tcl communication technology holdings limited …•sales volume: 2.3 million units, up 118% yoy;...
TRANSCRIPT
Q1 2015 Results PresentationHong Kong, 23 April 2015
TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED (02618.HK)
Agenda
BUSINESS REVIEW & OUTLOOK FINANCIAL HIGHLIGHTS Q & A
2
BUSINESSREVIEW &OUTLOOK
Q1 2015 RESULTS
BUSINESS OVERVIEW
4
• Sales Volume: 15.8 million units, up 16% YoY (including 9.7 million units of smart devices, up 54% YoY)
• Revenue: HK$6.7 billion, up 21% YoY
• Net Profit: HK$185 million, up 3% YoY
• Basic EPS: Increased to 15.11 HK cents from 15.05 cents HK YoY
• Leading Market Position: In Q4 2014, ranked No. 4 global handset manufacturer and No. 1 Chinese handset player in overseas
(Source: Gartner & Company data)
• Outstanding Financial Performance: Consecutive growth in turnover and net profit for three years; gross margin remained healthy at 19.1%
• Business Restructuring: Overseas market: restructured to 5 sales regions: North America, South America, Europe, The Middle East & Africa, Asia-Pacific
China market: Formed Momoda to be the agent for the business in China, streamlined organisational structure, integrated mobile Internet and smart devices brand
• Strategy: implementation continued, including:
1) Formed a joint venture with TCL Group and TCL Multimedia, together launched the Smart Home Project to enter into the business of internet of things.
2) Launched the mobile healthcare APP self healthcare services, integrating high-quality mobile healthcare resources
3) Teamed up with TCL Corporation and Cisco for the establishment of an enterprise cloud service platform toprovide domestic enterprise and individual users with high-quality video communications services
Q1 2015 OVERVIEW
Rank CompanyQ4 14Shipments(million units)
Q4 14Market Shares(%)
QoQGrowth Rate(%)
YoYGrowth Rate(%)
1 Samsung 91.5 17.4 -2.3 -23.3
2 Apple 74.8 14.3 +96.0 +49.0
3 Microsoft-Nokia 71.4 13.6 +0.9 +8.1
4 TCL-ALCATEL 23.8 4.5 +31.0 +25.4
5 LG 21.6 4.1 +1.5 +17.7
6 Huawei 21.4 4.1 +31.0 +23.4
7 Xiaomi 18.6 3.5 +17.8 +231.9
8 Lenovo 17.1 3.3 +12.8 +26.0
9 ZTE 13.6 2.6 -2.0 -16.8
10 Micromax 10.6 2.0 -3.7 +26.5
Others 160.3 30.6 +8.6 +2.3
TOTAL 524.7 100.0 +13.8 +6.9
Top 10 Mobile Phone Brands in Q4 14 (Source: Gartner and Company Data)
5
Industry Ranking - Total PhoneNo.4 Global Handset Manufacturer; No. 1 Chinese Handset Player + Company Data
Rank CompanyQ4 14Shipments(million units)
Q4 14Market Shares(%)
QoQGrowth Rate(%)
YoYGrowth Rate(%)
1 Apple 74.8 20.4 +96.0 +49.0
2 Samsung 73.0 19.9 +0.1 -12.3
3 Huawei 21.0 5.7 +32.0 +31.0
4 Xiaomi 18.6 5.1 +17.8 +231.9
5 LG 16.4 4.5 +1.1 +27.9
6 Lenovo 15.5 4.2 +3.3 +20.3
7 TCL-ALCATEL 14.4 3.9 +39.0 +93.6
8 ZTE 11.7 3.2 +12.3 +4.8
9 Microsoft-Nokia 11.0 3.0 +16.5 +34.4
10 Sony 10.5 2.9 +21.3 +2.6
Others 100.6 27.2 +8.7 +54.8
TOTAL 367.5 100.0 +20.3 +29.9
6
Top 10 Smartphone Brands in Q4 14 (Source: Gartner and Company Data)
Industry Ranking - SmartphoneRecord Shipment Growth, Rapid Expansion Outside China No.7 Global Smartphone Manufacturer
+ Company Data
Rank CompanyQ4 14Shipments(million units)
