Corporate Presentation. September 2004

Transcription

1 Corporate Presentation September

2 Agenda Company Overview Industry Overview Business Strategy Financial Highlights 2

3 Company Overview 3

4 Key Corporate Milestones Five Years in Our Corporate History Unit Shipment in MM Units Leverage TCL brand name to enter the mobile handset market Enhance distribution network to penetrate 3rd/4th tier cities Breakaway success of innovative diamondencrusted clamshell design Migration to chipset-based design through intensive R&D effort Formation of TCL-Alcatel Joint Venture in Aug TCL-Alcatel Joint Venture Contribution / Pro Forma (1) Leverage Household Brand Name Broad and Deep Distribution Market-Leading Industrial Design R&D Breakthrough Overseas Expansion (1) Annualized based on 1H 04 actual results. Pro Forma shipment data assuming the TCL-Alcatel Joint Venture commenced operations on January 1,

5 Corporate Structure Pre Listing and TCL-Alcatel JV Formation Post Listing and TCL-Alcatel JV Formation TCL Corporation ( CH) Public Shareholders (2) TCL Corporation ( CH) Other Investors (1) 55.1% 19.4% 57.4% 23.2% TCL International (1070.HK) Other Investors (1) TCL Communication Technology (2618.HK) 36.0% 40.8% 23.2% TCL Communication Technology (2618.HK) 100% TCL Mobile 55% TCL-Alcatel Joint Venture (1) Other investors include Cheerful Asset (10%), Nam Tai / Jasper Ace (9%) and Mate Fair (4.2%) (2) Includes approximately 1.8% retained by TCL International post-distribution 5

6 Management Team Dongsheng Li, Chairman of the Board Awarded titles of the Officier de la Légion D Honneur (France s highest distinction) in 2004, Fortune Asia Businessman of the Year in 2004 and CCTV Man of the Year on Chinese Economy in 2002 Mingjian Wan, Chief Executive Officer Graduated in 1991 from the University of Electronic Science and Technology of China with a doctoral degree in telecommunications Chambers Wong, Executive Director, International Business Has over 30 years of experience in the consumer electronics products industry Vincent Yan, Executive Director, Strategy and Finance Has over 10 years of management and finance experience in the United States and the PRC Simon Du, Executive Director, Research and Development Graduated in 1993 from the Chinese Academy of Space Technology with a Master s degree in Telecommunication and Electronic System George Guo, Chief Operating Officer Graduated from Stanford University with a PhD in Management Science and Engineering Habibullah Abdul Rahman, Chief Financial Officer Has over 18 years experience in accounting and finance fields 6

7 TCL A Premium Brand Name in China TCL is ranked the 6 th most valuable brand in China (1) We Are the Partner of Choice for Leading Wireless Companies in China (1) Based on data from the Beijing Famous Brand Evaluation Co., Ltd (2003) 7

8 Broad and Efficient Distribution Network in China Lean & Efficient Distribution Network Our Distribution Capabilities in China Approximately 30 provincial branch offices and over 160 local sales offices Operators Regional Distributors Over 60 core provincial distributors Local Distributors Over 850 core local distributors Retailers / Chain Stores Over 11,500 retail outlets Mobile Phone End Users 8

9 Rapid Growth of R&D Capabilities Rapid Expansion of R&D Team Number of R&D Employees Reducing Dependence on Module Suppliers % Unit Shipment with Chipset-Based Design % 56% 0% 7% H'04 Improving Product Mix 191 Color and Multimedia Phones as % of Total Revenues (1) 65% 43% 46 14% H'04 1H'03 2H'03 1H'04 (1) TCL Communication standalone revenue data, not taking into account TCL-Alcatel Joint Venture contribution 9

10 TCL-Alcatel Joint Venture (1) KEY BENEFITS TO TCL: GSM Handset Patents R&D Professionals Countries with Sales Presence Before ~10 After 560 1, New intangibles after the JV formation Brand Equity Operator Relationships (1) Established in August 2004, the JV is 55%-owned by the Company 10

11 Industry Overview 11

12 China Handset Market Impressive Growth in China s Wireless Market China s Handset Market Growth MM Subscribers CAGR=60% MM Units Sources: MII and IDC CAGR=51% Domestic Manufacturers Have Grown Rapidly GSM / GPRS Market Share in China % % 44% 56% Source: IDC (July 2004) Source: IDC (July 2004) Domestic Foreign Huge Market Opportunity in China 12

13 China Handset Market (cont d) Mobile Penetration Rate Remains Low in China % Mobile Penetration as at 31 December 2003 Strong Mobile Subscriber Growth in Next 5 Years 2008E Mobile Subscribers (MM) CAGR (%) 84% China % 70% 64% Western Europe Rest of Asia (excludes Japan & China) United States % 9% 4% 52% Japan 94 2% Source: IDC (July 2004) New Features Will Drive Handset Demand 21% MM Subscribers United Kingdom Source: IDC (July 2004) South Korea Japan United States China China SMS Subscribers China MMS Subscribers Source: IDC (July 2004) Market Potential for Continued Expansion 13

