Attached files
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| 8-K - SINOHUB, INC. | c1117928k.htm |
Electronic
Components Supply Chain Management
Investor
Presentation
November 2009
November 2009
www.sinohub.com
2
Safe
Harbor Statement
This
presentation contains “forward-looking statements” within the meaning of the
“safe-harbor”
provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and
unknown risks, uncertainties and other factors that could cause the actual results of the company to
differ materially from the results expressed or implied by such statements, including changes of
anticipated sales levels, future international, national or regional economic and competitive conditions,
changes in relationships with customers, access to capital, difficulties in developing and marketing new
products and services, marketing existing products and services, customer acceptance of existing and
new products and services, and other factors, including those factors described on Exhibit 99.1 to
SinoHub’s Current Report on Form 8-K filed on September 28, 2009. Any statements that are not
historical facts and that express, or involve discussions, as to expectations, beliefs, plans, objectives,
assumptions or future events or performance (often, but not always, through the use of words or
phrases such as "will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,”
“intends,” “plans,” and “projection”) are not historical facts, may be forward-looking statements and
may involve estimates and uncertainties. Accordingly, although the company believes that the
expectations reflected in such forward-looking statements are reasonable, there can be no assurance
that such expectations will prove to be correct. The company undertakes no obligation to update the
forward-looking information contained in this presentation.
provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and
unknown risks, uncertainties and other factors that could cause the actual results of the company to
differ materially from the results expressed or implied by such statements, including changes of
anticipated sales levels, future international, national or regional economic and competitive conditions,
changes in relationships with customers, access to capital, difficulties in developing and marketing new
products and services, marketing existing products and services, customer acceptance of existing and
new products and services, and other factors, including those factors described on Exhibit 99.1 to
SinoHub’s Current Report on Form 8-K filed on September 28, 2009. Any statements that are not
historical facts and that express, or involve discussions, as to expectations, beliefs, plans, objectives,
assumptions or future events or performance (often, but not always, through the use of words or
phrases such as "will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,”
“intends,” “plans,” and “projection”) are not historical facts, may be forward-looking statements and
may involve estimates and uncertainties. Accordingly, although the company believes that the
expectations reflected in such forward-looking statements are reasonable, there can be no assurance
that such expectations will prove to be correct. The company undertakes no obligation to update the
forward-looking information contained in this presentation.
www.sinohub.com
3
By
revitalizing electronics supply chain management in China,
SinoHub
believes it is poised to play a major role
in the world’s largest electronics marketplace
in the world’s largest electronics marketplace
SinoHub
At a Glance
● Headquarters:
Shenzhen,
PRC
● Founded: 2000
● NYSE Amex: SIHI
● Market cap: ~$110
million
● Revenues
(TTM) : $112
million
+77%
vs. year-ago TTM
● Net income
(TTM): $12
million
+81%
vs. year-ago TTM
● EPS (TTM) : $0.46
● Working capital:
$32
million
● ROE: 25.7%
TTM
data as of September 30, 2009.
www.sinohub.com
4
Chinese
Electronics Industry
SINOHUB’S
STRATEGIC POSITION
● Industry
participants seeking to
outsource supply chains
outsource supply chains
Web-Based
Supply Chain Management
● Largest producer
of electronic
products
products
● Biggest consumer
of electronic
components - and rising
components - and rising
● New approach to information access and
sharing
● Core
SCM services specialized for electronics industry - gives
SinoHub leverage along entire electronics supply
chain
●
Proprietary SCM platform for electronics industry in
China
● Positioned to consolidate a substantial
portion of the electronic industry on SCM
platform
Capitalizing on Current Trends
www.sinohub.com
5
Electronic
Products Production1
U.S.
