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TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED
(02618.HK)Q3 2011 Results Presentation
Hong Kong – 26 October 2011
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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.
Disclaimer
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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5
Sustainable Growth during Q1- Q3 2011
Sustainable Growth during Q1- Q3 2011
• Continuing Geographic Expansion• “Step-up” Product Strategy• Brand Building in Open Market
• Continuing Geographic Expansion• “Step-up” Product Strategy• Brand Building in Open Market
Smartphone Sales and China Business Achieved Remarkable Result
Smartphone Sales and China Business Achieved Remarkable Result
• Smartphones shipment grew substantially in September, up 38% MoM
• In Q3 2011, more new customers were attracted, the sales channels are successfully expanded and penetrated in China
• TCL A990 received positive response from customers and was awarded as ‘China Smartphones Outstanding Award 2011’
• Smartphones shipment grew substantially in September, up 38% MoM
• In Q3 2011, more new customers were attracted, the sales channels are successfully expanded and penetrated in China
• TCL A990 received positive response from customers and was awarded as ‘China Smartphones Outstanding Award 2011’
Growth Drivers Leading to Growth Momentum
Growth Drivers Leading to Growth Momentum
• Sales Volume: 30.5 million units, up 28% YoY• Revenue: HK$7.5 billion, up 33% YoY• Net Profit : HK$606 million, up 34%YoY• Basic EPS increased to 54.84 HK cents from 41.91 HK cents YoY
• Sales Volume: 30.5 million units, up 28% YoY• Revenue: HK$7.5 billion, up 33% YoY• Net Profit : HK$606 million, up 34%YoY• Basic EPS increased to 54.84 HK cents from 41.91 HK cents YoY
Q3 2011 Highlights
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Stable Growth in Sales VolumeQuarterly Sales Volume of Handsets and Other Products
‘000 units
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• Shipment in Q1-Q3 2011 totaled 11.6 million units, surged 42% YoY
• The robust sales of Vodafone 555 Blue, the world’s first prepaid handset with Facebook pre-installed, contributed to the main sales performance
• Shipment in Q1-Q3 2011 totaled 14.3 million units, significantly up 14% YoY
• Strengthened sales in existing markets such as Brazil (up 101% YoY), Argentina (up 179% YoY) and Mexico (up 35% YoY)
• ALCATEL ONE TOUCH is officially ranked No.1 in the Pacific Islands by the major operator including Vodafone in the region
• In USA, successful results in the negotiation with Wal-Mart have been achieved and the shipment has been recorded
Europe, Middle East and Africa (“EMEA”)
Americas
Business Review+42%
+14%
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• Shipment in Q1-Q3 2011 totaled 1.6 million units, up 22% YoY
• Successfully expanded into new markets such as Indonesia, Iraq andBangladesh, etc
• Intensified penetration into existing markets and enhanced marketinginitiatives in the Philippines and India
• Shipment in Q1-Q3 2011 totaled 3.0 million units, up 71% YoY
• Lined up with 3 operators in the PRC: China Unicom, China Mobile and China Telecom and launched customized products with popular local content features and attractive price
• Continued to achieve breakthroughs in sales in different regions such as Guangdong, Jiangsu and Shanghai
• New markets such as Guangxi and Xinjiang were beginning to record sales contributions during the period
Asia Pacific
The PRC
Business Review
+71%
+22%
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Innovation
Smartphones
Design
“Step-up” Product Strategy
Quality
Competitiveness
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980
Q4 2010
Q1 2011
Q2 2011
Q3 2011
……
……
905
Smartphone Roadmap
T60A906TCL
908910
990
906
% of smartphones vs overall shipments
● Number of smartphone models will increase in the coming quarter
● The proportion of smartphone will increase
● Overall ASP will further move up
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3G Android Products Selected by Global Mainstream Operators and Distributors
3G Android models (e.g. ONE TOUCH 990, ONE TOUCH 908,ONE TOUCH 910, ONE TOUCH 918, etc) have been selected by global mainstream operators and distributors in Americas, EMEA, APAC and China; more new models will be launched in Q4 2011 and year 2012.
