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TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED(02618.HK)
2010 Annual Results PresentationHong Kong - February 25th, 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
• Financial Highlights• Business Review & Outlook• Q&A Session• Appendix: Company Overview
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Financial Highlights
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2010 YoY 2009
8,701 100% 4,361
31 11% 35
34 3% 35
22.4% 0.6% 21.8%
702 2,952% 23
8.1% 7.6% 0.5%
Sales Volume
(„000 Units)
16,123
36,223
Total ASP (US$)
Net Profit
Revenue & Profit
(HK$ Million)
Revenue
GP%
Financial Highlights
Own Brand ASP (US$)
Net Profit%
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Wi-Fi
3G Android
Touch & Qwerty EDGE Social Networking
Entry Multimedia Touch
ULC Full keyboard SMS phone
VGA PhoneGPRS Messaging Side Slider
Sustainable Uptrend in Gross Profit Margin
Gross Profit
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Strong Profitability
Brand Value & Customer Relationship
Product Competitiveness
Operational Efficiency
Financial & Pricing Strategy
Economies of scale
Operating Profit
(HK$ Million)
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Income Statement Highlights
Income Statement
Highlights
(HK$ Million) Y2010 Y2009 Change Q4 2010 Q4 2009 Change
Sales Volume („000 Units) 36,223 16,123 +125% 12,491 6,825 +83%
Revenue 8,701 4,361 +100% 3,093 1,960 +58%
Gross profit 1,948 949 +105% 702 516 +36%
Gross profit margin(%) 22.4% 21.8% +0.6% 22.7% 26.3% -3.6%
Net profit 702 23 +2,952% 250 113 +121%
EBITDA 785 163 +382% 251 136 +85%
Net Operating Cashflow (as stated) 731 166 +340% 371 1 +370%
EPS (HK Cents) 64.69 2.51 +2,477% 23.05 12.39 +86%
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(HK$ Million) 31 December 2010 31 December 2009 Change
Non-current assets 635 488 +30%
Current assets 11,619 6,278 +85%
-Inventories 780 448 +74%
-Cash and cash equivalents 1,345 1,170 +15%
-Restricted deposits received from rights issue excess application - 1,604 N/A
-Trade receivables 2,535 1,304 +94%
-Pledged deposits 6,201 1,187 +422%
-Other current assets 758 565 +34%
Current liabilities (10,014) (5,310) +89%
-Interest bearing bank and other borrowings (6,488) (1,461) +344%
-Trade and notes payables (1,843) (1,074) +72%
-Other payable arising from rights issue excess application - (1,604) N/A
-Other current liabilities (1,683) (1,171) +44%
Net current assets 1,605 968 +66%
Other non-current liabilities (18) (361) -95%
Net assets 2,222 1,095 103%
Financial Position Highlights
Financial Position
Highlights
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Gearing Ratio* 8% 11%
Current Ratio* * 1.40 1.24
AR Turnover Days 69 81
Inventory Turnover Days 36 42
ROE 64% 2%
EPS 64.69 HK cents 2.51 HK cents
Proposed Final Dividend Per Share 16.8 HK cents 3.5 HK cents
Full Year Dividend Per Share 24.8 HK cents 3.5 HK cents
Dividend Payout Ratio 38% 139%
Key Financial Ratios
* Calculated based on the Group‟s total interest-bearing borrowings over total assets, excluding the arbitrage operation.