China
1 Reed Electronics
Research (RER), November 2007
2 Global Sources,
February 2009
Large
Electronic Components Industry in China
● World’s largest
consumer of electronic components
§ Produced US$391B
electronic products in
20081
20081
§ Domestically
consumed US$117B electronic
components in 20082
components in 20082
● Existing
electronic components supply chain
management (SCM) infrastructure offers significant
opportunities
management (SCM) infrastructure offers significant
opportunities
§ SCM providers in
U.S. and Europe have not
made the investments to provide adequate
services in China
made the investments to provide adequate
services in China
§ Existing
distributors in China lack ability to
provide full services
provide full services
● Large
manufacturers of non-branded products now
outsourcing SCM functions to reduce overhead
outsourcing SCM functions to reduce overhead
www.sinohub.com
6
Web-based
proprietary SCM platform = Competitive edge
The
Secret Sauce
● Import business
generates real-time, continually updated database
of electronic component market prices
of electronic component market prices
§ Competitors must
devote significant time, energy and resources to gain
access to similar information and build database with critical mass
access to similar information and build database with critical mass
● Proprietary
database search engine capability allows SinoHub to
identify most competitive deals for procurement-fulfillment and
electronic component sales
identify most competitive deals for procurement-fulfillment and
electronic component sales
● New business model
with much lower cost structure than
competitors
competitors
www.sinohub.com
7
The
SinoHub Advantage
● Integration of
Electronic Component Purchasing and Custom Phone
Supply around SCM core
Supply around SCM core
● Web-based
proprietary SCM technology platform
§ Provides insight
into price, quantity, lead time on 30,000+ components
§ Online MIS system
geared to expanding usage of Internet for business
transactions and information exchange
transactions and information exchange
§ Complete real time
supply chain transparency 24X7
§ Supports rapidly
growing electronic component sales
● Deep
entrepreneurial, managerial and local field expertise in
electronics industry
electronics industry
● Strong
relationships with Chinese Customs
www.sinohub.com
8
SinoHub
SCM™
Online
MIS
system
Strategically
located
warehouse
and service center network
150+
team of employees with deep
local
experience in the electronics industry
SinoHub’s
SCM Platform
Power
of SinoHub’s SCM Platform
SinoHub’s
SCM Platform provides a competitive advantage
in
a rapidly expanding electronic components industry in
China
www.sinohub.com
9
SCM
- Web-based MIS System
● Key
differentiator
● Creates barrier to
entry and provides competitive advantage
● Fully integrated
SCM services tailored to electronic components
● Promotes
transparency
§ 24X7, real time,
Web-based solution
§ Information
sharing between our customers and their customers and
suppliers
suppliers
● Integrated
solution combines information entry with automatic price
checking, processing, query and services
checking, processing, query and services
www.sinohub.com
10
Supply
Chain
Management
(SCM)
Management
(SCM)
Electronic
Component
Purchasing
(ECP)
Component
Purchasing
(ECP)
Custom
Phone
Supply*
(CPS)
Supply*
(CPS)
*
Represents recently-developed business line in early stages of revenue, which is
not yet material to results of operations.
Key
Service Offerings
Three
interdependent
business units
sharing information
at every level
www.sinohub.com
11
● Web-based SCM
platform to support services and provide information
● Makes supply chain
transparent for all participants
● Fully integrated
services:
§ Bill of material
and order processing management
§ Inventory
management
§ Import and export
services - customs applications,
tax reports, payment
services, certificates for paid customs tax
services, certificates for paid customs tax
§ Delivery services
- door-to-door
and just-in-time freight forwarding
Key
Service Offerings
Supply
Chain Management (SCM)
www.sinohub.com
12
Electronic
Component
Procurement
Logistics
Services
SCM
MIS
Solution
Enablement
Open
to 3rd
Parties
SinoHub
Vendors
(TI,
Motorola, etc.)
Distributors
(Avnet,
Arrow, etc.)
Express
Forwarders
(UPS,
DHL, FedEx, etc.)
Local
Import/Export
Companies
(Shenzhen
Eternal Asia, etc.)
Services
Chart
based on SinoHub’s internal research.
Supply
Chain Management - Powerful
Differentiation
SinoHub’s
SCM platform has an outstanding reputation with some of the
world’s largest electronic component distributors
world’s largest electronic component distributors
Key
No
Service
Limited
Scope
Partial
Scope
Full Scope
www.sinohub.com
13
Electronic
Component Purchasing (ECP)
Key
Service Offerings
● Spot component
sales based on information generated by core SCM -
presents revenue generating opportunities for SinoHub and allows design
houses, contract manufacturers and OEMs to purchase at better prices
presents revenue generating opportunities for SinoHub and allows design
houses, contract manufacturers and OEMs to purchase at better prices
● Procurement
services - SinoHub
buys and finances electronic components
for customers
for customers
● Fulfillment
services - SinoHub
manages customer determined purchasing
and finances purchases for customers
and finances purchases for customers
www.sinohub.com
14
Chart
based on SinoHub’s internal research.
Database
from
Core SCM
Business
Core SCM
Business
Minimum
Inventory
Requirement
Inventory
Requirement
Sales
Force not
Dedicated to
Product Line
Dedicated to
Product Line
Minimum
Sales
Engineers
Engineers
Requirement
SinoHub
Vendors
(TI,
Motorola, etc.)
Distributors
(Avnet,
Arrow, etc.)
