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2014 Investor Presentation 64 255 102 0 Calibri 1.

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Presentation on theme: "2014 Investor Presentation 64 255 102 0 Calibri 1."— Presentation transcript:

1 2014 Investor Presentation 64 255 102 0 Calibri 1

2 Safe Harbor Statement This presentation contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, including, without limitation, those with respect to the objectives, plans and strategies of the Company set forth herein and those preceded by or that include the words "believe," "expect," "anticipate," "future," “will,” "intend," "plan," "estimate" or similar expressions, are "forward-looking statements". Forward-looking statements in this release include, without limitation, the effectiveness of the Company’s multiple-brand, multiple channel strategy and the transitioning of its product development and sales focus to a “light-asset” model. Although the Company's management believes that such forward-looking statements are reasonable, it cannot guarantee that such expectations are, or will be, correct. These forward-looking statements involve a number of risks and uncertainties, which could cause the Company's future results to differ materially from those anticipated. These forward-looking statements can change as a result of many possible events or factors not all of which are known to the Company, which may include, without limitation, requirements or changes adversely affecting the LCD and LED market in China; fluctuations in customer demand for LCD and LED products generally; our success in promoting our brand of LCD and LED products in China and elsewhere; our ability to have effective internal control over financial reporting; our success in designing and distributing products under brands licensed from others; management of sales trends and client mix; possibility of securing loans and other financing without fixed assets as collateral; changes in government policy in China; the fluctuations and competition in sales and sale prices of LCD and LED products in China; China’s overall economic conditions and local market economic conditions; our ability to expand through strategic acquisitions and establishment of new locations; compliance with government regulations; legislation or regulatory environments; geopolitical events, and other events and/or risks outlined in SGOCO's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F and other filings. All information provided in this presentation is as of the date of the issuance, and SGOCO does not undertake any obligation to update any forward-looking statement, except as required under applicable law. 2

3 Agenda  Company Overview  Competitive Advantages  Industrial Overview & Emerging Growth Opportunities  Evolving Business Model & Growth Strategies  Financial Snapshots  Management Team  Appendix 3

4  Company Overview  Competitive Advantages  Industrial Overview & Growth Opportunities  Evolving Business Model & Growth Strategies  Financial Snapshots  Management Team  Appendix 4

5 Sgoco At a Glance 5 As of October 31, 2013 Stock Ticker: SGOC Stock Price: $3.40 Market cap: $58.5 M Share outstanding: 17.2M

6 A Company in Transformation …. 6 Capturing enormous opportunities from China’s urbanization Wide range from Smart displays and PCs, ASPs to LCD/LED monitors and TVs Develop and distribute products co-branded with top-tier brands Own in-house product development capabilities A multi-brand strategy supported by wide distribution network Target at China’s fast-growing 3 rd and 4 th tier cities Business model transformation in November, 2011 Sold manufacturing facilities and shifted focus to branding and distribution Listed in NASDAQ with an offering of 1.3M ordinary shares at $5.00 per share. Founded in China as a leading display products supplier and a OEM partner of choice. 2005 2010 2011 2012

7  Company Overview  Competitive Advantages  Industrial Overview & Growth Opportunities  Evolving Business Model & Growth Strategies  Financial Snapshots  Management Team  Appendix 7

8 An Integrated “Channel” Solution Model 8 Consumers TRADITIONAL LCD/ Monitor RetailerDistributionOEM Co-brand product design Procurement Consumers BRAND SOLUTION or RetailerDistribution DISPLAY SOLUTION OEM Product design Co-brand partnership Procurement R&D Find target corporate customers Consumers Corporate customers RetailerDistributionOEM Product design Procurement R&D or OEM Design solution based services and products Co-brand partnership Procurement Find target industry verticals Industry Verticals

9 A Multiple Brand Strategy 9 The company's flagship brand China's leading TV brand A leading brand in Tier 3 and Tier 4 markets China's leading PC brand

10 Anhui Zhejiang Guangdong Guangxi Hunan Hubei Sichuan Henan Shandong Shaanxi Heilongjiang Inner - Mongolia Jiangsu Hebei Fujian | Product center Chongqing Liaoning Jiangxi Beijing | Headquarter Shenzhen | Sales office An Extensive Channel Network in Tier 3 & 4 Markets Self-managed province-level distributors covering 19 provinces in China

11 TRADITIONAL BUSINESS: LCD/LED Monitors, LCD/LED TVs LED/LCD TV LED Monitor Touch-screen Monitor LCD Monitor 3D TV A Market Driven Product & Solution Offerings ADDITIONAL GROWTH BUSINESS: Smart Display Products Tablet PC Part-in-ones (PIO) All-in-ones (AIO) CCTV MonitorAdvertising LCD Touch Screen E-board FUTURE GROWTH FOCUS: Application: Specific products and services target at industry verticals

