TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED (02618.HK) 2010 Annual Results Presentation. Hong Kong - February 25th, 2011

Transcription

1 TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED (02618.HK) 2010 Annual Results Presentation Hong Kong - February 25th,

2 Disclaimer The information contained herein should not be utilized for any legal purposes in regards to any investor's investment decision or results. In particular, this document does not constitute any recommendation or invitation for subscribing for or sale and purchase of any securities of TCL Communication Technology Holdings Limited (the "Company"). The Company hereby expressly disclaims any liability for any loss or damage resulting from or in connection with any reliance by any investor on the information contained herein. A number of forward-looking statements may be made during this presentation. Forward-looking statements are any statements that are not historical facts. These forward-looking statements are based on the current expectations of the Company and there can be no assurance that such expectations will prove to be correct. Because forward-looking statements involve risks and uncertainties, the Company s actual results could differ materially from these statements. 2 2

3 Agenda Financial Highlights Business Review & Outlook Q&A Session Appendix: Company Overview 3 3

4 Financial Highlights 4 4

5 Financial Highlights Sales Volume ( 000 Units) 36,223 Revenue Revenue & Profit (HK$ Million) 2010 YoY , % 4,361 Total ASP (US$) 31 11% 35 16,123 Own Brand ASP (US$) GP% 34 3% % 0.6% 21.8% Net Profit 702 2,952% 23 Net Profit% 8.1% 7.6% 0.5% 5 5

6 Gross Profit Sustainable Uptrend in Gross Profit Margin 3G Android Wi-Fi Touch & Qwerty EDGE Social Networking Entry Multimedia Touch GPRS Messaging Side VGA Slider Phone ULC Full keyboard SMS phone 6 6

7 Strong Profitability Operating Profit (HK$ Million) Operational Efficiency Product Competitiveness Brand Value & Customer Relationship Financial & Pricing Strategy Economies of scale 7 7

8 Income Statement Highlights Income Statement Highlights (HK$ Million) Y2010 Y2009 Change Q Q Change Sales Volume ( 000 Units) 36,223 16, % 12,491 6, % Revenue 8,701 4, % 3,093 1, % Gross profit 1, % % Gross profit margin(%) 22.4% 21.8% +0.6% 22.7% 26.3% -3.6% Net profit ,952% % EBITDA % % Net Operating Cashflow (as stated) % % EPS (HK Cents) ,477% % 8 8

9 Financial Position Highlights Financial Position Highlights (HK$ Million) 31 December December 2009 Change Non-current assets % Current assets 11,619 6, % -Inventories % -Cash and cash equivalents 1,345 1, % -Restricted deposits received from rights issue excess application - 1,604 N/A -Trade receivables 2,535 1, % -Pledged deposits 6,201 1, % -Other current assets % Current liabilities (10,014) (5,310) +89% -Interest bearing bank and other borrowings (6,488) (1,461) +344% -Trade and notes payables (1,843) (1,074) +72% -Other payable arising from rights issue excess application - (1,604) N/A -Other current liabilities (1,683) (1,171) +44% Net current assets 1, % Other non-current liabilities (18) (361) -95% Net assets 2,222 1, % 9 9

10 Key Financial Ratios 31 December December 2009 Gearing Ratio* 8% 11% Current Ratio* * AR Turnover Days Inventory Turnover Days ROE 64% 2% EPS HK cents 2.51 HK cents Proposed Final Dividend Per Share 16.8 HK cents 3.5 HK cents Full Year Dividend Per Share 24.8 HK cents 3.5 HK cents Dividend Payout Ratio 38% 139% * Calculated based on the Group s total interest-bearing borrowings over total assets, excluding the arbitrage operation. ** Excluding the arbitrage operation

