Transcript Electronic Components Supply Chain Management

Investor Presentation
May 2010
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.
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Company Profile
● SinoHub provides a Web-based supply chain management (SCM)
platform that is open to third parties and connects facets of the
electronics industry:
 Manufacturing
 Finished Product Distribution
 Design
 Component Purchasing
● SinoHub’s SCM platform offers a free, open and robust network
operating in China’s booming electronics industry
● SinoHub generates sales of electronic components throughout China
and of electronics products (currently mobile phones) throughout
South East Asia from information and relationships derived from its
SCM business
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Select Financials
Net Income
$140
$128.4
Millions
Millions
Revenue
$120
$12.4
$12
$10
$100
$79.5
$80
$8.5
$8
$6
$60
$40
$20
$14
$3.5
$4
$29.0
$19.1
$1.2
$2
$0
$0
2006
2007
2008
2006
2009
2007
2008
2009
Flexibility and leverage in business
model allows for solid profitability
Superior revenue growth despite
global economic turmoil
2010 Revenue Guidance of
40% Growth to $180MM
Founded: 2000
NYSE Amex Ticker: SIHI
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HQ: Shenzhen, China
www.sinohub.com
Strong Customer Relationships
More than 120 companies utilize SinoHub’s SCM platform …
Product
Manufacturers
Design
Houses
Product
Distributors
SinoHub Customers
Component
Suppliers &
Manufacturers
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Investment Highlights
● Strong demand for mobile computing devices drives growth for SinoHub.
● Business model is capital-efficient and asset-light, minimizing risk.
● High barrier to entry: SinoHub’s SCM platform is a customer-designed
solution created over 6 years.
● SinoHub’s SCM platform solves mission critical, costly supply-chain
problems for the electronics industry in China.
● SinoHub has a proprietary database of 50,000 electronic components,
enabling arbitrage and brokering opportunities.
● Five consecutive years of high growth with profitability.
● Strong management team and solid governance by five independent board
members.
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Industry Problem: Closed Model
XYZ Manufacturing Corp.
Design
Purchasing
Supply Chain Mgmt.
Manufacturing
Sales
● Lack of flexibility
● High system costs
● Supply chain only as strong as
weakest link
● Difficult to outsource any step
due to lack of information flow
● Inventory management issues
● Drain on working capital
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SinoHub’s Solution: SCM Platform
Product Distributors
(Global)
Electronics
Design Houses
(China)
Finished Goods
Manufacturers
(China)
Electronic Component Suppliers
(Global)*
 Flexible, open model
 Open access to best providers
 Reduces cost & time to market
 Transparent information source
* 85% of the components consumed in Chinese electronics manufacturing are imported into China; Source: China Customs
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Business Model
Three inter-related business
units leveraging SCM’s
proprietary data assets:
Provides supply chain
application and services to
electronics industry clients in
China
BUSINESS UNITS
1) SCM:
2)ECP:
Sales of electronic
components throughout China
Electronic
Component
Purchasing
(ECP)
Supply
Chain
Management
Electronic
Component
Purchasing
Virtual
Contract
Manufacturing
(SCM)
(ECP)
(VCM)
3)VCM:
International sales of
electronic finished products (1)
(1) Represents recently-developed business segment in early stages focusing on mobile phone production and sales, which was not material to results of operations in
2009. VCM Subsidiary known as Topology Electronic Company (Shenzhen) Ltd.
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Market Opportunities
China Electronics Market:
●
China is world’s largest consumer of
electronic components
●
China consumed over US $100B+ of
electronic components in 2009, producing
US $400B+ of finished goods
Business Unit
Market
SCM
$3B
ECP
$20B
VCM
$24B
Reed Electronics Research (RER), November 2007
SCM, ECP and VCM Markets:
●
SCM: serves design houses, manufacturers and suppliers in China
●
ECP: serves design houses and manufacturers in China
●
VCM: serves “white box“ mobile phone resellers in the developing countries
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SCM
Supply Chain Management – Powerful Differentiation
SinoHub’s SCM platform is a proven resource for some of the
largest electronic component distributors in the world
Electronic
Component
Procurement
Logistics
SinoHub
Vendors
SCM
Software
Platform
Open to
3rd Parties
Key
No Service
Limited Scope
(TI, Motorola)
Distributors
(Avnet, Arrow)
Partial Scope
Express Forwarders
(UPS, DHL, FedEx)
Full Scope
Local Import/Export
Companies
(Shenzhen Eternal Asia)
*Chart based on SinoHub’s internal research.
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SCM
Supply Chain Management
US$ millions
7 % of
Total
Revenue
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ECP
Electronic Component Purchasing
Proprietary ECP platform &
database to broker components:
Sales not
Minimum Sales
Database
from Minimum
Force not Minimum
Database
Dedicated
to
Sales
Inventory
Inventory
CoreSCM
SCM
Dedicated
from
Product to Engineers
Requirement Product
Business Requirement