** Excluding the arbitrage operation.
31 December 2010 31 December 2009
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Business Review & Outlook
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Y2010 Highlights
Sales Volume: 36.2 million units, up 125% YOY
Revenue: HKD8.7 billion, up 100% YOY
Net Profit : HKD702 million, up 30 fold YOY
Basic EPS increased to 64.69 HK cents from 2.51 HK cents of 2009
Year of Growth in
2010 with NEW
Record High
Continuing Geographic Expansion
“Step-up” Product Strategy
Brand Building in Open Market
Complementary ODM Strategy
Four Growth
Drivers Leading to
Growth Momentum
Successful launch of Group‟s 1st 3G Android smartphone & tablet
OT-806 won iF award & Kapok Prize
OT-808 won China Red Star Design Award & Kapok Prize
One of core patents won China Patent Award of Excellence
Successful
Expansion in Mid-
to High End Market
with Strong R&D
Capabilities
Successful turnaround to be profitable
Nationwide sales network established successfully
Launched UnionPay Online (“銀聯在線”) Phone
and Sina Twitter(“新浪微博”) Phone
Sustainable
Development in the
PRC Market
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Record High in Sales Volume
Quarterly Sales Volume of Handsets and Accessories
„000 units
Q1 2009 Q2 2009 Q1 2010Q4 2009Q3 2009 Q2 2010 Q3 2010 Q4 2010
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* Source: iSuppli, presenting handset only, and adjustment was made to include TCL-Alcatel ODM business.
Top-10 Cell Phone Brands in the Fourth Quarter of 2010 (Ranking by Unit Shipments in Millions)
Q4 10
RankBrand
Q4 09
Shipments
Q3 10
ShipmentsQ3 10 Share
Q4 10
ShipmentsQ4 10 Share
Q4 10
Sequential
Growth
Q4 10 YOY
Growth
1 Nokia 126.9 110.4 34% 123.7 33% 12% -3%
2 Samsung 68.8 71.4 22% 80.7 22% 13% 17%
3 LG Electronics 33.9 28.4 9% 30.6 8% 8% -10%
4 ZTE 13.4 15.1 5% 22.2 6% 47% 66%
5 Apple 8.7 14.1 4% 16.2 4% 15% 86%
6 RIM 10.1 12.1 4% 14.2 4% 17% 41%
7 TCL-Alcatel* 6.5 8.8 3% 11.8 3% 34% 82%8 Motorola 12 9.1 3% 11.3 3% 24% -6%
9 Sony Ericsson 14.6 10.4 3% 11.2 3% 8% -23%
10 Huawei 11 6.9 2% 11.2 3% 62% 2%
Others 28.7 41.4 13% 39.2 11% -5% 36%
Total Handsets 334.6 328.1 100% 372.3 100% 13% 11%
Moving Up On Competitive Ranking
“Alcatel 4th Largest OEM in LATAM region”Source: IDC Latin America Mobile Phone Tracker, Q2 2010
#7 Global Handset Manufacturer
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Business Review
6.3m units
13.4m units
+109%
6.4m units
18.8m units
+194%
Europe, Middle East and Africa (“EMEA”)
• Shipment in 2010 totaled 13.4 million units, up 109% YOY
• Broadened customer base and distribution channels
• Positive sales trend in Western European countries with expanded
product portfolio
• The Group‟s 1st Android 3G smartphone OT-980 launched in UK with
positive feedback
• Ranked No. 4 in Russia in terms of shipments
Americas
• Shipment in 2010 totaled 18.8 million units, up 194% YOY
• “ALCATEL” as one of Top 4 brands in Latin America
• Successful expansion in open market and distribution channels in
Argentina and Chile
• Cultivate in new & high potential markets such as USA, Brazil and Cuba.
