Exhibit (c)(2)
Presentation to the Special Committee at Highpower International June 26, 2019 | June 26, 2019 CONFIDENTIAL
2 | June 26, 2019 CONFIDENTIAL This presentation was prepared by ROTH Capital Partners, LLC (“ROTH”) and provided to the Special Committee of the Board of Directors of Highpower International, Inc . (the “Company”) in connection with their consideration of a potential transaction among HPJ Parent Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands (“Parent”), HPJ Merger Sub Corp . , a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and Highpower International, Inc . , a Delaware corporation (the “Company”) . This presentation has been provided to the Special Committee of the Board of Directors by ROTH and may not be used or relied upon for any purpose without the written consent of ROTH . The information contained herein is confidential . By accepting this presentation you agree to use it for informational purposes only and will not disclose any such information to any other party without the written consent of ROTH . This presentation has not been prepared with a view toward public disclosure under state or federal securities laws or otherwise . Reproduction, dissemination, quotation, summarization or reference to this presentation without our written consent is prohibited . The information utilized in preparing this presentation was obtained from the Company and other public sources . ROTH assumes no responsibility for independent investigation or verification of such information and has relied on such information being complete and accurate in all material respects . To the extent such information includes estimates and/or forecasts of future performance prepared by Company management, we have assumed that such estimates and forecasts have been reasonably prepared on bases reflecting the best currently available estimates and judgments of Company management . As ROTH is relying on the Company for the information required to deliver its analysis, ROTH makes no independent representation or warranty, express or implied, as to the accuracy or completeness of such information and nothing contained herein is, or shall be relied upon as, a representation, whether as to the past or the future . ROTH has no obligation, express or implied, to update any or all of the information contained in this presentation or to advise you of any changes . Because this presentation was prepared for use in the context of an oral presentation to the Special Committee of the Board of Directors, which is familiar with the business and affairs of the Company, ROTH does not take any responsibility for the accuracy or completeness of any of the material included in this presentation if used by persons other than the members of the Special Committee of the Board of Directors . This presentation is not intended to provide the sole basis for evaluating, and should not be considered a recommendation with respect to, any transaction or other matter . Prior to entering into any transaction the Company and the Special Committee of the Board of Directors should determine, without reliance on ROTH, the economic merits and risks as well as the legal, tax and accounting consequences of any such transaction . This presentation does not constitute an opinion and ROTH’s only opinion is the written opinion that is to be rendered to the Special Committee of the Board of Directors . In preparing this presentation, ROTH has made certain assumptions regarding the information contained herein and certain limitations apply to such information . For a detailed description of these assumptions and limitations, we refer you to the written fairness opinion to be delivered to the Special Committee of the Board of Directors by ROTH .
