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Interim Presentation Interim Presentation 1H 2009 1H 2009 TCL Communication Technology Holdings Limited TCL Communication Technology Holdings Limited Page 1 Agenda Company Overview Investment Highlights Business and Strategy Overview
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TCL Communication Technology Holdings Limited TCL Communication Technology Holdings Limited
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Agenda Company Overview Business and Strategy Overview Financial Highlights Investment Highlights
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Company Overview
Principal Business
Research & Development, manufacturing and global sales of cell phones and 3G
data card of two key brands - ”TCL” and ”ALCATEL”
Core Products
Cell phones --- Two key brands TCL (in China) ALCATEL (in Europe, Middle East, Africa, Latin America, Asia-Pacific and
China)
Production Facilities
Headquartered in Shenzhen, China Global research facilities located in Shenzhen, Shanghai and Huizhou Global factory located in Huizhou Global presence across over 80 countries and regions 65 repair centres, over 50 offices and more than 4,000 employees around the
world
Listing Status
Listed on the Hong Kong Stock Exchange in Sep. 2004 (Ticker: 02618 HK)
TCL Communication Technology Holdings Limited (TCL Communication)
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Shareholding Structure
Public 52% TCL Communication Technology Holdings Limited ( 02618 HK ) 46% TCL Group (000100 SZ)
2%
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Agenda Company Overview Financial highlights Investment Highlights Business and Strategy Overview Financial Highlights
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Investment Highlights
1 2 5 6
Strong relationship with worldwide
Experienced management team Strong portfolio of brands with high consumer recognition
TCL Communication: Chinese leading global manufacturers of consumer electronics products 3
Leading manufacturing capacity and experienced global logistics management Innovative business model Strong R&D capability with wide series of products
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Highly Experienced Senior Management Team and Company Structure
Board
Chairman CEO Charles Yang
TCL Business Charles Yang TCL executive committee GSM
Wang Jiyang
Americas
Nicolas Zibell
EMEA Yves Morel APAC
Albert Wong
CDMA
Li Bing
BDL
Vittorio Di Mauro
China Interface
Zhang Yongjun
Alcatel Business George Guo Alcatel executive committee CMD
Chun Lau
HQ & Operation Charles Yang George Guo, Thomas Liu HR,IS/IT,Audit
George Guo
Finance Thomas Liu QMS&GCS
Laurent Labbe
Legal
Stephen Chiang
CEO Office
Niu Haizhen
GMC
Lv Xiaobin
BPS
Products design center
Xu Jinhong
R&D center
Wang Kailong
Sales center Chen Qihui Operator center Xie Feng Operation center Xiao Feng
Finance
Hu Lihua
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Highly Experienced Senior Management Team
Chairman of TCL Communication
University of Technology with a major in wireless technology. Li had taken the position of the general manager of TCL Communication Group, general manager of TCL Corporation and now acts as the chairman of the board and president of TCL Corporation.
home appliance industry” 1994.
Jacques Chirac 2004
Entrepreneur magazine 2005
People’s Congress
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Executive Director, CEO
1982 and a Master`s degree in 1985, both in Engineering from Xian Jiaotong University. He obtained a M.S. in 1987 and Ph.D. in 1989 from the University of California, Los Angeles (UCLA).
Communication Corporation in 2001 and served as the CEO and President between 2001 and 2006 and the Honorary Chairman between 2006 and 2008.
Communication as President in charge of TCL brand business in January 2009. Dr. Yang has been appointed as an executive director and the CEO of TCL Communication with effect from 1 April 2009.
Highly Experienced Senior Management Team
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Strong Portfolio of Brands with High Consumer Recognition
TCL & ALCATEL have strong brand awareness with consumers in China and Europe respectively
TCL Brand established since 1981 as a leading electronics brand in PRC No.1 of 2002 Deloitte Technology Fast 500 Asia Pacific Winners Total estimated brand value of RMB40.1bn and ranked the 3rd Most Valuable Brand in China according to China Most Valuable Brand survey in 2007 Established in France since 1898 Worldwidely accepted by its fame and great reputation Typical brand in Europe’s telecommunication industry
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Leading Independent Production Capacity
Production capacity of 30 million units annually
World-class SMT production lines and supporting facilities
Experience of efficient global logistics Strict tests by key telecommunication
ISO9001 and ISO14001 qualified Testing & manufacturing capability for platform TI, MTK, ADI & QUALCOMM
Manufacture center in Huizhou, China SMT production line Testing centre
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Strong R&D Capability
More than 700 highly skilled and experienced research engineers distributed in Shanghai, Shenzhen and Huizhou The 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 core patents in the world, excellent tradition of research and development Able to provide solutions to GSM, GPRS, EDGE, CDMA, WCDMA, TD-SCDMA independently Start to work on 3G, projects already run for TD-SCDMA products Focus on innovation as well as the high quality of our products
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Full Series of Products and Product Strategy
Low-end Products in Emerging Markets
Quality
Entry-level Camera Phone
Products Design and Competitiveness
Mobile Music Experience
Innovation
Mobile Internet Features High-end Devices and Services
2007 2008 2009 2010 2011
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Matured Cooperation with Oversea Telecommunication Operators
EMEA USA LATAM China APAC
HQ, R&D and Manufacture
Mexico City
Sales centre
Paris
Sales centre
Shanghai Shenzhen & Hong Kong Huizhou
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Innovative Profitability
4C Convergence Business Model
Computer Consumer electronic Communication Contents
Year One of 3G 3 Core Competences
Products Innovation Ability Sales and Marketing Operator Collaboration
Innovative Profitability
Quality guaranteed products
and services based on good
To provide 3G experience by
integrating cell phone and 4C model
To achieve the progression of
average revenue by retaining and expanding customers
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Business and Strategy Overview Financial highlights Investment highlights Appendix Agenda Financial Highlights Investment Highlights Company Overview
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PRC Market
Following the award of 3G licenses by the Chinese Government, relevant 3G services has been launched gradually and drove the sustained growth
Despite the weakness of handset industry elsewhere in the world, the Chinese market maintained healthy growth. ASP of branded handsets were adversely affected by copycat phones in the market.