Independent
stocking
distributors
Traders
Key
Does
Not Apply
Partially
Applies
Applies
Electronic
Component Purchasing - Enhancing
Efficiencies
SinoHub’s
ECP platform has enabled the company to create what we
believe to be the industry’s most cost effective business model
believe to be the industry’s most cost effective business model
www.sinohub.com
15
Custom
Phone Supply* (CPS)
*
Represents recently-developed business line in early stages of revenue, which is
not yet material to results of operations.
Key
Service Offerings
● Online CPS
platform to connect customers with design houses and
manufacturers
manufacturers
● Minimal investment
in R&D and fixed assets
● Flexibility on
order quantities which creates a distinct opportunity in
under-serviced markets
under-serviced markets
www.sinohub.com
16
Chart
based on SinoHub’s internal research.
Outsource
R&D
Small
Minimum
Minimum
Order
Size
Complete
Platform
SinoHub
OEMs
(Nokia,
Samsung, etc.)
Tier
1 Contract Mfgs.
(Foxconn,
Flextronics, etc.)
Local
Contract Mfgs.
(TCL,
Skyworth, Konka, etc.)
Design
Houses
(Longcheer,
Wintech, etc.)
Outsource
Manufacturing
Key
Does
Not Apply
Partially
Applies
Applies
*
Represents recently-developed business line in early stages of revenue, which is
not yet material to results of operations.
Custom
Phone Supply* - Niche
Position
SinoHub’s
CPS Platform allows customers to place small orders
for exactly what their markets need while generating a profit
for the company by eliminating fixed overhead
for exactly what their markets need while generating a profit
for the company by eliminating fixed overhead
www.sinohub.com
17
SinoHub
Revenue by Verticals
(2008)
No
one customer represents more than
10% of total revenues
10% of total revenues
1 China Market
Intelligence Center (CMIC) data for 2008
Industry
Verticals
● Mobile phone
industry in China
§ More than 1,000
mobile phone models -
“Must Have” not “Nice-to-Have”
“Must Have” not “Nice-to-Have”
§ China responsible
for 50% of worldwide
mobile phone manufacturing capacity1
mobile phone manufacturing capacity1
§ Price and
functionality replacing brand as
primary market driver
primary market driver
§ Non-branded mobile
phone sales expected
to account for 33% of total market in China
in 2010
to account for 33% of total market in China
in 2010
§ Large local
manufacturers - whose
phones
are sold into 2nd tier market - seeking to
outsource procurement, SCM functions
are sold into 2nd tier market - seeking to
outsource procurement, SCM functions
● Success in mobile
phone market replicable
in other industry verticals
in other industry verticals
www.sinohub.com
18
Independent
Distributors
Distributors
Franchise
Distributors
Distributors
Design
Houses
Manufacturer
Customers
EMS
Providers
Vendors
(electronic
component
manufacturers)
(electronic
component
manufacturers)
Supplier
Customers
Strong
Customer Relationships
More
than 120 enterprises utilize SinoHub’s SCM platform …
including
some of the largest electronic components distributors in the
world
www.sinohub.com
19
Value
of Customer Goods Processed by
SinoHub Through Huanggang Customs
SinoHub Through Huanggang Customs
($
in US millions)
Client
Coordinator Enterprise
(At
Huanggang - Main Border Crossing
Between Hong Kong
and China)
AA
Customs High Credit Enterprise
(Throughout
China)
Priority
Customs Clearance Status
● Awarded to top
service providers
§ Highest
reputation
§ Strong track
record
§ Greater than RMB
200 million per year
in VAT paid
in VAT paid
● Accelerates
SinoHub’s Huanggang
customs clearance in Shenzhen
customs clearance in Shenzhen
§ Releases goods by
up to 20X faster
● Highest level of
achievement awarded
to long-standing enterprises
to long-standing enterprises
§ Standardized
operations
§ Reliable customs
declaration
● Perfect record of
compliance
● Recognized in all
China’s customs ports
§ Expedited
clearance
§ Exemption from
customs examinations
§ Processing by
dedicated personnel
www.sinohub.com
20
Hong
Kong
China
Beijing
Regional
Office
(300
sq. ft.)
Shanghai
(Pudong)
Regional
Service Center + Warehouse
(6,000
sq. ft.)
Shanghai
(Wai Gao Qiao)
Regional
Service Center + Warehouse
(5,300
sq. ft.)
Hangzhou
Regional
Service Center
(500
sq. ft.)
Shenzhen
HQ + Regional Service Center + Warehouse
(27,600
sq. ft.)