3 | June 26, 2019 CONFIDENTIAL Table of Contents I. Transaction Overview II. Valuation Analysis III. Appendix
4 | June 26, 2019 CONFIDENTIAL I. Transaction Overview 4
5 | June 26, 2019 CONFIDENTIAL Transaction Description • Mr. Dang Yu (George) Pan, the Company’s Chairman and Chief Executive Officer and a stockholder of the Company, Wen Liang Li, a director and stockholder of the Company, Wen Wei Ma, a stockholder of the Company, and Essence International Capital Limited, a company incorporated in Hong Kong, have agreed to acquire the outstanding shares of the Company Transaction • $4.80 / Share • Cash Consideration • The consortium plans to finance the proposed transaction with equity capital Financing
6 | June 26, 2019 CONFIDENTIAL Transaction Overview Transaction Value Valuation Summary (in millions except per share amounts) (in millions except per share amounts and percentages) Proposed Per Share Offer Price $4.80 Share Price Day Prior to Offer 2 $2.88 Diluted Share Count 1 16.4 Enterprise Value to EBITDA EBITDA Multiple Enterprise Value / LTM EBITDA 3 $23.9 6.7x Enterprise Value / 2019E EBITDA 4 $23.5 6.9x Implied Equity Value $78.9 Enterprise Value / 2020E EBITDA 4 $25.2 6.4x Enterprise Value / 2021E EBITDA 4 $24.3 6.6x (+) Debt $107.2 Price to Earnings Earnings Multiple ( - ) Cash $24.9 Price to LTM Earnings 3 $11.1 7.1x Implied Enterprise Value $161.2 Price to 2019E Earnings 4 $10.5 7.5x Price to 2020E Earnings 4 $9.9 8.0x Price to 2021E Earnings 4 $8.5 9.3x 1) Source: management 2) Source: CapitalIQ . A s of 06/01/18 3) Source: Mgmt. LTM as of 3/31/19 4) Source: Company projections
7 | June 26, 2019 CONFIDENTIAL II. Valuation Analysis 7
8 | June 26, 2019 CONFIDENTIAL Valuation Analysis Valuation Methodologies and Key Assumptions Comparable Companies Precedent Transactions ▪ Compared the offer multiple against the trading multiples of comparable companies ▪ Compared against similar companies in the following groups: • Batteries • Electronic components ▪ Compared the offer multiple against multiples paid in comparable transactions ▪ Reviewed comparable transactions from 01/01/10 to present ▪ Included transactions that occurred in the battery and battery application space ▪ Only closed transactions with public data were included in the analysis Discounted Cash Flows (“DCF”) Other Data and Considerations ▪ Estimated the DCF value of HPJ by analyzing: • 3 - year projected cash flow model • Management financial projections (2019 - 2021) • Considered the weighted average cost of capital (“WACC”) range of 12.6% to 16.6% • Considered exit EBITDA multiples to be between 6.0x to 10.0x ▪ ROTH also considered the following other facts and data: • Considered premiums paid for other U.S. listed companies from 01/01/17 to present • Considered high and low trading prices for stock over the 52 weeks prior to 06/01/18 • Lack of trading liquidity • Conducted a market check for any other offers
