Download - 1 Beijing Beida Jade Bird Universal Sci-Tech Company Limited Strategic Development May 2002
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Beijing Beida Jade Bird Universal Beijing Beida Jade Bird Universal
Sci-Tech Company LimitedSci-Tech Company Limited
Strategic DevelopmentStrategic Development
May 2002May 2002
2
ContentContent
Part (I) About the Company Part (I) About the Company
Part (II) Strategic Investment in SMICPart (II) Strategic Investment in SMIC
Part (III) Prospects & Outlook of SemiconductorPart (III) Prospects & Outlook of Semiconductor
IndustryIndustry
Part (IV) Proposed Placing of New H SharesPart (IV) Proposed Placing of New H Shares
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Part (I)Part (I)About the CompanyAbout the Company
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Company BackgroundCompany Background
29 Mar 2000
27 Jul 2000
• The first H Shares Listed on the Growth Enterprise Market of the Stock Exchange of Hong Kong
• Stock Code : 8095
• Capital raised : Approx. HK$300 million
• Incorporated as a joint stock limited company
• Registered capital : RMB 96,400,000
18 Dec 2000 • Company subdivided each of the Promoters’ shares and H shares into ten shares`
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Shareholder’s StructureShareholder’s Structure
The Company
Employees ofJade Bird Group & the Company
93.37% 6.63%
22.82% 27.39%32.16%
Peking University
17.63%
Strategic Investors from
Hong Kong
Public
(H Shares)
Dynamic
Win
Strategic Investors from HK& Singapore
Jade Bird
Group
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Company Structure (1)Company Structure (1)
100%
100%
5.29%
75% 51%
Hebei Beida Jade Bird Universal Fire Alarm
Device Co Ltd
Beijing Jade Bird Hao Di Electric System Co Ltd
Beida Jade Bird Universal Sci-Tech (Cayman)
Development Co Ltd
Beida Jade Bird Universal Sci-Tech (Cayman) Investment Co Ltd
SMIC
The Company
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Company Structure (2)Company Structure (2)• JBU (Cayman) Development
: engaged in the sales of computer products
• JBU (Cayman) Investment: holding the investment in SMIC
• SMIC: an IC foundry factory located in Shanghai Pudong
• Hebei JBU Fire Alarm Device: engaged in the manufacture and sales of fire alarm devices
• Jade Bird Hao Di: engaged in the manufacture and sales of electric meter remote reading system
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Principal ActivitiesPrincipal Activities
• One of the leading software developers and integrated circuit designers in the PRC
• Engaged in the design, manufacture, marketing, distribution and sale of proprietary embedded products including: Application Specific Integrated Circuit (“ASIC”)
Network Security Products
GPS Application System
Smart Card Application System
Wireless Fire Alarm System (“WFAS”)
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Awards & Qualifications (1)Awards & Qualifications (1)
People’s Bank of China One of the short-listed authorized products
Passed the JB151A-97 anti-electromagnetic release
national standard examination
China State Cryptography Control Authorities Office (CSCCAO)
Certificate of Technological Examination
People’s Liberation Army Information Security Testing Evaluation and Certification Center (PLAISTEC)
Certificate of Military Information Security Product
China National Information Security Testing Evaluation and Certification
Center(CNISTEC)
Certificate of Information Security Product
Ministry of Public SecuritySales CertificateJade Bird Firewall JB-
FW1
AUTHORITY OF CERTIFICATEQUALIFICATIONPRODUCT
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Awards & Qualifications (2)Awards & Qualifications (2)
China Certificate Committee for Fire Alarm Products Quality
ISO9002 Certificates for the Fire Products Safety
Certification
Four Fire Alarm Devices from Hebei Jade Bird Universal Fire Alarm
Device Company Limited
CSCCAO Passed system security review
SJY-A Data
Encryption Card
CSCCAO Passed system security review
SZD02 Bank Terminal Certificate Card
PLAISTECCertificate of Military Information Security
Product
JB-SG2 Security Gateway
AUTHORITY OF CERTIFICATEQUALIFICATIONPRODUCT
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Awards & Qualifications (3)Awards & Qualifications (3)