12 A Distinctive SGOCO Competencies 12 Low Credit Risk Business Model 4-Pronged Sales Strategy Rural Market Knowledge Highly Integrated Channel  Low AP risk : Direct control and billing to few distributors  First-hand market information : Localized sales and CRM teams in key sales points  Low AP risk : Direct control and billing to few distributors  First-hand market information : Localized sales and CRM teams in key sales points  Top tier licensing brands focus  Continue to expand distribution networks  High growth industries focus  Continue to expand product and solution offerings  Top tier licensing brands focus  Continue to expand distribution networks  High growth industries focus  Continue to expand product and solution offerings  Strong presence in rural display market  Product development team owns market-know-how  Cross-connected sales and product development team sharing market knowledge  Strong presence in rural display market  Product development team owns market-know-how  Cross-connected sales and product development team sharing market knowledge  Successful early development in high margin products  Big opportunities ahead in commercial  International expansion through distribution  Optimize Cross-channel synergies  Successful early development in high margin products  Big opportunities ahead in commercial  International expansion through distribution  Optimize Cross-channel synergies

13  Company Overview  Competitive Advantages  Industrial Overview & Growth Opportunities  Evolving Business Model & Growth Strategies  Financial Snapshots  Management Team  Appendix 13

14 Expanding Addressable Display Market in China – Industry Verticals 14 Fast-growing demand for domestic travel. Intensive infrastructure investments in China, encouraged domestic travel and the growth of budget hotels. By the end of 2013, 37% of classrooms in China will have an interactive display. Source: Futuresource. Travel & Leisure Transportation & Infrastructure Education RMB Source: China National Tourism Administration Domestic Tourism Expenditure per Capita Growth in China National Enrolment Breakdown 2012 Approx. 509.6 million students Source: Ministry of Education of China

15 Emergence of Solutions Driven Demand from Retail and Commercial Interactive panel displays are gaining popularity: For 1H 2013, sales of interactive whiteboards & interactive flat panel displays in the education and corporate sectors up 20% Source: Futuresource China retained its position as the largest world country market, with 40% of the global market and 77% of the Asia region's sales. Household ASP Commercial ASP Younger generation’s need on sophisticated electronic devices 15 Source: KDB Daewoo Securities Research Touchscreen Penetration in Desktop PCs The “Screenager” Era: Touch panels are in increasingly widespread use in a variety of applications, including mobile phones, tablets, notebook PCs, and in-car technology... (Nomura)

16 Exponential Growth in Lower Tier Cities 16 In China: PC shipment to have double-digit growth until 2016. Lower tier cities are growth drivers. (1) Disposable income per capita of urban households up 9.6% to nearly RMB 25K. (2) Urbanization rate at 42.2% in 2012 (3). 390 million people will move to urban areas by 2030. Internet population to reach ≈ 800 mil by 2015. Mobile internet users up 18.1% yoy to 420 mil in 2012. (4) 210 mil fixed-line broadband subscribers by 2013, 270 mil by 2015 end, 400 mil by 2020 end (1)IDC, June 2012 (2)National Bureau of Statistics of China (3)Chinese Academy of Social Sciences, CASS TV PC Mobile/ Handheld 4.Chinese Ministry of Industry and Information Technology, MIIT 5.China’s Sate Council – 2013-2020 Broadband Development Plans Disposable Income of Urban Households 2008 ~ 2012 (2)

17  Company Overview  Competitive Advantages  Industrial Overview & Growth Opportunities  Evolving Business Model & Growth Strategies  Financial Snapshots  Management Team  Appendix 17

18 Transformative Business Model Moves Up the Value Stack 18 Channel Play = Combining products and display solution V A L U E C H A I N P R O D U C T S Multi-brands: -Sgoco -TCL -Founder -Povizon -No. 10 Channels SGOCO Brand Channels e-commerce Sector Driven : Education Market Driven : Media Display Display Solution Others ….

19 Strengthen brand & product portfolio Expand distribution channel Focus on high-growth industries Develop solution based services Transformation in 4-Pronged Strategies 19  Leverage on strong distribution network to sign up top tier brands  Increase overall brand awareness for SGOCO and clients to capture additional market share  Leverage on strong distribution network to sign up top tier brands  Increase overall brand awareness for SGOCO and clients to capture additional market share  Continue to expand in the traditional distribution network  Look into emerging channels such as e-commerce to capture the shift of consumer behaviors in the market  Continue to expand in the traditional distribution network  Look into emerging channels such as e-commerce to capture the shift of consumer behaviors in the market  Identified high growth industries, such as budget hotel chains - provide them with tailored display products for their boutique size  Self-develop and partner with brand clients to develop niche products o All-in-one PCs o Parts-in-one PCs  Self-develop and partner with brand clients to develop niche products o All-in-one PCs o Parts-in-one PCs

20 Product Driven Short-Term Growth Catalysts 20 All-in-One / Part-in-One PCs  Features: Touch-screen, Built-in to a flat screen monitor, Multi-functional, Slim design. PIO also provides flexibility for users to configure and build their own PC system  Target markets: Retail and Commercial use e.g. Budget hotels  Features: Touch-screen, Built-in to a flat screen monitor, Multi-functional, Slim design. PIO also provides flexibility for users to configure and build their own PC system  Target markets: Retail and Commercial use e.g. Budget hotels Design and Price is King! Worldwide All-in-one Desktop PC Forecast CAGR: 13% DisplaySearch

