TCL Multimedia Technology Holdings Limited - … · TCL Multimedia Technology Holdings Limited Stock Code: 01070 2012 Interim Results Presentation . ... (TCL ranked No.4) 1Q 2012

TCL Multimedia Technology Holdings Limited Stock Code: 01070

2012 Interim Results Presentation

2012 Interim Results

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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 Multimedia 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.

Disclaimer


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Agenda

Results Overview

Financial Highlights

Business Review

Outlook

The financial results used in the presentation are unaudited results for the six months ended 30 June

Results Overview


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131

434

1H 2011 1H 2012

343

681

1H 2011 1H 2012

2,060 2,774

1H 2011 1H 2012

13,156 16,380

1H 2011 1H 2012

24.5% 34.7%

98.5% 231.3%

Results Overview • Turnover and gross profit margin improved and satisfactory results achieved

(HK$ million) (HK$ million)

(HK$ million) (HK$ million)

Turnover Gross Profit*

Operating Profit** Profit attributable to owners of

the parent**

*Gross profit margin improved to 16.9% from 15.7% in the same period of last year

** Including the one-off gain of HK$144 million arising from the acquisition of entire equity interest in TCL Optoelectronics Technology (Huizhou) Co., Ltd. and its 60% owned-subsidiary, Huizhou TCL Coretronic Co., Ltd. The acquisition was completed on 18 January 2012.


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4,033 6,477

1H 2011 1H 2012

2,527 3,338

1H 2011 1H 2012

1,506

3,139

1H 2011 1H 2012

32.1% 108.4% 60.6%

Overall PRC Market Overseas Markets*

• Product mix has continuously been optimized. Sales volume of smart & internet TVs and 3D TVs accounted for 38.3% and 16.9% of LCD TV sales volume in the PRC Market, respectively. Sales volume of LED backlight LCD TVs accounted for 66.5% and 67.7% of overall LCD TV sales volume and LCD TV sales volume in the PRC Market, respectively

• The acquisition of the entire equity interest in TCL Optoelectronics Technology (Huizhou) Co., Ltd. and its 60% owned-subsidiary, Huizhou TCL Coretronic Co., Ltd. was completed on 18 January 2012

*Emerging Markets: 103.9 % y-o-y

Results Overview (continued)

1H 2012 LCD TV sales volume

(‘000 sets) (‘000 sets) (‘000 sets)

Financial Highlights


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(HK$ million)

1H

2012

1H

2011

Change

Turnover 16,380 13,156 +24.5%

Gross profit 2,774 2,060 +34.7%

Operating profit 681* 343 +98.5%

Profit attributable to owners of the parent

434* 131 +231.3%

Basic earnings per share (HK cents)

33.55 12.07 +178.0%

Interim dividend per share (HK cents)

10.00 -- N/A

Consolidated Results

* Including the one-off gain of HK$144 million arising from the acquisition of entire equity interest in TCL Optoelectronics Technology (Huizhou) Co., Ltd. and its 60% owned-subsidiary, Huizhou TCL Coretronic Co., Ltd. The acquisition was completed on 18 January 2012.


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LCD TV Average Selling Prices

Average Selling Prices & Profit Margins

1H 2012

1H 2011

Change

Gross profit margin

16.9% 15.7% +1.2%

Expense ratio* 14.0% 14.0% unchanged

Operating profit margin

4.2% 2.6% +1.6%

*Expense ratio = (Selling and distribution costs + administrative expenses) / turnover

Profit Margins

2,404

2,802

2,134

2,565

Overall PRC

1H 2011 1H 2012

(HK$)


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(HK$ million) 30 June

2012

31 December

2011

Change

Non-current assets 2,408 1,797 +34.0%

Current assets 17,443 22,335 (21.9%)

- Inventories

- Cash and bank balances

3,762

3,242

4,298

4,452

(12.5%)

(27.2%)

Current liabilities 14,687 19,749 (25.6%)

Net current assets 2,756 2,586 +6.6%

Non-current liabilities 627 730 (14.1%)

