Uoig Deer Final Report

8/6/2019 Uoig Deer Final Report

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UNIVERSITY OF OREGON

INVESTMENT GROUP

Covering Analyst: Steven EndersEmail: [email protected]

The University of Oregon Investment Group (UOIG) is a student run organization whose purpose is strictly educational.Member students are not certified or licensed to give investment advice or analyze securities, nor do they purport to be.Members of UOIG may have clerked, interned or held various employment positions with firms held in UOIG’s portfolio. In

addition, members of UOIG may attempt to obtain employment positions with firms held in UOIG’s portfolio.

December 1, 2010

Consumer Goods

Deer Consumer Products

RECOMMENDATION – Hold

BUSINESS O VERVIEW

Deer Consumer Products is a leading designer, manufacturer and seller of quality small home andkitchen appliances. Deer develops and produces a variety of safe and easy to use products out of theirhome and manufacturing facility in Shenzhen, China. They were found in 2001 and have been tradingon the NASDAQ since July of 2009. Their products are sold both in China and exported internationally,with contractors selling their products in key North and South American, European, and Asian markets.

Stock Data

Price (52 weeks) 6.98 – 18.97

Symbol/Exchange DEER /NASDAQ

Beta 1.658

Diluted SharesOutstanding

33,591,108

Average daily volume(3 month average)

379,206

Current market cap 373,197,210

Current PriceDividend

Dividend Yield

11.41

0

0

Valuation (per share)

DCF Analysis $20.57

Comparables Analysis Target PriceCurrent Price

$11.43

$16.00

$11.41

Summary Financials

(2009A)

RevenueNet Income

$81,342,680

$12,369,082

Operating Cash Flow $384,221



D e e r C o n s u m e r P r o d u c t s u n i v e r s i t y o f o r e g o n i n v e s t m e n t g r o u p

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h t t p : / / u o i g . u o r e g o n . e d u

Their products include blenders, juicers and other appliances including soy milk, coffee and rice makers.In China, Deer is an Original Brand Manufacturer (OBM), by selling their products under the Deerbrand name or other Deer private retail labels, targeting the rising Chinese middle class. In the exportmarket Deer is an Original Equipment Manufacturer (OEM) and an Original Design Manufacturer(ODM), producing small kitchen appliances for international distributors. These products are sold underinternationally recognized brand names, such as Black & Decker, Betty Crocker Cookware, Disney, andToastmaster.

Revenues from 2008 to 2009 grew by 85% from $43.78 million to $81.34 million. Year on year quartergrowth for 2010 has been even greater with 2009 to 2010 quarter 3 revenue growth of 109% from $26.5million to $55.3 million. Quarter 2 year on year revenue growth from 2009 to 2010 was 125%, $15.31million to $34.45 million. This increased revenue is from expanding sales in the domestic Chinesemarket, along with increasing market share in Asian, European, Middle Eastern and South Americanmarkets. Third quarter domestic Chinese revenue accounted for 42.1% of revenue, up from 17.6% of revenue for 2009.

Deer has 2000 employees and its manufacturing process is fully integrated, producing its motors andmoldings in house. This creates a cost advantage when compared to its competitors, as they are lessreliant on outside companies. This facility has 13 tooling houses, 136 injection-molding machines, and18 production lines, producing potential revenue of $320 million. As of the end of 2009 less than 5% of their components were manufactured by outside suppliers. Deer’s production process is fully automated

to keep labor costs down and to create consistent quality.

Deer’s core products can be broken down into three core categories, blenders, juicers, and other

products. Blenders have traditionally been a large portion of their sales, at 51% in 2009. They have 80

different models available, which are sold to over 300 brands in more than 40 countries. Their second

biggest product is their line of juicers. These juicers accounted for 21% of 2009 sales. 20 different

models are produced and sold to over 100 brands in more than 40 countries. Other appliances, such as

rice cookers, coffee makers and soy milk makers made up 28% of 2009 sales. Deer expects to further

penetrate the soy milk maker market and hope to gain a large market share. Deer manufactures 90

models for more than 20 different brands in greater than 40 countries throughout the world.

BUSINESS AND GROWTH S TRATEGIES

Original Design and Equipment Manufacturer (ODM & OEM)Deer exports their ODM and OEM products to large consumer product brands, who offer productsworldwide under numerous high-quality brand names. ODM accounted for 85% of export sales in 2009and are expected to account for roughly 90% of export sales in 2010. OEM therefore accounted for 15%




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of 2009 export sales and is expected to account for around 10% of 2010 export sales. For OEM’s, Deer produces appliances to the customers exact design and specifications. This does not allow for muchfinancial variability, as Deer must follow an exact design. On the ODM side, Deer can offer a bettervalued product, as it can design, manufacture and make the necessary changes to better a product, forfinancial or aesthetic reasons. Deer has a long running relationship with their ODM clients, and whosetop ten clients are all ODM product purchasers. Customers provide Deer with their annual salesforecasts in order for Deer to develop a quality and reliable product on time. Deer believes their ODMcustomers view them as a long time supplier due to building strong customer relations and producing aquality product. Deer owns all of the designs and molds for ODM products, creating high switchingcosts for their clients. Deer creates an economy of scope, as it can more efficiently produce manyproducts than its customers independently producing products. Growth in the ODM and OEM industryis expected to increase in the coming years as the economy recovers. Export growth increased from$41.59 million in 2008 to $66.7 million in 2009, 60.3% growth in what was deemed a down economy.Increasing current ODM and OEM market share, along with increasing product models to the ODMmarket, will allow for large growth in the future.

Original Brand Manufacturing (OBM)Deer has begun to further tap into the massive growth of the Chinese consumer product market in recentyears. Deer produces products under the Deer brand name and other subsidiaries for the Chinese market.Gross margins in this market are 40% compared to around 20% for the export market. These largermargins are mostly due to proximity of sales, along with less money given to the middle man. However,Deer does not have its own distribution and must establish a viable connect to move products to variousdistribution channels. Deer is expanding its OBM over the upcoming years due to the increase inChinese demand and greater profitability margins. 2009 OBM revenue accounted for 17.9% of revenueand 2010 revenue is expected to account for 42% of revenue. Deer believes OBM revenue will grow to60% in a few years and will continue to grow past 60% as well.