Q4 14Market Shares(%)
QoQGrowth Rate(%)
YoYGrowth Rate(%)
1 Apple 20.3 30.1% +58.5% -14.8%
2 Samsung 9.5 14.0% +8.0% -14.9%
3 Lenovo 3.9 5.8% +21.1% +50.3%
4 Asus 2.8 4.2% +2.2% -16.3%
5 Amazon 1.8 2.7% +26.0% +4.0%
6 Acer 1.6 2.3% +32.6% +67.6%
7 TCL-ALCATEL 1.1 1.6% +114.2% +433.8%
8 HP 0.9 1.3% +108.5% +16.9%
9 Microsoft 0.7 1.0% -0.4% +35.6%
10 Huawei 0.5 0.8% 0.0% 0.0%
Others 24.4 36.2% +32.4% +3.4%
TOTAL 67.5 100.0% +34.3% -1.7%
Top 10 Tablet Brands in Q4 14 (Source: Gartner and Company Data)
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Industry Ranking - TabletThe Fastest Growing Tablet Manufacturer + Company Data
Feature Phones & Other Products Smart Devices
8
North America43%
South America24%
Europe18%
MEA9%
APAC2%
China4%
North America23%
South
America
34%
Europe17%
MEA11%
APAC2%
China13%
Q1 2015 Geographical Revenue Breakdown
• Sales volume: 3.5 million units, up 87% YoY; Revenue: HK$1.8 billion, up 26%
YoY
• Sales volume of smart devices: 1.9 million units, up 43% YoY
• Q1 sales growth remains strong
• Increased product mix, established smart ecosystem for the connectivity of
smartphones, wearable smart devices and car accessories
• 2014 Q4 sales volume ranking (Source: Gartner & Company data):
North Americas: No. 4 (Total phones); No. 5 (Smartphones)
• Q2 business plan: introduce targeted pricing strategy, strengthen new sales
channel
+26%
Q1 2014
Q12015
9
Regional Business Review
North America (General Manager: Steve CISTULLI )
South America (General Manager: Christian GATTI )
• Sales volume: 5.4 million units, down 6% YoY; Revenue: HK$2.1 billion, up 18%
YoY
• Sales volume of smart devices: 3.4 million units, up 54% YoY
• Adopted effective and stringent hedging policies to control currency risk
• 2014 Q4 sales volume ranking(Source: Gartner & Company data) :
LATAM (excl Brazil): No. 1 (Total phones); No. 2 (Smartphones)
• Q2 business plan: launch more entry-level smartphones, develop online sales
channels
+18%
Revenue(HK$ billion)
0.0
0.8
1.6
2.4
1.8 2.1
Revenue(HK$ billion)
Q12014
Q12015
0.0
0.5
1.0
1.5
2.0
1.4 1.8
• Sales volume: 2.9 million units, up 1% YoY; Revenue: HK$1.1 billion, down 16% YoY
• Sales Volume of smart devices: 1.8 million units, up 18% YoY
• 2014 Q4 sales volume ranking(Source: IDC & Company data):
Central & Eastern Europe (Excluding Russia): No. 3 (Total phones)
Russia: No. 3 (Total phones)
• Q2 business plan: strengthen sales channels, increase product competitiveness
Europe (Acting General Manager: Nicolas ZIBELL )
The Middle East and Africa (Acting General Manager : Nicolas ZIBELL )
Regional Business Review
• Sales volume: 1.4 million units, up 47% YoY; Revenue: HK$0.7 billion, up 174% YoY
• Sales volume of smart devices: 0.8 million units, up 133% YoY
• 2014 Q4 sales volume ranking (Source: Gartner & Company data):
Middle East and Africa: No. 4 (Total phones); No. 4 (Smartphones)
• 2014 Q4 sales volume ranking (Source: IDC & Company data):
Egypt: No. 3 (Total phones); No. 2 (Smartphones)
South Africa: No. 3 (Total phones); No. 2 (Smartphones)
• Q2 business plan: explore new markets such as Nigeria, Pakistan etc.