Net assets 4,537 3,653 +24.2%

Balance Sheet Highlights


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30 June

2012

31 December

2011

Change

Inventory turnover (days)* 46 49 3 day

A/R turnover (days)* 36 35 1 days

A/P turnover (days)* 66 65 1 days

Current ratio (times) 1.2 1.1 +0.1

Gearing ratio** 0# 0 Unchanged

*The above turnover days are calculated based on average balance of the year

** Gearing ratio = Net Borrowing/Equity attributable to owners of the parent. Net Borrowing = total interest-bearing borrowings – cash and bank balances – pledged deposits

#As at 30 June 2012, as the Group’s total pledged deposits and cash and bank balances of HK$4.69 billion were higher than total interest-bearing borrowings of HK$3.89 billion, the Group’s gearing ratio was zero.

Key Financial Indicators


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(HK$ million) 1H

2012

1H

2011

Change

TV Business

PRC Market Turnover 8,641 7,484 +15.5%

Gross Profit 2,015 1,588 +26.9%

Operating Results 473 307 +54.1%

TV Business

Overseas Markets Turnover 5,784 3,401 +70.1%

Gross Profit 618 306 +102.0%

Operating Results 108 (63) N/A

AV Business Turnover 1,434 1,927 (25.6%)

Gross Profit 143 152 (5.9%)

Operating Results 44 65 (32.3%)

Segment Results

Business Review


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Continuously Optimizing Results and Key Financial Indicators • Remain committed to “speed and efficiency” in its operational and marketing

strategies with remarkable results

Strong sales volume growth of LCD TVs in the PRC

and Emerging Markets

Optimized product mix

and improved product

competitiveness

Profitability significantly

improved

Reduced inventory and

accounts receivable balance

Continuous and solid financial

position

• The PRC Market: 3.34 million sets, 32.1%

• Overseas Markets:

3.14 million sets,

108.4%

• Emerging Markets: 1.82 million sets,

103.9%

• Sales proportion of high-end products continued to increase

1H 2012: 3D:

PRC Market 16.9%

Smart & internet: PRC Market 38.3%

LED backlight: overall 66.5%; PRC Market 67.7%

(Compared to 1H 2011) (Compared to 1H 2011)

• Gross profit margin 1.2% points

• Expense ratio unchanged

• Operating profit margin 1.6% points

• Profit attributable to owners of the parent : HK$ 434 million, 231.3%

• Inventory HK$ 536 million

• Inventory turnover days 3 day

• Account receivables HK$ 645 million

(Compared against year end of 2011)

(Compared against year end of 2011)

• Cash and bank balance: HK$ 3.242 billion, HK$ 1.210 billion

• Current ratio: 1.2 (2011: 1.1)

• Gearing ratio: zero


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Source: DisplaySearch

Ranking Brand

2012 1Q

LCD TV Market Share

2011

LCD TV Market Share

1 Samsung 20.1% 18.8%

2 LGE 13.5% 12.1%

3 Sony 8.5% 9.9%

4 Toshiba 6.2% 7.2%

5 TCL 5.6% 4.9%

6 Sharp 5.1% 6.6%

7 Panasonic 5.0% 6.2%

8 Hisense 4.9% 4.5%

9 Philips 3.5% 3.5%

10 Skyworth 3.4% 3.5%

Ranking Brand

2012 1Q

TV Market Share

2011

TV Market Share

1 TCL 18.1% 15.6%

2 Hisense 17.4% 16.8%

3 Skyworth 13.7% 14.4%

4 Changhong 10.9% 13.8%

5 Konka 10.9% 11.0%

6 Haier 6.2% 5.4%

7 Sharp 4.2% 4.4%

8 Samsung 4.0% 3.5%

9 Sony 3.8% 4.3%


Ranking Brand

2012 1Q

LCD TV Market Share

2011

LCD TV Market Share

1 Hisense 18.5% 18.2 %

2 TCL 17.5% 14.9%

3 Skyworth 14.6% 15.8%

4 Konka 10.7% 10.7%

5 Changhong 9.7% 11.4%

6 Haier 6.6% 5.9%

7 Sharp 4.4% 4.8%

8 Sony 4.1% 4.8%

9 Samsung 3.3% 3.3%


TV Market Shares and Rankings 1Q 2012 TV global market share (TCL ranked No.4) 1Q 2012 LCD TV global market share (TCL ranked No.5)

