Skyworth Group Limited · HKEX:751
Skyworth — H1 2020 Earnings Presentation
39 slides from Skyworth's earnings presentation, Aug 31, 2020
Slide 1: 2020 Interim Results
2020 Interim Results 31 August 2020 1
Slide 2: Forward Looking Statement
Forward Looking Statement This presentation and subsequent discussion may contain certain forward-looking statements with respect to the financial condition, results of operations and businesses of Skyworth. These forward-looking statements represent Skyworth’s expectations or beliefs concerning fut
Slide 3: Six months ended 30 June results summary
Jan – Jun Jan – Jun Change Six months ended 30 June (RMB million) 2020 2019 % Revenue 15,979 17,230 (7.3%) Gross profit 3,086 3,387 (8.9%) Gross profit margin 19.3% 19.7% (0.4pp) Operating profit (EBIT) 1,010 785 28.7% Operating profit margin 6.3% 4.6% 1.7pp Profit for the period 573 348 64.7% Net p
Slide 4: Operating Expenses
Operating Expenses Jan - Jun Jan - Jun Jan - Dec (% to revenue) 2020 2019 2019 Selling & distribution 9.3% 10.7% 10.1% General & administration 3.7% 2.4% 2.7% Research & development 5.1% 5.3% 4.9% Total expense rate 18.1% 18.4% 17.7% S&D: Restructuring and implementing new incentive system R&D:
Slide 5: Cash Flow
Cash Flow Change Change (RMB million) Jun 20 Jun 19 Dec 19 (%) (%) Inventories - Total 5,388 5,617 (4.1%) 4,909 9.8% - Finished goods 2,916 3,141 (7.2%) 2,957 (1.4%) Liquid bills receivable - On hand 2,807 4,277 (34.4%) 4,149 (32.3%) - Discounted to banks# 201 600 (66.5%) 686 (70.7%) (cash equivalen
Slide 6: Borrowings
Borrowings (RMB million) Jun 20 Jun 19 Change (%) Dec 19 Change (%) Borrowings 1. Financial liabilities - for bills discounted# 201 600 (66.5%) 686 (70.7%) 2. Other loans 7,648 5,806 31.7% 7,491 2.1% Current 5,404 5,537 (2.4%) 7,135 (24.3%) Non-current 2,445 869 181.4% 1,042 134.6% 3. Corporate Bond
Slide 7: Financial ratios and turnover
Jun 20 Jun 19 Change Dec 19 Return on equity holders of 4.9% 2.4% 2.5pp 4.7% the Company Current ratio (times) 1.4 1.4 - 1.3 AR turnover (days) - excluded bills receivables 100 97 3.1% 93 - with discounted bills 145 160 (9.4%) 150 - without discounted bills 138 154 (10.4%) 144 Inventory Turnover (da
Slide 8: Revenue Breakdown by Business Segments
Revenue Breakdown by Business Segments Jan – Jun 2020 (Jan – Jun 2019) Smart System Technology (Digital Set-top box & Smart others) (000810.SZ) Appliances 23.8% (24.9%) RMB15.98bn 11.8% (12.5%)* RMB17.23bn Multimedia - (Jan – Jun 2019) Modern TV (China and Overseas) & Services TV OS 5.6% (3.5%)** 58
Slide 9: Gross Profit Margins
Gross Profit Margins Jan – Jun 20 Jan – Jun 19 Jan – Dec 19 Group 19.3% 19.7% 20.1% China Market Overall 22.0% 20.8% 21.3% Overseas Market Overall 14.3% 16.2% 17.5% (China) 18.3% 19.7% 21.0% Multimedia - TV (Overseas) 11.1% 14.8% 14.0% Multimedia - TV OS (coocaa) 42.2% 49.5% 49.4% Smart System (Chin
Slide 10: Segment margin commentary: China TV, Overseas TV, TV OS
China TV: COVID-19 pandemic impacted offline and high-end sales. Continuous online competition by new entrants; sales network and incentive scheme restructuring increased rebates; unstable panel cost. Overseas TV: Lower GPM due to new product and customers mix but orders increase since May due to
Slide 11: Segmental Profit Breakdown
Segmental Profit Breakdown Jan – Jun 2020 (Jan – Jun 2019) Diversification of Business to Sustain Growth Smart System Technology Smart Appliances (Digital Set-top box 10.3% (8.3%) & others) (000810.SZ) RMB551m 33.4% (48.5%) Modern RMB708m Services (Jan - Jun 2019) 9.3% (44.9%) Multimedia – TV (China
Slide 12: Operating Profit by Business Segments