R&DDeer has a dedicated department of 47 employees to develop new products and technologies for theirODM and OBM product segments. Their R&D expenditure increased 3% in 2009 and is expected toincrease in the future. The R&D department works with its ODM customers to develop productsconsumers want while also improving efficiency in design and cost. SKU growth, the number of products, has increased from 2007 by 199% from 80 to 239. Deer expects to introduce 20 new SKU’s(Stock Keeping Units) to the market each year as a way to better facilitate customer demand. Theseproducts are tailored to meet the demands of the respective market. Chinese OBM products have subtlechanges to a product that may be offered to Black & Decker. Deer has also been expanding intoproducing heavy-duty products, such as blenders, juicers, etc. for commercial entities, such as bars,hotels and restaurants. Deer expects sales in these segments to increase in the future as their name

spreads and they become better known.

Geographic ExpansionDeer plans to further expand its operations into the international market. Deer already has sales on fivecontinents and expects to further grow into emerging markets while solidifying its sales in alreadyestablished regions, like the US and Europe. Year on year sales growth for the third quarter 2010 were291% in Asia, 115.6% in South America, 53.7% in the Middle East, and 42.5% in Europe. Deer believesthis sales growth is due to increasing wealth in South America and Asia along with increased market




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share following the financial crisis. United States revenue was down for the quarter, most likely due tolower consumer spending. Deer expects revenue to recover in the coming years by pursuing other largecustomer bases in the United States.

Sales and MarketingDeer plans to have a large portion of its sales growth to come from the Chinese market. They have adedicated sales staff of 103 employees to increase brand awareness amongst the Chinese consumers.Deer will achieve greater brand awareness by expanding Deer’s product distribution among the major regions of China. Deer will facilitate this geographic growth by aligning new sales channels withnational, local and online retailers and distributors. Earlier this year, Deer began selling their products ina large Chinese retail store with 1100 stores, along with establishing contracts to be sold in Wal-martChina. If Wal-mart China proves to be successful, Deer could further expand its international customerbase to be sold in Wal-mart internationally. Deer further added retail locations in regional electricappliance stores and department stores, along with a growing online presence, on HC360.com andTaoboa.com. Deer expects triple digit growth on Taoboa.com, the Chinese eBay. Deer is also planningto further their retail touchpoints by expanding into another 20,000 stores in the next 3-5 years. Theirrapid and aggressive expansion into retail stores has been warranted as Deer’s products have been

stocked out in early 2010.

Chinese GrowthDeer’s biggest potential for growth comes in China as their GDP, consumer income, and small appliance

spending are growing immensely. The small appliance market has grown over the past five years at13.7% compounded yearly. Deer’s products target the growing middle class in China, which is

encouraged to spend on consumer goods by the government, and is demanding better lifestyle products.The middles class in China is expected to grow to 340 million in 2016, a 162% increase from 2006, andto grow to 500 million in 2026, an increase of 47%. Also, the average Chinese household has 5 homeappliances, compared to 30 in the US. This large growth of the middle class, along with the lack of appliances translates to a huge amount of expected consumer spending in the coming years, which Deeris expecting to have a large portion of.

Deer is expected to have large growth over the coming years due to several reasons: increasing marketshare in the OEM and ODM product segments; further growing into emerging markets in SouthAmerica and Asia; immense growth in Chinese retail stores; and further expanding their onlinepresence.

M ANAGEMENT AND EMPLOYEE R ELATIONS

Mr. Bill Ying He has been with the company since its start in 1995. He was namedChairman and CEO in 2001 of Winder Electric Group, now a wholly owned subsidiary of Deer. He owns 22.2% of all shares outstanding. Mr. He controls the election of all or amajority of the Board of Directors and is able approve significant corporate transactions.Such a large composition of the company being held by He could be dangerous andprevent Deer from entering into some potentially beneficial agreements if they conflictwith Mr. He’s interests.




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Mr. Nie was named Chief Financial Officer of the Company in 2009. He also joined theCompany's board of directors as a member in 2009. Prior to that, Mr. Nie was theCompany's Financial Controller since 2008.

PORTFOLIO HISTORY

Tall Firs PortfolioPurchased 5/10/20102000 shares at $8.731 for a cost basis of $17,461.6Current price as of 11/24/10: $11.01Current Holdings: $22,020% Change: 26.11%

Svigals Portfolio330 shares at 9.004 for a cost basis of $2979.32Current price as of 11/24/10: $11.01Current Holdings $3633.3% Change: 21.95%

DADCO Portfolio500 shares for a cost basis of $4518.47Current price as of 11/24/10Current Holdings: $5505

% Change: 21.83%

R ECENT NEWS

11/10/2010 – Deer Consumer Products, Inc. Announces Record 3rd Quarter Financial Results,

Raises 2010 Earnings Guidance, Provides Growth Outlook for 2011 – PR/Newswire

Deer announces their third quarter earnings and announce their recently purchased land will be used toopen a factory in Wuhu on the banks of the Ynagtze River, hours from economic centers Shanghai andNanjing. Wuhu is also close to raw material providers and major domestic retailers, SuNing and Gome.

This new factory will increase current capacity by 40% to $450 million in potential revenue, as well asestablish a factory for future growth. This new factory will decrease margins even more by cuttingtransportation costs. Deer targets at least 30% revenue and net income growth for 2011 as well.

9/20.2010 – Deer Consumer Products, Inc. Initiates Non-Deal U.S. Road Show Through Wells

Fargo Securities – PR/Newswire




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introduction. Growth in emerging markets, such as the Middle East, South America, Asia and Africa, ismuch higher and growing at a large rate. For example Deer’s earnings in these markets from the second

quarter of 2009 and 2010 are:

2Q 2010 2Q 2009 % Change

China 11,376,532 1,674,260 579.5%

South America 6,886,774 1,902,283 262.0%

Asia 5,641,665 1,909,456 195.5%

Middle East 4,359,474 2,029,455 114.8%

Africa 429,517 52,955 711.1%

Consumer spending is increasing in these areas as is the middle class and disposable income.

Chinese Domestic GrowthThe Chinese small appliance market has been growing at a fairly stable and strong rate for the past fiveyears and is expected to continue into the future. In 2005, the small appliance market was 10.2 billionwhile the expected 2010 market is 20 billion, almost doubling in size over the past six years. For 2011,the Chinese market is expected to grow to 22.1 billion in sales. The compound growth over this periodhas been 13.7%, with the expected growth in the market next year being 10.5%. This growth has beenfacilitated by the rising demand for consumer products from the growing middle class, which byconservative estimates, is expected to grow to 340 million by 2016 and to 500 million by 2026. The riseof the middle class has partly been caused by China’s rapid GDP expansion. GDP increased by 8.7%

from 2008 to 2009, during what was considered a recessionary year for most. This growth may not besustainable but is expected to be positive and bigger than the rest of the developed world in the comingyears.

