2017 interim results presentationglobal ran (radio access network) revenue 2015-2022 ($ m) the...
TRANSCRIPT
OUR company
MOBI Development Co., Ltd. (“MOBI”) is dedicated
to provide front-end products for wireless
communication, which apply to signal transmitting,
receiving and processing. Our business consists of
base station construction products and full range of
products for relevant extension coverage. We are
especially professional in antenna R&D and radio
frequency technologies. MOBI is listed in HKEx on 17
December, 2009 (Stock Code: 0947.HK).
MOBI Development Co., Ltd. has five R&D and
manufacture bases, located in Nanshan District in
Shenzhen, Guangming District in Shenzhen, Ji'an in
Jiangxi Province, Xi'an in Shaanxi Province, and
Wuhan in Hubei Province separately. The total area
of manufacture bases is around 110,000㎡.
Company Introduction
3
Introduction of Our Main Business
GPS Antenna
Indoor Coverage Solution
Aesthetic Antenna
Base Station Antenna
Microwave Antenna
Tower Mounted Amplifier
Combiner
Filter
T-Head Surge Arrester
Cable
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Company Structure
MOBI Technology (Hong Kong)
MOBI Technology (Xi An)
100%
100%
MOBI Technology (Shenzhen)
100%
International Trade and Funding
Base Station Production
Microwave Antenna Production
RF Feeder R&D and Production
Die-casting and CNC Processing RF Subsystem R&D and Production Antenna R&D
RF Subsystem R&D Antenna R&D Aesthetic Antenna R&D Product Sales
RF Subsystem R&D and Production Antenna R&D and Production Aesthetic Antenna R&D and Production
Self-owned Property Leasing
MOBI Industry (Shenzhen)
100%
Shenzhen Borynet (Equity Investment)
15.1%
Cloud WIFI
MOBI Technology
(Wuhan) (Newly set up in 2017)
Leteng Wireless
(2017 New Investment) Antenna R&D RF Subsystem R&D Aesthetic Antenna R&D
12%
100%
WIFI Acceleration
5
MOBI Communication
(JiAn)
100% MOBI Antenna (Shenzhen)
100%
Results Overview in 1H2017
Gross Profit Margin
Net Profit Growth Rate
Net Profit Margin
Sales Volume Growth Rate -24.0%
58.3
8.3
2016 1H 2017 1H
-85.7%
(RMB million)
23.2%
22.5%
2016 1H 2017 1H
6.4%
1.2%
2016 1H 2017 1H
-5.2%
-0.7%
904
688
2016 1H 2017 1H
(RMB million)
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Results Analysis in 1H2017 — by Business Category
33 52
249 271
622
365
2016 1H 2017 1H
688
904
53.1%
7.6%
39.4%
(RMB million)
Antenna System↘ 41.4%
Base Station RF Subsystem ↗ 9.0%
Coverage Extension Solution↗ 57.7%
8
Results Analysis in 1H2017 — by Customer Category
(RMB million)
498
315
226
225
79
72
61
67
40
9
2016 1H 2017 1H
45.8%
32.7%
10.5%
9.7% 1.3%
688
904
Chinese Equipment Manufacturers↘ 36.9%
Chinese Network Operators↘ 0.4%
International Equipment Manufacturers↘ 8.5%
Overseas Direct Sale↗ 9.8%
Others↘ 77.5%
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Results Analysis in 1H2017 — by Expenses
Financial Expense Increased by 17.6%, and accounted for approximately 1.0%, primarily due to the increase in borrowings.
Selling Expense Decreased by approximately 6.8%, and accounted for approximately 6.7% of the revenue, primarily due to the decrease in business expenditures, travelling expenses, logistics fees, agency fees and maintenance costs resulting from the decrease in sales products.
Administrative Expense Increased by approximately 4.7% and accounted for approximately 8.4% of the revenue, mainly due to (1) the increase in expenses such as salaries, social security contributions, welfare expenses and recruitment and personnel agency fees; and (2) the increase in expenses such as business expenditures, communication costs, rental fees, audit, consulting and advisory fees and legal costs.
