Hollysys Automation Technologies Ltd.

Transcription

1 Automation for Better Life Hollysys Automation Technologies Ltd. Investors Presentation FY2018 Q2

2 Safe Harbor This presentation may contain forward-looking statements within the meaning of the private securities litigation reform act of Forward looking statements are statements that are not historical facts. Such forward-looking statements, based upon the current beliefs and expectations of Hollysys' management, are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China; continued compliance with government regulations; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which Hollysys is engaged; cessation or changes in government incentive programs: potential trade barriers affecting international expansion; fluctuations in customer demand; management of transitions to new markets; intensity of competition from or introduction of new and superior products by other providers of automation and control system technology; timing, approval and market acceptance of new product introductions; as well as other relevant risks detailed in Hollysys' filings with the securities and exchange commission. The information set forth herein should be read in light of such risks. Hollysys does not assume any obligation to update the information contained in this presentation or filings. * All $ amounts in this presentation are in USD unless otherwise noted. Page 2

3 Corporation Overview Market Data NASDAQ: HOLI Approximately 60MM shares outstanding History Founded in 1993 The leading provider of automation & control technologies in China Operation Offerings Headquartered in Beijing Nationwide presence in 60 cities Worldwide subsidiaries and offices in Singapore, Dubai, Malaysia, India, etc. Proprietary technologies and products tailored to Industrial, Rail, Subway and Nuclear Industries Page 3 Headcounts 3,200 employees worldwide 600 in R&D

4 Agenda 1 Business Overview 2 Industrial Automation 3 Rail Transportation 4 Overseas 5 Management & Market Leadership Position 6 Financials Page 4

5 Business Overview Revenue by sector for FY2018Q2 19.2% 44.2% Industrial Automation Rail Transportation M&E Solution 36.6% Industrial Automation: Intelligent plant automation solution; DCS, PLC, MC, SCADA, MES and etc. Rail Transportation: High-speed rail signaling system: ATP, TCC, and etc. Subway SCADA and CBTC Mechanical & Electrical Solution and others: Design, electrification and engineering service Other businesses Page 5

6 Industrial Automation Growth Drivers Production Efficiency Safety Concern Accelerated Automation and Control Technologies Demand Environment Protection Energy Conservation Page 6

7 Industrial Automation Process Control Offering: Proprietary technologies in solution, design, manufacture, Integration and installation. Products: DCS, Batch, MES (Manufacturing Execution System), AMS (Asset Management System), SIS (Safety Instrumentation System), etc. Track record: More than 20,000 projects completed. China market share: Around 13-15% Clients: customers, including SOEs, Multinationals, and SMEs. Competitors: Plant Automation Solution ABB, Siemens, Emerson, Honeywell,Supcon Page 7

8 Distributed Control System Page 8

9 Industrial Automation Nuclear Power Control 90 China Nuclear Market France 76.3% 80 In # reactors World China 3.0% 11.5% Nuclear Electricity (TWh) Total Electricity (TWh) Nuclear Utilization (%) France % World 2,441 21, % China , % (As of March, Source: World Nuclear Association, IAEA) Page 9

10 Nuclear Power Business Overview Offerings Proven proprietary nuclear power plant control systems and reactor protection system. Engineering design, procurement, integration, installation, support, and specialized services for the safe, reliable, and economical operation of the nuclear power plant Market Position The only proven domestic company to supply control systems to nuclear power automation market in China J/V with the China s largest nuclear station operator: China General Nuclear Power Group (CGNPG) Projects Qin Shan I/II/III, Da Yawan, Ling Ao, Tian Wan, Hong Yanhe, Ning De, Yang Jiang, Fang Cheng Gang, etc. SIEMENS/AREVA/INVENSYS Competitors Page 10

11 Industrial Automation - Discrete Control City Transportation and Sewage Treatment PLC, MC and SCADA Coal Mining Machine Control Supply intergrate solution of city transportation and sewage treatment, including SCADA, LE PLC, LK PLC etc. Major player Plenty of successful completed projects Page 11 Provide control application in coal mining industry, as well as intrinsic safety device JV with Shenhua Group MC1000 motion coordinator and LK/LE PLC control servo or stepper motors, up to 32 Axes. Build-in Industry Ethernet : EtherCAT, RTEX, Ethernet/IP Safety: IEC61508 SIL2 Certification Security: Achillies Level 1 Certification

12 Industrial Software Industrial Cloud Management ERP/CRM/SCM/BPM/PLM Execution MES/APS/WMS/EMS Monitoring SCADA/APC/BATCH Field Device Control DCS/SIS/PLC/MC Software Embedded Software

13 Industrial Internet of Things (IIOT) Application BP BP BP BP BP BP BP BP BP BP BP BP MicroService Pool MS MS MS MS MS MS MS Model Reservoir CIM CIM CIM CIM CIM CIM CIM Data Lake Page 13

14 Industrial Automation Turn-key Solution Software Advanced Control Solutions SCADA, AMS, MES, Batch, EMS, APC, etc. Achievements Improved Production Procedure Management Process Control DCS, PLC, SIS, etc. Energy Conservation Enviroment Protection Instrumentation Transmitters, Actuators, Valves, Analyzer, etc. Product Quality Improvement Page 14

15 Industrial Automation Competitive Advantages Items HOLI Multis Local Brand Name Pricing Service Customization Quality Advantages of Hollysys Industry leading brand name recognition through more than 20 years operation. Continuous investment in R&D to deliver advanced technology. Extensive service network in more than 60 industrial cities across China, focusing on service and long-term client relationship. Cost structure advantage enables Hollysys deliver pricing competitive solution and products. Page 15

16 High-speed Rail Market of China China High Speed Railway Market Growth 38,000 45,000 30,000 19,000 8, E 2025E 2030E KM (As of July, Source: National Development and Reform Commission) Page 16