Q12014
Q12015
Q12014
Q12015
+174%
Revenue(HK$ billion)
Revenue(HK$ billion)
0.0
0.5
1.0
1.5
2.0
1.3 1.1
0.0
0.3
0.6
0.9
0.3
0.7
-16%
10
• Sales volume: 2.3 million units, up 118% YoY; Revenue: HK$ 800 million, up 161% YoY
• Sales volume of smart devices: 1.6 million units, increase two fold YoY
• Sales growth region of smart devices: Shaanxi, Jiangsu, Hunan
• Formed the Momoda Limited Company, streamlined operational structure, implemented
home, smart healthcare and Big Data
• Q2 business plan: establish online mall (www.mmd.cn), develop e-commerce sales at full
speed, enhance product mix and competitiveness
• Sales volume: 0.3 million units, down 73% YoY; Revenue: HK$ 200 million, down 67%
YoY
• Sales volume of smart devices: 0.2 million units, down 55% YoY
• New market for smart devices: Myanmar and Nepal
• Q2 business plan: focus on entry-level smartphones with price competitiveness,
increase penetration rate in operator network
-67%
Revenue(HK$ billion)
Q12014
Q1 2015
11
APAC (General Manager: Albert Wong)
CHINA (General Manager: Jiyang Wang)
0.0
0.3
0.6
0.9
1.2
0.3
0.8
Revenue(HK$ billion)
+161%
Q12014
Q12015
Regional Business Review
0.0
0.1
0.2
0.3
0.4
0.5
0.4
0.2
2007-08 2009 2010 2011 2012 2013 2014
GPRS, Ultra-low costQwerty key pad
Entry-levelMulti-touch PanelTechnology
EDGEQwerty keypadMulti-touchdisplay
-500MHz-600MHzAndroid2.1 - 2.3 3G
- 4.5650MHz-1.5GHzDual-core CPUAndroid 4.0 - 4.1Windows
-Quad-core CPU6.45mm ThicknessAndroid 4.2FirefoxMulti-screenWifi display on TV
--
Octa-core CPUMetal casing Android 4.4
2015Entry-level Feature Phone
AdvancedFeature Phone
EDGE Phone Entry-level Smartphone
AdvancedSmartphone
Smart Connectivity Devices
4G / Tablet /Cloud terminal
2.8 - Display7 -Wearable devicesAndroid LFirefoxWindowsCloud applications4G
2 in 1 / Wearable devices /Multiple OS / IoT
12
Step-up Product Strategy
NorthAmerica
China
APAC
13
Products Selected By Global Mainstream Operators & Distributors
Europe
South America
MEA
Octa Core 1.5 GHz CPU
Full lamination13 Mpxl rear camera Battery: 2,910mAhThickness: 7.4 mmDual speakers & Hi-FiSymmetrical design
14
Quad Core 1.2 GHz CPU
Full lamination13 Mpxl rear camera
Battery: 2,000mAhThickness: 7.5 mm
Dual speakers & Hi-FiSymmetrical design
New Products
Quad Core 1.2 GHz CPULarge
Ultra thin: 7.9 mmUltra light: 406 g
Long-lasting battery: 4,600 mAh2 in 1 keyboard and docking Station
Voice-call enabled IR blaster
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New Products
Compatible with Android 4.3 or above and iOS 7 or aboveLong battery life: 2-5 days
Easy charging: Built-in USB connectorIP67 technology: Water and dust resistant
Connectivity: Bluetooth 4.0 or aboveVarious styles: Sporty dark red/Volcano black, Feminine all-white,
Classic chrome/ Dark gray, Elegant metal-white
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Awards
New Products
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Consumer Electronic Show (CES) 2015,the United StatesThe Color Run Sponsorship, the United States
Brand Building in Overseas
Mobile World Congress (MWC) 2015, SpainCeBIT 2015, Germany
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TCL 2015 Spring Product Announcement, China
China Mobile Global Partner Conference, China TCL Momoda 3N Launch, China
Brand Building in Asia-Pacific & China
Promotion event of
2015 CES AWARDS• Reviewed.com • Engadget.com Best of Wearables Finalist• Stuff Magazine Wearable Tech Award• Tom' s Guide CES 2015 Top Pick • GSMARENA Best Smartwatch• iF Design Award
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STRONG MARKET RECOGNITION
CORPORATES•
•
• Best Investor Relations Company
PRODUCTS
2015 MWC AWARDS• Android Authority MWC 2015 Top Pick• Android Central MWC 2015 Top Pick• Know Your Mobile MWC 2015 Top Pick• Mashable MWC 2015 Top Pick
• CCID Best 4G Phone of the &Best Mobile Phone
• iF Design Award
• CCID Best Phone for Youth
Challenges & OpportunitiesChallenging global economic conditions might lead to short term currency fluctuation Decrease in purchasing power in many countriesDemand for affordable smartphones in emerging markets continues to surge
Rapid market development for wearable devices such as smart watchesAcceleration in 4G network deployments across the world drives demand for 4G smart devices
Execution Plans
Goal & Forecast2015 full year revenue growth: maintain 30% versus 20144G smartphones and tablets will be the main growth drivers in 2015Focus on seven innovative projects which based on mobile internet application and serviceTo achieve the long-term goal as a leading global smart device, Internet application and services enterprise
20
Reinforce credit control and hedging policies to mitigate short term currency fluctuationInvest resources to develop user-centric technology, product and business modelImplement targeted marketing strategy to increase market shareCarry out measures to control cost, improve efficiency and streamline structure
Outlook
FINANCIALHIGHLIGHTS
Incl. Sales Vol. of Smart Devicesunits)
Revenue
Gross Profit Margin (%)
Net Profit
Net Profit Margin(%)
Basic EPS (HK Cents)
+21%
5,541
6,690
Q12014
Q12015
Q1 2015 Q1 2014 Change (%)
15,780 13,608 +16%
9,707 6,316 +54%
54.7 52.2 +5%
6,690 5,541 +21%
19.1% 19.6% -0.5%
185 180 +3%
2.8% 3.2% -0.4%
15.11 15.05 +0.4%
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Income Statement(HK$ million)
Revenue(HK$ million)
Total Sales Vol.
