2016 Interim Results Presentation. 26 August, 2016

Transcription

1 2016 Interim Results Presentation 26 August, 2016

2 Agenda Company Profile 2016 Interim Results Market Outlook Q&A 1

3 Part 1. Company Profile 2

4 Company Introduction MOBI Development Co., Ltd. ( MOBI ) is dedicated to provide front-end products for wireless communication, which apply to signal transmitting, receiving and processing. Our business consists of base station construction products and full range of products for relevant extension coverage. We are especially professional in antenna R&D and radio frequency technologies. MOBI is listed in HKEx on 17 December, 2009 (Stock Code: 0947.HK). MOBI Development Co., Ltd. has four R&D and manufacture bases, located in Nanshan District in Shenzhen, Guangming District in Shenzhen, Ji'an in Jiangxi Province, and Xi'an in Shaanxi Province, separately. The total area of manufacture bases is around 110,000 m2. 3

5 Signal Path Core System Base Station Coverage Extension Antenna System Base Station RF Subsystem Coverage Extension Solution ( Aesthetic antenna ) 4

6 Company Structure 100% MOBI Antenna (Shenzhen) RF Subsystem R&D Antenna R&D Aesthetic Antenna R&D 100% MOBI Technology (Xi An) Die-casting and CNC Processing RF Subsystem R&D and Production Antenna R&D 100% MOBI Technology (Shenzhen) 100% MOBI New Material and Technology (Xi An) Electroplating 100% RF Subsystem R&D and Production Antenna R&D and Production Aesthetic Antenna R&D and Production Shenzhen MOBI Communication (Shenzhen) Communication System Engineering and Technology Service 100% MOBI Industry (Shenzhen) Self-owned Property Leasing 15.1% Shenzhen Borynet 2016 New Investment 100% Cloud WIFI MOBI Technology (Hong Kong) International Trade and Funding 95% 5% MOBI Indonesia (Indonesia) Engineering and Technology Services for Indonesia Market Package Solutions for Indonesian Market Engineering Services for Neighboring 100% MOBI Communication (JiAn) Base Station Production Microwave Antenna Production RF Feeder R&D and Production 5

7 Part Interim Results 6

8 Results Overview in 1H2016 Growth Rate of Sales Volume 10.1% (RMB million) Gross Profit Margin 23.2% % H H H H Net Profit Growth Rate (RMB million) Net Profit Margin 11.4% % 6.4% H H H H 7

9 Results Analysis in 1H2016 by Business Category (RMB million) Antenna System 54.2% % 3.7% 68.8% Base Station RF Subsystem 34.8% H H Coverage Extension Solution 8.0% 8

10 Results Analysis in 1H2016 by Customer Category (RMB million) Others Chinese Network Operators 90.5% Overseas Direct Sale 4.7% International Equipment Manufacturers 31.3% 3.7% 8.7% 6.7% 4.4% % 55.1% Chinese Equipment Manufacturers 23.8% H H 9

11 Results Analysis in 1H2016 by Expenses The Operating Expenses to Sales Revenue Ratio 1.3% 4.4% 5.1% 0.7% 4.8% 5.5% 5.5% 6.1% H H Administrative Expense Increased by approximately 23% and accounted for approximately 6.1% of the revenue, which was mainly due to (1) the increased expenses in average number of employees, salaries, social security contributions, premium for property insurance, housing provident funds and other expenses for business expansion; (2) the increase in expenses such as business expenditures, travelling expenses, amortization on intangible assets, repairs and litigation costs. Selling Expense Increased by approximately 19% and accounted for approximately 5.5% of the revenue, which was mainly due to increases in business expenditures, travelling expenses, rent and utilities, consultation fees and low-value consumables resulting from increases in products sales.. R&D Expense Increased by approximately 18% and accounted for approximately 4.8% of the revenue, which was mainly attributable to the increase in salaries for research and development activities, surcharge on wages, repairs, testing fees and research and development materials costs. Financial Expense Substantially reduced by approximately 44% and accounted for approximately 0.7% of the revenue, primarily due to the decrease in borrowings. 10