Oversea Market
As the global economy is expected to pick up gradually, the Q2 sales volume rebounded and increased by 22% over Q1. Middle-end products appear a favorable trend in market because of the popular of the touch screen phone. Consumers’ spending in Latin America, Europe, Middle East and Africa was adversely affected by the economic crisis. Sales performance in the emerging markets remained buoyant. ASP in the Q2 edged lower when compared to the Q1 as most products sold in the Q2 were low-end products.
Business Overview
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Business Review
Overview
the corresponding period in 2008 due to the economic crisis.
million units, increased by 35% over the previous month. In July, sales volume kept going up and reached 1.53 million units, increased by 51% over June. Europe, Middle East and Africa
was primarily attributed to lower sales volume in Africa. Meanwhile, sales in most European countries staged a steady growth.
Latin America
period of last year because of the weak market.
The PRC
Rural Areas” in the first half of 2009.
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New Product – OT 800 ( “JADE” )
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New Product – OT 708 ( “Mini” )
background picture and alarm clock without multi-choice
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Sales Volume and Revenue (Handset and Others)
Sales Revenue for Handset and Others in 1H 2009 and 1H 2008 Sales Revenue for Handset and Others in 1H 2009 and 1H 2008 ‘000 Units 09 Q1 09 Q2 1H 2009 1H 2008 Change Total 2,276 2,782 5,058 6,716
Overseas 1,787 2168 3,955 6,086
The PRC 489 614 1,103 630 75% Sales Volume for Handset and Others in 1H 2009 and 1H 2008 Sales Volume for Handset and Others in 1H 2009 and 1H 2008 HK $ Million 09 Q1 09 Q2 1H 2009 1H 2008 Change Total 615 712 1,327 2,340
Overseas 514 605 1,119 2,116
The PRC 101 107 208 224
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Growth of Sale Volume (Year 2005- Year 2008)
2005 2006 2007 2008
6 8 10 12 14
ALCATEL TCL
Million Units
phone business of ALCATEL
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Jan Feb Mar Apr May Jun July
400 600 800 1,000 1,200 1,400 1,600
ALCATEL TCL
Sales volume (Jan 2009 – July 2009)
‘000 Units
units in July, increased by 51% over June.
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Future Outlook
In the second half of 2009, European and American market will recover gradually while the Asia Pacific will remain the key driver for the growth of handset industry. China’s handset industry will continue to expand at a healthy pace. Management believes that the Group’s sales performance in PRC will be improved in the second half of this year. The Group will continue to push ahead with our “3G + 4C” business model and strengthen its efforts in product innovation and design. The Group’s research team has mastered 3G platforms and has started to design more competitive products to be sold at competitive prices. A mobile internet device product and three extra low-price products under the ALCATEL brand will be launched in the second half. Looking ahead, the management believes the second half will still present challenges. However, the management is confident of meeting sales targets of this year.
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Company overview Business and strategy overview Financial Highlights Investment highlights Appendix Investment highlights Appendix Agenda Investment Highlights Company Overview Business and Strategy Overview
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Income Statement Highlight
Income Statement Highlight Income Statement Highlight
(HK$ Million) 09Q1 09Q2 1H 2009 1H 2008 Change Sales Volume (‘000 Units) 2,276 2,782 5,058 6,716
Revenue 615 712 1,327 2,340
Average Selling Price (US$) 35 33 34 45
Gross profit 85 112 197 438
Gross profit （%) 14% 16% 15% 19%
Profit/(loss) before the effects of convertible bonds (42) 3 (39) 16 N/A Effects of convertible bonds (11) (54) (65) 96 N/A Profit/(loss) after the effects of convertible bonds (53) (51) (104) 112 N/A EBIT (before effects of the convertible bonds HK$ Million) (16) 12 (4) 61 N/A EPS (before effects of the convertible bonds HK$ cents) (5.9) 0.4 (5.5) 2.3 N/A
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Balance Sheet Highlight
Balance Sheet Highlight Balance Sheet Highlight
(HK$ Million) 2009-6-30 2008-12-31 Change
Non-current assets 525 528 0% Current assets 3,058 4,037
including
291 628 659 1,100 230 684 854 1,670 27%
Current liabilities (2,616) (3,349)
including
(964) (1,867)
(469) (591)
Net current assets 442 688
Non-current liabilities (7) (151)
including
(142)
Net assets 961 1,065
Net assets value per share (HK$) (after negative stock split) 1.34 1.5
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Key Financial Indicators
Key Financial Indicators Key Financial Indicators
09Q1 09Q2 1H 2009 1H 2008 Change
Trade receivable turnover (Days) 69 72 72 73
Inventory turnover (Days) (Finished goods) 23 21 21 24
Cash balance (HK$ Million) 350 628 628 740
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Comprehensive Operational Review
Conservative financial management, healthy cash position Already Repurchased all convertible bonds by using internal financial resources. Gearing ratio and financial pressure from bank interest are significantly reduced. Keep focusing on reduction of material cost. Well pressure-resistant of financial crisis and present of performance rebound New products with high potential already approved by operators Strengthen research and development. Meet the challenge of 3G market. Implement the 3G + 4C operation strategy. Strive for the growth of profit.
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