9 | June 26, 2019 CONFIDENTIAL Summary of Valuation I. Comparable Public Company Trading Analysis III. Premiums Paid Analysis Min 25th PCTL Median 75th PCTL Max Offer Multiples Min 25th PCTL Median 75th PCTL Max Offer Premium EV/LTM EBITDA 5.1x 7.0x 9.6x 11.8x 15.6x 6.7x Premium % - 1 Day Prior (30.3) 10.1 22.6 38.8 404.4 67.0 EV/2019 EBITDA 4.8x 5.0x 6.4x 8.0x 8.3x 6.9x Premium % - 1 Week Prior (27.7) 12.2 24.5 37.8 411.5 62.7 EV/2020 EBITDA 4.0x 4.6x 5.4x 6.5x 7.8x 6.4x Premium % - 4 Weeks Prior (27.7) 13.1 26.1 39.5 457.6 37.1 EV/2021 EBITDA 3.3x 4.3x 4.9x 5.7x 7.0x 6.6x P/LTM E 6.1x 11.4x 14.6x 19.1x 44.0x 7.1x IV. Discounted Cash Flow Analysis P/2019 E 6.4x 7.7x 8.9x 10.2x 11.5x 7.5x P/2020 E 3.9x 5.5x 7.1x 8.8x 10.4x 8.0x WACC Offer Price P/2021 E 1.6x 3.5x 5.3x 7.2x 9.0x 9.3x Exit EBITDA Multiple 12.6% 13.6% 14.6% 15.6% 16.6% 6.0x $0.33 $0.19 $0.06 $0.00 $0.00 $4.80 7.0x $1.43 $1.27 $1.11 $0.96 $0.81 8.0x $2.53 $2.34 $2.16 $1.98 $1.81 9.0x $3.63 $3.42 $3.21 $3.01 $2.82 10.0x $4.73 $4.49 $4.26 $4.04 $3.83 II. Selected Precedent Transactions V. 52 Week Stock Performance (Prior to Announcement) Min 25th PCTL Median 75th PCTL Max Offer Multiples High Low Offer Price EV/LTM EBITDA 7.1x 7.6x 8.0x 9.9x 11.8x 6.7x $5.75 $2.75 $4.80 P / LTM E 9.7x 12.3x 18.8x 19.1x 33.8x 7.1x
10 | June 26, 2019 CONFIDENTIAL $5.13 $2.08 $1.98 $1.31 $7.71 $5.74 $3.31 $1.80 $6.00 $8.34 $3.17 $3.31 $3.96 $2.75 $0.00 $12.16 $6.36 $5.00 $3.35 $5.27 $6.54 $5.28 $3.72 $9.41 $12.94 $3.99 $4.06 $4.88 $5.75 $4.73 $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 EV/LTM EBITDA EV/2019 EBITDA EV/2020 EBITDA EV/2021 EBITDA P/LTM E P/2019 E P/2020 E P/2021 E EV/LTM EBITDA P/LTM E 1 Day 1 Week 4 Weeks 52 Week DCF Public Comps Prec. Premiums Paid High /Low DCF Valuation Analysis Per Share Valuation Range 1,2,3 1) Valuation range based off 25th and 75th percentile multiples, except for DCF and 52 week 2) Negative valuation ranges are given a minimum value of $0 3) 52 week high/low based off of 52 weeks prior to announcement Offer Price: $4.80
11 | June 26, 2019 CONFIDENTIAL Valuation Analysis Comparable Company Multiples 1,2,3,4 1) Source: Capital IQ. Projected financials based on median analyst estimates 2) Enterprise Value = Market Cap + Debt – Cash 3) All EV/EBITDA multiples less than 0 or greater than 35 are considered "NM" 4) All P/E multiples less than 0 or greater than 50 are considered "NM" Diluted Share Price Mkt. Cap TEV EV/EBITDA P/Earnings Proj. Growth LTM Margins (%) Company Ticker Shares 06/26/19 06/26/19 06/26/19 LTM CY 2019 CY 2020 CY 2021 LTM CY 2019 CY 2020 CY 2021 18 - 19 19 - 20 Gross EBITDA Net Golden Power HK:3919 240.0 $0.07 $16.0 $35.2 15.5x NA NA NA NM NA NA NA NA NA 20.2 5.5 1.9 CBAK Energy CBAT 31.7 $0.98 $31.1 $69.9 NM NA NA NA NM NA NA NA NA NA (12.1) (38.8) (8.2) Ultralife ULBI 16.1 $8.15 $131.0 $110.6 15.6x NA NA NA 44.0x NA NA NA NA NA 28.2 8.5 28.0 Coslight SEHK: 1043 379.0 $0.22 $84.9 $326.1 8.7x NA NA NA 6.1x NA NA NA NA NA 18.7 8.1 6.2 Gold Peak SEHK: 40 784.7 $0.10 $80.4 $332.7 10.5x NA NA NA 9.9x NA NA NA NA NA 25.0 3.7 0.9 Leoch 842 1,357.7 $0.07 $100.8 $417.3 5.1x 4.8x 4.0x 3.3x 12.8x 6.4x 3.9x 1.6x 2.7% 15.5% 11.1 5.9 1.1 Maxell TSE: 6810 52.8 $13.62 $719.5 $745.5 7.6x 7.9x 6.1x 5.2x 19.8x NA NA NA 8.1% 5.6% 20.6 7.3 3.5 GS Yuasa TSE: 6674 81.8 $19.09 $1,562.1 $1,973.5 5.2x 5.0x 4.8x 4.6x 14.6x NA NA NA (0.6%) 2.1% 23.0 10.2 3.3 EnerSys ENS 42.9 $65.78 $2,820.3 $3,557.7 10.6x 8.3x 7.8x 7.0x 18.5x 11.5x 10.4x 9.0x 24.0% NA 25.0 12.0 5.7 Min 16.1 $0.07 $16.0 $35.2 5.1x 4.8x 4.0x 3.3x 6.1x 6.4x 3.9x 1.6x (0.6%) 2.1% (12.1) (38.8) (8.2) 25th PCTL 42.9 $0.10 $80.4 $110.6 7.0x 5.0x 4.6x 4.3x 11.4x 7.7x 5.5x 3.5x 1.9% 3.9% 18.7 5.5 1.1 Median 81.8 $0.98 $100.8 $332.7 9.6x 6.4x 5.4x 4.9x 14.6x 8.9x 7.1x 5.3x 5.4% 5.6% 20.6 7.3 3.3 75th PCTL 379.0 $13.62 $719.5 $745.5 11.8x 8.0x 6.5x 5.7x 19.1x 10.2x 8.8x 7.2x 12.0% 10.6% 25.0 8.5 5.7 Max 1,357.7 $65.78 $2,820.3 $3,557.7 15.6x 8.3x 7.8x 7.0x 44.0x 11.5x 10.4x 9.0x 24.0% 15.5% 28.2 12.0 28.0 Highpower HPJ 16.4 $4.80 $78.9 $161.2 6.7x 6.9x 6.4x 6.6x 7.1x 7.5x 8.0x 9.3x 9.1% 10.0% 20.5 7.9 4.8
12 | June 26, 2019 CONFIDENTIAL Valuation Analysis Precedent Transactions 1,2,3,4,5 1) Transactions from 01/01/10 - Present in battery and battery applications space 2) All transactions include sale of majority stake of target 3) Transactions with EV/LTM EBITDA multiples greater than 20x are listed as "NM“ 4) Transactions with P/LTM E greater than 50x are listed as "NM" 5) Transactions less than $10M in EV and without publicly available data were excluded from analysis Closed Date Target Buyers Implied Enterprise Value ($M) EV/LTM EBITDA P/LTM E Business Description 05/01/19 Southwest Electronic Ultralife $25.0 - - Lithium ion & lead acid batteries 12/29/18 Zuhai Power Zhuhai Battery $34.4 - - Manufactures lead acid batteries 10/17/18 Kokam SolarEdge Technologies $134.0 - - Batteries and battery solutions 09/19/18 Zhejiang Youchuang Solar Zhejiang Youchuang VC $84.6 - - Solar cell batteries 07/31/17 Zhuhai Coslight Battery Beijing Yi Kehui $169.1 - 9.7x Lithium - polymer batteries 04/28/17 Nesscap Energy Maxwell Technologies $23.0 - - Comprises energy storage and power delivery solutions design and manufacturing 02/22/17 Hunan Shinzoom Technology Hunan Zhongke Electric $74.9 - 33.8x Develops and manufactures cathode material lithium batteries 08/15/16 Saft Groupe TOTAL S.A. $1,192.7 7.1x - Designs, develops, manufactures rechargeable batteries 07/21/16 Shenzhen Optimum Nano Energy Shaanxi J&R Optimum Energy $793.7 - 18.8x Lithium iron phosphate batteries 01/13/16 Accutronics Ultralife Batteries $11.0 - - Designs, develops, and manufactures rechargeable batteries 02/11/15 Yokohama Industries Fordington Pte $51.6 NM 19.1x Manufactures and markets batteries 11/24/14 Ener - tek International Vectra Co. $24.0 8.0x - Manufactures storage batteries 10/25/12 SB LiMotive Samsung SDI $209.4 - - Researches and develops, manufactures, and sells lithium - ion batteries 10/19/12 Axeon Holdings Johnson Matthey $65.1 - - Design, development, manufacture, and supply of lithium - ion batteries 10/26/10 Zhejiang GBS Energy Hybrid Kinetic Group $24.6 NM NM Developing, manufacturing, and selling lithium - ion power battery 01/29/10 EaglePicher Technologies Vectra Co. $171.9 - - Designs, manufactures, and supplies lithium ion batteries 01/12/10 Shenzhen NewPower Technology Shenzhen E'Jenie Technology $14.3 11.8x 12.3x Manufactures lithium ion batteries. Min $11.0 7.1x 9.7x 25th PCTL $24.6 7.6x 12.3x Median $65.1 8.0x 18.8x 75th PCTL $169.1 9.9x 19.1x Max $1,192.7 11.8x 33.8x HPJ $158.0 6.6x 6.8x