Deer plans to utilize this large growth in Chinese GDP and consumer spending by placing more productsin large Chinese department stores. Some of China’s largest department stores, Suning, Gome, and Wal -mart, are placing a greater amount of Deer products on store shelves and a higher amount of SKU’s.Deer has been in Suning stores since the middle of 2009 and are currently sold in 700 of their 941 stores.Deer plans to be in more of their stores soon while also increasing the amount of products in stores aswell. Deer signed a major sales contract with Gome at the beginning of 2010 and are currently sold in140 of their 1,170 stores. Deer anticipates being in 400 by the end of the year and more to come in thefollowing years. Deer has also been in Wal-mart China since the beginning of the year and haveobtained tremendous success. Deer sold out of a single product within two weeks in their 36 Wal-martstores. As a result, Deer plans to expand SKUs per store and to increase to 100 of Wal-mart’s 279 stores

by the end of the year. Apart from these major department stores, Deer plans to expand into 300 morestores by the end of 2010 and 20,000 in the next five years.

Because of the large potential growth of China, many American companies have attempted to increasetheir market share in China and add more products to Chinese shelves. However, many companies havetried and failed at entering these markets. No major American company has a meaningful presence onChinese shelves. Deer attributes this to Chinese consumers not differentiating Deer-branded products toany other US based global brand. Aside from this, Deer, and other Chinese based companies have lower




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costs and greater knowledge of the Chinese consumer. These factors help keep American companiesfrom infiltrating the Chinese small electrical appliance market.

S.W.O.T. A NALYSIS

Strengths

Vertical Integration – Deer is one of the largest fully integrated companies in the small appliance

segment, allowing them to manufacture products more efficiently and cheaply. They are not

reliant on rising costs or markups from other producers.

OBM & ODM – Deer owns all of the molds and processes that it uses in these segments. Its

portion of OEMs are low and do not have much effect on their revenue.

R&D – Deer controls the products they produce and are able to retool products to meet the

consumer’s needs.

Multiple Suppliers – Deer is able to keep costs down and maintain a stable supply chain by

inducing competition among raw material suppliers.

Trusted and Varied Product – Deer has a reputation for quality and is able to produce a varied

product by size or price point.

Weaknesses

Small Size – Deer’s production capacity is much smaller when compared to its competitors

Customer Concentration – Deer’s five largest customers accounted for 37% of revenues in 2008

and 35% of revenues in 2009. If Deer loses one of its major customers then it may lose a major

portion of its revenue that it can’t make up.

Opportunities

Rising Middle Class – China’s growth prospects and increased consumer spending will allow for

Deer to have greater potential for future sales and to become a major player in the Chinese

market for years to come.

Emerging Markets – Rising income in the less developed countries allow a great opportunity for

future sales and market penetration

Threats




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Volatility of Exchange Rates – The volatility of Chinese Yuan and other currencies across the

world cause difficulties and could decrease or increase net income and cash flow. Deer does not

take any precautions to hedge currency volatility.

Volatility of Raw Materials – Deer’s costs are largely determined by the amount of plastic,copper and steel purchased, so the price of oil, copper and steel could greatly affect their

operating costs. However, Deer does recycle 30 tons of plastic each month to be reused in the

production process.

Economic and Political Turmoil – Potential economic and political issues in China, or the world

at large could affect their operations. Seizure or nationalization of companies could affect their

international operations as well.

PORTER ’S 5 FORCES A NALYSIS

Supplier Power – Medium. Deer uses at least two suppliers for all of its raw goods but they cannot

control the volatile prices of the steel, copper and oil industry.

Barriers to Entry – Medium to High. Companies coming in to the industry must have capital in order to

begin production but must also have an outlet to sell its product to. Deer is very well respected in the

industry for having a quality product, and as a result receives many contracts.

Buyer Power – Medium to Low. There are many large companies that sell consumer goods in the world

and are competing to have the best good. Deer also owns its molds and patents for their products,

causing these companies to have high switching costs.

Threat of Substitutes – Medium to High. Companies could switch to another producer easily, but have

high switching costs. If a company was unsatisfied with Deer’s product they could completely retool

their product and switch to a different producer. However, Deer is known for their variety and quality of

product, causing a switch to be unlikely.

Degree of Rivalry – Medium to High. There are many manufacturers of small home appliances in the

world, however, most of these companies specialize in one product, with many smaller hoping one of

those products will take off in that segment.

C ATALYSTS

Upside

Appreciating Chinese currency will help their sales and net income.

Decrease in price of their raw materials




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Downside

Volatility in either the currency or commodity market

Slower recovery or economic growth

CHINESE COMPARABLES A NALYSIS

Because Deer mainly operates in two distinct markets, International and Chinese domestic markets, I

decided to split the comparables into two sections. I weighted the Chinese comparable at 2/3 because

Deer’s Chinese revenues in the future are estimated to be 2/3 of total revenue, leaving the international

comparables with a 1/3 weighting. All Chinese company metrics were first put into US dollars from the

Chinese Yuan to make comparable.

Ultimately, I decided on using three Chinese companies: GD Midea Holding Co. (SHE:000527);

Joyoung Co., Ltd (SHE:002242), and Zhejiang Supor Co., Ltd (SHE:002032). Deer has no directcompetitors due to the nature of the market, however, these are the most direct competitors in the

Chinese market. Other companies considered were Guangdong Elecpro Electric Appliance Hld

(SHE:002260) and Tsann Kuen (China) Enterprise Co. Ltd. (SHE:200512), however, these companies

were deemed inadequate comparables due to outlier data.

GD Midea Holding Co. 10%

“GD MIDEA HOLDING CO.,LTD. is principally engaged in the manufacture and sale of household

electronics. The Company’s main products include household air conditioners, central air conditioners,

refrigerators and washing machines, as well as the related parts and components. The Company

distributes its products within the domestic market and to overseas markets.” – Google Finance

GD Midea is a major Chinese conglomerate and manufactures many of the large appliances in China.

