Transcript 거원시스템 IR (2003) - COWON SYSTEMS, Inc.

Chapter 1. Introduction
Overview
Overview
Value
Incorporation
1995 April
President
Nam Kyu Park
Capital
2,671 MW
Core
Confidence
Digital Audio Technology
Business Area
MP3 Player
Wireless Internet
Muitimedia S/W
Employee
105 (R&D 60)
Address
Seoul, Korea
www.cowon.com
Affiliate
company
JetAudio, Inc. US, CA. Irvine
Cowon 100% Ownership
Listing date
July 11th, 2003
 Concord
 Customer
 Challenge
 Creativity
 Confidence
 Contribution
No.of
Shares
5,340,000
par value
KRW 500
Stock option
51,000
Capital
KRW 2,671M
Overview-Finance
35.0
Billion KRW
30
Every Year 100% Growth rate
25
Over 37% Average ROE
43%
20
42%
16.8
35%
15
37%
32%
10
8.5
5
3.6
3.8
1.4
1.8
1.4
0.5
FY99
6.0
FY00
FY01
FY02
FY03 E
99’
00’
01’
02’
03’E
Sales
1.4
3.8
8.5
16.8
35.0
After Tax Profit
0.5
1.4
1.8
3.6
6.0
ROE
42%
37%
32%
43%
35%
Vision
“ Global Multimedia Total Solution Company ”
Hardware
(MP3 Player)
Core Confidence
“Digital Audio”
(iAUDIO.com)
Software
(Multimedia)
Wireless
Internet
(Contents)
3 Business Area Synergy Effect
Build up community for Service, Sales, Advertise in iAUDIO.com
Shareholders
Shareholders’ Ratio
Others
Lock Up
23.67%
23.67%
SKT 6.29%
Bokwang 4.65%
Employees
7.49%
Employees 4.27%
In IPO program
Board of
Director
53.63%
1Month lock-up
18.43%
1year lock-up
57.90%
Principal History
1995.04
Established
1995.05
Launched voice software ; Jet-talk, jet-voice, voice-wizard
1996.01
Launched multimedia S/W ; Jet-audio
1998.08
Established R&D center
1999.05
MP3 Player
1999.08
Wireless Internet Business
1999.10
Funding from Bokwang Venture Capital
2000.08
Funding from SK Telecom
2001.04
Established JetAudio, Inc. in US
2002.09
Launched 3D Avata Chatting Game
Chapter 2. Business parts
• MP3 Player- iAUDIO
• Wireless Internet
• S/W- Jetaudio
• New business- Partyparty
MP3 Player Market Size
<World/US MP3P Market Estimation>
구
분
World(Volume,Thous.)
World(Amount,USD Mil.)
US(Volume,Thous.)
US(Amount,USD Mil.)
2000
2001
2002
2003
2004
2005
2,260
3,500
5,830
8,990
12,110
15,710
450
710
1,220
1,930
2,550
3,250
1,810
2,660
4,360
6,610
8,670
10,940
360
540
920
1,400
1,790
2,150
* Resource: IDC, 2001-
Radio
Walkman
MP3 Player
MP3 Player-Product
 iAUDIO
Small & Multi-function MP3P
• Function
- MP3 Player : extreme Sound quality
-Voice recoder : 18 hours high quality
voice recoding
- FM radio: 24 channel & recording
• Products (Positioning in high-end market)
- iAUDIO CW250, CW300
- iAUDIO CW400 (Sept.2003, the smallest type)
- iAUDIO CW500 (Nov., Hard Disk type)
- Focus on the high-end market
MP3 Player- Competitiveness
The proven Worldwide
#1 MP3P By US users & experts
• Honors
- The World best MP3P by US Amazon.com users
- The World best MP3P by CNet experts
- The Korea best MP3P by PC-line magazine
- The Korea best MP3P by the electric newspaper
MP3 Player - SWOT
Strength
Weakness
• Superior R&D
• Produce outsourcing
• Accumulated S/W R&D
Solution ; Two partners (Samdo, Mirea)
• Brand building
• Not enough product model
• High royalty customer data base in
www.iAUDIO.com
Solution: launch new models (FY03 ; 2
products, FY04: 3~4 products)
• Set up distribution cannels
• Synergy with S/W, Wireless Internet
Opportunity
• Growing market size
• User infra-system up (P2P, speed-up
internet)
Threat
• China’s low pricing
Solution: High-quality, High-end
• Using for music, language,& business
* Major competitor : Reincom, Digitalway, Samsung Electric Co., Hyunwon,
Mpman.com, Sonicblue
MP3 Player- Strategy
• To Build Up Brand Power
- To Intensify Brand Marketing by utilizing domestic infrastructure
• To Diversify Product Portfolio
- To cover wide range of market sectors (including HDD Type market)
- To launch two more models in this year (Oct. and Nov.)