R&D Expense Increased by approximately 25.0%, and accounted for approximately 7.8% of the revenue, mainly attributable to the increase in salaries for research and development activities, surcharge on wages, travelling expenses, social security contributions, testing fees and research and development materials costs resulting from the increase in new R&D projects and the expansion of R&D team.
The Operating Expenses to Sales Revenue Ratio
6.1% 8.4%
5.5%
6.7%
4.8%
7.8%
0.7%
1.0%
2 0 1 6 1 H 2 0 1 7 1 H
10
Chinese Market — Intensifying Competition in Telecommunications Industry
Fierce market competition leads to further price decline; The decline is around 20% a year.
Price
Quality and reliability requirements are higher; The operators are more and more strict about the pre-tender samples and the inspection requirements after the bidding.
Quality Sales, administration and R&D expenses increased year on year; In 2017, a large increase in new research and development projects led to a big increase in R&D spending; R&D will take a period of time to generate revenue, and it is expected to bring new opportunities in the future.
Cost
Fierce Competition
Competition in the communication industry has evolved into a multi-directional competition involving price, quality and cost.
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Chinese Market — Intensifying Competition in Telecommunications Industry
2,548 2,809 3,384 3,769 4,386 3,562 3,100
Actual 2011- Expected 2017
Capital Expenditure of the 3 Largest Chinese Operators
First Drop of Capital Expenditure The overall capital expenditure of carrier operators in 2016 fell for the first time in the past five years, mainly due to the substantially reduced expenditure of China Unicom and the combined effect of China Tower.
1
Capital Expenditure Budgets in 2017 China Mobile plans RMB 176 billion ; China Unicom plans RMB 45 billion; China Telecom plans RMB 89 billion. Overall, capital expenditure in 2017 is expected to be RMB 310 billion.
2
(RMB hundred million)
Source: Announcement of Operators, research reports of telecommunications industry released by China Securities Co., Ltd. and China Great Wall Securities Co., Ltd., www.c114.net
7.00%
10.24%
20.47%
11.38%
16.37%
-18.79%
-12.97%
-25.00%
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2011 2012 2013 2014 2015 2016 2017E
中國移動
中國聯通
中國電信
整體增速
China Mobile
China Unicom
China Telecom
Overall Growth
13
Chinese Market — Intensifying Competition in Telecommunications Industry
Year 2016 – 2017 1H
Sales Volume of Other Domestic Listed Companies of Same Type Overall Situation In the first half of 2017, the overall
sales of domestic listed companies
in telecommunications industry was
weaker compared to the first half
year of 2016. However, the
projected sales are expected to
strengthen in the second half of
2017.
Main Reasons At the end of 2016 and early 2017,
there is only the big bidding of China
Telecom FDD-LTE low-frequency
resurfacing, but China Mobile TD-LTE
and China Unicom FDD-LTE 4G
construction overall delayed until the
second half of 2017.
In the second half of 2017, China
Mobile 2017-2018 centralized
procurement of 946,000 base station
antenna, exceeding expectations,
and is expected to bring good
growth opportunities in the second
half of 2017 and the year of 2018
Source: Announcement of Listed company
The First Half of 2016
The Second Half of 2016
The First Half of 2017
Company A
Company B
MOBI
(RMB)
14
Global Market — Continual Increase in RAN Investment
0
5000
10000
15000
20000
25000
30000
35000
40000
2015 2016 2017 2018 2019 2020 2021 2022
CDMA GSM WCDMA/HSPA+ LTE Pre-5G/5G
Global RAN (Radio Access Network) Revenue
2015-2022
($ m)
The real culprit in the market decline is not LTE; it is older mobile technologies.
Although LTE network expenditures have declined in markets such as North America, but overall LTE investments are still growing, especially in areas such as Africa, Eastern Europe, and Latin America . LTE investments will not peak until 2019. Even after initial commercial 5G solutions hit the market, LTE will remain strong.