Americas EMEAThe PRC
APAC
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Unique design with full QWERTYIntegrated FacebookPre-embedded entertainment and communication apps Bluetooth 2.0Mpxl 2.4” EDGE Java Music Opera Mini FM RSS
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Compact mainstream design withcapacitive touchAndroid 2.2-Pre-embedded-Dual SIM
Wi-FI 3.2 inch 3.2 MpxlG-sensorAGPS32GBCapacitive 3G2.2
927D
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3.2” capacitive touch with gesture controlAndroid 2.3 with pre-embedded apps3.2 megapixel camera & NFC 7.2 Mbps 2.3 3.2mpxl 3.2” Dual SIM AGPS 32GB Capacitive Wi-FI
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4.3” large display for high quality experienceHigh speed: 1.4 GHz &HDMI 3D one touch UI - NFC Capacitive32GBAGPS4.3”2.33G+ 5mpxl1.4 Ghz Wi-Fi
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Brand Building
Extended License Fee Arrangement with Alcatel-Lucent Favourable arrangement gives cost saving as anticipated and sustainable growth momentum and further extends the scope of products
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Outlook
• Adjust target sales volume for full year 2011• Global economy downturn and recent currency fluctuation
in some emerging markets lead to prolonged orders from some customers
• To reserve our own capacity for smartphones
Adjust 2011 Annual Sales Volume Target
• Make on-going effort in product-mix optimization• Improve overall ASP by launching more smartphone models and
increasing overall smartphone proportion• Sales of smartphones will achieve breakthrough in year 2012
Overall Products Sales and ASP Will Further Rise
• About 15 new models, including smartphone models, would be launched in Q4 2011 and Q1 2012
• Conduct more marketing campaigns for new smartphone models• Proportion of smartphone will increase• Sales channels will be further penetrated and expanded
China Market
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Q1-Q3 2011 YoY Q1-Q3 2010
7,462 33% 5,607
31 3% 30
22% - 22%
606 34% 452
8.1% - 8.1%
Sales Volume(‘000 Units)
Revenue & Net Profit(HK$ Million)
Financial Highlights
23,732
30,458
Total ASP (US$)
Net Profit
Revenue
GP%
Net Profit%
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Sustainable Gross MarginGross Margin
GPRS Messaging Side Slider
ULC Full Keyboard SMS Phone
3G Android
Wi-Fi
Touch & Qwerty EDGE Social Networking
Entry Multimedia Touch
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0
30
31
32
33
……
Q3 2010 Q4 2010 Q2 2011 ……
USD
Q2 2010
ASP
Overall ASP will steadily go up with the increasing shipment of smartphones
Foresee Upward ASP Trend in Coming Quarters
…
Q1 2011 Q3 2011
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22
Sustainable Strong ProfitabilityNet Profit
(HK$ Million) Brand Value & Customer Relationship
Product Competitiveness
Operational Efficiency
Financial & Pricing Strategy
Economies of Scale
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(HK$ Million) 30 September 2011 31 December 2010 Change
Non-current assets 1,641 635 158%
Current assets
-Inventories 1,512 780 94%-Trade receivables 2,141 2,535 -16%-Cash and cash equivalents 1,499 1,345 11%-Pledged deposits 7,304 6,201 18%
-Other current assets 1,540 758 103%
Total current assets 13,996 11,619 20%
Current liabilities
-Interest bearing bank and other borrowings (8,423) (6,488) 30%
-Trade and notes payables (2,276) (1,843) 23%
-Other current liabilities (2,337) (1,683) 39%
Total current liabilities (13,036) (10,014) 30%
Net current assets 960 1,605 -40%
Total assets less current liabilities 2,601 2,240 16%
Non-current liabilities (25) (18) 39%
Net assets 2,576 2,222 16%
Statement of Financial PositionFinancial Position Highlights
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* Calculated based on the Group’s total interest-bearing borrowings over total assets, excluding
RMB foreign exchange program
** Excluding RMB foreign exchange program
Gearing Ratio * 22% 8%
Current Ratio * * 1.12 1.41
Trade Receivables Turnover Days 78 68
Inventories Turnover Days 56 50
ROE (Annualized) 36% 64%
NAV per share 2.33 1.82
Basic EPS (Q1-Q3) 54.84 HK cents 41.91 HK cents
Key Financial Ratios
30 September 2011 30 September 2010
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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 ShareholdersMr. LI Dongsheng
Directors
4%
* As at 30 September 2011
Company Overview