GD Midea is considered to be in the white goods market, however, it still competes with Deer directly in

the small appliance industry. GD Midea is at leaset 20 times bigger than Deer and has over 50,000

employees. Due to its large stature and less future growth, GD Midea was only weighted at 10%.

Joyoung Co. 50%

“Joyoung Co., Ltd is principally engaged in the research, development, production and distribution of

small household appliances. The Company’s products include soymilk makers, induction cookers,

blenders, juicers, electric pressure cookers, electrical kettles, red porcelain cookers, commercial soymilk




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makers and meat grinders. The Company also provides soybean materials. The Company distributes its

products in China’s domestic market and to overseas markets.” – Google Finance

Joyoung directly competes with Deer in its production of cookers, blenders, juicers, and kettles. Joyoung

as well ships to many international markets as does Deer. Joyoung grew in 2009 by 7.5%, so it is notgrowing as much as Deer, but it is also much larger than Deer at this time. Because of their similar

products and comparables, Joyoung was given the highest weighting at 50%.

Zhejiang Supor Corp. 40%

“Zhejiang Supor Co., Ltd is engaged in the research, development, production and sale of cookware andelectrical appliances under the brand name of Supor. The Company's major products are pressure

cookers, milk cookers, stockpots, stir fry pans, tureens, frying pans, cutters, electric kettles, induction

cookers, electrical hot pots, rice cookers, intelligent pressure cookers, juice extractors, electrical

saucepans, gas-ovens, ventilators and sterilizers. The Company distributes its products throughout China

and exports to overseas markets.” – Google Finance

Supor competes with Deer directly in its line of cookers but is mostly classified as a white goods

manufacturer. Supor is considered the main distributor of cookware in China and has similar gross

margins compared to Deer, despite being more than five times its size. Supor also grew much faster than

the other comparables and has very similar metrics compared to Deer. Its growth, similar metrics andsome direct competition is why Supor is weighted at 40%.

US COMPARABLES A NALYSIS

Jarden Corp (JAH) 35%

“The Company is a provider of a range of consumer products. Jarden operates in three business

segments: Outdoor Solutions, Consumer Solutions and Branded Consumables. It manufactures orsources, markets and distributes a number brands in Consumer Solutions segment, which includeBionaire, Crock-Pot, FoodSaver, Health o meter, Holmes, Mr. Coffee, Oster, Patton, Rival, Seal-a-Meal,Sunbeam and VillaWare.” – Google Finance

Jarden was weighted at 35% because they have a multitude of product segment and only 1/3 of theirprofits are due to their small kitchen appliance sector. Jarden primarily manufactures blenders,




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coffeemakers, irons, mixers, slow cookers, toasters, toaster ovens and vacuum packaging machines.These products compete semidirectly with Deer, which is why Jarden is weighted as highly as it is.

The Middleby Corp (MIDD) 50%

“The Middleby Corporation is engaged in the design, manufacture, marketing, distribution, and serviceof a line of cooking and warming equipment used in all types of commercial restaurants and institutionalkitchens, and food preparation, cooking and packaging equipment for food processing operations. TheCompany conducts its business through three divisions: the Commercial Foodservice Equipment Group;the Food Processing Equipment Group, and the International Distribution Division.” – Google Finance

Some of the Middleby Corp’s products include ovens, food warming equipment, griddles, coffee

brewers, and tea brewers. Middleby was weighted at 50% because their company is solely focused onproviding cookware equipment and operate in similar international markets as Deer. Middlebyspecializes in its line of commercial appliances for restaurants and hotels, which is one of Deer’semerging markets and which it plans to target for future growth.

National Presto Industries (NPK) 15%

“National Presto Industries, Inc. (National Presto) operates in three segments: Housewares/SmallAppliance Segment, Defense Products Segment and Absorbent Products Segment. TheHousewares/Small Appliance segment designs, markets and distributes housewares and small electricalappliances, including pressure cookers and canners, kitchen electrics, and comfort appliances.” – GoogleFinance

While NPK is in three very distinct and different industries, expecially the defense product segment,they directly compete with Deer products in the houseware and small appliance segment. Another issuewith NPK is its lack of international exposure as their products are limited internationally. For being adirect competitor but also being more diversified, NPK is weighted at 15%.

Valuation MultiplesAll multiples were equally weighted at 1/3EV/Revenue: To measure how well a company is able to generate revenue compared to its sizeEV/Gross Profit: To measure how well a company is able to keep margins high regardless of its sizeEV/EBITDA: To measure how well a company is able to maintain its margins excluding accountingfactors.




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Valuation Price Weight

Chinese Comparable 12.55919 66.67%

Domestic Comparable 9.164269 33.33%

Weighted Comparable 11.42755

Based on the comparable method, I have come up with an implied price of 11.43. When compared to its

current price of 11.41, Deer is undervalued by .2%.

DISCOUNTED C ASH FLOW A NALYSIS

Revenue Projections: The percentage of sales method was used for conducting this analysis. For

determining the revenue I separated revenue flows into its key segments, OBM, ODM, and OEM. I

believe separating the domestic and international markets was important for determining the growth rate

of each segment as their operations are growing at much different rates. For determining long run

targets, I used management projections, such as Deer expecting OEM would be less than 5% of total

exports and the OBM market to become more than 60% of total sales in the coming future. ODM andOBM growth are projected to be high going into the future, especially in the next few years. Also,

management believes total revenue would increase by more than 30% compound growth for the next

five years, however, this amount of growth sounds to be high after the next two years as the world

economy recovers. For the past three years, the economy has grown at a considerable rate in each of

their regional markets.




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Deer expects to continue to grow in these segments in the future as they continue to make inroads in

these regions as their name becomes recognized by both consumers and retailers and consumer spending

begins to recover. This growth is expected to be especially large in China in the coming years due to

population growth, the rise of consumer spending in the middle class and increased shelf space in

wealthy sectors of China. Deer is currently in almost 2000 stores and expects to be in 20,000 within fiveyears. This store growth is attributed to entering into new department stores and other appliance stores in

China, along with expansion into more Suning, Wal-mart and Gome stores, which are currently their

biggest retailers. The Chinese small kitchen appliance sector is expected to grow at approximately 18%

in the coming years and growing. But, since all growth isn’t continually increasing, this growth rate was

trending down throughout the life of the DCF. Also, OBMs were stated by Deer to eventually become

65% of sales in the future. Revenues in the long run were trended towards this rate as well.

