About Us. Headquarter : Taipei, Taiwan, R.O.C. Founded : November 3, 1983 Capital (as of Dec. 31, 2010)NT$2,869 Million. Major shareholder (as of Feb. 28, 2010): Jwo & Chen's Family(25...
KYE Review and Perspective 2011 Q1 Kevin Kao / Finance VP Mar. 3, 2011 About Us Headquarter : Taipei, Taiwan, R.O.C. Founded : November 3, 1983 Capital (as of Dec. 31, 2010)NT$2,869 Million Major shareholder (as of Feb. 28, 2010): Jwo & Chen's Family(25%-30%) QFII(10.7%); Employee(4%-5%) 2010 Revenue : NT$11,036 Bn (yoy +8.5%), US$349.8Mn (+15.2%) Employees : 1,930 (Taipei:360, Marketing subsidiary:70, Factory:1,500) Core technology Input Device : Mice, K/B, Tablet (Digitizer) Image: DV, Web Cam, Cam Module (NB, Smartphone), Laser Bar Code Printer Acoustic products: Speakers, Headsets Selling Subsidiaries : US, Germany, UK, HK, China Marketing Rep. America: Brazil, Argentina, Mexico, Chile, Colombia EMEA: Poland, Ukraine, Czech, Iran, Turkey , Hungary, Kazakhstan Asia-Pacific: India, China, Vietnam, Indonesia PR Consultant America: U.S. EMEA: Italy, Poland, Czech, Kazakhstan, Turkey, Iran Germany, France, UK Asia-Pacific: Vietnam, India, Indonesia Factory : Dong Guan Guang Dong , China -1- Key Financials-Consolidated P/L Preliminary unaudited for 2010 in millions of NT$ Item Net Sales COGS Gross Profit Operating Expense Operating Income Non-Operating Income before Tax EPS(Pretax )* Net Income EPS (After-tax)* 2010Q4 YOY% QOQ% 2010 2009 YOY% 2.588 100% (15.1%) (8.7%) 11,036 100% 10,183 100% 8.5% 2,163 83.6% (13.8%) (8.9%) 425 16.4% (21.1%) (7.5%) 334 12.9% (2.9%) (4.2%) 91 3.5% (53.1%) (18.0%) (36) (1.4%) (596%) (203%) 55 2.1% (72.7%) (62.4%) 0.19 43 1.7% (76.2%) (63.5%) 0.15 9,055 82.1% 1,981 17.9% 1,465 13.3% 516 4.7% (1) 0.0% 515 4.7% 1.80 429 3.9% 1.50 8,221 80.7% 10.3% 1,961 19.3% 1.0% 1,337 13.1% 9.6% 624 6.1% (17.4%) 120 1.1% (101%) 745 7.3% (30.8%) 2.61 686 6.7% (37.4%) 2.41 *Note1EPS are based on the weighted average shares outstanding of 286,178K and 284,768K shares in Q4 2010 and Q4 2009. -3- Key Financials- Consolidated B/S Preliminary unaudited for 2010 YoY Comparison1 Cash & Equiv. Financial Assets Accounts Receivable Inventories Bank Loan Accounts Payable Equity Total Assets 2010 Q4 1,883 24.1% 432 5.5% 1,744 1,790 600 1,397 4,218 7,800 22.4% 22.9% 7.7% 17.9% 54.7% 100.0% 2010 Q3 1,772 23.6% 298 4.0% 1,847 24.6% 2,009 0 26.8% 0.0% 1,612 21.4% 4,312 7,510 57.3% 100.0% in millions of NT$ 2009 Q4 1,935 26.4% 155 2.1% 1,670 1,792 0 1,697 4,778 7,337 22.8% 24.4% 0.0% 23.1% 65.1% 100% -4- Financial Ratio Summary 9Adequate liquidity and Excellent operating efficiency with strong cash generating ability 9Strong financial structure with keep reducing liability ratio 9Proven track records in profitability 9Constant dividend policy High payout ratio(60% to 80%) with majority of cash makes an very attractive yield as in past 3 years. Item Financial Ratio/Year 07 08 09 10 Capital Structure Liabilities to Assets ratio(%) 37.9 34.1 33.4 45.3 Liquidity Current ratio(%) 220.8 229.8 185.4 211.3 