12 Part 3. Market Outlook 11

13 Market Outlook GSMA: By 2020, there will be 1 billion newly added independent mobile users, of which users in Asian-Pacific region will account for 60%. In the coming 10 years, 4G will still be the investment highlight and 4G connection is expected to account for one-third of all mobile connection by Strategy Analytics: In 2016, the global revenue of 4G technology is expected to outnumber that of 3G technology. Its income share will increase to 49% in 2016 from 25% of last year. - US FCC assigns 5G spectrum and w ill launch a large-scale 5G test in the next year. 5G will be c o m m e r c i a l l y available as early as V e r i z o n completed the establishment of 5 G w i r e l e s s standards; AT&T l a b o r a t o r y conducted a lot of 5G tests and expects to have p r e - s t a n d a r d e quipment in 2017; S p r i n t s u c c e s s f u l l y demonstrated 5 G m o b i l e technology and will conduct a l a r g e r - s c a l e deployment. Source: NORTH AMERICA EU approved all member states to use 700MHz band for mobile service and will reassign MHz band spectrum for mobile broadband service no later than 30 June SOUTH AMERICA AFRICA EUROPE - O f c o m, a B r i t i s h t e l e c o m m u n i c a t i o n s s u p e r v i s i o n organization, promised there would be enough spectrum resources for commercially used 5G networks by EE plans to build 750 new base stations as a part of 4G expansion plan, which will cover 95% of British land area by ASIA AUSTRALIA The huge bonus coming from African telecommunications market users will promote the investment of Chinese telecommunications industry in Africa. This promotion includes African Information Highway Project, which was jointly built by China and Africa in "Eight Verticals and Eight Horizontals". China IMT-2020 (5G) Promotion Group released "5G Network Architecture Design" white paper. South Korea SK Telecom plans to start the deployment of LTE-A Pro (4.5G) in mid-2016, targets to cover 90% of population in 2019, and plans to conduct pre-commercial used 5G deployment in BSNL in India plans to add 21,000 wireless base stations in 2016 and targets to launch 4G service in 14 telecom service areas. - Bharti Airtel will build 70,000 base stations in 2016 and deploy more than 160,000 base stations after three years. - Thai operator True Move began the scale deployment of 4.5G 4T4R network. - Thai operator TOT in Thailand intends to start TD-LTE test. Celcom Axiata in Mal ays i a spe nt USD566.7 million on 4G network upgrade and got prepared for the introduction of 5G. XL Axiata in Indonesia sold out more than 2, 500 telecom towers and f i n a n c e d U S D m i l l i o n. T h e transaction amount was used for the mass deployment of 4G service.

14 Key Events Acceleration of 4G and Start-up of 5G Intensifying Competition in Mainland Operators China Broadcasting:In May 2016, received the Basic Telecommunications Business License issued by the Ministry of Industry to operate Internet domestic data transmission services and domestic communication infrastructure services, becoming the 4 th large telecom operator after China Mobile, China Unicom and China Telecom. Further applied for more licenses in June 2016, and signed strategic cooperation framework agreement with Citic, to start up building the China Broadcasting Mobile and be in charge of operating 700 MHz of the best 4G spectrum. Received special construction fund loan of RMB300 millions in July 2016,for the construction of basic networks and data broadband. The Ministry of Industry permits service providers from HK/Macao to establish joint venture and owned enterprise to offer value added telecom services. The 3 Largest Chinese Operators 5G Technology of Equipment Manufacturers International Equipment Manufacturers Integration Completes This Year Foreign Operators Restructuring and Cooperation The 3 largest Chinese operators draw up the plan of starting 5G network business in 2020: have officially initiated the experiment of research and development of 5G technology in 2016,built up the open platform for experiments; Construction and related tests of trial network is expected to start in 2017; Launch 5G network construction in 2018, and officially initiate business by The Ministry of Industry releases signal spectrum sharing, and may make China Broadcasting s 700 MHz a shared spectrum resource in broadcasting industry and telecom industry, to meet the demand of 5G era. The Ministry of Industry approves China Unicom to conduct 900MHz LTE FDD trials in 14 provinces and cities. China Telecom launches 800M LTE reconstruction of the whole network and forge the first low frequency LTE network in China, to cover the whole network in ZTE and China Mobile jointly complete the periodical trial of 5G high frequency technology, and conducts research and development and cooperation of 5G/Pre5G with several premium operators. Ericsson collaborates with Korean SK Telecom and Deutsche Telekom to conduct the first trans-continental 5G trial in the world; cooperates with Vodafone to build up 5G core network prototype and 5G intelligent network marginal prototype. Nokia collaborates with Canadian operator Bell Canada and finishes the first 5G network technology trial in Canada. Samsung lags behind other international equipment manufacturers due to misjudgment of wireless technology standard; plans action in American market and strive to become the world s top 3 manufacturer in 5G network market; joins the White House s 5G Advanced Wireless Communication Research Plan as board member. The merger of Nokia China and Shanghai Bell is expected to complete in this summer; Nokia purchases Alcatel-Lucent at a re-exchange consideration of approximately 140 millions, with shareholding exceeding 95%. Frequent mergers and acquisitions, and frequent cooperation. Source: 13