Cost of Revenue: Gross margins of ODM’s and OEM’s have been stated by Deer to be 20% while

OBM gross margin is expected to be 40%. As a result, cost of revenue was taken as a percent of

projected revenue, as revenue was broken up by OBM and the export market. As a result terminal grossmargin was stated at 33.4%.

SG&A: SG&A has remained fairly constant in the past but heir rapid growth in China, along with their

construction of a new factory, will cause SG&A expense to increase rapidly. As a result, SG&A was

expected to increase to 13.5 million for 2010, almost 8% of revenue, is projected to increase to 8.75%

for 2011 due to the new factory. From there, this is predicted by .25% until 2016 when it will remain

constant.

Current Assets: Current Assets in the past have pretty consistent with revenue except for cash. This

cash account increased in 2009 due to the sale of stock. To account for the large cash position, Deer hasbeen buying back shares to use the cash up, along with spending on capital expenditure to build a new

factory. Because the cash is expected to be used it was left in but trended down over time. After the

factory is completed in 2011 cash will be roughly 19% of revenue and expected to be 17% of revenue in

2012, and to continue so in the future. All other current asset accounts were held at a % of revenue

averaged over the past three years.

Current Liabilities: This account was held at the 2010 rate of 31.5% for the future. This is very similar

to their past year rates, except for 2008, which is taken as an outlier.

Tax Rate: Deer’s tax rate of 15% for the past three years is expected to continue. However, there is a

chance Deer will lose its special 15% rate from the Chinese government for operations in a privileged

economic zone. This deal is set to expire in 2010 but is expected by Deer to be renewed. If it is not then

the tax rate will increase to 25%. Because of the uncertainty of the rate, a conservative estimate of 20%

was taken.




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Capital Expenditure: Because of the rapid expansion of Deer in the coming years Construction in

Process and acquisition of PP&E are expected to increase greatly in the next two years but remain high

in the future to account for more product being sold. The current expansion is expected to take revenue

capacity to $500 million. However, this factory can be renovated to increase production. The spikes in

CIP every three years is an estimate as to when a major renovation of the factories will be needed, basedon historical data. Long run is expected to be 3% of revenues moving forward. Acquisition of intangible

assets spiked in 2010 due to leasing land for their new factory for 50 years. Intangible assets are

expected to be an insignificant in the future and trended at .2% of revenue for the future based off of

past average. Acquisition of PP&E was trended down from 2009 values as Deer expects to grow through

CIP in the future. This will be at 2% of revenue in 2011 and trend down to 1.25% for the terminal year.

Depreciation & Amortization: D&A is expected to increase greatly in 2011 due to the factory and the

new land. 3% of revenue is projected for next year and expected to grow until 2016 by .1% per year and

then it will level off from there.

Debt: Deer has not historically taken out long term debt and does not expect so in the future. Because of

their large cash position they do not expect to take short term debt in the short run. Because they have no

debt, they do not expect to have any insurance expense as well.

Beta: Deer has only been trading on the NASDAQ since July of 2009 so a five year regression was not

possible. But due to their rapid expansion, this would not have been the best choice anyway. As a result,

I ran a weekly regression against the S&P, since the inception of their trading to create more data points.

As a result of the regression, the beta was calculated to be 1.658. When compared to other companies in

the industry over the same time Deer is .2 points higher. I believe this is reasonable due to Deer’s rapid

expansion, recent introduction to the NASDAQ, and market volatility.

R ECOMMENDATION

Deer Consumer Products has huge potential to become a major player in the global small appliance

market due to its rapid expansion and increasing demand from ODM and OEM retailers along with

OBM consumers in China. The Chinese small appliance market is growing rapidly due to an increase in

Chinese domestic spending from a rising middle class. Deer is expecting to meet the large demand dueto its rapid production expansion and ability to meet consumer’s needs.

As a result of the DCF analysis, I value Deer at $20.57 while the comparable analysis yielding a price

target of $11.43. Weighting both the DCF and comparables equally, I have determined Deer’s implied

target price to be $16.00. With a current price of 11.41, Deer is currently undervalued by 40.2%. As a

result, I recommend a hold for all portfolios.





A PPENDIX 1 – CHINESE COMPARABLES A NALYSIS

The University of Oregon Investment Group

10.00% 50.00% 40.00%

In $ DEER GD Midea Joyoung Supor

6.7865Y=$1

Stock Characteristics

Current Price 11.41 2.494658513 2.559493111 3.539379651

50 Day Moving Avg. 9.15

200 Day Moving Avg. 9.02

Beta 1.658235308

Size

ST Debt (MRQ) 9,393,419 1310800000 0 0LT Debt (MRQ) 0 0 0 0

Cash and Cash Equiv. (MRQ) 54,377,822$ 1,252,400,000$ 342,100,000$ 115,900,000$

Minority Interest -$ 513,400,000$ 10,000,000$ 38,900,000$

Market Value Preferred Stock 0 0 0 0

Diluted Share Count 33,591,108$ 3,120,300,000$ 760,950,000$ 577,250,000$

Market Cap 383,274,542$ 7,784,082,959$ 1,947,646,283$ 2,043,106,903$

Enterprise Value 338,290,139$ 8,355,882,959$ 1,615,546,283$ 1,966,106,903$

Profitability Margins Max Min Avg. Median

Gross Margin 0.369 0.192 0.283 0.285 0.283 0.192 0.369 0.286

EBIT Margin 0.203 0.048 0.122 0.118 0.203 0.048 0.139 0.098

EBITDA Margin 0.214 0.101 0.141 0.109 0.214 0.101 0.143 0.104

Net Margin 0.152 0.041 0.095 0.094 0.152 0.041 0.115 0.074

Credit Metrics

Interest Expense (MRQ) 7900000 0 1983994 17989 35,977 7900000 0 0Debt/Equity(MRQ) 0.612 0.000 0.171 0.036 0.072 0.612 0 0

Debt/EBITDA (LTM) 1.432 0.000 0.433 0.150 0.300 1.432 0 0

EBITDA/Interest Expense (LTM) 870 0 246 58 869.970 115.899 0 0

Operating Results

Revenue (LTM) 9,058,800,000$ 146,235,375$ 2,698,583,844$ 794,650,000$ 146,235,375$ 9,058,800,000$ 786,900,000$ 802,400,000$

Gross Profit (LTM) 1,740,000,000$ 41,450,945$ 575,362,736$ 260,000,000$ 41,450,945$ 1,740,000,000$ 290,300,000$ 229,700,000$

EBITDA (LTM) 915,600,000$ 31,298,899$ 285,874,725$ 98,300,000$ 31,298,899$ 915,600,000$ 112,900,000$ 83,700,000$

Valuation Weighted Avg.