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Asia Pacific
• Shipment in 2010 totaled 1.9 million units, significantly up 217% YOY
• Expansion into new markets like the Philippines, Singapore, India, etc
• Diversified product mix to strengthen brand image
• Lined up with Yahoo and launched “One Touch Net” with positive response
The PRC
• Shipment in 2010 totaled 2.1 million units, a 23% YOY decrease due to
decline in ODM business
• Successful turnaround to be profitable
• Expanded sales network nationwide with over 1,300 retail shops
• Lined up with mainstream Internet providers such as Sina, Sohu, Baidu
and developed products with popular local content features
• Successfully launched UnionPay Online (“銀聯在線”) Phone and SinaTwitter (“新浪微博”) Phone with positive feedback
• ALCATEL Flagship Store placed Top 5 of handset category in TaoBao Mall
(“淘寶商城”)
0.6m units
1.9m units
+217%
2.8m units
2.1m units-23%
Business Review
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“Step-up” Product Strategy
Entry-level camera phones Competitiveness
Low-end products in emerging markets Quality
Android OS Smartphones
Mobile internet features Innovation
Mobile music experience Design
Y2007 Y2008 Y2009 Y2010 Y2011
Tablets
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Smart TouchSmart design Smart experience For Smart users
Powerful & Intuitive
Capacitive touch, gesture control, proximity & light sensor
5.0 MpxlWi-Fi3G+ 3.5”
display
32GBG-SENSOR
Capacitive
TouchAGPS
Y2011 New Products
One Touch990
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One Touch910
Wi-Fi3G+ 32GBG-SENSORCapacitive
Touch
AGPS2.8”
display5.0 Mpxl
Y2011 New Products
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One TouchA906
Android ExperienceSweet spot. Android brought to the masses
Compact mainstream design
Android 2.2 – Pre-embedded apps
3G E-mailResistive
Touch
Opera
mini
2.0 Mpxl Music
player
32GBBluetoothJava
Y2011 New Products
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Best value Android concept
Innovative Edge & Wi-Fi combination
Android 2.1 - Android market - Pre-embedded apps
Wi-Fi Resistive
Touch
16GB
2.0 Mpxl2.8”
display
G-sensor
EDGE AGPS
One Touch890
Y2011 New Products
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One TouchTab
Smart Navigator7” 800x480 display perfect for carry and read
Flex move Home Internet Terminal
Customised dedicated UI & content
WiFi 802.b/g/n, 3G compatible
720P Video Playback, HDMI output
Y2011 New Products
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Brand Building2011 Las Vegas Consumer Electronics Show
2011 Barcelona Mobile World Congress
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Outlook Year of Growth in Y2011
Four growth drivers continue - further expansion in USA, Russia, Brazil and PRC, secure our position in 3G Android
smartphones segment, and continue strategic ODM business
Sales volume for 2011 full year target at 50 million units, 39% up versus 2010 sales performance
Further Development - New Product Mix
Over 100 new models to be launched in Y2011, including 3G Android smartphones and a series of tablets
Enter into strategic alliance with Sagem Mobile in France to establish TCL Ningbo R&D Center to enhance in-house R&D
capabilities and to accelerate high-end smartphones developments. Strengths of new R&D Center include:
Experienced in product developments with 1st tier operators,
such as Vodafone and Orange
Possessed world-class quality R&D capabilities, know-how
in developing 3G Android smartphones and other
advanced technologies such as Near Field Communications
(NFC)
Strong in mechanic design as evidenced in the distinctive
work done for “Porsche Phone”
Global experience in ODM/OEM business such as with Puma
and Sony Ericsson.
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Outlook
Breakthrough in PRC Market
Several new models have been selected by China Mobile and China Unicom,
and will be launched in the market in near future
Broader product segmentation to lead the trend in “3C” era, promotion convergence of
connected devices and tablets, through the tri-networks integration (三網融合)
Further development in E-Commerce and more advertising & marketing resources will
be spent on brand building
New Production Plant for Future Growth
Upgrade infrastructure including construction of
new production plant with a site over 300,000 sq. meter
to further increase annual production capacity up to
130 million units for future sustainable developments
Proceeds to be raised from the proposed issue of
Taiwan Depositary Receipts (“TDR”) mainly to finance
the construction of new production plant
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Q & A Session
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Appendix: Company Overview
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• TCL Communication Technology Holdings Limited (“TCL Communication”) is a
member company of TCL Corporation. It is listed on Hong Kong Stock
Exchange (Stock code: 02618.HK).
• TCL Communication is a China-based, global-oriented mobile handsets provider
with a multi-cultural workforce of over 7,600 employees.
• Two strong brands: “TCL” and “ALCATEL ONE TOUCH”.
• Seven Product Lines: GSM/WCDMA, CDMA, TD-SCDMA, CMD, Accessory,
Brand Design Lab and MID.
