Skyworth Group Limited · HKEX:751
Skyworth — FY2019 Earnings Presentation
41 slides from Skyworth's earnings presentation, Mar 26, 2020
Slide 1: 2019 Annual Results
2019 Annual Results 26 March 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: Year-end changed from March to December, HKD to RMB
Year-end changed from March to December, HKD to RMB Jan – Dec Jan – Dec Change Year ended 31 Dec (RMB million) 2018 2019 (unaudited) % Revenue 37,277 38,978 (4.4%) Gross profit 7,502 7,194 4.3% Gross profit margin 20.1% 18.5% 1.6pp Operating profit (EBIT) 2,037 1,441 41.4% Operating profit margin 5.
Slide 4: Operating Expenses
Operating Expenses Jan - Dec Apr - Dec Jan - Jun (% to sales) 2019 2018 2019 Selling & distribution 10.1% 9.5% 10.7% General & administration 2.7% 2.7% 2.4% Research & development 4.9% 4.4% 5.3% Total expense rate 17.7% 16.6% 18.4% S&D: Restructuring and implementing new incentive system R&D: ex
Slide 5: Cash Flow
Cash Flow Change Change (RMB million) Dec 19 Dec 18 Jun 19 (%) (%) Inventories - Total 4,909 6,031 (18.6%) 5,617 (12.6%) - Finished goods 2,957 3,883 (23.8%) 3,141 (5.9%) Liquid bills receivable - On hand 4,149 6,442 (35.6%) 4,277 (3.0%) - Discounted to banks# 686 500 37.2% 600 14.3% (cash equivalen
Slide 6: Borrowings
Borrowings (RMB million) Dec 19 Dec 18 Change (%) Jun 19 Borrowings 1. Financial liabilities - for bills discounted# 686 500 37.2% 600 2. Other loans 7,491 5,824 28.6% 5,806 Current 7,135 5,590 27.6% 5,537 Non-current 1,042 734 42.0% 869 3. Panda Bond 2,029 2,026 0.1% 2,081 (1st Issue, interests inc
Slide 7: Dec 19 Dec 18 Change
Dec 19 Dec 18 Change Jun 19 Return on equity holders of 4.7% 3.6% 1.1pp 2.4% the Company Current ratio (times) 1.3 1.4 (7.1%) 1.4 AR turnover (days) - excluded bills receivables 93 75 24.0% 97 - with discounted bills 150 131 14.5% 160 - without discounted bills 144 127 13.4% 154 Inventory Turnover (
Slide 8: Revenue Breakdown by Business Segments (Jan – Dec 2019)
Revenue Breakdown by Business Segments (Jan – Dec 2019) Smart System Technology (Digital Set-top box & others) (000810.SZ) 25.8% RMB37.28bn Smart Appliances Multimedia - 11.5%* TV (China and Overseas) & RMB38.98bn TV OS (Jan – Dec 2018) Modern Services 57.7% 5.0%** * Smart Appliances included refrig
Slide 9: Gross Profit Margins
Gross Profit Margins Jan – Dec 19 Jan – Jun 19 Apr – Dec 18 Group 20.1% 19.7% 18.7% China Market Overall 21.3% 20.8% 19.9% Overseas Market Overall 17.5% 16.2% 15.6% (China) 21.0% 19.7% 20.0% Multimedia - TV (Overseas) 14.0% 14.8% 13.6% Smart System (China) 24.7% 18.9% 14.4% Technology (Digital Set-t
Slide 10: Segment margin commentary
China TV: Slower GP margin recovery due to continuous online competition, sales network and incentive scheme restructuring, unstable panel cost Overseas TV: Risk control in scale due to China US trade war conflict but with improved ODM margin Smart System Technology (Digital Set-top box & othe
Slide 11: Segmental Profit Breakdown Jan – Dec 2019
Segmental Profit Breakdown Jan – Dec 2019 Diversification of Business to Sustain Growth Smart Appliances 5.5% Modern Services 35.3% Smart System RMB1,830m Technology (Digital Set-top RMB863m box & others) (Apr - Dec 2018) (000810.SZ) Multimedia – TV (China and 39.5% Overseas) & TV OS 19.7% 11
Slide 12: Operating Profit by Business Segments
Operating Profit by Business Segments Total 863 1,830 360 Multimedia - TV & TV OS 403 Smart System Technology 723 (Digital STB & others) 247 101 (RMB m) Smart Appliances 52 Jan – Dec 2019 Apr – Dec 2018 646 Modern Services 161 China TV: Weaker ASP, gross profit margin under pressure & expenses sur
Slide 13: HB BE
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Slide 14: TV Sales Volume
TV Sales Volume Jan – Dec 2019 YoY Jan – Mar 2020 YoY 2019 2018 2020 2019 Unit Unit Increase/ Unit Unit Increase/ (‘000) (‘000) (Decrease) (‘000) (‘000) (Decrease) China Market 9,031 8,804 2.6% 1,437 2,058 (30%) Overseas Market 6,775 6,512 4.0% 1,528 1,623 (6%) Total 15,806 15,316 3.2% 2,965 3,681 (
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 (RMB) 3,000 ASP (HK$, net of tax and rebate) 2,500 2,000 1,500 1,000 500 - 2000/01 04-1218 2019 01/02 01-0619 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/