1Q 2012 LCD TV PRC market share (TCL ranked No.2) 1Q 2012 TV PRC market share (TCL ranked No.1)

Samsung 20.9%

LGE 16.3%

Sony 7.2%

TCL 6.3%

Panasonic 5.7%

Toshiba 5.6%

Sharp 4.4%

Hisense 4.1%

Philips 3%


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Total TV Sales Volume (‘000 sets) 1H 2012 1H 2011 Change

Total 7,748 6,276 +23.5%

PRC 3,482 3,128 +11.3%

Overseas 4,266 3,148 +35.5%

LCD TV Sales Volume (‘000 sets) 1H 2012 1H 2011 Change

Total 6,477 4,033 +60.6%

Of which: LED backlight LCD TVs Smart & Internet TVs 3D TVs

4,307 1,302

592

1,379 389

40

+212.3% +234.7%

+1,380.0%

PRC 3,338 2,527 +32.1%

Overseas 3,139 1,506 +108.4%

CRT TV Sales Volume (‘000 sets) 1H 2012 1H 2011 Change

Total 1,271 2,243 (43.3%)

PRC 144 601 (76.0%)

Overseas 1,127 1,642 (31.4%)

TV Sales Volume


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Product mix has continuously been optimized

• In 1H, 7 series with 14 new products were launched, of which 5 series with 10 new products were 3D TVs

• In 1H, sales volume of 3D TVs and smart & internet TVs as a proportion of LCD TV sales volume reached 16.9% and 38.3%

• In 1H, sales volume of LED backlight LCD TVs as a percentage of total LCD TV sales volume increased to 67.7%

• Gross profit margin increased by 2.1% points from 21.2% to 23.3%

Enhanced speed and efficiency

• Inventory turnover days decreased by 9 days y-o-y

• Operating profit margin increased to 5.5% from 4.1% in the same period of last year

Improved sales channels and establishment of points of sales

• The number of points of sales in third- to sixth-tier markets and rural markets in 1H 2012 increased to approximately 27,000, planning to increase to 30,000 by the end of 2012

Operating profit amounted to HK$473 million, up 54.1 % y-o-y

LCD TV sales volume reached 3.34 million sets, up 32.1 % y-o-y

TV – PRC Market


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Product mix has continuously been optimized

• Proportion of LCD TV sales volume to overall TV sales volume: 73.6%

• Continued to optimize its product mix, the proportion of the LED backlight LCD TV sales volume to LCD TV sales volume continually increased to 65.2%

Sales volume of LCD TVs in Emerging Markets surged 103.9 % y-o-y

• Vigorously explored new sales channels and customers

• Continued to improve the brand image of its key stores in key cities

• Satisfactory sales performance in Africa and Thailand, etc.

Strategic OEM business showed results after the optimization of its customer base, leading to continuous growth in LCD TV sales volume

Driven by the UEFA EURO in European Market, along with the improvement of the product mix, sales volume of LCD TVs grew 59.1% y-o-y

Sales volume of LCD TVs reached 3.14 million sets, up 108.4 % y-o-y

Recorded operating profit of HK$108 million

TV – Overseas Markets


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As a Percentage of Total LCD TV Sales Volume

Proportion of 3D TV, Smart & Internet TV Sales Volume Increased Stably in PRC Market

5.3%6.6%

10.7%

7.0% 7.3%

3.3%

12.3%

12.4%

14.9%

19.6%20.8%

22.7%20.8%

27.3%

30.1%

33.1%

19.6%

28.0%

24.5%

14.6%

33.0%

45.9%

43.0%44.1%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

7/1/2012 Aug Sep Oct Nov Dec 1/1/2012 Feb Mar Apr May Jun

3D TV sales volumeSmart & internet TV sales volumeProportion of 3D TV to the overall LCD TV sales volumeProportion of Smart & internet TV to the overall LCD TV sales volume

