SIM Technology Group st Half Results Announcement

Transcription

1 SIM Technology Group st Half Results Announcement August 30,

2 Disclaimers This presentation includes forward-looking statements. All statements, other than statements of historical facts, that address activities, events or developments that SIM Technology expects or anticipates will or may occur in the future (including but not limited to projections, targets, estimates and business plans) are forwardlooking statements. SIM Technology s actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to price fluctuations, actual demand, exchange rate fluctuations, market share, competition, environmental risks, changes in legal, financial and regulatory frameworks, government policies, international economic and financial market conditions, political risks, cost estimates and other risks and factors beyond our control. In addition, SIM Technology makes these forward-looking statements as of today and undertakes no obligation to update these statements. 2

3 Presentation Contents 1H-2013 Financial Highlight 1H-2013 Business Highlight Richard Chan Richard Chan 3

4 1H-2013 Financial Highlight 4

5 1st Half Financial Highlights (HK$M) 1H H-2012 % YoY Change Revenue 787 1,317-40% Gross Profit % Gross profit as % of Revenue 9.5% 10.0% Loss for the period (126) (58) +116% Loss as % of Revenue (16.0%) (4.4%) Basic Loss per share (HK cents) (5.0) cents (3.4) cents +47% Interim Dividend (HK cents) Nil Nil 5

6 Revenue by Business Segment 1H H-2012 Revenue (HK$M) % of core business revenue Revenue (HK$M) % of core business revenue % YoY Change Handsets & Solutions % 1, % -60.7% Full handsets (ODM) % % -72.6% Handset solutions and royalties % % -22.0% Wireless Communication Modules % % -9.7% Display Modules % % % Revenue of Core Business % 1, % -45.7% Residential Properties 72 Nil NA Total Revenue 787 1, % 6

7 Gross Profit by Business Segment 1H H-2012 (HK$M) Gross Profit % of respective revenue Gross Profit % of respective revenue Handsets & Solutions % % Wireless Communication Modules % % Display Modules 1 1.3% 3 8.2% Core Business GP % % Residential Properties 17 24% Nil NA Total GP % % 7

8 1H H-2012 Operating Expenses HK$M % of revenue HK$M % of revenue % YoY Change Research & development % % +18.8% Selling & distribution % % -18.3% Administrative % % -5.3% Total operating expenses % % +2.1% 8

9 Cash Flow Statement Highlights (HK$M) 1H-2013 Net Cash used in operating activities (131) Capital expenditure (56) Development costs (46) Net increase in bank borrowings 180 Investment in an associate (30) Investment in entrusted loan receivables (51) Others 1 Net cash outflow (133) Cash balances at beginning period (excluding cash refundable to shareholders on oversubscription of Rights Issue) Cash / Bank balances at 30 June 2013 (Including pledged bank deposits) Net cash balances less bank borrowings 210 Gearing ratio (bank borrowings / total assets) 7.7% 9

10 Financial Ratio 1H-2013 Yr-2012 % Change Current ratio (times) % Inventory turnover ratio (days) % A/R turnover ratio (days) % N/R turnover ratio (days) % A/P turnover ratio (days) % 10

11 1H-2013 Business Highlight * Handsets and Solutions * Wireless Communication Modules * Display Modules * Property Development 11

12 Revolutionary Change in Handset Market industry adversely impacted the Group s core business H 1.04 HS Sales H H Handsets and Solutions and GP (HK$ B) WM Sales H H H: GP% H: GP% 5.6 Wireless Communication Module and GP (HK$ B) 0.04 DM Sales H H Display Module and GP (HK$ B) H: GP% H: GP% H: GP% H: GP% 1.3 Handset and Solutions Sales The impact of the price war has caused SIM to substantially scale down its ODM business which had targeted the operator procurement market in China High-end ODM business with Japanese customers also downsized severely as compared to H Handset and Solutions GP % While our business with the Japanese customers was stagnant, other high-end ODM customers and their business volume were comparatively insignificant in H, thus resulting in drastic declined of the handset GP% Wireless Communication module Sales & GP% Both turnover and gross profits recorded a slight decreased was adversely impacted by intensive market competition and raw material supply shortage Investment expansion in the R&D of 3G and 4G products, thus impacting a significant drop of the segmental profit Display Module sales & GP% A surge in turnover over H, as the Group s CTP business was still in its initial development stage with both delivery volume and turnover at a lower level. Sharp decreased in GP% were due to excess supply of both LCM and CTP, leading ASP dropped notably as compared to the same period last year 12