14 Global Handset Market Global Handset Demand Continues to Rise MM Units Growth From Asia Pacific and Emerging Markets Unit Shipment CAGR (%) 21% 18% CAGR=13% Emerging Markets Asia Pacific (ex-japan) Source: IDC (July 2004) 6% U.S. 2% Western Europe (1%) Japan Increasing Appetite for Enhanced Features % of Global Handset Unit Shipment with Embedded Cameras 29% 43% 54% 62% 68% 14% Source: IDC (July 2004) Source: IDC (July 2004) Global Handset Market Continues to Grow 14

15 Business Strategy 15

16 Strengthen Our R&D Capabilities Leverage Existing Core Competencies Product development and qualification process / methodology Validation / Interoperability testing Telecom and applications platforms integration skills Customization skills (to meet telecom operator requirements) Strong MMI / user interface expertise Focus on Next-Generation Requirements Essential software development Enhanced features / applications - Mega pixel camera phones - Advanced PDA phones with Microsoft Smartphone operating system - Video streaming, stereo sound, etc. 3G plan Our Technology Partners 16

17 Execute on Product Roadmap to Drive Future Growth Current New Products In the Market TCL Communication TCL-Alcatel Joint Venture TCL screens (a classic two-hand digital clock and a 65K color screen) WAP / SMS capabilities Jewel-encrusted clamshell TCL e K color TFT LCD screen SMS / MMS capable with USB port Embedded digital camera Handwritten data input One Touch K color video player TFT LCD screen with integrated VGA digital camera MP3 capable One Touch high quality color screens (262K and 65K colors) 300K pixel camera capable of video capture Dedicated loudspeaker Product Roadmap Technological Sophistication TCL Communication Product Roadmap Product 1 Color screen Streaming media PC synchronization Product 1 Color screen WAP / MMS / SMS capabilities Java software Product 2 1 mega pixel camera MP3 capable Embedded games Product 2 Color screen Camera with video mode MP3 capable Product 3 3 mega pixel camera Embedded 3D games Stereo sound capabilities Product 3 Video streaming 2 mega pixel camera Stereo sound capabilities TCL-Alcatel Joint Venture Product Roadmap 17

18 Realize Synergies to Turn Around Joint Venture Profitability Cross-selling opportunities - Alcatel phones sold through TCL distribution channels domestically - TCL phones sold through Alcatel s networks (operator and distributor) Cost savings - Procurement: Savings from the combined volumes of TCL Communication and the TCL-Alcatel Joint Venture - R&D: Combination of French technical expertise and Chinese lowcost engineering resources leads to savings for R&D - Manufacturing: ODM/OEM-type co-operation leverages TCL s lowcost design and production base 18

19 Be An Industry Leader In The Long-Term Target early-stage markets Geographic Coverage Develop a comprehensive portfolio from low-end monochrome to high-end multimedia Cost Efficiency Player in Global Handset Industry Product Strength Leverage TCL s competitive cost structure Brand Equity Increase consumer mind share of Alcatel handset brand 19

20 Financial Results 20

21 Unit Shipment Breakdown by Product TCL Communication MM Units Alcatel mpd MM Units H H2004 Monochrome Color Multimedia Monochrome Color Multimedia 21

22 TCL Communication Results Highlights 2001 (RMB MM) 2002 (RMB MM) 2003 (RMB MM) 1H 04 (RMB MM) Net sales 2,167 8,348 9,561 3,697 Gross profit 743 2,244 2, Gross margin (%) 34% 27% 21% 23% Net profit 329 1, Net margin (%) 15% 15% 9% 9% 22

23 TCL Communication Key Financial Data H 04 ROE (annualized) 79% 75% 39% 30% Inventory turnover (days) (1) A/R turnover (days) Current ratio (2) Debt/Equity ratio (1) Finished goods only (2) Current liabilities exclude dividends payable 23

24 Alcatel mpd Results Highlights 2001 (Euro MM) 2002 (Euro MM) 2003 (Euro MM) 1H 04 (Euro MM) Net sales 1,047 1, Gross profit (153) Gross margin (%) (15%) 12% 11% 10% Net loss (398) (20) (74) (35) Net margin (%) (38%) (2%) (12%) (13%) 24

25 Alcatel mpd Key Financial Data H 04 ROE (annualized) NM NM NM NM Inventory turnover (days) (1) (2) A/R turnover (days) Current ratio Debt/Equity ratio (1) Finished goods only (2) Based on 1Q 04 finished goods balance as of March 31,

26 Recent Financial Performance 2004 Handset Unit Shipment (000) July 661 August