15 Chinese Market Opportunities and Challenges Number of Newly built 3G/4G base stations by Chinese operators (Number of Base Stations, thousand) Chinese Operators Developments Number of Base Station China Tower 485 China Tower 560 China Mobile China Unicom Plans over 300,000 new 4G base stations in 2016 launched 2016 LTE FDD Phase III Project to intensively purchase wireless equipments, with over 469,000 base stations 300 thousands 469 thousands China Telecom Bidding of collection of base station antenna has been finished in 2016, with over 740,000 antennas 247 thousands (Supposed 3 antennas with 1 base station) China Tower In 2016, undertakes nearly 560,000 tower projects demands from top 3 Chinese operators. 560 thousands FY2014 FY2015 FY2016(E) Source: Data from the Ministry of Industry 14

16 Chinese Market Opportunities and Challenges Opportunity 01 Changes in Product Structure Although the number of base station construction of domestic top 3 operators almost stays flat at that in 2015, China Tower will undertake a majority of base station construction demand, so 4G networks and multi-system station will become the trend of networks construction, which will help the Company remain leading technological edge in this field. Opportunity 02 Changes in Commercial Model Structure China Mobile 4G networks construction applies the mode of turn-key, while antenna and RF subsystem product is purchased by network solutions providers, such as ZTE. China Unicom and China Telecom lags behind China Mobile regarding to 4G networks construction, and China Mobile s networks construction mode won t be ruled out. Operators have more complex requirements of technology and reliability of antenna and RF subsystem, and the Company is in a leading position in domestic industry, regarding to technology and customer tests of 4G high-performance antenna and RF subsystem technology product development, with huge potential for growth in the future. Source: 15

17 Chinese Market Comprehensive Technology and Cost Competition Construction of 4G base station tends to be more stable Request from Operator and Tower Company Pre 5G was launched; 4.5G Innovation Demonstration Zone was established Launched 5G R&D technology experiment and cooperated with equipment manufacturers to make 5G commercial plan in 2020 Ultra wideband, multi-frequency and multi-system become popular Multi-beam, AAU, stealth technology application Product tends to be lighter, smaller and integrated Cost Control MOBI TD Smart Antenna Ultra Wideband / Multi-frequency / Multi-system Antenna Multi-beam Antenna Massive MIMO Antenna Microwave Antenna GPS Antenna Integrated Camouflage antenna Small Cell Antenna Special Antenna Pre5G/5G Antenna 16

18 Overseas Market High Threshold and Key Breakthrough LTE trend among overseas operators (including multi-national and single-national operators) The Situation of Overseas Market High Technology Standards Cost Suppression MIMO Antenna Independent R&D Ability Reliability of Products Price Control Cost of supplier management (short lists of suppliers with diversified product series; strict supplier recognition) The leading LTE experience in cooperation with domestic and abroad operators MOBI Successfully entered into shortlists of overseas operators Diversified development of MIMO product series Independent R&D ability Good price with high gross profit 17

19 5G Technology Start up Prospects What is 5G? 5G is the super high-speed rail in the information age: High speed, low latency, high density. Current Status Operators and equipment manufacturers had started to collaborate and develop 5G technology in Governments from various countries are very concerned about it and plan to launch commercial 5G service in 2020 universally. International Telecommunication Union announced 5G standard will be completed in Development America:First to open the highfrequency spectrum and start 5G development widely. European Union: 17 Telecom operators issued 5G Declaration in July. EU will launch 5G Operation Plan in the end of this year, but the internet neutrality is an important variable. Asian: China, Korea, Japan and other countries are actively promoting the development of 5G technology. Korea would even try to use the commercial 5G service in 2018 Pyeongchang Winter Olympics. Ovum, a professional analysis company, forecasted the worldwide 5G users would reach approximately 24million by the end of 2021 and commercial 5G would be provided in approximately 20 markets; approximately 40% of users in North America and Asia respectively, which centralized mainly in America, Japan, China, Korea and other counties, while approximately 10% of 5G users would be in Europe. Source: 18

20 Three-year Strategy Double-Driving on Technology & Marketing Strengthen market share in China, Africa and Asia Pacific markets. Continue expanding multi-national operators markets, explore new opportunities in European market and emerging markets. Develop miniature, integrated and MIMO productions and 5G technologies. Optimize technologies Enlarge product series Asian Market European Market Emerging Market African Market 19

21 Part 4. Q&A 20

22 Disclaimer This report is drafted and audited by MOBI Development Co., Ltd. ("Company"). The information contained in this report shall only be disclosed under the permission of relevant laws, regulations and rules and for the sole purpose of providing information and shall not constitute any advertisement. The material, comment and forecast (if any) contained in this report merely reflects Company's situation or opinion at the date of initial disclosure of this report. Company may revise the information contained in this report and suggest investors to independently pay attention to related updates or amendments. This report may contain some forward-looking statements. Such statements are the description, analyzing or prospect of Company employees with respect to Company or relating industries. Company makes no promise or guaranty that the contents of such statements will be consistent with Company or relating industries' future performance. 21