Post on 21-May-2020
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TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED (02618.HK)
Q3 2012 Results Presentation
Hong Kong – 26 October 2012
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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.
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Agenda
• Business Review & Outlook • Financial Highlights • Q&A Session • Appendix: Company Overview
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Q3 2012 Business Review
• Sales Volume: 29.2 million units, down 4% YoY (including smartphone of 4.2 million units, surged 5 times YoY)
• Revenue: HK$ 8.1 billion, up 9% YoY
• Net Profit: HK$ 9 million, down 99% YoY
• Basic EPS: Decreased to 1.59 HK cents from 54.84 HK cents YoY
Result for the Period of Q1-Q3 2012
• Sales of smartphone and other smart devices accounted for 14% of total volume for Q1-Q3 2012, as compared to 2% for Q1-Q3
2011, and overall ASP increased from US$ 31.4 to US$ 35.8 accordingly
• In Q3 2012, revenue of smartphone (HK$1.6 billion) surpassed that of feature phone (HK$1.5 billion) for the first time
• Made good progress in increasing the smartphone volume in the first nine months of 2012, but still need to enhance R&D
capability to improve new product TTM and to achieve economies of scale
• Year of Consolidation – Transition from feature phones to smartphones. As several smartphones were selected by global 1st –
tier operators, the Company has become a real global smartphone supplier
•Year of Consolidation - Transition from feature phone to smartphone
Right Direction: Focus on Developing Android Smartphone
• Sluggish handset market and substantial decrease on feature phone demand, resulting in a lowered gross profit
• Smartphone market grew rapidly, but competition was intense
• Maintain steady investment on R&D and speed up the product time-to-market
• Starting from the stage of product design, focus on standardization, optimize supply chain so as to enhance product
competitiveness
• Unceasing to innovate, create quality products and make star models
Coping with challenges: Quick Establishment of Core Competitiveness on Smartphones
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Sustainable Revenue Growth Quarterly Revenue of Handsets & Other Products
In Q3 2012, revenue of smartphone surpassed
feature phone for the first time.
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Volume of Smartphone & Other Smart Devices
(„000 units) Proportion of Smartphone & Other Smart Devices (%)
Smartphone Sales Upward Trend
Quarterly Volume & Proportion of Smartphone & Other Smart Devices
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Industry Ranking
#7 Global Handset Manufacturer
Top-10 Cell Phone Brands in the Second Quarter of 2012 (Ranking by Unit Shipments in Millions)
Q2 2012
Rank Company
Q2 2012
Shipments
(M units)
Q2 2012
Market Share
(%)
QoQ
Growth rate
(%)
1 Samsung 90.4 21.6% 1.3%
2 Nokia 83.4 19.9% 0.3%
3 Apple 28.9 6.9% -12.6%
4 ZTE 17.9 4.3% 2.9%
5 LG Electronics 14.3 3.4% -2.5%
6 Huawei 10.9 2.6% 0.9%
7 TCL-Alcatel* 9.4 2.2% 50.7% 8 HTC 9.3 2.2% 20.7%
9 Motorola 9.2 2.2% 9.5%
10 RIM 8.0 1.9% -19.6%
Others 137.3 32.8% -2.7%
TOTAL 419.0 100.0% -0.7%
* Source: Gartner Report (August 2012), presenting handset only, excluding TCL-Alcatel ODM product.