Hong
Kong
Procurement-Fulfillment
Hub
+ Bonded Warehouse
+ Transportation Hub (26,500 sq. ft.)
+ Bonded Warehouse
+ Transportation Hub (26,500 sq. ft.)
System
of warehouses, trucking and freight handling
equipment add value to physical logistics
equipment add value to physical logistics
Shenzhen
Hangzhou
Strategic
Service Center Network
www.sinohub.com
21
|
|
2006
|
2007
|
2008
|
|
Revenue
|
$19.1
|
$28.8
|
$79.5
|
|
Gross
profit
|
$4.0
|
$6.7
|
$16.2
|
|
Net
income
|
$1.2
|
$3.5
|
$8.5
|
|
Earnings
per share - basic
Number
of shares (millions)
- basic
|
$0.09
13.9
|
$0.22
15.8
|
$0.41
20.9
|
|
Earnings
per share - diluted
Number
of shares (millions)
- diluted
|
$0.09
14.0
|
$0.22
15.9
|
$0.40
21.5
|
(Audited,
$ in US millions, except EPS data)
|
Gross
margin
|
21.2%
|
23.2%
|
20.4%
|
|
Net
income margin
|
6.4%
|
12.2%
|
10.7%
|
|
Revenue
|
44.4%
|
51.1%
|
176.0%
|
|
Gross
profit
|
92.0%
|
65.0%
|
143.1%
|
|
Net
income
|
190.7%
|
191.5%
|
142.3%
|
Year-Over-Year
Growth Rates
Growth Rates
Margin
Analysis
Analysis
Financial
Highlights
www.sinohub.com
22
|
|
Q3
2009
|
Q3
2008
|
YTD
2009
|
YTD
2008
|
|
Revenue
|
$36.2
|
$28.2
|
$85.6
|
$53.0
|
|
Gross
profit
|
$6.4
|
$6.1
|
$16.0
|
$9.9
|
|
Income
from operations
|
$4.7
|
$5.0
|
$11.4
|
$7.1
|
|
Net
income
|
$3.5
|
$3.9
|
$8.7
|
$5.5
|
|
Earnings
per share - basic
|
$0.14
|
$0.19
|
$0.35
|
$0.28
|
|
Earnings
per share - diluted
|
$0.13
|
$0.18
|
$0.34
|
$0.28
|
($
in US millions, except EPS data)
|
|
9/30
2009
|
12/31
2008
|
|
Cash
and cash equivalents
(unrestricted) |
$6.7
|
$5.9
|
|
Total
current assets
|
$47.3
|
$29.3
|
|
Total
current liabilities
|
$15.2
|
$6.5
|
|
Working
capital
|
$32.1
|
$22.8
|
|
Total
stockholders’ equity
|
$34.0
|
$23.5
|
|
Total
liabilities and
stockholders’ equity |
$49.2
|
$30.0
|
Condensed
Income Statement
Financial
Condition
($
in US millions)
2009
Q3Financial Results
www.sinohub.com
23
Proven
Organic Growth Strategy
● Add more
value-added services and enlarge footprint through
customer-driven improvements in SCM platform
customer-driven improvements in SCM platform
§ Optimize web-based
MIS system to bolster industry position
§ Open offices and
warehouses in additional key locations
● Leverage
capabilities and customer benefits to increase market share
and processing volume
and processing volume
§ Combination of
procurement-fulfillment and end-to-end, integrated SCM
services maximizes customers’ supply chain efficiencies
services maximizes customers’ supply chain efficiencies
§ Promotes industry
participants to seek SinoHub’s services to remain
competitive in the market
competitive in the market
● Build SinoHub
brand and distribution capabilities
www.sinohub.com
24
Experienced
Management Team
● Henry
T. Cochran - CEO
and Chairman of the Board
§ 30+ years founding
and managing companies
§ Former CEO and
president - Content Integrity and Advanced Visual Systems
§ Former VP - Sybase
§ Strong MIS
background
● Lei
Xia - President
§ 15 years in
electronic components industry in China
§ Significant senior
management experience in the Chinese electronics industry
§ First sales
manager of Arrow Electronics’ Shanghai office
§ Founded RGL
Beijing (high-end distributor and solution provider) and NEFAB China
(manufacturer and packaging solution provider)
(manufacturer and packaging solution provider)
● Willa
Li - CFO
§ Years of
experience working with Chinese banks
§ Significant
knowledge of electronic components industry
§ Prior CFO of
Shenzhen Excellence Investment Development Company where he raised
RMB 120 million
RMB 120 million
§ Prior EFO of Hong
Kong B&D Engine Company
www.sinohub.com
25
|
|
BOARD
OF DIRECTORS
|
Audit
Committee
|
|
|
Harry
Cochran -
Chairman
of the Board and CEO
|
|
|
Lei
Xia -
President
|
|
|
|
|
Will
Wang Graylin -
CEO,
ROAM Data
-
Extensive operational and entrepreneurial skills in mobile phone
industry
|
|
|
Charles
Kimball -
Chief
Research Consultant, Bosera Fund Management
- Significant Wall Street and financial management experience as 30-year veteran of JPMorgan |
P
|
|
|
Dr.
