1 TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED (02618.HK) Q1 2012 Results Presentation Hong Kong – 26 April 2012
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TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED (02618.HK)
Q1 2012 Results Presentation
Hong Kong – 26 April 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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Revenue: HK$ 2.1 billion, down 1% YoY
Net Profit: HK$ 24 million, down 87% YoY
Sales Volume: 7.8 million units, down 10% YoY
Basic EPS decreased to 2.3 HK cents from 16.4 HK cents YoY
Results for the
Period
New record high in Q1 2012 smartphone sales volume up to 746k units, despite slack
season of the year
Gartner: “Alcatel successfully entered in the top 10 mobile vendors ranking in Q4 2011”
Gartner: “Strong relationships with key operators have proved key to its growth”
IHS iSuppli and Strategy Analytics: “TCL-Alcatel Ranked NO.8 in Q4 2011”
Record High In
Smartphone
Sales Volume
In spite of weaker demand for feature phone, the enhanced product mix enables the
products of the Group with sustainable competitiveness
Having passed the smartphone validations of operators, series of smartphone models
will commence shipment from Q2 2012 onwards
Growth momentum for China smartphone market continued, shipment increased month
by month
ONE TOUCH 916 won the “Red Dot Award: Product Design 2012” in Germany
Achieved
Remarkable Result
Q1 2012 Review
„Step-up‟ product strategy
Geographic expansion
Brand building and channel penetration in open market
Growth Drivers of
Growth
Momentum
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Quarterly Revenue of Handsets and Other Products
Sustainable Revenue Growth
(HK$ Million)
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Mobile Devices Market Share, Unit Sales, Q4 2011 ('000 Units)
Current Company Current Growth Rate Current
Quarter Name Quarter Sales Previous Quarter
Rank Quarter (%) Market
Share (%)
1 Nokia 111,699.4 6.0% 23.4%
2 Samsung 92,682.3 12.2% 19.4%
3 Apple 35,456.0 105.0% 7.4%
4 ZTE 18,915.1 34.1% 4.0%
5 LG Electronics 16,938.3 -19.4% 3.6%
6 Huawei Device 13,966.2 30.9% 2.9%
7 Research In Motion 13,184.5 3.8% 2.8%
8 HTC 10,837.4 -10.4% 2.3%
9 Motorola Mobility 10,075.3 -9.9% 2.1%
10 Alcatel 9,004.7 14.8% 1.9%
Others 143,795.8 -1.9% 30.2%
Total 476,554.9 7.9% 100.0%
Note : Alcatel for Alcatel Brand Only, excluding TCL Brand & ODM
Source: Gartner (February 2012)
Gartner.
Gartner: “Alcatel ( a brand of TCL Communication) successfully entered in the top 10 mobile vendors ranking in Q4 2011”
Gartner: “Strong relationships with key operators have proved key to its growth”
IHS iSuppli and Strategy Analytics: TCL-Alcatel Ranked NO.8 in Q4 2011
Industry Ranking
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Geographical Breakdown
Geographical Breakdown of
Smartphone for Q1 2012
(based on sales volume)
Geographical Breakdown of Feature Phone/
Other Products for Q1 2012
(based on sales volume)
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Quarterly
Smartphone
Shipment
‘000 units
Upward Trend in Smartphone Volume and Proportion
0.0%
1.5%
3.0%
4.5%
6.0%
7.5%
9.0%
10.5%
%
Quarterly
Smartphone
Proportion/
Overall shipment
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-26%
• Due to the consequences of unstable political status in Africa and European
debt crisis, shipment declined by 26% in Q1 2012, totaled 2.5m units
• Despite the weaker demand for feature phone, the Group still maintain strong
relationship with key operators and several smartphone models have been
successfully selected by first-tier operators such as Orange, Vodafone and
Telefonica
• Amid in product transition period, demand for entry-level feature phone slowed
down, shipment in Q1 2012 totaled 3.4m units, declined by 21%
• Remarkable result for smartphone have been achieved, our products ONE
TOUCH 918 and ONE TOUCH 991, have been selected as flagship entry-level
smartphone in many mainstream operators, such as Telefonica, Entel, Comcel,
and Digicel
• In USA, low cost feature phones are popular in prepaid market. Meanwhile, the
Group still works closely with the local operators
Europe, Middle East and Africa (“EMEA”)
Americas
Business Review
-21%
2.5m units
3.3m units
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• Shipment totaled 0.6 m units, up 10% YoY
• Successfully continued to grow in many countries, such as in Indonesia,
Vietnam, Israel and the Philippines
• Products were selected by a number of new customers, e.g. TG phone
and D Plus (distributors in Thailand), and TATA and Reliance (operators
in India)
• Most fast-growing region with shipment skyrocket 2.1 times YoY to
1.3m units, including 0.4m units smartphones
• TCL A966, a product deeply integrated with Tencent QQ, was the best
seller in Q1 2012
• Strengthened the cooperation with large retail chain stores, such as
Suning, Dixintong Telcom and Zhongyu Telecom
• Growth momentum for China smartphone market continued. New 3G
Android models have been successfully selected by China Unicom
(Model W939 and W969) and China Mobile (Model E906) which are
scheduled to be launched in Q2 2012
Asia Pacific
China
Business Review
+211%
+10%
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Innovation
Design
Quality
Competitiveness
Dynamic
Smart
“Step-up” Product Strategy
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3G Android Products Selected by Global Mainstream Operators and Distributors
3G Android models (e.g. TCL W939, TCL W969, ONE TOUCH 995 ULTRA,
TCL E906, etc) have been selected by global mainstream operators and
distributors in Americas, EMEA, APAC and China. More new models will be
launched in coming quarters.