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36%
8%
20%
36%
EMEA
China
APAC
Americas
Americas
APAC
China EMEA
Feature Phone and Other Products Smartphone and Other Smart Devices
Q1-Q3 2012 Sales Volume Geographical Breakdown
12%
6%
50%
32%
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Business Review
• Shipment in Q1-Q3 2012 totaled 13.2M units, down 7% YoY, while revenue
down 8% YoY
• Drop in shipment affected by the delay in homologation inspections, fierce
competition and gloomy economy
• Started its FIRST direct shipments to 1st tier operator, AT&T, in the US
• ALCATEL ONE TOUCH is the No. 1 handset brand in Central America and the
Caribbean area, and ranks No. 2 in Colombia
-8%
Revenue
HK$ Billion Americas
Europe, Middle East and Africa (“EMEA”)
• Shipment in Q1-Q3 2012 totaled 9.8M units, down 15% YoY, while revenue up 7%
YoY, benefited from optimized product portfolio
• Though weakened market demand as a result of political instability in Middle East
and euro zone debt crisis, we continued to further penetrate smartphone market
• Smartphone shipment ramp-up was on track; several models like ONE TOUCH
995, ONE TOUCH 991 and VF860 received great responses from the market
• Shipment to Russia and France remained strong despite weaker handset demand
in EMEA
• Expanded market penetration into Angola, Kenya and Romania
+7%
Revenue
HK$ Billion
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• Shipment in Q1-Q3 2012 was 1.8M units, increased by 6%, while revenue
significantly grew by 26% YoY
• Several smartphone models like ONE TOUCH 918 received great responses
from the market and ranked No. 5 in the Philippines smartphone market
• Strengthened sales in existing markets such as the Philippines (627% YoY)
and India (324% YoY)
• Expanded its operator and distribution channels in Malaysia, Vietnam and
Myanmar
• Being the Group‟s fastest-growing market, shipment was 4.4M units, increased
by 48% YoY, while revenue increased by 104% YoY
• Introduced several competitive products in the market, including two dual-core
products, TCL S800 and S600, featuring liquid-repellent nano-coating
technology, which receive rapturous market response
• Partnering with Baidu to launch customized smartphone, S710, which creates a
comprehensive cloud services portal for mobile internet cloud users
• TCL S500 and TCL D662 were selected by China Unicom and China Telecom
respectively
• Successfully expanded distribution network to 8,400 point-of-sales
+26%
Revenue
HK$ Billion
Revenue
HK$ Billion
+104%
Business Review
China
Asia Pacific (“APAC”)
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“Step-up” Product Strategy
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USA
LATAM
China
APAC
Western
Europe
Eastern
Europe
Africa
3G Android Products Selected by Global Mainstream Operators and Distributors
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TCL S810 / ONE TOUCH X‟ POP
New Products TCL S606 / ONE TOUCH View
3G+ 4.5” 5.0 mpxl Wi-Fi Capacitive 1Ghz ICS 4.0
High performance entertainment: HD video, SRS, HDMI, DLNA
Voice unlock
Improved Android experience with ICS
4.5” capacitive display
Upgradeable to Jelly Bean 4.1
High performance entertainment: HD video, SRS, HDMI, DLNA
Voice unlock
Win7.5 OS, bringing brand-new feeling
5.0 megapixel camera
3G+ 4.08” 5.0 mpxl Wi-Fi
Capacitive 1Ghz
Dual Core 32GB
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New Products TCL S710
High performance entertainment: HD video, SRS, HDMI, DLNA
Voice unlock
Improved Android experience with ICS
P2i (Nano) liquid repellent coating
Upgradeable to Jelly Bean 4.1
3G+ 4.3” 8.0 mpxl Dual SIM 32GB Wi-Fi
Capacitive 1Ghz
ICS 4.0 Dual Core
TCL S500
WCDMA & GSM/GPRS/EDGE Dual Mode
4.0” capacitive display
5.0 megapixel camera
Cloud-service & Cloud-backup
P2i (Nano) liquid repellent coating
Upgradeable to Jelly Bean 4.1
7.2 Mbps 4.0” 5.0 mpxl Dual SIM Wi-Fi Capacitive 1Ghz ICS 4.0 Dual Core
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Brand Building in EMEA & Americas
ALCATEL ONE TOUCH billboard
at Times Square NYC
Donated school bags to Dominican schoolchildren
Promotion event with Operators in US
Sponsored a British Girl Band, STOOSHE
The caravan and mascot of ALCATEL ONE TOUCH
at La Vuelta 2012 in Spain
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Brand Building in APAC & China
Sales Booth in Myanmar
Banner Advertisement in Chengdu, China
Product Launch in China
Promotion Event in Thailand
Promotion Event in Guangzhou, China
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Outlook
• The popularity of the smartphone market and the launch of more affordable priced smartphones put enormous pressure
on selling prices and profit margins of feature phones
• Demand for smartphone is growing, but our smartphones has not yet achieved economies of scale
• Changes in smartphone platforms and technology during smartphone era will continue, demand for R&D resources will