13 | June 26, 2019 CONFIDENTIAL Valuation Analysis Premium Analysis 1,2 Effective Date Target Buyer Transaction Value ($M) Premium - 1 Day Prior (%) Premium - 1 Week Prior (%) Premium - 1 Month Prior to (%) 05/21/19 Sierra Monitor MSA Safety $36.7 54.8 72.9 58.5 05/16/19 Maxwell Technologies Tesla $277.2 96.3 110.7 142.0 05/15/19 MPM Holdiing MOM Holding $1,582.7 (2.6) (2.3) 2.1 04/03/19 Pershing Gold Corp Americas Silver Corp $73.3 80.3 101.9 66.5 03/14/19 Esterline Technologies Corp Transdigm Group Inc $3,610.1 62.4 63.0 67.1 03/08/19 NutriSystem Inc Tivity Health Inc $1,443.4 38.7 29.3 29.9 03/01/19 Livent Corp Shareholders $1,586.8 1.8 2.5 (8.3) 02/28/19 Nexeo Solutions Inc Univar Inc $1,969.8 13.3 13.7 13.9 02/22/19 Tahoe Resources Inc Pan American Silver Corp $1,287.7 54.6 37.7 16.8 02/21/19 Command Security Corp Prosegur SIS USA Inc $29.8 56.6 52.4 62.9 02/08/19 Dun & Bradstreet Corp Investor Group $6,881.4 15.2 16.2 13.3 02/01/19 Electro Scientific Industries Inc MKS Instruments Inc $1,024.1 100.9 98.5 76.4 01/31/19 Essendant Inc Staples Inc $428.0 17.2 31.7 33.8 01/14/19 Engility Holdings Inc Science Applications Intl Corp $2,394.9 11.6 16.5 19.2 12/19/18 Corporate Capital Trust Inc FS Investment Corp $1,590.4 (23.4) (21.8) (21.0) 12/06/18 JetPay Corp NCR Corp $90.4 146.3 153.8 197.1 12/05/18 American Railcar Industries Inc STL Parent Corp $1,335.9 51.2 52.5 48.7 11/26/18 Rockwell Collins Inc United Technologies Corp $23,329.9 19.7 24.6 33.3 11/15/18 KMG Chemicals Inc Cabot Microelectronics Corp $1,239.5 19.6 16.5 5.1 11/07/18 WSI Industries Inc Polaris Industries Inc $21.6 35.9 30.8 26.7 11/02/18 Kapstone Paper & Packaging WestRock Co $3,495.7 31.9 35.4 54.3 10/31/18 RLJ Entertainment Inc AMC Networks Inc $43.6 9.8 9.3 8.4 10/26/18 Pinnacle Foods Inc Conagra Brands Inc $8,150.2 12.0 11.6 17.0 10/22/18 SuperValu Inc United Natural Foods Inc $1,255.3 94.0 113.4 114.0 10/01/18 Xcerra Corp Cohu Inc $764.7 8.5 15.7 16.6 08/27/18 Cotiviti Holdings Inc Verscend Tech Inc $4,282.4 12.2 13.1 33.9 08/21/18 A Schulman Inc LyondellBasell Industries NV $2,043.3 8.7 18.1 9.8 08/20/18 Mattersight Corp NICE Ltd $102.7 25.6 17.4 28.6 08/01/18 Capella Education Co Strayer Educ Inc $861.7 22.5 18.8 12.0 07/13/18 HRG Group Inc Spectrum Brands Holdings Inc $3,623.4 6.7 7.3 (8.2) 07/09/18 Dr Pepper Snapple Group Inc Keurig Green Mountain Inc $22,250.2 8.5 7.2 6.9 07/06/18 Azarga Uranium Corp Urz Energy Corp $10.5 136.7 136.7 134.1 06/22/18 Analogic Corp Altaris Capital Partners LLC $1,050.1 (11.5) (11.3) (10.5) 06/19/18 RPX Corp HGGC LLC $524.3 (24.6) (20.8) (23.6) 06/14/18 Layne Christensen Co Granite Construction Inc $325.0 28.5 27.1 22.3 06/07/18 ELXSI Corp SPX Corp $174.7 39.0 35.5 30.8 06/07/18 Monsanto Co Bayer AG $56,598.0 41.7 42.8 43.9 06/06/18 Orbital ATK Inc Northrop Grumman Corp $9,170.8 22.2 24.7 28.0 1) Source: Thomson Eikon . U.S. listed, majority transactions from 01/01/17 - Present in Basic Materials, Industrials, and Non - Cyclical Consumer Goods/Ser vices space 2) Excludes transactions less than $10M