Operating Profit by Business Segments 551 Total 708 259 Multimedia - TV & TV OS -12 Smart System Technology 184 (Digital STB & others) 343 (RMB m) 57 Jan – Jun 2020 Smart Appliances 59 Jan – Jun 2019 51 Modern Services 318 Multimedia: One-off VAT refund of RMB286m Smart System Technology (000810
Slide 13: GED waePkAR ARBR
GED waePkAR ARBR Ol 4 Sm AS AER 13
Slide 14: TV Sales Volume
TV Sales Volume Jan – Dec 2019 YoY Jan – July 2020 YoY 2019 2018 Change 2020 2019 Change Unit Unit Unit Unit % % (‘000) (‘000) (‘000) (‘000) China Market 9,031 8,804 2.6% 3,945 4,621 (14.6%) Overseas Market 6,775 6,512 4.0% 4,602 3,857 19.3% Total 15,806 15,316 3.2% 8,547 8,478 0.8% 14
Slide 15: China TV Blended ASP
China TV Blended ASP Raise Price on New Models and Raise Large Panel TV Proportion Display Technology Upgrade Era CRT LCD OLED 3,000 ASP (HK$, net of tax and rebate) (RMB) 2,500 2,000 1,500 1,000 500 - 2000/01 2019 06/07 01-619 01-620 04-1218 01/02 02/03 03/04 04/05 05/06 07/08 08/09 09/10 10/11 11/
Slide 16: China TV Revenue Breakdown
China TV Revenue Breakdown Jan – Jun 2020 (Jan - Dec 2019) Nationwide Well Built Distribution Channels Strong in Rural Ongoing Reforms to Enhance Customers Loyalty and Suit Diversified Consumption Behaviors Other Electronic Shops cover Online 3rd, 4th tier 39.1% (40.5%) cities to rural 20.1% (23.0%)
Slide 17: China TV Online and Offline Market Shares
China TV Online and Offline Market Shares (July 2020 YoY) Online Offline Online Offline Volume % Revenue % 20 vs 19 20 vs 19 20 vs 19 20 vs 19 1 Xiaomi 23.9 33.5 7.2 9.2 1 Xiaomi 21.5 28.5 4.1 6.5 2 Hisense 11.4 11.6 17.9 17.5 2 Hisense 14.0 14.3 20.8 18.9 3 Skyworth 9.8 10.2 19.8 18.4 3 Skyoworth 9
Slide 18: China TV Market
China TV Market TV Volume 2009 2015 2016 2017 2018 2019 YoY 2020E YoY (m units) Total 29.4 46.7 50.9 47.5 48.7 47.7 46.1 2.0% 3.3% 2020 8K 5G TV, microLED and miniLED are new trends in display technology 2019 China exports 93.6m units 3.1% YoY; US market 23% of total 11pp 2019 China TV
Slide 19: Smart System Technology (Digital Set Top Box & others) (000810.SZ)
Smart System Technology (Digital Set Top Box & others) (000810.SZ) (Spin-off Listed in Shenzhen A Share Market in Sep 2014) No.1 in China Cable Operators & Export Market, No. 2 in Global Market Market Cap RMB11bn by Aug 2020, Skyworth holds 57.5% 12,000 Sales (RMB mil) 10,000 (Sales HKD mil) 8,000 6
Slide 20: Set-top box market position in China and overseas
China No.1 in cable operator market for 10 years (peers: 银河，同洲); First tier in telecom IPTV market (peers: Huawei, ZTE); Top 3 in consolidating OTT retail market After speedy growth in 10 years, China product mix is shifting from cable to IPTV and OTT boxes with lower margins. Focus to strengthe
Slide 21: Overseas Revenue Geographical Summary
Overseas Revenue Geographical Summary Skyworth Brand Entering Emerging and European Markets TV Acquired Toshiba TV in ASEAN in early 2016 TV Acquired Sinoprima in Africa in 2014 & METZ in Germany in 2015 Set-top Box Acquired STRONG MEDIA in Europe in Sep 2015 % overseas sales Jan-Jun 20 Jan-Jun 19 7
Slide 22: Internationalization – Growth Driver
Internationalization – Growth Driver @CES Las Vegas, IFA Berlin and AWE Shanghai Overseas Production sites in Indonesia, Germany, Africa and India Branches set up in 20 countries or regions 22
Slide 23: Skyworth Smart TV with Self-developed TV OS coocaa
Skyworth Smart TV with Self-developed TV OS “coocaa” Smart Control and Interactive Hub for Big Data Monetisation at Smart Home and Community 23
Slide 24: Big Data Analysis on coocaa TV OS
Big Data Analysis Timely Consumers’Behavior on Skyworth coocaa TV OS 24
Slide 25: Coocaa investors and valuation
Coocaa (Skyworth holds 56.8%) Invested by Baidu (11%) Given Valuation at RMB10bn in Mar 2018 Tencent (6.9%) Given Valuation at RMB3.9bn in Jun 2017 iQIYi (4.1%) Given Valuation at RMB3bn in Sep 2016 Best Smart TV + Best Entertainment + AI in Smart Home Synergies to Transform the Living Room Economy