Total ASP (US$)
Financial Highlights
0
2
4
6
8
10
12
0.6 1.1
1.6 1.9 1.2
2.5 3.4
5.2 4.3
5.4
6.8
9.6
6.0
1.5
1.91.5
2.0
1.2
1.5
2.1
2.3
1.2
1.3
1.0
1.1
0.7
2.1
3.0 3.1
3.9
2.4
4.0
5.5
7.5
5.5
6.7
7.8
10.7
6.7
Smart devices Handsets and other products
23
Revenue(HK$ billion)
+61%
+59%
2014
2012
2013
Q12012
Q22012
Q32012
Q42012
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Quarterly Revenue of Handsets & Other Products
Sustainable Revenue Growth
25
30
35
40
45
50
55
34.6 35.6
37.1 37.1 37.0
41.8
45.4
50.2
52.2 52.4 53.4
55.1 54.7 平均銷售單價
(%)
24
10%
14%
19%17% 17%
27%
34%
40%
46%
53%
58%
62% 62%
0%
10%
20%
30%
40%
50%
60%
70%Smart devices %
Q12012
Q22012
Q32012
Q42012
Q12013
Q22013
Q3201
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Smartphone Sales Volume Proportion & ASP Growth
ASP(USD)
Sales Proportion of Smart Devices
ASP
Better Sales Product Mix & Upward ASP Trend
17.4%
19.0%19.6% 19.4% 19.0% 19.2% 19.1%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
25
20132012Q1
2014Q2
2014Q3
2014Q4
2014Q1
2015
Product competitiveness
Economiesof scale
Pricing and Currency Strategy
Brand Value and Customer Relationship
Continuous Cost-Down Effort
Sustainable Healthy Range
Gross Margin Trend
Statement Of Financial Position
Non-current assets 3,803 3,691 +3%
Current assets
Inventories 2,664 3,293 -19%
Trade & factored receivables 6,839 8,244 -17%
Other current assets 2,467 2,081 +19%
Pledged deposits 1,782 1,914 -7%
Cash and cash equivalents 845 473 +79%
Total current assets 14,597 16,005 -9%
Current liabilities
Interest-bearing bank and other
borrowings(3,516) (4,312) -18%
Other current liabilities (5,378) (5,929) -9%
Trade and notes payables (5,020) (5,167) -3%
Total current liabilities (13,914) (15,408) -10%
Net current assets 683 597 +14%
Total assets less current liabilities 4,486 4,288 +5%
Non-current liabilities (108) (109) -1%
Net assets 4,378 4,179 +5%
(HK$ Million) 31 March 2015 31 December 2014 Change (%)
26
Financial Position Highlights
* Calculated -bearing borrowings over total assets,
excluding RMB foreign exchange program
** Excluding RMB foreign exchange program
*** Excluding factored trade receivables
**** Only inventories in factory
31 March 2015 31 December 2014
Gearing Ratio* 15% 17%
Current Ratio** 1.04 1.04
Trade Receivables Turnover Days*** 72 72
Inventories Turnover Days **** 35 37
NAV per share HK$ 3.50 HK$ 3.43
27
Key Financial Ratios
Q & A
THANK YOU
Disclaimer
The information contained herein should not be utilized for any legal purposes in regards to any investment decision or results. In particular, this documentdoes not constitute any recommendation or invitation for subscribing for or sale and purchase of any securities of TCL Communication Technology Holdings Limited (the
. The Company hereby expressly disclaims any liability for any loss or damage resulting from or in connection with any reliance by any investor on theinformation 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. Theseforward-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 actual results could differ materially from these statements.
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