1872% 9/1/200820906.398.33% 8/29/200821261.9101.38% 8/28/200820972.397.71%

14. Background Synergy Value Evaluation Equity Value Cost of Capital Calculation – Cost of Debt Retrieved directly from Huiyuan’s 2007 annual report 6.49%

15. Background Synergy Value Evaluation Equity Value Cost of Capital Calculation – Cost of equity = 34.75% – Cost of debt = 6.49% – D/E ratio = 0.33 – Tax rate = 33% (from Huiyuan’s 2007 annual report)

16. Background Synergy Value Evaluation Equity Value Cost of Capital Calculation – D/E ratio calculation Book value of debt = HKD 2,225,987,000 – Total liabilities from Huiyuan's 2007 consolidated balance sheet Market value of equity = HKD 6,741,866,376 – Share price = HKD 4.59 » Average closing price as quoted on the Stock Exchange for the 60 trading days prior to and including the last trading date – Number of shares = 1,468,816,204 » Stated in Huiyuan’s 2007 annual report

17. Background Synergy Value Evaluation Equity Value Cost of Capital Calculation – WACC Formula – Cost of Capital = 27.20%

18. DCF Approach Terminal Value PV of In- horizon cash flows Total value of HuiYuan

19. DCF Approach Assumption – 2008 growth rate: 26%, decreases at rate of 1% each year until 2019 200520062007 RMB 000 Sales139210020662752656337

20. DCF Approach Short-term period: 10 years Long-term growth rate: 15% (According to a report)

21. DCF Approach Other assumptions – Current Liabilities, current assets and variable costs grow in the same rate with sales – Long term assets and non- current liabilities are constant during in-horizon period

22. YearSalesNet IncomeOCF 20083346985347662.4318207551.4 20094183731455563.2214280424.5 20105187826585044.1689367872.1 20116381026738910.6949471789.1 20127784852919938.0077594049.6 201394196711130752.542736427.6 2014113036051373691.196900501.3 2015134512901650641.2611087545 2016158725221962866.0191298413 2017185708512310823.1651533413 2018215421872693985.3881792189 2019247735153110674.3052073609

23. DCF Approach Future cash flow by pro Forma analysis CFFA=OCF - Change in Capital Spending - Change in NWC

24. DCF Approach Scenario analysis – High: 23% – Normal :26% – Low :35%

25. DCF Approach Terminal Value of Hui Yuan Juice:1.53 billion RMB PV of cash flow from 2009-2019: 1.79 billion RMB NPV of Hui Yuan Juice: 3.32 billion RMB Deduct book value of debt Value of Equity of Hui Yuan Juice: 1.21 billion RMB

26. Background Synergy Value Evaluation Equity Value Multiple approach P/E ratio multiple approach Formula:

27. Background Synergy Value Evaluation Equity Value Multiple approach Comparable firms Tianyi Fruit Holdings Limited SDIC Zhonglu Fruit China Haisheng Juice Holdings Co Ltd. Uni-President China Holdings Ltd. Yantai North Andre Juice Co., Ltd.

28. Background Synergy Value Evaluation Equity Value NI target EPS com price com Equity value Tianyi 640,217,0000.02800.8018,318,296,854 Zhonglu 640,217,0000.503017.8622,870,903,057 Haisheng 640,217,0000.13241.336,441,218,748 Uni-President 640,217,0000.14045.0823,144,280,278 Yantai 640,217,0000.05201.0512,924,782,161 Unit: RMB Multiple approach

29. Background Synergy Value Evaluation Equity Value Share price range: 4.4~15.6 Weighted average share price: 11.4 RMB Equity value range: 6.4B~23.1B Weighted average equity value: 16.7 billion RMB Multiple approach

30. Background Synergy Value Evaluation Equity Value 200520062007 Net income110192220983640217 Multiple approach

31. Weights on Multiple and DCF Weighted value of equity: 4.22 billion RMB Weighted value of equity: 4.22 billion RMB 20%*16.7B + 80%*1.21B =4.22 B

32. Equity value Synergy value Debt Company value 15.23 billion RMB

33. Scenario Analysis 盛要用 PerformanceTotal value Normal15.23 billion RMB High17.83 billion RMB Low14.69 billion RMB

34. Background Synergy Value Evaluation Equity Value “If the Offers are completed, The Coca-Cola Company is expecting to use its expertise as a global beverage company to further develop the “Huiyuan” juice brand to address the evolving needs of the Chinese consumer. There are anticipated synergies that will drive operational and cost efficiencies, particularly in Huiyuan’s production footprint and in The Coca-Cola Company’s distribution and raw material purchasing capabilities.” ---- JOINT ANNOUNCEMENT Synergy Value

35. Background Synergy Value Evaluation Equity Value In millions dollars 2007200620052004Average Net operating revenues 28857240882310421742 Cost of Goods Sold 10406816481957674 Cost % of Revenue 36.06%33.89%35.47%35.30%35.18% Coca Cola’s cost Same Cost % of Revenue after merge

36. Background Synergy Value Evaluation Equity Value In millions RMB 20082009201020112012201320142015201620172018 on 25%24%23%22%21%20%19%18%17%16%15% Sales 3320.424117.325064.316178.457475.938971.1210675.6312597.2414738.7717096.97 COGS (65.83%) -2185.81-2710.41-3333.80-4067.24-4921.36-5905.63-7027.70-8292.69-9702.45-11254.84 COGS after merge (35.18%) -1168.11-1448.46-1781.61-2173.56-2630.01-3156.01-3755.65-4431.67-5185.05-6014.66 Cost Saving 1017.701261.951552.201893.682291.352749.623272.053861.024517.395240.18 Synergy 11,006.70 Cost Savings

37. Background Synergy Value Evaluation Equity Value Value of the deal = Weighted Average Equity Value + Synergy Value 4.22bil. + 11.006bil. RMB =15.226 billions RMB =17.42 billion HKD RMB to HKD exchange rate (09/03/2008) =1.14390 Value per share =17.42 billions HKD / 1,468,816,204 shares = 11.86HKD/ share Cost of the deal = 12.20HKD /share

38. Background Synergy Value Evaluation Equity Value Scenario Performance In Horizon Growth Rate Total value of the deal (HKD) Value per share Normal26%17.42 billion11.86 HKD High36%20.39 billion13.89 HKD Low23%16.80 billion11.44 HKD

39. Background Synergy Value Evaluation Equity Value May have under looked other synergy values – Brand effect – Possibility of expanding to international market Depends on Coca Cola’s valuation for the Chinese market – Eager to expand Chinese juice market Actual value may be larger for Coca Cola

40. USD 2.5 Billion by Cash HKD 12.2 per share USD 2.5 Billion by Cash HKD 12.2 per share Synergy Value Evaluation Background Equity Value Evaluation of HUIYUAN Synergy Value Conclusion Divided by total NO. of shares WACC ?