2017 interim results presentationglobal ran (radio access network) revenue 2015-2022 （$ m） the...

2017 Interim Results Presentation

24 August, 2017

0

Company Profile 01

2017 Interim Results 02

Market Outlook 03

Q&A 04

Agenda

1

Part 1. Company Profile

2

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

4

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%

Part 2. 2017 Interim Results

6

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)

7

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%

9

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

Part 3. Market Analysis & Outlook

11

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.

12


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

http://www.c114.net/


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

http://www.cww.net.cn/

http://www.c114.net/

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

19


Market

Market-Entry

Asia-pacific

(Base Station Antenna, Microwave Antenna, RF Module)

Latin America

(Base Station Antenna, RF Module)

Africa


Europe

(Base Station Antenna, Microwave Antenna, RF Module)

North America


20


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

21


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


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

24

Part 4. Q&A

25

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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2017 interim results presentationglobal ran (radio access network) revenue 2015-2022 （$ m） the...

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