21 Solution & Channel Driven Mid to Long-Term Growth Catalysts 21  Target markets: High growth industries in China  Education  Infrastructure  Travel and Leisure  Target markets: High growth industries in China  Education  Infrastructure  Travel and Leisure Flexibility and Diversification is King! Display Solution ProductsBrandsDistributionMarketing

22  Company Overview  Competitive Advantages  Industrial Overview & Growth Opportunities  Evolving Business Model & Growth Strategies  Financial Snapshots  Management Team  Appendix 22

23 US$ Millions Revenue Growth Traction Returned 23 3Q 2012: SGOCO was experiencing the transition to a “light-asset” business model. Therefore, the revenues were negatively impacted. Total Revenue

24 Profitability Focused 24 Income from Operations & Operating Margin US$ Millions

25 Stabilized Cash Position to Fuel Growth 25 Working Capital & Current Ratio US$ Millions Cash and Cash Equivalents US$ Millions Inventories

26 Shareholders’ Return Focused 26 Return on Invested CapitalReturn on Equity Per Quarter

27  Company Overview  Competitive Advantages  Industrial Overview & Growth Opportunities  Evolving Business Model & Growth Strategies  Financial Snapshots  Management Team  Appendix 27

28 A Dynamic Management Team 28 Chief Financial Officer CPA in Hong Kong and Australia Started with Deloitte in Hong Kong and Beijing from 1997, Mr. Lau has over 17 years of experience in the accounting profession Previous worked in various public companies in the US and England as Director of Finance and CFO for nine years Bachelor degree in commerce from Monash University, Australia Mr. Johnson Lau Mr. David Xu Chief Executive Officer Appointed as SGOCO’s CEO in January 2014 Served as SGOCO’s COO from July 2013 to January 2014 Served as SGOCO’s CFO from May 2011 to July 2013 Nearly 20 years of finance and accounting experience in both Asia and North America Previous employers include General Electric and Yum! Brands MBA from the University of Illinois at Chicago, and a BA in English and American Literature from Beijing Normal University Mr. Tin Man Or Chairman of the Board Appointed as SGOCO’s Chairman of the Board in January 2014 Previously served as a director of the Board from 2010 to 2013 35+ years of experience in the investment and marketing of the display and trading industries throughout Greater China. Owns Sun Zone Investments Limited, which is the major shareholder of SGOCO Group. Served as General Manager of Honesty Group from 2005 to 2011, before SGOCO's sale of Honesty Group and transformation into a light-asset business model

29  Company Overview  Competitive Advantages  Industrial Overview & Growth Opportunities  Evolving Business Model & Growth Strategies  Financial Snapshots  Management Team  Appendix 29

30 $ in thousands except shares and per share data Three Months Ended September 30, 2013 Nine Months Ended September 30, 2013 2013201220132012 Revenues 42,96926,047156,754103,272 Cost of Goods Sold 39,50125,105144,34195,692 Gross Profit 3,46894212,4137,580 Selling expenses 259212815460 General and administrative expenses 7651,4822,4354,166 Total operating expenses 1,0241,6943,2504,626 Income (Loss) from Operations 2,444(752)9,1632,954 Income before Provision for Income Taxes 2,667(759)9,2102,946 Provision for Income Taxes 5133311,9421,887 Net income (loss) 2,154(1,090)7,2681,059 Comprehensive Income 2,180(1,093)7,400974 Earnings (Loss) per Share – basic & diluted 0.12(0.06)0.420.06 Weighted Average Number of Common Shares – basic & diluted 17,254,86017,059,86017,172,72017,059,860 P&L – Selected Items 30

31 $ in thousands except shares and per share data As of September 30, 2013 As of December 31, 2012 Cash 13,68111,548 Accounts receivable 54,39359,355 Inventories 25,7095,725 Advances to suppliers 20,50228,511 Total Current Assets 120,204105,386 Total Assets 120,445105,647 Short-term loan 11,4516,230 Accounts payable 8,34212,038 Customer deposits 6,0981,155 Taxes payable 7,9157,147 Total Current Liabilities 34,47727,314 Total Liabilities 34,50527,332 Retained earnings 60,31253,044 Total Shareholders’ Equity 85,94078,315 Total Liabilities and Shareholders’ Equity 120,445105,647 Balance Sheet – Selected Items 31

32 $ in thousands of U.S. dollars Nine Months Ended September 30, 2013 Nine Months Ended September 30, 2012 Net cash provided by (used in) operating activities (2,921)(12,138) Net cash (used in) provided by investing activities (29)18,629 Net cash provided by (used in) financing activities 5,012(254) Increase in cash 2,1336,213 CASH, beginning of period 11,548535 CASH, end of period 13,6816,748 Cash Flow Statements – Selected Items 32

33 Investor Relations Contact Serena Wu SGOCO Group, Ltd. Direct Line: +86-10-8587-0173 Email: ir@sgoco.com 33


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