Shenzhen Radio Management OfficeCertificates for Sale, Manufacture and Network
Forming of Radio Communication Equipments
Shenzhen Branch of the
Company
Ministry of Information TechnologyCertificate for Wireless Radio Transmitter
JB-DT1 Data Transmitter
Public Security Department of Guangdong Province
The Security Technology Safeguard Management office of Shenzhen Public
Security Bureau
Security Technology Safeguard Product
Manufacture Certificate
Security Technology Safeguard Certificate
JB-DT1 GPS Vehicle Box
Ministry of Public Security & National Radio Monitor and Examination Center
Acceptance quality certificate
GPS 230M Vehicle Box
AUTHORITY OF CERTIFICATEQUALITY PRODUCT
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Major Products (1)Major Products (1)
ASIC• Develop embedded microprocessor and specific integ
rated circuits
• Provide ASIC technologies and customized engineering design, strives to improve the system with optimal performance, smaller size and lower cost
• Design and develop ASIC synthesized with cryptographic logic (“Security ICs”) for commercial information security systems
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Major Products (2)Major Products (2)
Network Security Products• Security gateway, firewall and network monitor syste
ms are applied in government branches, financial institutions, large enterprises and the army
• Begin mass production of SJY01- A, SZD02 and SJY04 encryption cards
• Emphasize security services such as risk evaluation, system optimization, security alarm and consulting
• Strengthen cooperation with SYMANTEC and other famous information security providers
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Major Products (3)Major Products (3)
GPS Application System• Box unit installed in moving or static target sending longitude and
latitude information via wireless communication network, thus allowing remote monitoring facility and control center to keep track of target
• Apply JB-230M GPS system in fleet management monitoring, dispatch and theft alarm of all kinds of vehicles
• Strengthen R&D on emerging applications such as logistics distribution and navigation
• Strengthen ties with regional governments, and strive to establish markets in Beijing, Guangdong, Sichuan and South-eastern part of the PRC
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Major Products (4)Major Products (4)
Smart Card Application System• Provide contact and contactless smart cards
• Products cover intelligence household management system, logistics management system, POS and access control system
• Major customers include universities, hotels, financial institutions and large enterprises
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Major Products (5)Major Products (5)
WFAS• Accurate fire detecting and fire alarm functions
• More reliable, economic and versatile
• Apply in Haikou Fire Alarm Control Center, Zhongnanhai, Yuquan Mountain, the Summer Palace and other projects
• Manufacture fire alarm sensors and controllers through subsidiary Hebei Beida Jade Bird Universal Fire Alarm Devices Limited
• Strengthen support for upstream R&D and flexible applications of wire and wireless fire alarm solutions
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Major ClientsMajor Clients
Financial InstitutionsFinancial Institutions Business EnterprisesBusiness Enterprises
UniversitiesUniversitiesArmy & Army &
Police ForcePolice Force
Government AuthoritiesGovernment Authorities
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Financial Highlights (1)Financial Highlights (1)
11,379371,307403,997N/AShareholders’ equity
26,299386,800831,372N/ATotal assets
N/A0.50.5N/ADividend per share
- (RMB cents)
(0.64)3.83.90.46Earnings (Loss) per share
- basic (RMB cents)
(3,237)27,30140,64111,678Earnings (Loss) before interest, tax, depreciation, amortization and minority interest
(4,486)31,06737,5104,469Profit (Loss) attributable to shareholders
10,41960,843124,61727,733Turnover
1999200020012002 Q1(unaudited)
RMB’000
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Financial Highlights (2)Financial Highlights (2)
-20,000
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
1998 1999 2000 2001-20,000
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