Slide 16: China TV Revenue Breakdown Jan – Dec 2019
China TV Revenue Breakdown Jan – Dec 2019 (Apr - Dec 2018) Nationwide Well Built Distribution Channels Strong in Rural Ongoing Reforms to Enhance Customers Loyalty and Suit Diversified Consumer Behaviors Other Electronic Shops cover Online 3rd, 4th tier 40.5% (36.8%) cities to rural 23.0% (26.8%) Ot
Slide 17: O2O Community Stores
O2O Community Stores Around 4,000 Stores located in Major to 3rd and 4th Tier Cities Products + Experience + Community Service 17
Slide 18: Strategic Retail Customers and Flagship Stores in 3rd 4th Tier Cities
Strategic Retail Customers and Flagship Stores in 3rd 4th Tier Cities 18
Slide 19: 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% 2019 China exports 93.6m units 3.1% YoY; US market 23% of total 11pp 2019 China TV Revenue 11.2% YoY; ASP RMB2,809 the lowest in 10 years; 1.19 units TV/ h
Slide 20: China TV Market Shares (Domestic Brands 86% by Volume)
China TV Market Shares (Domestic Brands 86% by Volume) Volume 2019 2018 Revenue 2019 2018 1 Xiaomi 16.7% 13.3% 1 Hisense 17.1% 15.2% 2 Hisense 14.7% 13.6% 2 Skyworth 15.7% 17.0% 3 Skyworth 14.6% 15.9% 3 TCL 11.1% 13.2% 4 TCL 10.7% 13.0% 4 Xiaomi 10.6% 8.9% 5 Changhong 8.3% 9.9% 5 Changhong 8.2% 9.9%
Slide 21: 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 RMB12bn by Mar 2020, Skyworth holds 57.5% 12,000 10,000 Sales (Sales HKD mil) (RMB mil) 8,000 6
Slide 22: Set-top box market position
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 23: 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- Dec 19 Apr-Dec 18
Slide 24: Internationalization – Growth Driver
Internationalization – Growth Driver @CES Las Vegas, IFA Berlin and AWE Shanghai Overseas Production sites in Indonesia, Germany and Africa Branches set up in 20 countries or regions 24
Slide 25: 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 25
Slide 26: Big Data Analysis
Big Data Analysis Timely Consumers’Behavior on Skyworth coocaa TV OS 26
Slide 27: Coocaa Invested by Baidu, Tencent, iQIYI
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 28: 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 29: Skyworth Smart TV Household Users in China
Skyworth Smart TV Household Users in China Additional 6m – 8m coocaa TV OS Users Every Year Accumulated Activated Users 44.59m (Internet TV installed since 2012) (2019 vs 18 17% 6.23m new users) (By March 2020) Smart TV Monthly Active Users 28.10m Conversion Rate 63% Smart TV Monthly Activated Use
Slide 30: 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 30
Slide 31: 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 31
Slide 32: 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% 32
Slide 33: coocaa Shopping, Sports and Health, Gaming
coocaa Shopping coocaa Sports and Health Gaming on Big Panel Alliances with Geek Box, Ministation (Tencent) 33
Slide 34: 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 34
Slide 35: Appendices
Appendices Transformation and Escalation Strategies (36) Land and Recurrent Rental Income in Shenzhen (37) Brand Valuation and Investment in Smart Production (38) Integrated Chain Management and Production Capacity (39) TV Replacement Demand in China (40) 35
Slide 36: Skyworth Transformation and Escalation Strategies
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 37: Assets and Recurrent Rental Income in Shenzhen
Assets and Recurrent Rental Income in Shenzhen Nanshan Qianhai Shiyan 37
Slide 38: Brand Valuation in China Achieved RMB100bn in 2017
Brand Valuation in China Achieved RMB100bn in 2017 Headquarter & Smart Production Base in GZ Development Zone 38
Slide 39: 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, Innolux and BOE Investments in LGD 8.5G LCD Panel fab & module fab in Guangzhou TV Production Capacity 2020 (16m units ) Shiyan, Shenzhen 8m units Gu
Slide 40: 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 41: Vision
Vision To create a globally prominent brand of consumer electronic products ir@skyworth.com.hk http://investor.skyworth.com Wechat Subscription ID: skyworth-1988 (创维集团), SKYWORTH1988-TV (创维电视)