Slide 26: Monetisation of Skyworth Smart TV & coocaa TV OS Users
Monetisation of Skyworth Smart TV & coocaa TV OS Users Opened Platform for Distribution of Products and Services at a Smart Home and Community Profit Sharing and Synergies with Internet Giants Content Advertising Apps Store (RMB160bn market) E-commerce: Shopping/ Health Gaming Travel Education Care/
Slide 27: Skyworth coocaa OS Terminals in China
Skyworth coocaa OS Terminals in China Additional 6m – 8m Activated Units Every Year Accumulated Activated Terminals 50.54m units (since 2012) (2019 vs 18 19% 7.09m new units) (By July2020) Daily Active Terminals 18.44m units Conversion Rate 63% Monthly Active Terminals 31.92m units Jan – Jun 2020
Slide 28: TV with AI functions integrated with coocaa OS and Duer OS
TV with AI functions integrated with coocaa OS and Duer OS Content Push Based on Users Category Accurate Recognition and Instant Enquiry Solving Smart Home Assistant – Interactive AI Function 28
Slide 29: Upgrade Users' Experience Promotion Activities
Upgrade Users’ Experience Promotion Activities To Induce Content Subscription and Conversion 精选推荐位 状态栏&VIP主入口 29
Slide 30: Advertising on Big Panel Revenue Breakdown
Advertising on Big Panel Revenue Breakdown Coocaa Highest CPM in the Market Ad before or during Content Turn On TV 12% Loading Ad (Static ) 56% Turn On TV Content Ad (Dynamic) 12% Others 8% Front Page Block Ad 12% 30
Slide 31: coocaa Shopping, Sports and Health, Gaming
coocaa Shopping coocaa Sports and Health Gaming on Big Panel Alliances with Geek Box, Ministation (Tencent) 31
Slide 32: coocaa Online Education and Travel
coocaa Online Education coocaa Travel For different age segments Abundant demand in domestic and global travel link up with content on TV Paid Education Apps 1. 果果乐园 2. 义方快乐学堂 3. 才智小天地 4. 百映生活学苑 5. 乐学名师课堂 32
Slide 33: Appendices
Appendices Transformation and Escalation Strategies (34) Land and Recurrent Rental Income in Shenzhen (35) Investment in Smart Production Park (36) Integrated Chain Management and Production Capacity (37) TV Replacement Demand in China (38) 33
Slide 34: Transformation and Escalation Strategies (2017-2021)
Skyworth Transformation and Escalation Strategies (2017-2021) Driven by Manufacturing and Servicing Industries Construct 4 Major Business Segments: 1. TV and TV OS Monetisation 2. Digital Settop Box & Smart Systems Technology (security devices, LCD module, car electronics) (000810.SZ) 3. Smart Appli
Slide 35: Assets and Recurrent Rental Income in Shenzhen
Assets and Recurrent Rental Income in Shenzhen Nanshan Qianhai Shiyan 35
Slide 36: Headquarter & Smart Production Park in GZ Development Zone
Headquarter & Smart Production Park in GZ Development Zone 36
Slide 37: Integrated Chain Management and Production Capacity
Integrated Chain Management and Production Capacity Upstream Strong and Cost Efficient Supply Chain Management Strategic partnerships with LG Display, BOE and Innolux Investments in LGD 8.5G LCD Panel fab & module fab in Guangzhou TV Production Capacity 2020 (16m units ) Shiyan, Shenzhen 8m units Gu
Slide 38: TV Replacement Demand in China
TV Replacement Demand in China Replacement Cycle around 8 Years Stable Demand Urban TV Rural TV penetration penetration (1.4 TV /household) TV Demand (1.1 TV /household) • 80% Replacement • 10% More TV/ household • 10% New TV (properties Digitalisation and new family) Urbanisation 2015 - 20 New Prop
Slide 39: ir@skyworth.com.hk http://investor.skyworth.com Wechat Subscription ID:
ir@skyworth.com.hk http://investor.skyworth.com Wechat Subscription ID: skyworth-1988 (创维集团), SKYWORTH1988-TV (创维电视)