1998 1999 2000 2001
RMB’000
Turnover Profit
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Part (II) Part (II) Strategic Investment in SMICStrategic Investment in SMIC
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Reasons for & Benefits of Reasons for & Benefits of Investing in SMICInvesting in SMIC• Strengthen and enhance the Company’s technology in the desig
n and development of ICs
• Enable the Company to obtain more market intelligence about ICs manufacturing technology, which in turn benefit our design of ICs which are key components of the Company’s products
• Ensure stable supply of ICs at competitive price by subcontracting ICs manufacture to SMIC
• Enable the Company to receive other support from SMIC in technologies and techniques enhancement
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JBU’s Involvement in the JBU’s Involvement in the Management of SMICManagement of SMIC
• The Company has an active role in setting up and running of SMIC
• As one of the promoters of SMIC, the Company has participated in SMIC’s feasibility study and taken up an important role in its liaison with PRC government authorities
• Two of the Company’s directors have been actively participating in the management and operation of SMIC
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JBU’s Investment HighlightsJBU’s Investment Highlights
• Investment vehicle : Beida Jade Bird Universal (Cayman) Investment Company Limited, wholly owned subsidiary
• Subscribe for 54,000,540 SMIC Preference Shares at US$1.1111 per share
• Subscribe for 54,000,540 SMIC Series A-1 Preference Shares at US$0.00001 per share
• Total investment amounting to US$60 million
• Hold approximately 5.29% of the total issued voting share capital of SMIC
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Pro Forma Financials after the InvestmentPro Forma Financials after the Investment
* Assumed the preference shares dividend rate at 8%
** Based on issuing the additional 192,800,000 H shares and the current market price of HK$1.5 per share (total placing proceeds amounting to HK$289 million or US$37 million)
(Based on the actual financials of year 2001)
787,764403,997Shareholders’ equity
-390,000Bank loans
787,764831,372Total assets
6.73.9Profit per share
- (RMB cents)
77,35037,510Profit attributable to shareholders
39,840-Income Dividend*
124,617124,617Turnover
Upon Completion of Investment and Share Placing **
CurrentRMB’000
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SMIC’s Competitive Advantages (1)SMIC’s Competitive Advantages (1)
• Strong base of strategic partners and investors
• Enormous market potentials
• Lower costs :
- Building/facilities
- Workforce/operations
- Supplies/material
• Strong government support
• Experienced management
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SMIC’s Competitive Advantages (2)SMIC’s Competitive Advantages (2)
• Import tax (tariff) exemptions Equipment Raw Material
• Value added tax (VAT) rebates 17% Vs <5%
• Corporate tax discounts First profitable year = “5 exempt-5 halves”
• Accelerated depreciation (tax purposes)
• Preferential treatment for Fabless design houses Same treatment as software industry (3% VAT)
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SMIC’s Initial FinancingSMIC’s Initial Financing
• Registered Capital : US$1 billion
• First phase investment amount : US$ 1.4 billion
• Major investors include
Strategic Partners
Jade Bird Universal
Shanghai Industrial Holdings
Institutional Investors
Goldman Sachs
H&Q Asia Pacific
Walden International
Vertex Management
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SMIC’s CapabilitySMIC’s Capability• Low power static random access memory (SRAM) technology transfer fr
om Toshiba
• 0.18-micron baseline logic process technology transfer and patent license rights from Chartered, one of the world's top three silicon foundries
• Manufacture 0.22um and 0.18um FCRAMTM (Fast Cycle RAM) Products for Fujitsu Limited
• Conclude a non-exclusive alliance with ChipPAC, Inc. (Nasdaq: CHPC) for end-to-end solutions from wafer probe to packaging and test and final distribution in China and global market
• Establish partnership in the area of advanced semiconductor process technology with Europe's leading independent R&D centre for microelectronics, IMEC