14 | June 26, 2019 CONFIDENTIAL Valuation Analysis Premium Analysis (cont.) 1,2 Effective Date Target Buyer Transaction Value ($M) Premium - 1 Day Prior (%) Premium - 1 Week Prior (%) Premium - 1 Month Prior to (%) 05/29/18 Hardinge Inc Investor Group $215.0 12.1 15.4 21.1 05/10/18 Chicago Bridge & Iron Co NV McDermott International Inc $1,862.9 3.1 2.1 18.5 04/24/18 Blue Buffalo Pet Products Inc General Mills Inc $7,926.9 17.2 14.0 20.2 04/16/18 Ply Gem Holdings Inc Clayton Dubilier & Rice LLC $1,501.6 19.6 17.9 19.2 03/26/18 Snyder's - Lance Inc Campbell Soup Co $4,964.3 12.6 30.1 37.8 03/23/18 Crystal Rock Holdings Inc Cott Corp $20.7 22.8 24.4 18.3 03/22/18 Key Technology Inc Duravant LLC $173.3 50.6 46.9 40.1 03/09/18 Calgon Carbon Corp Kuraray Co Ltd $1,113.6 62.9 62.9 77.7 02/28/18 Straight Path Communications Inc Verizon Communications Inc $2,311.8 404.4 411.5 457.6 02/20/18 Deltic Timber Corp Potlatch Corp $1,165.1 7.1 6.2 9.0 02/12/18 CalAtlantic Group Inc Lennar Corp $5,790.2 26.9 31.4 39.2 01/31/18 Amplify Snack Brands Inc Hershey Co $921.0 71.4 86.1 114.7 12/19/17 Omega Protein Corp Cooke Inc $501.0 32.5 32.1 37.9 12/14/17 Inventure Foods Inc Utz Quality Foods Inc $79.1 (10.3) (9.3) (14.7) 12/11/17 Detrex Corp Italmatch Chemicals SpA $45.9 8.0 8.0 10.2 12/07/17 Numerex Corp Sierra Wireless Inc $104.3 11.2 6.5 8.0 11/17/17 The Advisory Board Co Optum Inc $2,155.0 5.6 1.9 (4.8) 11/17/17 Brocade Communications Systems Broadcom Ltd $5,535.8 13.4 44.9 34.2 11/08/17 Bankrate Inc Red Ventures LLC $1,253.2 9.0 12.5 30.2 10/19/17 Landauer Inc Fortive Corp $648.2 9.6 8.6 10.0 10/10/17 West Corp Apollo Global Management LLC $1,988.2 (7.1) (5.4) (3.3) 10/05/17 Forestar Group Inc DR Horton Inc $558.3 26.3 25.9 36.5 10/02/17 Neff Corp United Rentals Inc $606.6 26.9 31.2 47.1 09/29/17 PAREXEL International Corp Pamplona Capital Management $4,629.2 27.9 36.4 43.7 09/28/17 Sevcon Inc BorgWarner Inc $125.7 60.8 59.7 38.4 09/13/17 CDI Corp AE Industrial Partners LLC $155.0 33.1 32.0 38.7 09/10/17 Swift Transportation Co Knight Transportation Inc $2,959.1 10.2 8.2 6.3 08/31/17 EI du Pont de Nemours & Co The Dow Chemical Co $62,141.1 5.7 4.7 5.1 08/28/17 Whole Foods Market Inc Amazon.com Inc $13,561.4 35.2 41.1 45.1 07/31/17 Intrawest Resorts Holdings Inc Hawk Holding Co LLC $944.7 (6.1) (5.3) 5.4 07/28/17 Rightside Group Ltd Donuts Inc $205.9 8.7 9.3 18.0 07/25/17 Reynolds American Inc British American Tobacco PLC $49,053.7 26.2 26.0 22.6 07/20/17 Electrical Geodesics Inc Koninklijke Philips NV $36.7 36.0 35.1 33.1 07/19/17 Sajan Inc AMPLEXOR International SA $28.0 46.1 61.1 53.8 06/27/17 LMI Aerospace Inc Sonaca SA $190.9 51.4 57.1 55.5 1) Source: Thomson Eikon . U.S. listed, majority transactions from 01/01/17 - Present in Basic Materials, Industrials, and Non - Cyclical Consumer Goods/Ser vices space 2) Excludes transactions less than $10M
15 | June 26, 2019 CONFIDENTIAL Valuation Analysis Premium Analysis (cont.) 1,2 1) Source: Thomson Eikon . U.S. listed, majority transactions from 01/01/17 - Present in Basic Materials, Industrials, and Non - Cyclical Consumer Goods/Ser vices space 2) Excludes transactions less than $10M Effective Date Target Buyer Transaction Value ($M) Premium - 1 Day Prior (%) Premium - 1 Week Prior (%) Premium - 1 Month Prior to (%) 06/22/17 MOCON Inc AMETEK Inc $187.4 38.6 33.9 36.1 06/21/17 TRC Cos Inc New Mountain Partners IV LP $554.5 46.9 61.8 63.3 06/15/17 Mead Johnson Nutrition Co Reckitt Benckiser Group PLC $16,650.6 27.7 20.1 25.4 06/07/17 AdvancePierre Foods Holdings Inc Tyson Foods Inc $4,264.4 9.8 18.6 27.6 06/06/17 Multi Packaging Solutions International WestRock Co $1,398.5 25.1 26.9 23.6 06/01/17 Valspar Corp Sherwin - Williams Co $9,308.7 34.8 38.1 46.7 05/26/17 Ultratech Inc Veeco Instruments Inc $769.5 10.4 10.1 18.1 05/04/17 Stillwater Mining Co Sibanye Gold