Investments in 5G will bring revenue growth back to the market.
Source: A report of Ovum 15
Global Market — Acceleration of 5G Technology
At different Stages
5G:Three scenarios correspond to three networks
5G
Enhance Mobile
Broadband
Massive Machine-Type
Communication
Ultra-high Reliability Low Latency
Communication
Interpersonal Mobile
Network (Mobile phone, etc.) 2G-3G:Mature commercial,some countries
exit 2G network;
4G:Commercially available in 2013, but keep on
updating;
5G:The first edition in 2018 is clear in standard
and is expected to be commercially available in
2020.
Wide-area Internet of Things 4G:NB-Iot,EMTC,Agreed to freeze in 2016,
Commercial use in 2017;
5G:The standard is not yet clear, and is
expected to be finalized after 2020, and will be
commercially available around 2022.
Highly Reliable Internet of
Things (Internet of vehicles) 4G: 2016 LTE-V initial standard landing, not
yet commercial;
5G: The preliminary standard landing in 2020
and is expected to be commercially available
in 2025.
Attention 5G actually means three networks. Since the slow progress of Internet of things and Internet of vehicles, current 5G is now as an interpersonal network.
Source: Citic Construction Investment Securities Communication Industry Research Report
16
Global Market — Acceleration of 5G Technology
2015 2016 2017 2018 2019 2020
3GPP
Research on 5G System and Key
Technology
The first version of 5G standard
Complete all the 5G standardization
work
First Stage of 5G
Second Stage of 5G
ITU
Global Operators
China MIIT
China Operators
Rel-14 Rel-15 Rel-16
Prepared for making 5G
international standard
Identified technology assessment indicators
Formed file template for submission
Clearly defined the requirements for 5G Technical
Performance ITU-R will start to solicit
candidate 5G technologies
Start technical program evaluation
and standardization
Form 5G commercial
ability
America Verizon completed 5G
technical specification
making in July 2016
America Verizon will use 5G
commercially in the 4th quarter of
2017
Korea SK and KT plans to use
5G commercially in February 2018
Japan NTT commercially uses
5G in 2020
Completes R&D test for 5G technology (Three stages: key technology verification, technical program verification and system
program verification )
R&D test for 5G product
China Mobile used 4.5G in 2016; plans to introduce 5G technology and to conduct 5G field test in 5 cities in 2017
Top 3 Operators commercially use
5G in 2020
Top 3 Operators conduct 5G
commercial trial in 2018
Source: Citic Construction Investment Securities Communication Industry Research Report ;www.cww.net.cn;www.c114.net
China Unicom In 2018, 5G system network verification will be conducted in 5 and 6 cities
American AT&T Plan to deploy 5G technology by the
end of 2018 or beginning of 2019,
and to achieve scale usage in 2019
17
Global Market — Our manufacturers are leaders in developing 5G network technology
Seamless Wide-area Coverage
Low-latency High-reliability
Low-power Massive-
connection
High-capacity Hotspot (Low-
frequency)
High-capacity Hotspot (High-
frequency)
Mixed Scenarios
Completed Partially Completed
Completion of second-phase 5G technology test which is led by MIIT:
Source: Citic Construction Investment Securities Communication Industry Research Report ; MIIT 18
Company Highlights — MOBI’s New Breakthroughs
R&D Expenditure In the first half of
2017,R&D Expenditure increased by 25%, which
was mainly due to the increase in salaries for
R&D activities, testing fees and R&D materials costs.
R&D Personnel In the first half of 2017,
the number of R&D personnel increased
rapidly, reached a high record. The number of
people with master's degree and above is approximately 20%.
R&D Environment The Test Center of MOBI
Antenna Technology (Shenzhen) Co. Ltd,. , has great R&D
environment and professional laboratory equipment which
has passed CNAS.
R&D System Innovation Established perfect information security management, intellectual property management and patented technology management system. Patent rankings is at the forefront of Shenzhen City.
R&D Training Organize training project for new engineers and have routinely internal skills training activities.