EV/Revenue 2.45 x 0.92 x 1.93 x 2.18 x 2.31 x 0.92 x 2.05 x 2.45 x 2.10 x

EV/Gross Profit 8.56 x 4.80 x 6.77 x 6.86 x 8.16 x 4.80 x 5.57 x 8.56 x 6.69 x

EV/EBITDA 23.49 x 9.13 x 14.43 x 12.56 x 10.81 x 9.13 x 14.31 x 23.49 x 17.46 x





Appendix_2_Domestic Comparables Analysis

The University of Oregon Investment Group

($s, except per share data) DEER JAH MIDD NPK

35% 50% 15%

Stock Characteristics

Current Price 11.41 30.89 79.67 116.04

50 Day Moving Avg. 9.15 31.32 65.95 111.13

200 Day Moving Avg. 9.02 29.67 59.79 104.02Beta 1.658 1.457 1.456 0.904

Size

ST Debt (MRQ) 9,393,419$ 432,100,000$ 5,300,000$ -$

LT Debt (MRQ) -$ 2,523,600,000$ 238,300,000$ -$

Cash and Cash Equiv. (MRQ) 54,377,822$ 456,100,000$ 6,000,000$ 29,700,000$

Minority Interest 0 0 0 0

Market Value Preferred Stock 0 0 0 0

Diluted Share Count 33,591,108 89,600,000 18320000 6,860,000

Market Cap 383,274,542.3$ 2,767,744,000.0$ 1,459,554,400.0$ 796,034,400.0$

Enterprise Value 338,290,139.3$ 5,267,344,000.0$ 1,697,154,400.0$ 766,334,400.0$

Profitability Margins Max Min Avg. Median

Gross Margin 41.2% 25.6% 30.6% 27.0% 0.283 0.272770101 0.412251656 0.256467712

EBIT Margin 21.6% 4.5% 13.8% 14.6% 0.203391 0.088253769 0.044701987 0.21633734

EBITDA Margin 23.4% 11.2% 19.4% 21.5% 0.214031 0.112489531 0.216586394 0.234263597

Net Margin 15.2% 1.1% 8.1% 8.1% 0.152061157 0.010678392 0.026339554 0.135669179

Credit Metrics

Interest Expense (MRQ) 47,600,000.0$ -$ 12,470,494.3$ 1,140,988.5$ 35,977.0$ 47,600,000.0$ 2,246,000.0$ -$Debt/Equity(MRQ) 1.646 0.000 0.471 0.119 0.071582844 1.646170983 0.166900254 0

Debt/EBITDA (LTM) 4.585 0.000 1.644 0.996 0.30011979 4.584612998 1.692842252 0

EBITDA/Interest Expense (LTM) 869.970 0.000 236.896 38.807 869.9696751 13.54411765 64.06945681 0

Operating Results

Revenue (LTM) 5,731,200,000$ 146,235,375$ 1,758,183,844$ 577,650,000$ 146,235,375$ 5,731,200,000$ 664,400,000$ 490,900,000$

Gross Profit (LTM) 1,563,300,000$ 41,450,945$ 501,137,736$ 199,900,000$ 41,450,945$ 1,563,300,000$ 273,900,000$ 125,900,000$

EBITDA (LTM) 644,700,000$ 31,298,899$ 233,724,725$ 129,450,000$ 31,298,899$ 644,700,000$ 143,900,000$ 115,000,000$

Valuation Weighted Avg.

EV/Revenue 2.55 x 0.92 x 1.84 x 2.06 x 2.31 x 0.92 x 2.55 x 1.56 x 1.83 x

EV/Gross Profit 8.16 x 3.37 x 5.95 x 6.14 x 8.16 x 3.37 x 6.20 x 6.09 x 5.19 x

EV/EBITDA 11.79 x 6.66 x 9.36 x 9.49 x 10.81 x 8.17 x 11.79 x 6.66 x 9.76 x





Metric Implied Price Weight

EV/Revenue 10.48 33.33%

EV/Gross Profit 9.59 33.33%

EV/EBITDA 17.61 33.33%

Price Target 12.56

Current Price 11.41

Under (Over) Valued 0.10

Chinese Comparables Anallysis

Metric Implied Pric Weight

EV/Revenue 9.319137 33.33%

EV/Gross Profit 7.7441 33.33%

EV/EBITDA 10.42957 33.33%

Price Target 9.164269

Current Price 11.41

Under (Over) Valued -0.19682

Domestic Comparable Analysis





APPENDIX 3 – DISCOUNTED CASH FLOWS($s, except per share data) 0.25 1.25 2.25 3.25 4.25 5.25 6.25 7.25 8.25 9.25

2007 2008 2009 2010 A123 2010 E Q4 2010 E 2011 E 2012 E 2013 E 2014 E 2015 E 2016 E 2017 E 2018 E 2019 E

Total Company Revenue 33,476,259 43,784,935 81,342,680 113 ,616 ,453 56,383,547 170,000,000 228,760 ,000 299,675 ,600 389,578 ,280 502,555 ,981 638,246 ,096 785,042 ,698 934,200 ,810 1,074,330,200 1,203,250,644

% Y/Y Growth 30.79% 85.78% 108.99% 34.56% 31.00% 30.00% 29.00% 27.00% 23.00% 19.00% 15.00% 12.00%

Cost of Revenue 26,249,009 34,125,019 61,176,610 81,011,120 40202753.8 121,213,874 15 9,6 74,4 80 20 6,1 76, 81 3 2 65, 69 2,3 87 34 0,7 32 ,9 55 43 0,1 77 ,8 69 5 25, 97 8,6 08 6 24 ,0 46 ,14 1 7 15 ,5 03, 91 3 8 01 ,3 64, 92 9

% Revenue 78.41% 77.94% 75.21% 71.30% 71.30% 71.30% 69.80% 68.80% 68.20% 67.80% 67.40% 67.00% 66.80% 66.60% 66.60%

Gross Profit 7,227,250 9,659,916 20,166,070 32,605,333 16172758.7 48,778,092 6 90 85 52 0 9 34 98 787 .2 12 38 858 93 1 61 82 302 5.9 2 080 68 22 7.3 25 90 64 09 0. 3 3 10 15 46 68 .9 3 58 82 62 86 .8 4 01 88 57 15 .1