increase, and our R&D investment is expected to grow
Challenges
• Step up our product from „‟mid-to-low end „‟ to „‟mid-to-high end‟‟ smartphones
• More smartphone models for various market segments will be added to the product portfolio, targeting both
entry-level products for emerging markets and upgrades for mature markets
• Besides Android, the company will launch smartphones with other operating systems, such as Windows
Steady Smartphone Growth
• A new wave of more competitive products to be launched in Q1 and Q2 2013
• Satisfy operators with the optimized product portfolio, better TTM and faster responses
• Optimize the R&D process and strengthen the collaborations with the key component suppliers to speed up the new product TTM
Continuing Operation Improvement
• 2012 is the Year of Consolidation, paving the way to a prosperous future
• In spite of the challenges, we maintain 2012 full year revenue growth target as
15% increase YoY
Revenue Growth Target
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Q1-Q3 2012 YoY Q1-Q3 2011
29,169 -4% 30,457
35.8 +14% 31.4
8,146 +9% 7,462
18.3% -3.3% 21.6%
9 -99% 606
0.1% -8.0% 8.1%
Revenue & Net Profit
(HK$ Million)
Financial Highlights
Total ASP (US$)
Net Profit
Revenue
GP%
Net Profit%
Sales Volume („000 units)
Revenue
(HK$ Million)
Q1-Q3 2011 Q1-Q3 2012
7,462
8,146
+9%
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Better Sales Product Mix and Upward ASP Trend
Smartphone & Other Smart Devices Proportion / ASP Growth
Smartphone & Other Smart
Devices Proportion (%) ASP (USD)
0.3%
1.3%
4.4%
5.5%
9.5%
13.5%
18.8%
31.3
29.6
33.4
31.2
34.6
35.6
37.1
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
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Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012
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Gross Margin Trend
Gross Margin
Product Competitiveness
Economies
of Scale
Pricing and Currency Strategy
Brand Value and
Customer Relationship
Continuous Cost Down Effort
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(HK$ Million)
30 September 2012
31 December 2011
Change(%)
Non-current assets 2,125 1,773 +20%
Current assets
-Inventories 1,552 981 +58%
-Trade & factored receivables 2,654 2,895 -8%
-Other current assets 1,342 1,099 +22%
-Pledged deposits 4,492 6,092 -26%
-Cash and cash equivalents 1,150 1,187 -3%
Total current assets 11,190 12,254 -9%
Current liabilities
-Interest bearing bank and other borrowings (5,917) (7,222) -18%
-Other current liabilities (2,092) (2,141) -2%
-Trade and notes payables (2,485) (1,952) +27%
Total current liabilities (10,494) (11,315) -7%
Net current assets 696 939 -26%
Total assets less current liabilities 2,821 2,712 +4%
Non-current liabilities (367) (39) +841%
Net assets 2,454 2,673 -8%
Statement of Financial Position
Financial Position Highlights
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Gearing Ratio * 23% 22%
Current Ratio ** 1.13 1.12
Trade Receivables Turnover Days *** 78 80
Inventories Turnover Days **** 48 52
NAV per share HK$ 2.18 HK$ 2.33
Basic EPS (Q1-Q3 2012 / Q1-Q3 2011) 1.59 HK cents 54.84 HK cents
Key Financial Ratios
30 September 2012 30 September 2011
* Calculated based on the Group‟s total interest-bearing borrowings over total assets, excluding RMB foreign exchange program
** Excluding RMB foreign exchange program
*** Excluding factored trade receivables
**** Only inventories in factory
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Principal
Business
• 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)
Background
• A member of TCL Corporation (stock code: 000100.SZ)
• Listed on the Hong Kong Stock Exchange in Sep 2004 (stock code: 02618.HK)
TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED
(02618.HK)
Public Shareholders
45%
TCL Corporation
51%
Huizhou City
Investment Holdings
TCL Employee
Committee Public Shareholders Mr. LI Dongsheng
Directors
4%
* As at 18 October 2012
Company Overview
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Shenzhen:
- Headquarter
- R&D Center
Huizhou:
- Global factory
- R&D Center
Shanghai:
- R&D Center Paris:
- Sales Center
Mexico City:
- Sales Center
Ningbo:
- R&D Center
California:
- Sales Center
Chengdu:
- R&D Center
Production
Facilities,
R&D Centres,
Sales Offices
• Headquartered in Shenzhen, China
• Global research facilities located in Shanghai, Ningbo, Huizhou, Shenzhen and Chengdu
• Global factory located in Huizhou, China
• Global presence across over 120 countries and regions
• 115 repair centers, over 50 offices, over 12,000 employees around the world
Global Presence
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• A globally-oriented China-based provider of mobile and internet products
• A multi-cultural workforce over 12,000 employees
• Two strong brands: ALCATEL ONE TOUCH internationally and TCL in China