Close Cooperation with Universities Closely cooperate with 985/211 universities in talent training and R&D support, which is expected to bring more cooperation.
Technology Research and Development
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Company Highlights — MOBI’s New Breakthroughs
Market
Market-Entry
Asia-pacific
(Base Station Antenna, Microwave Antenna, RF Module)
Latin America
(Base Station Antenna, RF Module)
Africa
(Base Station Antenna, RF Module)
Europe
(Base Station Antenna, Microwave Antenna, RF Module)
North America
(Base Station Antenna, RF Module)
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Company Highlights — MOBI’s New Breakthroughs
Organizational Culture
Employee Care
Community Participation
Product Liability
• Regular health examination
• Related vocational skills training
• Option incentive policy
• Various cultural and sports activities
• Corporate donation
• Employee volunteer services
• Product production follows industry and international standards
• Standardize intellectual property management and operation system
• Establish a product recall system
Environmental Protection
MOBI Academy
Supply Chain Management
• “Eagles "graduate program
• Set up MOBI academy library
• Organize a series of training activities
• Standardize industrial waste gas and emissions treatment system
• Use environmentally recyclable or recycled materials
• Advocate water, electricity , paper and other resources saving internally
• Sign enterprise social responsibility agreement with suppliers
• Advocate Suppliers’ Code of Conduct
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Company Highlights — MOBI’s New Breakthroughs
Exploration in New Frontiers
MOBI Lete
ng
W
irele
ss Bo
ryn
et
Mobile communications RF
technology products suppliers
R&D, production and sales of base station
RF and base station antenna, docking with
mobile operators and telecom equipment
manufactures.
Facing wireless broadband for Internet Plus
The Development, production and sales for WIFI routers,
wireless access points and other products, is committed to
analyzing enterprise wireless broadband access infrastructure
products and solutions.
Help to provide a better mobile
Internet experience
ROM and plug-in development, docking router
manufacturers and commercial WIFI operators to
help optimize WIFI access network.
A more developed
industrial chain
Complement each other
22
Company Highlights — MOBI’s New Breakthroughs
New Growth Points – Domestics and Overseas
01 02 03 04
Domestic Operators
• Completed batch delivery of
two major procurement
projects of China Telecom
base station plate antenna;
• Won the bid for China
Mobile 2017-2018 base
station antenna centralized
procurement, ranking among
the top 3 in terms of share;
• Aesthetic business is wining
more bid, performance
increased about 23% over the
same period last year.
Equipment
Manufacturer
Customers
• Won a bid for a Nokia base
station project with a large
share.
Overseas projects
• European operators achieved
batch delivery;
• Russian client’s share of bid
has been greatly increased,
and a project won an exclusive
bidding.
Procurement Projects
in the 2nd half of the
year
• China Telecom aesthetic
concentrated procurement;
• China Mobile aesthetic
concentrated procurement;
• China Unicom LTE
concentrated procurement.
23
Company Three-year Strategy
Enlarge products
series
Optimize product
technology
Improve product
reliability
01
02
03
Strengthen market share in China,
Africa and Asia Pacific markets.
Continue expanding multi-national
operators markets, explore new
opportunities in European market
and emerging markets.
Develop miniature, integrated and
MIMO productions and 5G
technologies; improve product
quality and reliability.
Double-Driving on Technology & Marketing
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Disclaimer
This report is drafted and audited by MOBI Development Co., Ltd. ("Company"). The information contained in this report shall only be disclosed under the permission of relevant laws, regulations and rules and for the sole purpose of providing information and shall not constitute any advertisement. The material, comment and forecast (if any) contained in this report merely reflects Company's situation or opinion at the date of initial disclosure of this report. Company may revise the information contained in this report and suggest investors to independently pay attention to related updates or amendments.
This report may contain some forward-looking statements. Such statements are the description, analyzing or prospect of Company employees with respect to Company or relating industries. Company makes no promise or guaranty that the contents of such statements will be consistent with Company or relating industries‘ future performance.
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