11 Business Review & Outlook 11 11

12 Y2010 Highlights Year of Growth in 2010 with NEW Record High Sales Volume: 36.2 million units, up 125% YOY Revenue: HKD8.7 billion, up 100% YOY Net Profit : HKD702 million, up 30 fold YOY Basic EPS increased to HK cents from 2.51 HK cents of 2009 Continuing Geographic Expansion Step-up Product Strategy Brand Building in Open Market Complementary ODM Strategy Four Growth Drivers Leading to Growth Momentum Successful Expansion in Midto High End Market with Strong R&D Capabilities Successful launch of Group s 1st 3G Android smartphone & tablet OT-806 won if award & Kapok Prize OT-808 won China Red Star Design Award & Kapok Prize One of core patents won China Patent Award of Excellence Successful turnaround to be profitable Nationwide sales network established successfully Launched UnionPay Online ( 銀聯在線 ) Phone and Sina Twitter( 新浪微博 ) Phone Sustainable Development in the PRC Market 12 12

13 Record High in Sales Volume Quarterly Sales Volume of Handsets and Accessories 000 units Q Q Q Q Q Q Q Q

14 #7 Global Handset Manufacturer Top-10 Cell Phone Brands in the Fourth Quarter of 2010 (Ranking by Unit Shipments in Millions) Moving Up On Competitive Ranking Q4 10 Rank Brand Q4 09 Shipments Q3 10 Shipments Q3 10 Share Q4 10 Shipments Q4 10 Share Q4 10 Sequential Growth Q4 10 YOY Growth 1 Nokia % % 12% -3% 2 Samsung % % 13% 17% 3 LG Electronics % % 8% -10% 4 ZTE % % 47% 66% 5 Apple % % 15% 86% 6 RIM % % 17% 41% 7 TCL-Alcatel* % % 34% 82% 8 Motorola % % 24% -6% 9 Sony Ericsson % % 8% -23% 10 Huawei % % 62% 2% Others % % -5% 36% Total Handsets % % 13% 11% * Source: isuppli, presenting handset only, and adjustment was made to include TCL-Alcatel ODM business. Alcatel 4th Largest OEM in LATAM region Source: IDC Latin America Mobile Phone Tracker, Q

15 Business Review Europe, Middle East and Africa ( EMEA ) 13.4m units Shipment in 2010 totaled 13.4 million units, up 109% YOY Broadened customer base and distribution channels Positive sales trend in Western European countries with expanded product portfolio The Group s 1st Android 3G smartphone OT-980 launched in UK with positive feedback Ranked No. 4 in Russia in terms of shipments 6.3m units +109% Americas 18.8m units Shipment in 2010 totaled 18.8 million units, up 194% YOY ALCATEL as one of Top 4 brands in Latin America Successful expansion in open market and distribution channels in Argentina and Chile 6.4m units +194% Cultivate in new & high potential markets such as USA, Brazil and Cuba

16 Business Review Asia Pacific Shipment in 2010 totaled 1.9 million units, significantly up 217% YOY Expansion into new markets like the Philippines, Singapore, India, etc Diversified product mix to strengthen brand image Lined up with Yahoo and launched One Touch Net with positive response 0.6m units +217% 1.9m units The PRC Shipment in 2010 totaled 2.1 million units, a 23% YOY decrease due to decline in ODM business Successful turnaround to be profitable Expanded sales network nationwide with over 1,300 retail shops Lined up with mainstream Internet providers such as Sina, Sohu, Baidu and developed products with popular local content features 2.8m units -23% 2.1m units Successfully launched UnionPay Online ( 銀聯在線 ) Phone and Sina Twitter ( 新浪微博 ) Phone with positive feedback ALCATEL Flagship Store placed Top 5 of handset category in TaoBao Mall ( 淘寶商城 ) 16 16

17 Step-up Product Strategy Tablets Android OS Smartphones Mobile internet features Innovation Mobile music experience Design Entry-level camera phones Competitiveness Low-end products in emerging markets Quality Y2007 Y2008 Y2009 Y2010 Y

18 One Touch 990 Y2011 New Products Smart Touch 3G+ Wi-Fi Capacitive 3.5 Touch display AGPS 5.0 Mpxl Smart design Smart experience For Smart users Powerful & Intuitive Capacitive touch, gesture control, proximity & light sensor G-SENSOR 32GB 18 18