13 Handsets and Solutions Business Review H Our handsets and solutions business performance was adversely impacted by first, ODM business with the Japanese customers was downsized severely as compared to H. Second, The impact of the price war has caused the Group to substantially scale down its ODM business which had targeted the operator procurement market in China Continued to shift its key R&D resources to high-end ODM handsets and the Internet of Things industrial application terminals with focuses on 4G- LTE technology. Continued to expand into the Internet of Things and industrial application markets, including smart terminals and tablets targeting specific industries such as medical and healthcare, express logistics, retail, automobile and law enforcement. currently developing LTE smart terminals for industrial use with the highest dustproof, shock resistant and waterproof standards for industrial application brand customers in North America. Mass delivery of these products is expected to commence in the second quarter of

14 Brighter Future For Handsets & Solutions Business Group s Road Map and Future Direction: An IDH focused on 2G & 3G design and R&D of terminals for local customers ( ) Provide mid-to-high end full handset ODM product services for upmarket customers and International brand ( ) Provide high-end ODM LTE smartphone for upmarket customers; Provide industrial communication terminals under our self-owned brand (2013 and onwards) The Group targets to tap the contemporary service industry by providing full integrated solutions for terminals and backend application systems To provide customers a cross-sector service including Internet of Things data and operation services Customer s respective equipment financial leasing and product wholesale services. The Group s first integrated solution and cross-sector operation service project commenced in June 2013, which is expected to generate returns for the Group in mid

15 Wireless Modules Business Review and Prospects Slight decrease both in sales and gross profit was due to the combined effect of the highly intensive market competition and raw material supply despite delivery volume increased mildly in 1H Continued expansion of its investment in 3G and 4G-LTE projects: The group has enhanced R&D capabilities targeted at high-end 3.75G/4G platform products and has expanded the CDMA1X product series, aiming to meet different needs of customers by providing products of various operational standards such as CDMA 1X/HSPA+/LTE The Group has also entered into a cooperation agreement with Oracle following the Oracle Global Summit to introduce Oracle s advanced technologies applied in JAVA virtual machines to the Group s wireless modules. This helps reduce the product development cycle of customers products The Group has established a high-end customer base in the PRC power market covering major smart meter suppliers in the industry The Group s future plan include the developing a prototype of an " Internet of Things Demonstrative Residential Community in Shenyang City and an Internet of Things New Energy Demonstration Community in Taizhou City, Jiangsu Province. 15

16 Display Modules and Property Development Business Review and Prospects Display Module Business A surge in turnover over 1H-2012, as the Group s CTP business was still in its initial development stage with both delivery volume and turnover at a lower level, while sharp decreased in GP% were due to excess supply of both LCM and CTP, leading ASP dropped notably as compared to 1H The Group has relocated its production base from Shenyang to Shanghai, resulting in 20% to 30% increase in production capacity, but has led to a substantial loss in the display modules business during the period under review. The Group will continue its effort to control expenditures and lower production cost to improve its business segment profit margin. Property Development Business (Shenyang) Construction of Phase I of The Riverside Country residential project was completed in 2012 and sales recognized in 1H-2013 amounted to HK$71.6 million (1H-2012: Nil) and the gross profit margin was 24%. Construction of Phase II of The Riverside Country residential project is expected to be completed by phases starting from Development of the commercial areas is expected to be completed in the third quarter of

17 - Thank You - 17