• To increase overseas market
- To launch several products in major markets (Korea, US, China)
- To penetrate new market (Middle East, East Europe)
• To increase production capacity
- To set up Assembly lines in short term
- To produce goods in China in long term when production exceed 50K/Month
• To put products in right position
- To position new products as High-end products continuously
- To cover low/mid-end market with old models with competitive price
MP3 Player-Distribution channel
Event
10%
MP3
Specialized
mall
20%
Traditional
market
15%
Major on-line mall
30%
Chain
Store
25%
Traditional
Market
Yongsan, Techno Mart
Chain
Store
Hi-Mart, Junjaland21,
eMART, Wall Mart,
Kugje, Busan & Other cities
Lotte Mart, Home Plus
Major
On-line Mall
Samsung Mall, LGeShop,
Lotte.com,Interpark, Hmall
CJMall, BuynJoy
MP3
Specialized
Mall
MPmate, Mpnavi
Total MP3
MP3 Player- Overseas market
- US, Mexico, Canada
- Japan, China, HK,Taipei, Singapore , Australia, Russia
- Germany, Swiss, Austria, UK, Norway, Denmark, Sweden, Fineland
- AFFES(US Army PX: Korea, Japan, Europe) DFS(Incheon, HK)
MP3 Player- FY03 Sales Volume(E)
Enlarge & Diversify Overseas market
(Thousand)
Country
Total
1Q
2Q
3Q(E)
4Q(E)
N. America
29.4
3.4
6.5
8.0
11.5
China/HK
25.3
3.0
4.3
7.8
10.2
Other Asia
12.0
0.4
0.9
4.1
6.6
W. Europe
16.7
0.3
2.6
5.0
8.8
N. Europe
4.3
0.8
1.3
2.2
S. Europe
5.6
2.4
3.2
Arab/E. Europe
2.0
0.5
1.5
AFFES
5.5
0.3
1.7
1.7
1.8
Sub-total
Export
100.8
7.4
16.8
30.8
45.8
Domestic
79.0
18.7
12.0
13.5
34.8
Total
179.8
26.1
28.8
44.3
80.6
* New product launching : CW400-Oct., CW500-Nov.
Wireless Internet –Market Size
<CDMA2000-1x Subscriber>
(Thousand person)
2001
2002
Growth rate
SKT
2,681
9,457
252%
KTF
751
4,862
547%
LGT
213
1,740
716%
합계
3,645
16,059
340%
Resource: Mobilecome, Feb. 2003
<Wireless internet subscriber & Mobile subscriber>
(Thousand person)
WI Subscriber (A)
Mobile
Subscriber(B)
% (A/B)
SKT
14,355
17,105
83.9
KTF
10,387
10,490
99.0
LGT
4,070
4,729
86.1
전체
28,812
32,324
89.1
Resource: Ministry of Information and Communication (2002. Oct)
Wireless Internet-Sales flow
Contents
Special Ring , Ring-back tone service, June, Game
Copyrighter
Contents
Customer
Contents
Plan
Service
& converse
& Marketing
Profit Sharing Structure
45%
45%
* Cowon’s sales revenue : 90%
10%
Wireless Internet
 Contents service
• Digital audio contents
Bell sound, ring-back-tone service
live-bell, music on demand
• Digital video contents
Music video, live-screen, VOD
• Game
Casino land, Nemologic, vocabulary-wizard
Wireless Internet-Competition
• Made an Strategic Alliance with SKT (SKT
invested in COWON in August 2000).