Gross Margin 21.59% 22.06% 24.79% 28.70% 28.68% 28.69% 30.20% 31.20% 31.80% 32.20% 32.60% 33.00% 33.20% 33.40% 33.40%

Operating Expenses

SG&A 3,306,507 5,421, 580 5,936,408 9,250, 414 4323199.062 13,573,613 20016500 26970804 36035990.9 47742818.2 60633379.12 76541663.06 91084578.98 104747194.5 117316937.8

% Revenue 9.88% 12.38% 7.30% 8.14% 7.67% 7.98% 8.75% 9.00% 9.25% 9.50% 9.50% 9.75% 9.75% 9.75% 9.75%

Total Operating Expenses 3,306,507 5,421,580 5,936,408 9,250,414 4323199.062 13,573,613 20016500 26970804 36035990.9 47742818.2 60633379.12 76541663.06 91084578.98 104747194.5 117316937.8

% Revenue 9.88% 12.38% 7.30% 8.14% 7.67% 7.98% 8.50% 8.75% 9.00% 9.25% 9.50% 9.75% 9.75% 9.75% 9.75%

EBIT 3,920,743 4,238,336 14,229,662 23,354,919 11,849,560 35,204,479 49,069,020 66,527,983 87,849,902 114,080,208 147,434,848 182,522,427 219,070,090 254,079,092 284,568,777 % Revenue 11.71% 9.68% 17.49% 20.56% 21.02% 20.71% 21.45% 22.20% 22.55% 22.70% 23.10% 23.25% 23.45% 23.65% 23.65%

Financing Costs -194 -247,901 -223,607 0 0 0 0 0 0 0 0 0 0 0 0

% Revenue 0.00% -0.57% -0.27% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Interest Income 18,524 13,870 94,986 519,814 257964.0213 777,778 686280 899026.8 1168734.84 1507667.943 1914738.288 2355128.094 2802602.43 3222990.6 3609751.932

% Revenue 0.06% 0.03% 0.12% 0.46% 0.46% 0.46% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30%

Interest Expense -114,361 -310,762 -122,299 -85,438 -42399.64689 -127,838 0 0 0 0 0 0 0 0 0

% Revenue -0.34% -0.71% -0.15% -0.08% -0.08% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Other Income (Expense) 64,698 40,216 364,418 17,450 8659.774788 26,110 228760 299675.6 389578.28 502555.981 638246.096 785042.698 934200.81 1074330.2 1203250.644

% Revenue 0.19% 0.09% 0.45% 0.02% 0.02% 0.02% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%

Realized loss on trading securities 0 -34,873 0 0 0 0 0 0 0 0 0 0 0 0 0

% Revenue 0.00% -0.08% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Unrealized gain on trading securities 57,043 0 0 0 0 0 0 0 0 0 0 0 0 0 0

% Revenue 0.17% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Foreign Exchange Gain (Loss) 90,707 959,943 138,284 -884,431 -773998.944 -1,658,430 0 0 0 0 0 0 0 0 0

% Revenue 0.27% 2.19% 0.17% -0.78% -1.37% -0.98% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Total Non-operating Income 116,417 420,493 251,782 -432,605 -549,775 -982,380 915040 1198702.4 1558313.12 2010223.924 2552984.384 3140170.792 3736803.24 4297320.8 4813002.576

Pre-tax Income 4,037,160 4,658,829 14,481,444 22,922,314 11,299,785 34,222,099 49,984,060 67,726,686 89,408,215 116,090,432 149,987,833 185,662,598 222,806,893 258,376,413 289,381,780

% Revenue 12.06% 10.64% 17.80% 20.18% 20.04% 20.13% 21.85% 22.60% 22.95% 23.10% 23.50% 23.65% 23.85% 24.05% 24.05%

Less Taxes (Benefit) 615,568 1,302, 045 2,112,382 3,599, 127 1 69 49 67 .7 2 5,2 94 ,0 95 99 96 81 2 1 354 53 37 .1 2 17 88 164 3.0 5 2 32 18 086 .3 2 2 999 75 66 .5 1 37 13 25 19 .6 2 4 45 61 37 8. 64 5 16 75 28 2. 62 5 78 76 35 5. 98

Tax Rate 15.25% 27.95% 14.59% 15.70% 15.00% 15.47% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00%

Net Income 3,421,592 3,356,784 12,369,062 19,323,187 9,604,817 28,928,004 39,987,248 54,181,348 71,526,572 92,872,345 119,990,266 148,530,078 178,245,515 206,701,130 231,505,424

Net Margin 10.22% 7.67% 15.21% 17.01% 17.03% 17.02% 17.48% 18.08% 18.36% 18.48% 18.80% 18.92% 19.08% 19.24% 19.24%

Add Back Depreciation and Ammortization 814040 1,218,301 1449186 1,186,426 588778.3359 1,775,204 6862800 9289943.6 12466504.96 16584347.37 21700367.26 27476494.43 32697028.35 37601557 42113772.54

% Revenue 2.43% 2.78% 1.78% 1.04% 1.04% 1.04% 3.00% 3.10% 3.20% 3.30% 3.40% 3.50% 3.50% 3.50% 3.50%

Add Back Interest Expense*(1-Tax Rate) 96924 223911 104459 72,014 36040 108,053 0 0 0 0 0 0 0 0 0

% Revenue 0.29% 0.51% 0.13% 0.06% 0.06% 0.06% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Operating Cash Flow 4,332,556 4,798,996 13,922,707 20,581,627 10,229,635 30,811,262 46,850,048 63,471,292 83,993,077 109,456,693 141,690,633 176,006,573 210,942,543 244,302,687 273,619,196

% Revenue 12.94% 10.96% 17.12% 18.12% 18.14% 18.12% 20.48% 21.18% 21.56% 21.78% 22.20% 22.42% 22.58% 22.74% 22.74%

Current Assets 14,967,471 25,102,155 118,026,587 128,343,593 129200000 129200000 148694000 194789140 253225882 326661387.7 414859962.4 510277753.7 607230526.5 698314630 782112918.6

% Revenue 44.71% 57.33% 145.10% 76.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00%

Current Liabilities 10,261,460 21,718,975 24,060,237 38,621,145 53550000 53550000 72059400 94397814 122717158.2 158305134 201047520.2 247288449.9 294273255.2 338414013 379023952.9