Richard King -
Venture
Partner,
GRP; Advisor, Nexit; and Science Advisory Board, NYU
-
Extensive experience in financial markets as an electronics analyst and
investment banker, advanced economic studies
|
|
|
|
Robert
Torino -
COO,
iPayment
-
CPA, former CFO, significant public company experience
|
P
|
|
|
Afshin
Yazdian -
EVP
& General Counsel, iPayment
-
SEC reporting knowledge, strong M&A experience
|
P
|
Building
World Class Corporate Governance
www.sinohub.com
26
Customers will
utilize
SinoHub’s platforms to
manage electronics supply
chain, electronic component
purchases and order
fulfillment themselves
SinoHub’s platforms to
manage electronics supply
chain, electronic component
purchases and order
fulfillment themselves
Centered in China
with
strategically located sales
offices around the world
strategically located sales
offices around the world
Global,
profitable
electronics company
electronics company
Leading
independent
distributor of electronic
components in China
distributor of electronic
components in China
Strong force in
electronics
products sales in selected
verticals worldwide
products sales in selected
verticals worldwide
Supply
Chain
Management (SCM)
Management (SCM)
SinoHub SCM
platform is making
entire electronics supply chain
transparent to all SinoHub
customer/supplier participants
entire electronics supply chain
transparent to all SinoHub
customer/supplier participants
Electronic
Component
Purchasing
(ECP)
Purchasing
(ECP)
SinoHub ECP
platform will set new
standard for online electronic
component purchasing
standard for online electronic
component purchasing
Custom
Phone Supply*
(CPS)
(CPS)
SinoHub CPS
platform will enable
distributors and operators to fill
orders quickly regardless of size and
allow manufacturers to track all
aspects of production process
distributors and operators to fill
orders quickly regardless of size and
allow manufacturers to track all
aspects of production process
Three
interdependent
business units
sharing information
at every level
interdependent
business units
sharing information
at every level
Increasing
Shareholder
Returns
*
Represents recently-developed business line in early stages of revenue, which is
not yet material to results of operations.
Five-Year
Goals - The
Big Picture
www.sinohub.com
27
HuaQin begins
utilizing SinoHub SCM for
warehousing/inventory management,
import/export and logistics services
warehousing/inventory management,
import/export and logistics services
“SinoHub
SCM has enabled us to
reduce our production cycle by 33%
thus far. We regard SinoHub SCM as
an indispensable tool to enhancing
our efficiencies and increasing our
profitability.”
reduce our production cycle by 33%
thus far. We regard SinoHub SCM as
an indispensable tool to enhancing
our efficiencies and increasing our
profitability.”
Ms.
Qiang Qinlin
Vice
President of HuaQin
Case
Study:
Enhancing Efficiencies through SinoHub SCM
Enhancing Efficiencies through SinoHub SCM
● Founded June 2005
and dedicated to the research and
development of leading mobile handsets
development of leading mobile handsets
● Aug 2008 - Signed
license agreement with Qualcomm to
introduce advanced 3G CDMA2000 products in China
introduce advanced 3G CDMA2000 products in China
● Aug 2008 -
Received ISO-9001 certification
● Awards
§ 2008 Top 10
Project Design of Mobil Phone
§ Lenovo’s Best
Provider 2008
● Achieving nearly
100% CAGR in shipment volumes
● Annual revenue
approaching RMB 1.7 billion for 2009
www.sinohub.com
28
Investment
Opportunity Highlights
● Revolutionary
business model making existing franchise distribution model in China
obsolete
● Growing
utilization of SinoHub SCM propagates information generation
● Database
management system maximizes value of sales network and inventory
● Operating in
largest and growing electronic components market in the world
● Web-based
proprietary system and electronics components focus provides high barriers
to
entry
entry
● Success in mobile
phone market replicable in other industry verticals
● Proven organic
growth strategy
● Solid, experienced
management team and board with clear roadmap for continued growth
● Low SG&A and
attractive valuation