19 Y2011 New Products One Touch 910 3G+ Wi-Fi Capacitive 2.8 AGPS 5.0 Mpxl G-SENSOR 32GB Touch display 19 19

20 One Touch A906 Y2011 New Products Android Experience Sweet spot. Android brought to the masses Compact mainstream design Android 2.2 Pre-embedded apps 3G Resistive Touch Opera mini 2.0 Mpxl Music player Java Bluetooth 32GB 20 20

21 One Touch 890 Y2011 New Products EDGE Wi-Fi Resistive Touch 2.8 display 2.0 Mpxl AGPS Best value Android concept Innovative Edge & Wi-Fi combination Android Android market - Pre-embedded apps G-sensor 16GB 21 21

22 One Touch Tab Y2011 New Products Smart Navigator 7 800x480 display perfect for carry and read Flex move Home Internet Terminal Customised dedicated UI & content WiFi 802.b/g/n, 3G compatible 720P Video Playback, HDMI output 22 22

23 2011 Las Vegas Consumer Electronics Show Brand Building 2011 Barcelona Mobile World Congress 23 23

24 Year of Growth in Y2011 Four growth drivers continue - further expansion in USA, Russia, Brazil and PRC, secure our position in 3G Android smartphones segment, and continue strategic ODM business Sales volume for 2011 full year target at 50 million units, 39% up versus 2010 sales performance Outlook Further Development - New Product Mix Over 100 new models to be launched in Y2011, including 3G Android smartphones and a series of tablets Enter into strategic alliance with Sagem Mobile in France to establish TCL Ningbo R&D Center to enhance in-house R&D capabilities and to accelerate high-end smartphones developments. Strengths of new R&D Center include: Experienced in product developments with 1st tier operators, such as Vodafone and Orange Possessed world-class quality R&D capabilities, know-how in developing 3G Android smartphones and other advanced technologies such as Near Field Communications (NFC) Strong in mechanic design as evidenced in the distinctive work done for Porsche Phone Global experience in ODM/OEM business such as with Puma and Sony Ericsson

25 Outlook Breakthrough in PRC Market Several new models have been selected by China Mobile and China Unicom, and will be launched in the market in near future Broader product segmentation to lead the trend in 3C era, promotion convergence of connected devices and tablets, through the tri-networks integration ( 三網融合 ) Further development in E-Commerce and more advertising & marketing resources will be spent on brand building New Production Plant for Future Growth Upgrade infrastructure including construction of new production plant with a site over 300,000 sq. meter to further increase annual production capacity up to 130 million units for future sustainable developments Proceeds to be raised from the proposed issue of Taiwan Depositary Receipts ( TDR ) mainly to finance the construction of new production plant 25 25

26 Q & A Session 26 26

27 Appendix: Company Overview 27 27

28 One Company, Multiple Brands ODM BUSINESS TCL Communication Technology Holdings Limited ( TCL Communication ) is a member company of TCL Corporation. It is listed on Hong Kong Stock Exchange (Stock code: HK). TCL Communication is a China-based, global-oriented mobile handsets provider with a multi-cultural workforce of over 7,600 employees. Two strong brands: TCL and ALCATEL ONE TOUCH. Seven Product Lines: GSM/WCDMA, CDMA, TD-SCDMA, CMD, Accessory, Brand Design Lab and MID

29 Company Overview Principal Business Background Research & Development, manufacturing and global sales of mobile phones and accessories of two key brands: - TCL (in China) - ALCATEL ONE TOUCH (in Europe, Middle East, Africa, Americas, Asia Pacific and China) A member of TCL Corporation Listed on the Hong Kong Stock Exchange in Sep 2004 (02618.HK) Huizhou City Investment Holdings Philips TCL Employee Committee Mr. LI Dongsheng Other & Public Directors TCL Corporation Public Shareholders 2.74% 47.12% 50.14% TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED (02618.HK) * As at 18 Feb

30 Global Presence Production Facilities, R&D Centers, Sales Offices Headquartered in Shenzhen, China Global research facilities located in Shenzhen, Shanghai, Chengdu, Ningbo and Huizhou Global factory located in Huizhou Global presence across over 100 countries and regions 105 repair centers, over 50 offices, over 7,600 employees around the world California: - Sales Center Mexico City: - Sales Center Paris: - Sales Center Chengdu: - R&D Center Shanghai: - R&D Center Ningbo: - R&D Center Huizhou: - Global factory - R&D Center Shenzhen: - Headquarter - R&D Center 30 30