•Started business with an inception of
wireless Internet in Korea
• Powerful human resources keeping many top-Mobile용 Server
구축 기술
trained engineers
Mobile Solution 및
Application
개발 기술
• To maintain information channels for new
technology and trend
• To perform reliable after service and adapt new
technology and contents
• To have strong partnerships with over 100 music
agencies and label companies
• To run multimedia contents Data Base
Mobile용 Contents
(Multimedia Contents)
편집 및 제작 기술
Mobile
Server
Solution
Contents (Multimedia)
• To play a role as a leading company in June
multimedia service
• To focus on multimedia solution and contents for
EV-DO, IMT2000
• Selected the best CP and best partner by SKT
Total Mobile Business
Wireless Internet - SWOT
Strength
• Strategy partnership with SKT
(As a master CP, SKT investment in 6.29%)
Weakness
• To have taken part in WI contents early stage
of SKT
• Lack of own brand in WI
Solution : To increase marketing activity –
advertisement, promotion, co-marketing with
S/W & MP3 Player
• To take lots of contents (music, video, etc)
• To service for only SKT
• To accumulate know-how of WI business
Solution : To launch ring-back-tone service
for LGT, KTF from July 2003
such as business model, service model
Opportunity
• To innovate the internet technology
(Ultra-speed data transfer, grade-up
handset with multimedia function,
decreasing mobile subscription fee)
Threat
• WIPI (Wireless Internet Platform for
Interoperability
Solution :To set up and increase our
competition than others’- Portals, other CPs
• To set up pay-market in digital music
• to move up from WI to mass-media
Main competitor : 5425, Yaho, Danal, Widerdan.com, Feelink
Wireless Internet-Monthly Sales Amount
Continuous Sale Growth
Billion KRW
1.4
1.2
1
0.8
0.6
0.4
0.2
Year 2002
Year 2003
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Jetaudio - Multimedia S/W
 Product
• Audio/Video total solution
• Internet broadcasting function
• Able to mp3PRO, OGG, Divx, DVD format
 Competitor: Winamp, MediaPlayer
 Honors
• 99’ SoftExpo Champion
•, The most popular S/W 20 in Cnet and ZDNet
• 02’ The world-class product of Korea
 Marketing Strategy
• To focus on high quality of the product by utilizing accumulated
world-class R&D ability
-> To widen market into B2B bundle business
(Major reference customers - NEC, Fujitsu, IBM, Gateway)
• To manipulate existing worldwide 10M customer bases
-> To enlarge customer base by providing a prompt upgrade and to
make online digital audio business by connecting it into JetAudio.
“JetAudio is Portal.”
New business - 3D Avata chatting game
 Product
• www.partyparty.co.kr
• Chatting & game by 3D Avata
 Competition
• Using the first Cartoon 3D
• Using Cowon’s multi-media tech.
 Busines Model
• To sale virtual items
• To set up communities
• 60,000 members from April 2003
• To connect with Cowon’s digital
audio contents
3D
Avata
Chatting
Music
Game
Community
Dance
Chapter 4. Financial Outlook
Financial outlook
Sales
Net profit & ROE
35.0
(KRW, Billion)
30.0
(KRW, Billion)
6.0
6.0
100% YOY
Average 37% ROE
25.0
5.0
20.0
4.0
43%
42%
37%
16.8
3.6
35%
02
03E
32%
15.0
3.0
10.0
2.0
8.5
1.8
1.4
5.0
1.4
99
1.0
3.8
00
0.5
01
02
03E
99
00
01
Sales revenue by business part
35.0
MP3 Player
30.0
*( )
S/W & Others
1st Half
Wireless Internet
25.0
24.0
(8.5)
20.0
16.8
15.0
10.0
12.2
8.5
1.0
4.2
5.0
3.8
1.4
99
1.3
0.1
00
10.0
0.6
2.7
0.5
0.4
2.5
1.8
01
(4.0)
4.2
02
03(E)
Break-down by business part
- Increasing sales & net profit % in MP3 Player
- Every year twice sales in Wireless internet
MP3 Player
Wireless
Internet
Software
Other
(Xing-Q)
Total
(Million, KRW)
FY99
FY00
FY01
FY02
1
560
1,780
11,196
Net Profit
55
242
2,053
%
10%
14%
18%
Sales
Sales
107
459
1,806
4,182
Net Profit
20
108
292
1,129
%
19%
24%
16%
27%
Sales
1,301
2,770
2,440
385
Net Profit
448
1,068
1,172
369
%
34%
39%
48%
96%
Sales
1
13
2,429
1,048
Net Profit
2
73
30
%
15%
3%
3%
Sales
1,410
3,802
8,454
16,811
Net Profit
468
1,233
1,779
3,581
%
33%
32%
21%
21%
R &D
R&D
(KRW, Billion)
3.0
R&D비용
• MP3P R&D Exp/model : 0.25
2.84 (주1)
매출액
11%
• 2 models launched in 2001
17%
2.5
2.0
• 50% Exp of the competitor
• Jet-audio new version in 2002
10%
10%
1.8
1.5
5%
1.0
0.86
0.39
0.5
Person
0.15
99
00
01
02
03E
14
16
33
40
56
(1.1 billion won)
주1) 0.03 won for New business
Chapter 5. Investment highlight
points
• Growth
• Competition
• Profitability
• Stability
• Others
Investment Point 1
Growth
• CAGR 100% growth in high growing market
- MP3 Player, Wireless Internet
• Market growth and M/S increasing
• Worldwide market
• The products proven by users and experts
- The world best products
- ZDNet, CNet, Amazon -> No.1 in the world
Competition
• The well skilled employees in low moving rate
• The synergy in all business parts w/ digital audio
• The flexible company structure
- Quick response to market change
• over 37% ROE during 5 years - target 30%
Profitability
• over 20% Net profit during 5 years
• Almost none of capital expenditure to do more profit
• Increasing interest income from accumulated working
capital
Investment Point 2
• Never borrowing since establishment
Stability
Others
• Pull-strategy marketing (small A/R)
• Stable stock share of management and employees
(65.39%)
• Over 1year lock-up 57.90%
• Market forecasting ability of CEO
Appendix
• Organization structure
• Affiliate- JetAudio Inc.