Ltd $2,179.6 22.6 18.7 21.4 04/21/17 Air Methods Corp American Securities LLC $1,568.1 20.5 18.5 23.2 04/21/17 Chemtura Corp Lanxess AG $2,109.7 18.9 23.0 12.8 04/13/17 B/E Aerospace Inc Rockwell Collins Inc $8,200.8 (30.3) (27.7) (27.7) 04/12/17 The WhiteWave Foods Co Danone SA $10,355.6 18.6 19.8 22.4 04/05/17 CEB Inc Gartner Inc $2,492.4 24.8 27.2 30.2 04/05/17 Joy Global Inc Komatsu America Corp $2,777.6 20.2 21.0 24.3 03/21/17 G&K Services Inc Cintas Corp $1,960.2 18.7 21.8 23.7 03/10/17 Linear Technology Corp Analog Devices Inc $14,375.6 23.9 24.2 33.3 02/06/17 Team Health Holdings Inc Blackstone Group LP $3,312.9 32.6 36.8 25.4 02/01/17 Apollo Education Group Inc AP VIII Queso Holding LP $1,086.4 51.8 32.1 38.7 01/20/17 AEP Industries Inc Berry Plastics Grp Inc $566.5 42.9 41.4 31.5 Min $10.5 (30.3) (27.7) (27.7) 25th PCTL $313.1 10.1 12.2 13.1 Median $1,311.8 22.6 24.5 26.1 75th PCTL $3,524.3 38.8 37.8 39.5 Max $62,141.1 404.4 411.5 457.6 HPJ $158.0 67.0 62.7 37.1
16 | June 26, 2019 CONFIDENTIAL Valuation Analysis Discounted Cash Flow Analysis 1 1) Assumes a valuation date of 07/01/19 and a mid year discount period. Projections provided by mgmt. 2) NOPAT = EBIT x (1 - Tax Rate), where Tax Rate = 15% 3) Taken from median of precedents FY FY FY Cash Flow Projections 2019E 2020E 2021E DCF Assumptions & Output Revenue $329.7 $362.7 $399.0 Discount Rate: 14.6% EBITDA $23.5 $25.2 $24.3 Exit EBITDA Multiple 3 8.0x EBIT $15.7 $15.6 $14.1 Terminal EBITDA $24.3 NOPAT 2 $13.4 $13.2 $12.0 Terminal Value $194.3 D&A $6.9 $9.6 $10.2 PV of Terminal Value $138.2 Capex ($26.8) ($22.1) ($8.8) Sum of PV of Cash Flows ($20.4) (Increase)/Decrease in NWC ($10.1) ($15.2) ($12.4) Implied EV $117.8 Unlevered Free Cash Flow ($16.7) ($14.5) $0.9 Subtract Debt $107.2 PV of Free Cash Flow ($8.1) ($13.1) $0.7 Add Cash $24.9 Implied Equity Value $35.5 End of Year Discount Period: 0.5 1.5 2.5 Diluted Shares Outstanding 16.4 Mid - Year Discount Period: 0.3 0.8 1.8 Implied Price/Share $2.16
17 | June 26, 2019 CONFIDENTIAL Valuation Analysis Discounted Cash Flow – WACC Calculation a) Beta was found using Capital IQ. Only comparable companies that had a minimum of 60 months of trading history were used. Capital IQ calculates beta on a monthly basis. Roth uses mid - year conventions to discount cash flows as Roth assume that cash flows come in continuously throughout the year. Assume a valuation date of 07/ 01/19 b) B(u) = B(l) / (1+(1 - Tax Rate) x Debt - to - Equity) c) Assumption that debt is carried at the corporate level d) Effective tax rate provided by management e) Source: 10 - Year Treasury yield at 06/26/19 f) Source: www.costofcapital.duffandphelps.com g) CAPM Cost Equity Capital Calculation: Risk Free Rate + (Equity Beta x Equity Risk Premium) h) Source: www.costofcapital.duffandphelps.com . 10b decile i) US High Yield CCC Effective Yield as of 06 /26/19 j) Weighted Average Cost of Capital = (Debt - to - Capital x Cost of Debt x (1 - Tax Rate)) + (Equity - to - Capital x Cost of Equity Capital) WACC Calculation Step 1 - Calculate Average Portfolio Beta (a) Calculated Average Portfolio Equity Beta 1.58 Step 2 - Unlever Portfolio Beta (b) Average Debt - to - Equity Ratio 2.3 Average Tax Rate 14.7 Unlevered Average Portfolio Equity Beta 0.74 Step 3 - Arrive at HPJ Equity Beta Unlevered Average Portfolio Equity Beta 0.74 HPJ Debt - to - Equity Ratio (c) 1.4 Effective Tax Rate (d) 15.0% HPJ Equity Beta 1.59 Step 4 Risk Free Rate (e) 2.1% Equity Risk Premium (f) 6.9% Levered Equity Beta 1.59 Cost of Equity Capital (g) 13.1% Size Premium (h) 8.3% HPJ Adjusted Cost of Equity Capital 21.3% Step 5 Debt - to - Capital Ratio 57.6% Equity - to - Capital Ratio 42.4% Pre - tax Cost of Debt (i) 11.3% After - tax Cost of Debt 9.6% Cost of Equity Capital 21.3% Weighted Average Cost of Capital (i) 14.6%