17 High-speed Rail Signaling System Page 17

18 High-speed Rail Business Overview High-speed Rail Signaling System HSR signaling products: ATP, TCC, LEU and etc. In China: Market Position: 1 of the only 3 approved providers in km/h segment; 1 of the only 3 approved providers in km/h segment, Competitors: China Railway Signal & Communication Corp (CRSC), Academy of Railway Science, Zhuzhou CRRC Overseas: Market Position: First international contract win from Hong Kong MTR for HongKong-Shenzhen High-speed rail line Competitors: Bombardier, Siemens, Ansaldo, Hitachi. Page 18

19 China Subway Market China Subway Market Growth In # kilometers 8,314 City In operation (km) Total Length by 2020 (km) Beijing 604 1,000 3,173 4,630 Shanghai Tianjin Guangzhou Shenzhen E Nanjing (As of the end of Source: China Association of Metros) Page 19

20 Subway Automation Business Overview Signaling System Clients: China and international subway construction authorities Market position: One of the key proprietary subway signaling system provider Competitors: Siemens, Alstom, Thales Page 20 SCADA SCADA Placeholder for text Clients: Beijing, Shenzhen, Guangzhou, Hong Kong MTR Market position: The leading SCADA (Supervisory Control and Data Acquisition) system supplier Competitor: Nanjing Automation Research Institute (NARI)

21 Internationalization Presence Beijing Headquarter Xi an Facility India Office Hangzhou Facility Singapore Office Indonesia Office Bond Concord Page 21

22 Hollysys Management Team Photo Name & Title Industry Working Years Previous Experience Mr. SHAO Baiqing CEO & Chairman 24 years Vice President of Hollysys Group Master of Computer Science from the 6th Research Institute of China Electronics Corporation and MBA from Peking University Ms. QU Herriet CFO 22 years Financial controller for Hollysys Financial controller for Chum Capital Group Ltd. ( Chum ) MBA degree from Oklahoma City University Page 22

23 Market Leadership Position 10,000+ customers 20,000 projects customer base Industry leading automation and control brand name JV with China General Nuclear Power Holding Corp JV with Shen Hua Group Successful integration of rail team Acquisition of Concord and Bond Market Leadership Early entry to high-speed rail Early entry to nuclear Re-focusing in industrial automation Increasing R&D investment Page 23 Wide range of core technologies Various industry expert solutions 600 R&D engineers

24 State of the Art Production Line In-house Production State of the art production line Almost fully automated production process Enough capacity for accelerated growth Multiple round of precise testing Flexible and efficient in house production for different demand Page 24

25 Revenue by Fiscal Year In US$ million FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018E Page 25

26 IA Revenue(US$ m) Recovery of IA in Revenue 70.0 Revenue by Quarter from FY2015 In US$ million 40% % 20% 10% 0% -10% yoy change% % % Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 IA Revenue IA Revenue Growth% -40% Page 26

27 IA New Orders(US$ m) Recovery of IA in New Contracts IA New Contracts by Quarter from FY2015 In US$ million % % % 40% 20% 0% yoy change% % % Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 IA New Contract IA New Contract Growth -60% Page 27

28 Non-GAAP Net Income by Fiscal Year In US$ million FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018E Page 28

29 National Spread Service Network, Professional & High Quality Service % After Sale Revenue In US$ million (with revenue from miscellaneous ticked out as divestment of HollyCon) % 20.0% 14.3% 13.8% 15.0% % 10.7% 10.0% % 7.9% 5.0% 0.0 FY2015 FY2016 FY2017 After Sales Revenue After Sale Growth After Sale as Revenue% 0.0% Page 29

30 Gross Margin & EBIT Margin Performance Gross Margin of Each Business Sector FY % 16.2% 32.7% Industrial Automation Total Solution 35% - 40% Nuclear 60% - 75% FY2016 FY % 19.4% 25.2% 16.7% 37.9% 41.2% Rail Transportation High-speed Rail Signaling 40% - 50% Subway SCADA 15% - 20% FY2014 FY % 16.5% 19.5% 17.8% 34.7% 36.2% M&E Solution and others Design, electrification, installation 15%- 20% FY2012 Non-GAAP Gross Margin Non-GAAP Net Margin 39.3% 22.1% 16.0% Non-GAAP EBIT Margin Page 30

31 Heavy R&D Investment to Continuously Deliver Leading Technologies R&D Expenditure In US$ million New Products Development Subway Signaling Motion Control % 8.0% 9.3% 7.0% 6.7% 6.7% 7.0% FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 % of revenue Energy Conservation Environment Protection Industrial Internet of Things (IIOT) Page 31

32 Sufficient Cash On-hand & Solid Operating Cash Flow Performance CAPEX Operating Cash Flow Debt In $MM Cash and equivalents + time deposits In $MM FY FY FY FY FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY Page 32

33 High Backlog Ensures Another Strong Year Ahead Backlog In US$ million Backlog Breakdown as of Dec 31, In US$ million Industrial Automation Rail Transportation M&E Solution FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 Total Backlog: US$547.6 million Page 33

34 Automation for Better Work, Life and Environment Striving to be a world leading automation and control system provider Demographic Change, shortage of labor Environmental protection Urbanization Process of China Customer s buying behavior change Macro Enviroment Strategy Automation solutions to offset labor cost increase Dedicated customized solutions for energy conservation and efficiency Dedicated customized solutions Customized control system: improvment Alternative energies: Nuclear power, wind power etc. Water process Leading position in China s highspeed rail and subway automation control market Customer- centric approach, enlarge service team and enhance service capabilities Page 34

35 Automation for Better Life Contact Information: Investor Relations (8610)