• Summary of Financial Statement
• Other products
Organization structure
President Park Namkyu
MP3 Player Div.
(31)
Wireless Internet Div.
(39)
• Seoul National University
• Seoul National University
- MS
Stockholders
• LG Electric Co.
• Establisher of COWON
President
New business div.
(15)
Vice President M.Y. Lee
Sales & Marketing-A/S
• Seoul National University
• Seoul National University- MS
(11)
V.President
• Samsung Electric Co
Finance & Administration : IR (5)
Auditor JW Choi
• Seoul National University
• Michigan State Univ.- MBA
•PerreGreen Security Co.
•IMM Venture
JetAudio, Inc.
(8)
Strategy & PR
(2)
Affiliate Company
Outlook
Name
JetAudio, Inc.
Incorporate
April 2001
President
Jae-Ook Chung
Capital
USD 1Million
(Cowon 100%)
Business
Area
Multimedia S/W R&D, Sales
N. America MP3 Player sales
Employee
8 Person (R&D 5)
Address
California, Irvine
www.jetaudio.com
Purpose
Open up US market
FY02 Financial Outlook
(USD, Thousand)
Asset : 1,308
Liabil. : 249
Cap.
: 1,057
Sales
: 1,084
Net Profit : 268
BOD of JetAudio, Inc.
 Chung, Jae-Ook : CEO, President
- Seoul National Univ., BA, Engineering
- Seoul National Univ., Ph.D, Engineering
- An establisher of Cowon
 Steve Ryu :CFO
- Seoul National Univ., BA Economics
- Univ. of Southern California, MBA
- Samsung Everland
- Samsung Security Co.
 Kang, sangkoo : Sales & Marketing director
- Seoul National Univ., BA, Engineering
- Duke University MBA
- DACOM
- Nortel Networks
Summarized Financial Statements(B/S, P/L)
B/S
P/L
(KRW, Million)
항목
1999
(KRW, Million)
2000
2001
2002
2003
1st Half
항목
1999
2000
2001
2002
Current Assets 1,820
3,570
4,403
5,859
7,874
Sales
1,410
3,803
8,455
16,811
Quick Assets 1,820
3,374
3,679
4,208
6,035
Cost of goods 542
1,994
4,906
10,875
8,236
Gross profits
868
1,808
3,549
5,936
4,293
Sales & Adm.Ex
345
517
1,543
Operating income
523
1,291
2,006
3,167
Non oper income
31
127
121
166
68
Non oper expense
14
1
51
190
56
2,076
3,144
2,534
Inventories
-
196
724
1,651
1,839
Fixed Assets
225
1,466
3,321
6,122
6,349
2,045
5,036
7,724 11,981 14,224
119
202
1,096
1,634
1,666
40
112
40
103
179
Total liabilities
159
314
1,136
1,737
1,845
Common stock
444
1,522
1,522
2,100
2,100
Capital surplus
956
1,476
1,476
894
894
Retained earnings
486
1,718
3,507
7,089
9,193
6
83
161
192
Total Asset
Current liabilitie
Long-term liabilities
Capital adj.
-
Ordinary income 541
1,418
2,769
12,529
1,770
1,094
Extra ordinary income
-
-
-
-
-
Extra ordinary expense
-
-
-
-
-
541
1,418
2,076
EBITA
Total equity
1,886
4,722
6,588
10,244 12,379
Taxes
73
185
287
Lia. & Cap.
2,045
5,036
7,724
11,981
Net income
468
1,233
1,789
14,224
2003
1st Half
3,144 2,534
-437
431
3,581 2,104
MP3 Player iAUDIO (amazon.com #1)
Thank You