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• A globally-oriented China-based provider of mobile and internet products• A multi-cultural workforce over 10,100 employees • Two strong brands: ALCATEL ONE TOUCH internationally and TCL in China• Seven Product Lines: GSM/WCDMA, CDMA, TD-SCDMA, CMD, Accessory, Brand Design Lab and MID
One Company Multiple Businesses
TCL COMMUNICATION
TECHNOLOGY HOLDINGS
LIMITED
ODM Worldwide CustomersThe PRC Market
Worldwide Market
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Shenzhen:- Headquarter- R&D Center
Huizhou:- Global factory- R&D Center
Shanghai:- R&D CenterParis:
- Sales Center
Mexico City:- Sales Center
Ningbo:- R&D Center
California:- Sales Center
Chengdu:- R&D Center
ProductionFacilities, R&D Centers, Sales Offices
• Headquartered in Shenzhen, China
• Global research facilities located in Shenzhen, Shanghai, Chengdu, Ningbo and Huizhou
• Global factory located in Huizhou, China
• Global presence across over 120 countries and regions
• 115 repair centers, over 50 offices, over 10,100 employees around the world
Global Presence
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• More than 2,000 highly skilled and experienced research engineers distributed in Shanghai, Shenzhen, Chengdu, Ningbo and Huizhou
• 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, 3G patents in the world, excellent tradition of research and development
• Able to provide solutions to GSM, GPRS, EDGE, CDMA, WCDMA, TD-SCDMA independently
• 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
Strong R&D capability
Durable Flip Testing Abrasion Testing
Electrostatic Testing Durable Press Testing
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◆ ISO9001 and ISO14001 qualified◆Testing & manufacturing capability for platform
MTK , QUALCOMM, BROADCOM and TI
◆ Experience of efficient global logistics◆ Strict tests by key telecommunication
operators in the world
◆Production capacity of approximately 65 million units annually ◆World-class SMT production lines and supporting facilities
Highly Efficient Production Facilities
Manufacture center in Huizhou, China
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Board of Directors
Mr. GUO AipingCEO and Executive Director
Extensive experience in overall management of multinational company, strategic planningand development
Graduated from Stanford University with Doctor’s degree in Management Science
Mr. BO LianmingNon-executiveDirector
Over 10 years of experience in consumer electronics products industryWith Doctor’s
degree in Business Administration
Mr. HUANG XubinNon-executiveDirector
Rich experience in finance areaWith Master’s
degree in Economics and EMBA degree
Fellow member of both HKICPA and ACCAWith profound
financial and accounting expertise
Mr. LAU Siu KiIndependent Non-executive Director
Mr. LOOK Andrew IndependentNon-executiveDirector
Over 20 years' experience in equity investment analysisBest Hong Kong
Strategist and Best Analyst by Asiamoney Magazine
Ms. XU FangNon-executiveDirector
Vice President and Human Resource Director of TCL CorporationDistinguished
professor at Shantou University
Mr. LI DongshengChairman and Executive Director
Founder of the Company “Business Leader of the
Decade” by CCTV in 2009 About 30 years in various
aspects of electronicsindustry
Over 19 years experience of research, development and management in electronics industry
With PhD major in Electrocircuit & Systemand MBA degree
Mr. WANG JiyangSenior Vice President and Executive Director
Prof. Kwok Hai SingIndependentNon-executiveDirector
Chair ProfessorDept. of Electronic & Computer Engineering, HKUSTFellow 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, AlbertExecutive Vice President & General Manager of APAC• 13 years of experience in computers and electronics industry in Hong Kong, Canada and the PRC
• With Bachelor’s degree in Science and Master’s degree in Electrical and Electronics Engineering
Mr. Nicolas ZIBELLSenior Vice President & General Manager of Americas• Over 20 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, ThomasCFO & Senior Vice President of Business Strategy• About 25 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 JiyangSenior Vice President of R&D, General Manager of GSM/WCDMA Production Line & Executive Director•Over 19 years experience of research, development and management in electronics industry
•With PhD major in Electrocircuit & System and MBA degree
Mr. Yves MORELSenior Vice President & General Manager of EMEA•26 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
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