(sets)


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2012

2011

Continuous Enhancement of Product Competitiveness

TV Development

Adopt “cloud”

computing and

storage technology

Integration of Smart and

3D Technology


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Developed sales channel to raise sales volume and enhanced brand influence

• TCL has 29 sales branches as well as 178 operation departments in the PRC Market

• First-tier and second-tier cities accounted for 30% of PRC Market sales volume, while

third-tier to sixth-tier markets and rural markets accounted for 70% of PRC Market

sales volume

Target

24,000 26,000 27,000

30,000

11-Jun 11-Dec 12-Jun 12-Dec

National Professional

Home Appliance Chain 18% Department

Store Channel & Supermarket

Chain 10%

Traditional Channels

50%

Others 1%

Regional Home Applicance Chain

15%

Emerging Channels (Such

as specialty stores and e-commerce)

6%

Number of Points of Sales in third- to sixth-tier markets and rural markets in PRC

Distribution of Sales Channels in PRC Market


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TCL cooperated with Sweden IKEA to develop a new concept of comprehensive household solution which includes TV set, audio equipment and furniture – enhance impact of TCL brand in the global market


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Strengthened marketing efforts to build up a global and youthful brand image

Movie marketing through new “Batman” movie


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Strengthened marketing promotion to enhance product competitiveness

Participate in the Consumer Electronic Show 2012 in Las Vegas, US

Sponsor for a well-known TV show “Generation Show” of Shenzhen Cable TV in the PRC


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Huaxing Photoelectrics (CSOT) 8.5 Generation LCD Panel Production Line Source 1.42 million sets of whole panels in

the first half Ensure supply of raw materials and effective

cost control

LED Backlight Modules Production Line TCL Optoelectronic + TCL Coretronic + Huizhou

Bri-King Optronics Whole process of quality control

TCL has become the only TV

manufacturer and distributor with a fully

integrated supply chain and sales

capabilities in the PRC

Effect of Integration of Upstream and Downstream Industry Chain Has Started to Show Up

• Stable supply of raw materials and cost control

• The effect from

the vertical integration has started to show up

Own the PRC's most advanced LCD module production line

Create new revenue streams by improving production capabilities through strategic cooperation with Shenzhen Huaxing Photoelectrics Technology Company Limited

TCL Optoelectronics Technology (LCD Module Business)


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Improved efficiency and

established its overseas supply

chains to reduce cost, further

enhancing the competitiveness

of the products

Under the influence of the volatile global economy and the continuously shrinking of DVD player market, the total sales volume of AV products recorded a decline. However, sales volume of both blue ray products and electro-acoustic products recorded an increase year-on-year

AV Business

Continued to carry out

diversification of product and

customer base, boost

investment in R&D,

proactively develop blue ray

products and enhance the

competiveness of electro-

acoustic products

Sales volume of AV products reached 6.79 million sets, down 28.5 % y-o-y

Outlook


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Industry Analysis – Global TV Market Capacity

million sets

Source: DisplaySearch

*According to DisplaySearch’s 1Q 2012 report, estimated shipment of global LCD TVs in 2012 was revised down to 216 million sets from 220 million sets, representing a decrease of 1.8%

0

50

100

150

200

250

300

2010 2011 2012 2013 2014 2015

38.3 26.0 16.5 8.0 2.9 0.6

151.5

112.3

66.6

30.9

8.0 0.0

40.0

93.0

149.2

203.5 242.5 262.1

18.4 17.2 12.7 9.2

5.7 2.6 0.0 0.0 0.0

0.3 2.3 5.0

OLED

PDP

LCD(LED)

LCD(CCFL)

CRT

248.3 248.5 245.1 261.3 270.3

251.8

Global Shipment by Product

The popularity of 3D TV and smart & internet TV has been growing, LED backlight LCD TVs have become mainstream products