Business
Lines LineRequirement
 by substituting suppliers
SinoHub
 by aggregating orders to secure
volume discounts
Vendors
Vendors
(TI, Motorola)
Motorola, etc.)
(TI,
Distributors
Distributors
 cost-effective and capital efficient
to lower customer costs and
create revenue source for
SinoHub
(Avnet, Arrow,
(Avnet,
Arrow)etc.)
Independent
Independent stocking
Stocking
distributors
Distributors
Traders
Traders
Original Buyer Cost
Buyer Savings
SinoHub profit is
a portion of the
savings our
lower cost
delivers
New Buyer Cost
SinoHub Profit
SinoHub Cost
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Electronic Component Purchasing
ECP
US$ millions
93 % of
Total
Revenue
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VCM
Virtual Contract Manufacturing
SinoHub is uniquely positioned to
become the most flexible, costeffective contract manufacturer by:
Mobile Handset Unit Sales by
Geography (millions)
 Leveraging 3rd party design house
and manufacturing capacity from
SCM and ECP customers
2009
166
176
36
38
40
Western Europe
147
151
155
Developed Countries
335
356
373
China
190
205
226
Korea
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11
11
India
151
193
233
92
92
105
Latin America
127
128
138
E. Europe, Middle East,
Africa
225
266
302
Japan
Database Assets:
 50,000+ unique electronic
components
Rest of Asia Pacific
 Detailed profiles on buyers’ projects,
needs, shipping, payment record
 Detailed information on suppliers’
2011
151
North America
 Achieving low breakeven volume due
to small investment in R&D and
manufacturing
2010
capabilities, terms, and prices
Developing Countries
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797
895
1015
www.sinohub.com
VCM
Virtual Contract Manufacturing*
SinoHub’s VCM business allows customers to place small orders for their markets, while
generating a profit based on low fixed overhead
R&D Open
to 3rd
Parties
Manufacturing
Open to 3rd
Parties
Small
Minimum
Order Size
SinoHub
Web-based
Platform
Key
Does Not Apply
OEMs
(Nokia, Samsung)
Tier 1 Contract Mfgs.
Partially Applies
(Foxconn, Flextronics)
Local Contract Mfgs.
(TCL, Skyworth, Konka)
Applies
Design Houses
(Longcheer, Wintech)
Chart based on SinoHub’s internal research.
* Represents recently-developed business line in early stages of revenue, which is not yet material to results of operations.
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Synergistic Service Network
System of warehouses, trucking and freight
equipment add value to physical logistics
Beijing
Regional Office
(300 sq. ft.)
Shanghai (Wai Gao Qiao)
Regional Service Center + Warehouse
(5,300 sq. ft.)
Beijing
Hangzhou
Regional Service Center
(500 sq. ft.)
Shanghai
Hangzho
u
China
Shenzhen
Hong Kong
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Shenzhen
Headquarters + Regional Service
Center + Warehouse
(27,600 sq. ft.)
Hong Kong
Procurement - Fulfillment Hub
Bonded Warehouse
Transportation Hub (79,500 sq. ft.)
www.sinohub.com
Case Study: HuaQin
HuaQin Annual Shipments (‘000 pieces)
● Founded June 2005
● Dedicated to R&D of leading mobile handsets
● August 2008: license agreement with Qualcomm
to introduce advanced 3G CDMA-2000 products
throughout China
● Achieved ~100% CAGR in shipment volumes
● Annual revenue ~ $250MM (2009)
HuaQin began utilizing SinoHub SCM
in March 2009 for:
• Inventory Management
• Import / Export
Results
• Just-in-Time Delivery
• Electronic Parts Movement
Between Projects
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14000
12000
12,000
10000
8000
7,600
6000
4,800
4000
2000
1,800
0
2006
2007
2008
2009
“SinoHub SCM has enabled us to
reduce our production cycle by
33%. We regard SinoHub SCM as
an indispensable tool to enhancing
our efficiencies and increasing our
profitability.”
Mr. Jiang Qinlin
Director of Purchasing of HuaQin
www.sinohub.com
Growth Strategy
Grow customer base
 Further enhance SCM services
 Deploy ECP and VCM platforms
Expand Existing
Relationships
Enter New Products
& Adjacent Markets
Pursue International
Expansion
 Convert more SCM customers into ECP customers
 Increase number of products per VCM customer
 Grow presence in networking equipment and expand
into other verticals through acquisition
 VCM for mobile phones in Vietnam, Malaysia, Indonesia,
and India
 VCM for mobile phones in US – Mobile Virtual Network
Operators (e.g. Virgin Mobile)
 Acquire overseas distribution channels (ECP / VCM)
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Financial Highlights
(Audited, $ in US millions, except EPS data)
Revenue
2007
2008
2009
$28.8
$79.5
$128.4
Gross profit
$6.7
$16.2
$22.4
Net income
$3.5
$8.5
$12.4
$0.22
15.9
$0.40
21.5
$0.48
25.7
Revenue
51.1%
176.0%
61.5%
Gross profit
65.0%
143.1%
38.3%
Net income
191.7%
142.3%
45.9%
Earnings per share – diluted
Number of shares (millions) – diluted
Year-Over-Year Growth Rates
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Balance Sheet
($ millions)
December 31, 2009
Assets:
Cash & Cash Equivalents
Working Capital
Total Assets
$8.3*
$39.4
$59.3
Liabilities & Shareholders’ Equity
Total Debt, including current portion
$11.8
Total Liabilities
$15.2
Total Shareholders’ Equity
$41.7
Total Liabilities & Shareholders’ Equity
$59.3
* Does not include recent equity raise completed in March
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Experienced Management Team
●
Henry T. Cochran – CEO and Chairman of the Board