One Company,
Multiple Brands
ODM
BUSINESS
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Company Overview
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
• Listed on the Hong Kong Stock Exchange in Sep 2004 (02618.HK)
TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED
(02618.HK)
Public Shareholders
50.14%
TCL Corporation
47.12%
Huizhou City
Investment HoldingsPhilips
TCL Employee
Committee Other & PublicMr. LI Dongsheng
Directors
2.74%
* As at 18 Feb 2011
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Production
Facilities,
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
• Global presence across over 100 countries and regions
• 105 repair centers, over 50 offices, over 7,600 employees around the world
Shenzhen:
- Headquarter
- R&D Center
Huizhou:
- Global factory
- R&D Center
Shanghai:
- R&D CenterParis:
- Sales Center
Mexico City:
- Sales Center
Global Presence
Ningbo:
- R&D Center
California:
- Sales Center
Chengdu:
- R&D Center
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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
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• Annual production capacity of approximately 60
million units
• 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 TI,
MTK & QUALCOMM
High Efficient
Production Facilities
SMT production line Testing centre Main building
Manufacture center in Huizhou, China
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Engaged in teaching and research in Electrical Engineering for a long time
Honorary Chair Professor of National Tsing Hua University in Hsinchu, Taiwan
Mr. LI Dongsheng
Chairman and
Executive Director
Founder of the Company “Business Leader of the
Decade” by CCTV in 2009 About 30 years in various
aspects of electronicsindustry
Mr.GUO AipingCEO and Executive Director
Extensive experience in overall management of multinational company, strategic planningand development
Graduated from Stanford University with Master degree in Engineering Economics and System and Doctor degree in Management Science and Engineering
Mr. BO LianmingNon-executiveDirector
Over 10 years of experience in consumer electronics products industryWith Doctor’s
degree in Business Management
Mr. HUANG XubinNon-executiveDirector
Rich experience in finance areaWith Master’s
degree in Economy and an EMBA Degree
Ms. XU FangNon-executiveDirector
Vice President and Human Resource Director of TCL Corporation,Distinguished
professor at Shantou University
Mr. LAU Siu KiIndependent Non-executive Director
Fellow member of both HKICPA and ACCAWith profound
financial and accounting expertise
Mr. SHI CuimingIndependentNon-executiveDirector
An engineer Served in
Ministry of Posts and Telecommunications for many years
Mr. Andrew LookIndependentNon-executiveDirector
Over 20 years' experience in equity investment analysisBest Hong Kong
strategist and best analyst by Asiamoneymagazine
Mr. LIU Chung LaungIndependentNon-executiveDirector
Board of Directors
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Executive Committee
Mr. Guo Aiping, George
CEO & Executive Director
• Extensive experience in overall management of multinational company, strategic planning and development
• Graduated from Stanford University with Master degree in Engineering Economics and System and Doctor degree in Management Science and Engineering
Mr. Wong Kwok Chung, Albert
Executive 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 Zibell
Senior Vice President of the Company & General Manager of Americas
• Over 20 years of experience in sales, marketing, product strategy and management in Automotive and Telecommunications industries in Europe and in the Americas
• Graduated from É cole Superieure de Commerce de Lyon and ESADE Business School with an MBA
Mr. Liu Yuk Tung, Thomas
Senior Vice President of Business Strategy & CFO
• About 25 years of experience in areas of audit, international finance and trading business
• A CPA of HKICPA, Charted Accountant of ICAEW and fellow member of ACCA
• With Bachelor‟s degree major in Economics, a MBA and a Master‟s Degree in Accounting
Mr. Wang Jiyang
Senior Vice President of R&D & General Manager of GSM/WCDMA Production Line
• Over 19 years experience of research, development and management in electronics industry
• With a PhD major in Electrocircuit & System and an MBA Degree
Mr. Yves Morel
Senior Vice President & General Manager of EMEA
• 26 years sales and marketing experience mainly in Telecom industry
• Contributed to develop sales area such as Russia, central Europe, Middle East, Africa and at a later stage Western Europe
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