• A growing range of products: mobile phones, convergence mobile devices, tablets and fixed-line phones
One Company Multiple Businesses
TCL
COMMUNICATION
TECHNOLOGY
HOLDINGS
LIMITED
ODM Worldwide Customers
The China Market
Worldwide Market
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Strong R&D capability
• About 3,000 highly skilled
and experienced
research engineers
• Ownership of GSM core
technological patents
obtained through
acquisition of ALCATEL
mobile phone business
• 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
• 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
Strong R&D capability
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◆ Production capacity of approximately
65 million units annually
◆ 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 MTK , QUALCOMM,
BROADCOM and TI
Highly Efficient Production Facilities
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• Android
• Windows
• Firefox
Platform
• Premium Finishing
• T-Cloud
• Customized Apps
Hardware/Software
• TCL (China)
• Alcatel (Overseas)
Brand
• Global Operators
• Powerful
Distributors
• Strategic Partners
Global Partners
Platform
Hardware/
Software
Global
Partners
Brand
Business Information
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Board of Directors
Mr. GUO Aiping
CEO and
Executive Director
Extensive experience in overall
management of multinational
company, strategic planning
and development
Graduated from Stanford
University with Doctor‟s degree
in Management Science
Mr. BO Lianming
Non-executive
Director
Over 11 years of
experience in
consumer
electronics products
industry
With Doctor‟s
degree in Business
Administration Mr. HUANG Xubin
Non-executive
Director
Rich experience
in finance area
With Master‟s
degree in
Economics and
EMBA degree
Fellow member
of both HKICPA
and ACCA
With profound
financial and
accounting
expertise Mr. LAU Siu Ki
Independent
Non-executive
Director
Mr. LOOK Andrew
Independent
Non-executive
Director
Over 20 years'
experience in
equity investment
analysis
Best Hong Kong
Strategist and Best
Analyst by
Asiamoney
Magazine
Ms. XU Fang
Non-executive
Director
Vice President and
Human Resource
Director of TCL
Corporation
Distinguished
professor at
Shantou University
Mr. LI Dongsheng
Chairman and
Executive Director
Founder of the Company
“Business Leader of the
Decade” by CCTV in 2009
Over 30 years in various
aspects of electronics
industry
Over 20 years experience of
research, development and
management in electronics
industry
With PhD major in
Electrocircuit & System and
MBA degree Mr. WANG Jiyang
COO and
Executive Director
Prof. Kwok Hoi Sing
Independent
Non-executive
Director
Chair Professor
Dept. of Electronic &
Computer Engineering,
HKUST
Fellow of the Optical
Society of America,
IEEE and Society for
Information Display
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Mr. GUO Aiping, George
CEO & Executive Director
• Extensive experience in overall management of multinational company, strategic planning
and development
• Graduated from Stanford University with a Doctor‟s degree in Management Science
Mr. WONG Kwok Chung, Albert
Executive Vice President
& General Manager of (APAC)
• 14 years of experience in computers and electronics industry in Hong Kong, Canada and the China
• With Bachelor‟s degree in Science and Master‟s degree in Electrical and Electronics Engineering
Mr. Nicolas ZIBELL
Senior Vice President
& General Manager of Americas
• Over 21 years of experience in sales, marketing, product strategy and management in automotive and telecommunications industries in Europe and the Americas
• Graduated from École Superieure de Commerce de Lyon and ESADE Business School with MBA degree
Mr. LIU Yuk Tung, Thomas
CFO & Senior Vice President of Business Strategy
• About 26 years of experience in areas of audit, international finance and trading business
• CPA of HKICPA, Charted Accountant of ICAEW and fellow member of ACCA
• With Bachelor‟s degree major in Economics, MBA and Master‟s degree in Accounting
Mr. WANG Jiyang
COO & Executive Director
• Over 20 years experience of research, development and
management in electronics industry
• With PhD major in Electrocircuit & System and MBA degree
Mr. Yves MOREL
Senior Vice President
& General Manager of EMEA
• 27 years experience of sales and marketing mainly in telecommunication industries
• Contributed to develop sales area such as Russia, Central Europe, Middle East, Africa and Western Europe
Executive Committee
Mr. Lv Xiaobin
Senior Vice President
& General Manager of Global Manufacturing Center
• About 18 years of experience in communication terminal manufacturing industry.
• Graduated from University of Electronic Science and Technology of China with Bachelor degree in Science, and also holds an EMBA Degree from China Europe international Business School
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