18 | June 26, 2019 CONFIDENTIAL Valuation Analysis Discounted Cash Flow – Beta Derivation 1,2,3 1) Beta was found using Capital IQ. Only comparable companies that had a minimum of 60 months of trading history were used. C api tal IQ calculates beta on a monthly basis. 2) Effective tax rate; NM if tax rate is less than 0 3) B(u) = B(l) / (1+(1 - Tax Rate) x Debt - to - Equity) Levered Equity Unlevered Name Ticker Beta 1 Debt Value Tax Rate 2 Beta 3 Golden Power HK:3919 0.90 $21.7 $16.0 NM NM CBAK Energy CBAT 3.65 $39.0 $31.1 0.0 1.62 Ultralife ULBI 0.93 $0.8 $131.0 NM NM Coslight SEHK: 1043 1.83 $282.5 $84.9 13.5 0.47 Gold Peak SEHK: 40 0.61 $436.9 $80.4 30.6 0.13 Leoch 842 1.50 $425.2 $100.8 11.1 0.32 Maxell TSE: 6810 1.39 $232.7 $719.5 28.3 1.13 GS Yuasa TSE: 6674 0.99 $624.6 $1,562.1 32.2 0.78 EnerSys ENS 1.43 $1,036.5 $2,820.3 11.8 1.08 Average 1.58 $156.2 $68.7 14.7 0.74 Levered Beta & WACC Calculation Unlevered Equity Levered Beta 1 Debt Value Tax Rate Beta 3 HPJ 0.74 $107.2 $78.9 15.0% 1.59
19 | June 26, 2019 CONFIDENTIAL 1.00 2.00 3.00 4.00 5.00 6.00 7.00 0 .20mm .40mm .60mm .80mm 1.00mm Highpower International, Inc. (NasdaqGM:HPJ) - Volume Highpower International, Inc. (NasdaqGM:HPJ) - Share Pricing Valuation Analysis Trading Range 1 Announce date: 06/01/18 1) Source CapitalIQ . 06/01/17 to 06/26/19 Offer Price: $4.80
20 | June 26, 2019 CONFIDENTIAL III. Appendix 20
21 | June 26, 2019 CONFIDENTIAL Appendix Management Projections 1. P&L Currency : USD in thousands USD Revenue% USD Revenue% Increase% USD Revenue% Increase% Net sales 329,747 100.0% 362,722 100.0% 10.0% 398,994 100.0% 10.0% Cost of sales -265,041 -80.4% -294,676 -81.2% -11.2% -327,551 -82.1% -11.2% Gross profit 64,706 19.6% 68,046 18.8% 5.2% 71,443 17.9% 5.0% Research and development expenses -14,656 -4.4% -16,322 -4.5% -11.4% -17,954 -4.5% -10.0% Selling and distribution expenses -13,126 -4.0% -14,360 -4.0% -9.4% -15,710 -3.9% -9.4% General and administrative expenses -21,182 -6.4% -21,807 -6.0% -3.0% -23,643 -5.9% -8.4% Foreign currency transaction gain - 0.0% - 0.0% NA - 0.0% NA Income from operations 15,742 4.8% 15,557 4.3% -1.2% 14,136 3.5% -9.1% Changes in fair value of foreign currency derivatives- 0.0% - 0.0% NA - 0.0% NA Other income 853 0.3% - 0.0% 100.0% - 0.0% NA Equity in earnings of investee - 0.0% - 0.0% NA - 0.0% NA Interest expenses -3,269 -1.0% -3,934 -1.1% -20.3% -4,128 -1.0% -4.9% Income before taxes 13,326 4.0% 11,623 3.2% -12.8% 10,008 2.5% -13.9% Income tax expenses -2,787 -0.8% -1,743 -0.5% 37.5% -1,501 -0.4% 13.9% Net income 10,539 3.2% 9,880 2.7% -6.3% 8,507 2.1% -13.9% Add: Interest expenses 3,269 1.0% 3,934 1.1% 20.3% 4,128 1.0% 4.9% Income taxes expenses 2,787 0.8% 1,743 0.5% -37.5% 1,501 0.4% -13.9% Depreciation and Amortization 6,859 2.1% 9,622 2.7% 40.3% 10,150 2.5% 5.5% EBITDA 23,454 7.1% 25,179 6.9% 7.4% 24,286 6.1% -3.5% ITEM Y2019-Forcast Y2020-Forcast Y2021-Forcast