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Industry Analysis – Product Development Trend

Three layers of products in 2012

High-end product Mid-level

product

LED backlight & 3D

3D&Smart

Low cost direct LED backlight：last effort to replace

CCFL

LED: Dominant in the first- and second-tier markets in

the PRC

3D: SG Vs PR to co-exist in the long term

Functions ：3D, Smart; Degree of duplication：80% Smart platform: Android to be more popular, Linux to exit Industrial design: ultra slim, edgeless

Lower cost direct LED

to replace CCFL

OLED

*Source: China Market Monitor


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15.20 million sets

2012 sales volume target of LCD TVs with an

expected y-o-y increase of 40%

Product Mix Optimization

Global Industry Chain Integration

Global Sales & Marketing System Establishment

Outlook – TV Business

*Announced to raise global LCD TV sales target for 2012 to 15.20 million sets from 13.80 million sets in June 2012

Enhance core competitiveness and improve profitability by strengthening the innovation capability in its product technology

Remain committed to “speed and efficiency” in operations and marketing strategies


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Outlook – TV Business in the PRC Market

Remain committed to “speed and efficiency” in operations and marketing strategies

Enlarge market share and strengthen profitability

Continue to strengthen sales channels

• Further penetrate into third-to-sixth-tier cities and rural markets; with the aim to increase the number of points of sales in the third-to-sixth-tier cities and rural markets from 26,000 at the end of 2011 to 30,000 in 2012

Continue to improve operational efficiency

• Continue to reduce expense ratio

• Speed up turnover days of inventory and account receivables

PRC Market

Consolidating the Leading Position

Optimize its product mix and enhance brand influence

• Vigorously promote 3D TVs and smart “cloud” TVs

• Leverage the position as the exclusive partner of the PRC CCTV 3D channel to enhance brand influence


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Cloud·Zhuo V7300

Cloud·Shang E5300

Cloud·Bo V8200S

Cloud·Ya F3390

Cloud·Feng V7500

Cloud·Yue E5390

Outlook – “Full cloud strategies”

“Full cloud

strategies”

Innovation of

full-scale

cloud technology

Orientation of

full-scale cloud

market

Integration of

full-scale cloud

resources

Synergy of

full-scale

cloud industry

Tie up with the six series of 3D smart “cloud” TVs and focus on the four major areas – products, price, place and promotion – to carry out “full cloud strategies” and to build up core competitive advantages in the cloud age


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Innovative Business Model • TCL brand development

• Strengthen strategic partnership with e-commerce sales channel customers

• Further explore national sales channels

Build healthy business with further improvement

• Improve operational efficiency

• Endeavor to adjust product mix and improve inventory management

• Increase the proportion of TCL-branded products

Increase volume and generate profits

• Optimize the OEM clients mix

• Synergize resource of supply chain and production chain and optimize cost

1. Continue to implement a prudent operational strategy 2. Focus to develop the Emerging Markets and other profitable markets and

rapidly increase TCL brand’s market share in key regions 3. Continue to increase the proportion of sales volume of high-end products

Outlook – TV Business in the Overseas Markets

Ensure profit-making for the overall Overseas Markets in

2012

Dedicated to boosting sales in areas such as Central America and Africa

• Promoting TCL brand

• Optimize sales channels and product mix


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Outlook – AV Business

•Diversify product mix

• Step up investment in the R&D of software and electro-acoustic technology, etc.

• Strengthen strategic partnership with major customers and endeavor to expand its customer base

AV Business

•Optimize global supply chain

• Improve the product competitiveness and cost advantages


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Keys to Success: Speed and Efficiency

Sales Volume Growth

Sustainable Profit Growth

Transformation

Fast Value Efficiency Speed +

Thank You

Documents

TCL Multimedia Technology Holdings Limited - … · TCL Multimedia Technology Holdings Limited Stock Code: 01070 2012 Interim Results Presentation . ... (TCL ranked No.4) 1Q 2012