% Revenue 30.65% 49.60% 29.58% 31.50% 31.50% 31.50% 31.50% 31.50% 31.50% 31.50% 31.50% 31.50% 31.50%

Net Working Capital 4,706 ,011 3,383 ,180 93,966,350 89,722,448 75,650,000 75,650,000 7 66 34 60 0 1 003 91 326 13 05 087 23 .8 1 68 35 625 3.6 2 138 12 44 2.2 26 29 89 30 3. 8 3 12 95 72 71 .4 3 59 90 06 17 4 03 08 89 65 .7

% Revenue 14.06% 7.73% 115.52% 44.50% 33.50% 33.50% 33.50% 33.50% 33.50% 33.50% 33.50% 33.50% 33.50%

Change in Net Working Capital -1,322,831 90,583,170 -4,243,902 -18316350 -18,316,350 984,600 23,756,726 30,117,398 37,847,530 45,456,189 49,176,862 49,967,968 46,943,346 43,188,349

Construction in Process 111,835 559,651 2,829,702 2,195,791 563835.47 2 ,759 ,626 18000000 8990268 11687348.4 25127799.05 19147382.88 23551280.94 32697028.35 32229906 36097519.32

% Revenue 0.33% 1.28% 3.48% 1.93% 1.00% 1.62% 7.87% 3.00% 3.00% 5.00% 3.00% 3.00% 3.50% 3.00% 3.00%

Acquistions of PP&E 2,191,640 3,627, 873 1,474,527 1,539, 295 1127670.94 2 ,666 ,966 4575200 5244323 5843674.2 7538339.72 7978076.2 9813033.73 11677510.13 13429127.5 15040633.05

% Revenue 6.55% 8.29% 1.81% 1.35% 2.00% 1.57% 2.00% 1.75% 1.50% 1.50% 1.25% 1.25% 1.25% 1.25% 1.25%

Acquistions of Intangible Assets 162,263 8,319 0 22,305,052 281917.735 22,586,970 457520 599351.2 779156.56 1005111.962 1276492.192 1570085.396 1868401.62 2148660.4 2406501.288

% Revenue 0.48% 0.02% 0.00% 19.63% 0.50% 13.29% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%

Unlevered Free Cash Flow 1,866,818 1,925,984 -80,964,692 -1,214,609 26,572,561 21,114,050 22,832,728 24,880,624 35,565,500 37,937,912 67,832,494 91,895,311 114,731,635 149,551,648 176,886,194

Discounted Unlevered Free Cash Flows 26157274.95 21103438.79 21592008.02 28979909.76 29025377.33 48727998.28 61982698.88 72660210.96 88928509.74 98759774.57




21


A PPENDIX 4 – DISCOUNTED C ASH FLOWS A NALYSIS A SSUMPTIONS

Assumptions for Discounted Free Cash Flows Model

Tax Rate 20% Terminal Growth Rate

Risk-Free Rate 0.02563 Terminal Value 1,416,228,34 Beta 1.658235308 PV of Terminal Value 362,732,99

Market Risk Premium 0.07 Sum of PV Free Cash Flows 328,134,83

% Equity 1 Firm Value 690,867,82

% Debt 0 LT Debt

Cost of Debt 0

CAPM 0.141706472 Equity Value 690,867,82

WACC 0.141706472 Diluted Share Count 33,5

Terminal Risk Free Rate 4.26% Implied Price 2

Terminal CAPM 15.864647158453400% Current Price

Terminal WACC 0.158646472 Under (Over) Valued 0.80254

A PPENDIX 5 – BETA SENSITIVITY A NALYSIS

0.547657238

Beta St. DeviationImplied Price Under (Over) Value

2.75354978 2.00 10.59 -7.17%

2.47972117 1.50 12.21 7.04%

2.20589255 1.00 14.28 25.13%

1.93206393 0.50 16.96 48.68%

1.658235308 0.00 20.57 80.25%

1.38440669 -0.50 25.58 124.21%

1.11057807 -1.00 32.93 188.63%

0.83674945 -1.50 44.54 290.38%

0.56292083 -2.00 65.17 471.20%




22


A PPENDIX 6 – R EVENUE MODEL

($ in millions, except per share data)

2007A 2008A 2009A 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E

OEM 9.04 10.4 10.05 10.97 11.21 11.55 12.01 12.37 12.61 12.87 13.06 1 3.26 13.39

% Growth 15.0% -3.4% 9.2% 2.1% 3.0% 4.0% 3.0% 2.0% 2.0% 1.5% 1.5% 1.0%

% Exports 30.0% 2 4.6% 15.0% 11.0% 10.0% 8.8% 7.5% 6.3% 5.3% 4.7% 4.1% 3.7% 3.4%

ODM 21.07 31.82 56.95 88.79 100.88 120.31 147.72 183.63 223.54 261.90 304.57 341.27 383.68

% Growth 51.0% 79.0% 55.9% 23.0% 19.3% 22.8% 24.3% 21.7% 17.2% 16.3% 12.1% 12.4%

% Exports 70.0% 75.4% 85.0% 89.0% 90.0% 91.2% 92.5% 93.7% 94.7% 95.3% 95.9% 96.3% 96.6%

Total Exports 30.10 42.20 67.00 99.76 112.09 131.86 159.73 196.00 236.15 274.76 317.63 354.53 397.07

% Growth 40% 59% 49% 12% 18% 21% 23% 20% 16% 16% 12% 12%

% of Total 90% 96% 82% 58% 49% 44% 41% 39% 37% 35% 34% 33% 33%

Domestic OBM 3.35 2.05 14.32 72.24 116.67 167.82 229.85 306.56 402.10 510.28 616.57 719.80 806.18

% Growth -38.8% 598.5% 404.5% 61.5% 43.8% 37.0% 33.4% 31.2% 26.9% 20.8% 16.7% 12.0%

% of Total 10% 5% 18% 42% 51% 56% 59% 61% 63% 65% 66% 67% 67%

Total Revenue 33.45 44.25 81.32 172.00 228.76 299.68 389.58 502.56 638.25 785.04 934.20 1074.33 1203.25

% Growth 32% 84% 112% 33% 31% 30% 29% 27% 23% 19% 15% 12%

APPENDIX 6 – SOURCES

Deer 10-K Deer 10-Q Third Q 2010Google Finance Yahoo FinanceFact Set

www.deerinc.com

Uoig Deer Final Report

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