31 Strong R&D Capability More than 2,000 highly skilled and experienced research engineers distributed in Shanghai, Shenzhen, Chengdu, Ningbo and Huizhou Ownership of GSM core technological patents obtained through acquisition of ALCATEL mobile phone business One of the few companies who own 2G, 2.5G, 2.75G, 3G patents in the world, excellent tradition of research and development Able to provide solutions to GSM, GPRS, EDGE, CDMA, WCDMA, TD-SCDMA independently Continue efforts in the development of 3G products, OMS-based handsets, data cards and multifunctional phones. Focus on innovation as well as the high quality of the products 31 31

32 Manufacture center in Huizhou, China High Efficient Production Facilities Annual production capacity of approximately 60 million units World-class SMT production lines and supporting facilities Experience of efficient global logistics Strict tests by key telecommunication operators in the world ISO9001 and ISO14001 qualified Testing & manufacturing capability for platform TI, MTK & QUALCOMM SMT production line Testing centre Main building 32 32

33 Board of Directors Mr. LI Dongsheng Chairman and Executive Director Founder of the Company Business Leader of the Decade by CCTV in 2009 About 30 years in various aspects of electronics industry Mr.GUO Aiping CEO and Executive Director Extensive experience in overall management of multinational company, strategic planning and development Graduated from Stanford University with Master degree in Engineering Economics and System and Doctor degree in Management Science and Engineering Mr. BO Lianming Non-executive Director Over 10 years of experience in consumer electronics products industry With Doctor s degree in Business Management Mr. HUANG Xubin Non-executive Director Rich experience in finance area With Master s degree in Economy and an EMBA Degree Ms. XU Fang Non-executive Director Vice President and Human Resource Director of TCL Corporation, Distinguished professor at Shantou University Mr. LAU Siu Ki Independent Non-executive Director Fellow member of both HKICPA and ACCA With profound financial and accounting expertise Mr. SHI Cuiming Independent Non-executive Director An engineer Served in Ministry of Posts and Telecommunic ations for many years Mr. Andrew Look Independent Non-executive Director Over 20 years' experience in equity investment analysis Best Hong Kong strategist and best analyst by Asiamoney magazine Mr. LIU Chung Laung Independent Non-executive Director Engaged in teaching and research in Electrical Engineering for a long time Honorary Chair Professor of National Tsing Hua University in Hsinchu, Taiwan 33 33

34 Executive Committee Mr. Guo Aiping, George CEO & Executive Director Extensive experience in overall management of multinational company, strategic planning and development Graduated from Stanford University with Master degree in Engineering Economics and System and Doctor degree in Management Science and Engineering Mr. Wong Kwok Chung, Albert Executive Vice President & General Manager of APAC 13 years of experience in computers and electronics industry in Hong Kong, Canada and the PRC With Bachelor s Degree in Science and Master s degree in Electrical and Electronics Engineering Mr. Liu Yuk Tung, Thomas Senior Vice President of Business Strategy & CFO About 25 years of experience in areas of audit, international finance and trading business A CPA of HKICPA, Charted Accountant of ICAEW and fellow member of ACCA With Bachelor s degree major in Economics, a MBA and a Master s Degree in Accounting Mr. Wang Jiyang Senior Vice President of R&D & General Manager of GSM/WCDMA Production Line Over 19 years experience of research, development and management in electronics industry With a PhD major in Electrocircuit & System and an MBA Degree Mr. Nicolas Zibell Senior Vice President of the Company & General Manager of Americas Over 20 years of experience in sales, marketing, product strategy and management in Automotive and Telecommunications industries in Europe and in the Americas Graduated from É cole Superieure de Commerce de Lyon and ESADE Business School with an MBA Mr. Yves Morel Senior Vice President & General Manager of EMEA 26 years sales and marketing experience mainly in Telecom industry Contributed to develop sales area such as Russia, central Europe, Middle East, Africa and at a later stage Western Europe 34 34

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