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SMIC’s Development PlanSMIC’s Development Plan
Initial products/ processes qualified
Initial products/ processes qualified
Volume production commence
Volume production commence
Possible 2nd phrase
financing(2H 2003)
Possible 2nd phrase
financing(2H 2003)
Jan
2004
Aug
2000
June
2003
JunJan
2002
DecJun
2001
Aug Sep Dec
Equipment installation
begin
Equipment installation
begin
Pilot production
begin
Pilot production
begin
Half capacity reaches 25,000 wafers/month
Half capacity reaches 25,000 wafers/month
Combined productionto 85,000+
wafers/month
Combined productionto 85,000+
wafers/month
Construction ground
breaking
Construction ground
breaking
Photo mask shop
cleanroom completed
Photo mask shop
cleanroom completed
1H
SMIC has 1-2 year leads over its competitors in terms of entering into the China market
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SMIC’s EmployeesSMIC’s Employees
Total: 1032 employees as at August 27, 2001
721
212
1253 12
22
PRC
Taiwan
Singapore
USA
Italy
Others
41
511
152
183 145
PhD
Master
Bachelor
College
Others
4160
151
60
43677
Over 15 yrs
10 - 15 yrs
5 - 10 yrs
3 - 5 yrs
1 - 3 yrs
0 - 1 yr
By Experience
By Region By Education
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Part (III)Part (III)Prospects & Outlook of Prospects & Outlook of Semiconductor IndustrySemiconductor Industry
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Supply & Demand of ICs in ChinaSupply & Demand of ICs in China
Source:CCID
0.962.35 2.61
3.354.38
6.63
8.46
0.41 0.47 0.63 0.711.27
4.843.63
2.782.121. 63
10. 8
24.18
20.56
16.93
13.3
0
5
10
15
20
25
30
95 96 97 98 99 00 01 02 03 04 05Year
Billio
n $
China IC RevenueChina IC Revenue (E)China DemandChina Demand (E)
33
Semiconductor Market : Semiconductor Market : Worldwide and ChinaWorldwide and China
2435 31 39 38
51 54 55 60 6586
110
151142 147 140
170
226.2
188.4
213.3
264.9
188.4
336.9
346.5
0.960.630.41 4.842.781.63
2.35 3.35 6.63 10.8 16.93 24.18
0
50
100
150
200
250
300
350
400
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05Year
Bill
ion
$U
SD
World IC SalesWorld IC Sales (E)China IC SalesChina IC Sales (E)China DemandChina Demand (E)
Source:Dataquest
34
Existing Suppliers in ChinaExisting Suppliers in China
Grace, Belling, Hua Xia and others are either under the construction or at the planning stageGrace, Belling, Hua Xia and others are either under the construction or at the planning stage
24,000 wafers/month 8“ wafer0.25 micronTianjinMotorola
N/A5- 6“ wafer0.6/ 1.5 micronShanghaiASMC
20,000+ wafers/month by end of 2001
8“ wafer0.25 micronShanghaiNEC HuaHong
N/A5- 6“ wafer0.5/ 0.6 micronWuxiCSMC-HJ
N/A4- 5” wafer1- 5 micronWuxiHuajing
N/A6” wafer0.35 micronBeijingNEC Shougang
85,000+ wafers/month by 2004
8” wafer0.18/ 0.25 micronShanghaiSMIC
Capacity Technology LocationCompany
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Existing Fab Technology in ChinaExisting Fab Technology in China
Source: Computer World , CLSA Emerging Markets
Source: Computer World , CLSA Emerging Markets
Unit: Inch
10%
14%
5%
71%
3"-4"
5"
6"
8"
Year 2000
10%5%
24%
61%
2.0-5.0
0.8-1.2
0.5-0.8
0.25-0.35
Year 2000
Unit: Micron
35%32%
25%
15.50%
0%5%
10%15%20%25%30%35%40%
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Market Outlook (1)Market Outlook (1)
US$Billion
Source: Gartner Dataquest
• Rapid expansion of domestic market
• Current market = US$15 Billion (8% global market)
• 30.8% Growth p.a. 1998-2000
Expected Growth
37
Market Outlook (2)Market Outlook (2)
34.3%174Server Appliance
4.6%237Hard Disk Drive
33.7%273Handheld PC
18.4%839Optical Disk Drive
12.7%4,945Motherboard / PC
CAGR
(2000- 2005)
Revenue in 2000
(Unit :US$ million)
Product
Growth drivers :• Internet continues to drive growth • Increase investment from Taiwanese motherboard/ notebook/ PC manufacturers• Global OEMs are establishing production in China• Local consumer electronics producers are venturing this sector
Source: Gartner Dataquest
Data Processing Semiconductor
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Market Outlook (3)Market Outlook (3)
20.7%241Cordless Phone
8.2%593Legacy Phone
11.9%689Network Line Card
33.3%401LAN Switch
35.3%509Mobile infra.