●
Lei Xia – President




●
30+ years founding and managing companies
Former CEO and president – Content Integrity and Advanced Visual Systems
Former VP – Sybase
Strong MIS background
15 years in electronic 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)
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
 Prior CFO of Hong Kong B&D Engine Company
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Building World-Class Corporate Governance
Audit
Committee
EXECUTIVE
BOARD OF DIRECTORS
Harry Cochran – Chairman of the Board and CEO
Lei Xia – President
Will Wang Graylin – CEO, ROAM Data
INDEPENDENT
- Extensive operational and entrepreneurial skills in mobile phone industry
Charles Kimball – Consultant
- Significant Wall Street and financial management experience as 30-year veteran of JP Morgan

Dr. Richard King – Former All American Electronics Analyst and Investment Banker; 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
Afshin Yazdian – EVP & General Counsel, iPayment

- SEC reporting knowledge, strong M&A experience
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Why Invest in SinoHub?
 Capitalizes on substantial and growing market
opportunities
 Differentiated business model that delivers high
profitable growth
 Exciting potential in VCM custom-phone supply for
under-served markets
 Excellent corporate governance with experienced
board, Top-10 Accounting Firm (Baker Tilly) and
top US law firm (Seyfarth Shaw)
 Multiple expansion opportunities in the Company’s
public valuation, given growth rate and profitability
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Contact Us
COMPANY:
Falicia Cheng
SinoHub, Inc.
Phone: +86 755 2661 1080
Email: [email protected]
Douglas Menelly
SinoHub, Inc.
Phone: +86 139 2524-5053
Email: [email protected]
INVESTOR RELATIONS:
Ted Haberfield
HC International, Inc.
Phone: +1 (760) 755-2716
Email: [email protected]
www.hcinternational.net
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Thank You
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