APAC
Americas
The China
EMEA
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Capacitive 32GB 3.0 Mpxl
3.5” WLAN G-sensor GPS 3G
Customized by China Unicom, convenience of “WO”
3.5” multi-touch capacitive screen
Android 2.3, with countless applications to download
300 megapixel camera
GPS navigation
Dual SIM & free alternation from 2G to 3G
New Products
GSM/GPRS/EDGE & TD-SCDMA Dual Mode
4.0” capacitive display
3.0 megapixel camera
7.2 Mbps 4.0” 3.0 mpxl Dual SIM 32GB Wi-Fi Capacitive 1Ghz 2.3
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New Products
WiFi GPS & A-GPS ICS4.0 Capacitive 1080P Dual Camera 21Mbps M sensor Dual Core
4.5” IPS, HD Display
Dual core 1.5GHz CPU
Android 4.0, bringing brand-new feeling
Cloud-service & Cloud-backup
1800mAh large-capacity battery
4.3”IPS touch screen
Safe cloud experience
cdma2000 4.3” 3.0 mpxl 32GB Wi-Fi Capacitive 800Mhz 2.3 1800mAh
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New Products
Fluent & Unique design
High Downlink and Uplink speed
Allow you to connect anywhere in the world
Bright color will bring you a bright mood
Allow you to switch 3G signal to WIFI anywhere
Hello Kitty styled appearance and design
Adorable Hello Kitty customized software interface
4.0” WVGA IPS HD screen
1.0 Ghz high-speed CPU
500 megapixel autofocus camera
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Brand Building in Overseas Market
Marketing
Campaign
2012 Mobile World Congress
2012 TCL New Product Launch 2012 Milan Design Week
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Launching of
ONE TOUCH 979
Hello Kitty Smartphone
Brand Building in China Market
Sponsor Popular TV Show
“The Generation Show”
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Year of Growth
Smartphone Success
China Success
From Q2 2012 onwards, the shipment of smartphone will grow quarter by quarter
Reiterate 2012 full year revenue target at 30% up versus 2011 revenue performance
Continue to invest on R&D as well as marketing and promotion for smartphones, in order to enhance the images of both TCL and ALCATEL ONE TOUCH brand as a mainstream smartphone brand
Overall ASP will be improved gradually as a result of higher smartphone proportion
More competitive smartphone models will be launched from Q2 2012 onwards
Strong relationships with key operators will be the key driver to grow and succeed
Further enrich the product variety to meet different market segment‟s requirement across the country
More than 10 new models would be launched in Q2 2012, including the new flagship dual core products, TCL S900
Speed up distribution expansion, points of sales will be increased from 4,200 currently to 6,000 by the end of Q2 2012
Continue to increase market share by developing multiple distribution channels and strengthening cooperation with operators
Outlook
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Q1 2012 YoY Q1 2011
2,105 -1% 2,124
7,849 -10% 8,715
34.6 +11% 31.3
20% -2% 22%
24 -87% 180
1.1% -7.4% 8.5%
Revenue
(HK$ Million)
Revenue & Net Profit
(HK$ Million)
Financial Highlights
Total ASP (US$)
Net Profit
Revenue
GP%
Net Profit%
Sales Volume („000 units)
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Product Competitiveness
Economies
of Scale
Pricing and Currency Strategy
Brand Value and
Customer Relationship
Continuous Cost Down Effort
Healthy Gross Margin Maintained
Gross Margin
GPRS Messaging Side Slider
ULC Full Keyboard SMS Phone
3G Android
Wi-Fi
Touch & Qwerty EDGE Social Networking
Entry Multimedia Touch
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Foresee Upward ASP Trend in Coming Quarters ASP
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0
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…
…
USD
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(HK$ Million)
31 March 2012
31 December 2011
Change(%)
Non-current assets 1,850 1,773 +4%
Current assets
-Inventories 1,262 981 +29%
-Trade & factored receivables 2,017 2,895 -30%
-Other current assets 1,136 1,099 +3%
-Pledged deposits 5,069 6,092 -17%
-Cash and cash equivalents 1,169 1,187 -2%
Total current assets 10,653 12,254 -13%
Current liabilities
-Interest bearing bank and other borrowings (6,017) (7,222) -17%
-Other current liabilities (1,916) (2,141) -11%
-Trade and notes payables (1,799) (1,952) -8%
Total current liabilities (9,732) (11,315) -14%
Net current assets 921 939 -2%
Total assets less current liabilities 2,771 2,712 +2%
Non-current liabilities (39) (39) -
Net assets 2,732 2,673 +2%
Statement of Financial Position
Financial Position Highlights
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Gearing Ratio * 21% 22%
Current Ratio ** 1.13 1.12
Trade Receivables Turnover Days *** 75 89
Inventories Turnover Days **** 47 25
NAV per share HK$ 2.4 HK$ 2.4
Basic EPS (Q1 2012 / Q1 2011) 2.3 HK cents 16.4 HK cents
Key Financial Ratios
31 March 2012 31 December 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
48%
TCL Corporation
48%
Huizhou City
Investment Holdings
TCL Employee
Committee Public Shareholders Mr. LI Dongsheng
Directors
4%
* As at 24 April 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 10,400 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 10,400 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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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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