29.8%7,608Cellular Phone
CAGR
(2000-2005)
Revenue in 2000
(Unit: US$ million)
Product
Growth drivers :• Government’s effort to enhance the information and networking system• Strong foreign direct investment inflow in electronics and communications equipment sector• Increase percentage of low to mid end communications production
Source: Gartner Dataquest
Communications Semiconductor
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Market Outlook (4)Market Outlook (4)
95.6%134Digital Camcorder
44.4%263Net Audio Player
95.4%489Digital Camera
5.2%545Appliance
13.1%806Color TV
17.4%819DVD
CAGR
(2000-2005)
Revenue in 2000
(Unit :US$ million)
Product
Source: Gartner Dataquest
Consumer Semiconductor
Growth drivers :• Robust GDP growth• Critical mass of middle class consumers
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Market Outlook (5)Market Outlook (5)
• Only 1.9% PC penetration in 2000
• 48% growth Y/Y in Q1 2001
• Projected 26% CAGR 2001-2003
• Data processing electronics = 43% p.a. growth 1997-2000 Data processing electronics = 43% p.a. growth 1997-2000
Source: IDC, JP Morgan estimates
PC Shipment (units in million)
PC Market
41
Market Outlook (6)Market Outlook (6)
Source: IDC, JP Morgan estimates
No. of subscribers (in million)
(Accumulative)
Mobile Phone Subscribers
42
Part (IV)Part (IV)Proposed Placing of NewProposed Placing of New
H SharesH Shares
43
Proposed TransactionProposed Transaction
Issuer
Shares Offer
Size of Offer
Use of Proceeds
Closing Date
: Beijing Beida Jade Bird Universal Sci-Tech Co Ltd
(Stock code : 8095.hk)
: 192,800,000 ordinary shares (H Shares)
: US$ 37 million (estimated)
: Repayment of bank loan used for investment in
SMIC
: June 2002
44
Special Capital & PriceSpecial Capital & Price
• Record High : HK$2.925 per H share
31 May 2001• Record Low : HK$1.1 per H share (Placing Price)
27 July 2000 (IPO)
RMB 96,400,000Total Issued Share Capital
964,000,000Total Number of Issued Shares
264,000,000Number of H Shares
700,000,000Number of Promoters’ Shares
RMB 0.1Nominal Value
Current Market Capitalization HK$1,426,720,000
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Stock PerformanceStock PerformanceStock Price and Volume Performance (IPO Date to Present)
1.50
Jul-0
0
Aug
-00
Sep
-00
Nov
-00
Dec
-00
Jan-
01
Feb
-01
Mar
-01
Apr
-01
May
-01
Jul-0
1
Aug
-01
Sep
-01
Oct
-01
Nov
-01
Dec
-01
Jan-
02
Mar
-02
Apr
-02
0.50
1.00
2.00
2.50
3.00
Pri
ce (
HK
$)
20
40
60
80
100
- 120
- 140
Vo
lum
e (i
n m
illio
n)
Volume
Price
46
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www.china-jbu.com
Beijing Beida Jade Bird Universal Beijing Beida Jade Bird Universal
Sci-Tech Company LimitedSci-Tech Company Limited