Analysis Quick ratio(%) 160.0 141.4 158.1 187.6 Operating performance Average collection days Global inventory turnover days 57.0 65.0 56.0 58.0 50.0 59.0 72.0 78.0 Profitability ROE(%) 25.5 20.6 14.5 10.2 EPS(nt$/share) 4.80 3.03 2.41 1.50 Dividend Stock Dividends(nt$/share) 1.18 1.40 0.99 - Cash Dividends(nt$/share) 2.49 3.51 1.317 2.85 Capital Reduction(nt$/share) 1.00 1.00 - - Dividend yield(%) 6.7 21.3 5.0 10.0 -5- Business Operation Summary BU Turnover A/R Turnover (days) Genius Inventory Turnover (days) A/P Turnover (days) Cash Conversion Days A/R Turnover (days) Inventory Turnover (days) ODM/OEM A/P Turnover (days) Cash Conversion Days A/R Turnover (days) KYE Inventory Turnover (days) A/P Turnover (days) Cash Conversion Days 06 49.0 41.0 73.0 17.0 58.0 48.0 78.0 28.0 52.0 44.0 75.0 21.0 07 56.0 49.0 76.0 29.0 61.0 51.0 76.0 36.0 57.0 50.0 76.0 31.0 08 65.0 57.0 79.0 43.0 64.0 60.0 79.0 45.0 65.0 59.0 79.0 45.0 09 58.0 66.0 70.0 54.0 54.0 79.0 70.0 63.0 56.0 72.0 70.0 58.0 10 57.0 58.0 78.0 37.0 60.0 99.0 78.0 81.0 58.0 78.0 78.0 58.0 -6- Business Model OBM/ODM Mix Portfolio Branding Contributed 59%+ in 2010 415 401 400 369 61% 56% 59% 54% 46% 44% 39% 41% 318 58% 42% 350 59% OBM ODM / EMS (in millions of US$ ) in Consolidated basis 41% 2005 2006 2007 2008 -7- 2009 2010 Regional Sales Allocation- 2010 Q4 Russia & CIS & E.E. W.E & S.E. US Latin America M.E.A Total Sales % of Sales 28.4% 9.5% 6.2% 18.3% 37.6% 100.0% yoy % 40.3% -47.8% M.E.A, 37.6% -45.2% -13.4% -20.6% -15.0% 2010 Q4 (Total Revenue : NT$ 2.59 BN) Russia & CIS & E.E., 28.4% Latin America, 18.3% W.E & S.E., US, 6.2% 9.5% -8- Regional Sales Allocation- 2010 % of Sales Russia & CIS & E.E. 20.0% W.E & S.E. 12.6% US 8.3% Latin America 20.4% M.E.A 38.7% Total Sales 100.0% yoy % 50.3% -18.3% -24.5% 4.8% 16.5% 8.5% M.E.A, 38.7% 2010 (Total Revenue : NT$ 11.04 BN) Russia & CIS & E.E., 20.0% W.E & S.E., 12.6% Latin America, 20.4% US, 8.3% -9- OBM(Genius) Regional Allocation-2010 Q4 % of Sales yoy % Russia/ CIS / E.E. W.E & S.E. 43.9% 40.3% 13.9% -23.1% US 0.9% -47.1% Latin America 26.7% -13.1% M.E.A 14.6% -21.2% Total Sales 100.0% 0.0% Latin America, 26.7% 2010 Q4 (Total Revenue : NT$ 1.67 BN) M.E.A, 14.6% Russia & CIS & E.E., 43.9% US, 0.9% W.E & S.E., 13.9% -10- OBM(Genius) Regional Allocation-2010 % of Sales Russia/ CIS / E.E. W.E & S.E. US Latin America M.E.A 33.7% 15.3% 1.3% 33.7% 16.0% Total Sales 100.0% yoy % 50.3% -8.7% -12.2% 4.6% -2.3% 12.6% 2010 (Total Revenue : NT$ 6.53 BN) M.E.A, 16.0% Russia & CIS & E.E., 33.7% Latin America, 33.7% US, 1.3% W.E & S.E., 15.3% -11- Business Model KYE Production Product Mouse K/B DV/DSC Webcam & Cam Module Speaker Headset Gaming/Handheld Game Devices Card Reader Digitizer (Tablet) Barcode Label Printer Robotics GENIUS ODM/OEM Self-manufacturing Self-design & Out-sourcing Self-manufacturing Self-design Out-sourcing / Self-manufacturing Self-manufacturing Self-manufacturing Self-manufacturing Self-design & Out-sourcing Self-manufacturing Self-design & Out-sourcing Out-sourcing / Self-manufacturing Self-manufacturing Self-manufacturing Self-manufacturing Self-manufacturing Self-manufacturing Self-manufacturing -12- 2010 Q4 Product Portfolio 10.6% 5.1% 20.2% 21.8% 24.9% 2.7% 14.7% -13- 2010 Product Portfolio 17.0% 5.7% 7.5% 26.5% 27.1% 2.7% 13.6% -14- 2010 Q4 Genius Product Portfolio 31.3% 6.0% 29.1% 7.2% 4.2% 22.2% -15- 2010 Genius Product Portfolio 28.3% 5.3% 12.3% 4.5% -16- 27.7% 21.9% 2010 Q4 Product Summary PRODUCTS Mouse Genius ODM KB Speaker Headset DV/DSC Webcam Tablet Carder Reader 2010 Q4 Units yoy -19.4% 6.0% -51.4% 12.2% 16.8% 18.4% -18.3% -58.7% -1.3% -26.4% 2010 Q4 Revenues yoy -30.8% 2.8% -65.0% 9.2% 14.4% 1.5% -6.7% -63.7% 1.4% -32.7% 2010 Units yoy 4.9% 16.1% -8.9% 25.4% 21.4% 22.4% 29.3% 7.2% 16.2% -2.7% 2010 Revenues yoy -13.4% 15.4% -38.3% 21.6% 23.1% 9.2% 61.3% -10.2% 17.6% -8.0% -17- Growth Engines A. NB/Net Books Ring MicePen Mice OTC MiceWebcam XPad KB Digitizer C. Acoustic Devices iPod/MP3/5.1CH speakers MSN/Skype Headset & Headphones Earphone for cellular phone B. Card Reader External for Memory Card Mobil Phone bundle Build-in Cards Reader for Printer or Desktop PC D. New Projects DV/DSC/Peephole Cam Bar Code Label Printer Lab Equipment/Spectrometers Handheld Gaming Devices Mini Projector Robotic Vacuum -18- Growth Engines Genius Europe - Russia - Emerging Europe America - Brazil - Mexico - Columbia - Venezuela - U.S. Asia Pacific - China - Indonesia - Vietnam - Turkey - India - UAE ODM / OEM A. Customer - H company - Double A companies - D company - W company B. Products - Coreless Mice/KB/K+M - Card Reader - DV/DV application - Webcam/Peephole Cam / Cam Module - Handheld Gaming Devices - Robotic Vacuum - Bar Code Label Printer -19- Genius Perspective Genius Asset Value Brand Awareness (38.3 million Genius) Brand Value (2010 US$ 69 million ) Brand Image ( ) Brand Loyalty Brand Relationship (a) Physical Channels * NCS (National Chain Store) * Hypermarket * Systems Bundled (b) Virtual Channels * e-shopping * 3C Store * Mobile Phone Chain Store * Public Sector Projects * TV shopping -20- ODM/OEM Perspective Valuable Customers * H Company, Double A, M Company, D Company Profit-orientation and the Perfect Product Portfolio * ODM & OEM Keep the leadership in core technologies * Pointing Device Technology * Image Technology * Storage Technology * Wireless Technology A approved and certified manufacturer * H.P., Acer, Microsoft, Sony, Foxconn & Flextronics * ISO9001, ISO14001 & QCO80000 -21- Production Capability Factories : plant A Production Space : 24,900 Yearly Capacity : 30 million pcs Yearly output value: 230 million USD Factories : plant B Production Space : 45,000 Yearly Capacity : 50 million pcs Yearly output value: 450 million USD Products Output Capacity Mice/K+M5mn/m DV/DSC6XLines 450k/m now Card Reader1mn/m now Digitizer50k/m now 12XLines 800k/m Dec. 2009 2mn/m Sep. 2010 100k/m June 2010 -22- Near Term Financial Guidance Recovery of revenues from emerging markets, new products and new business to generate growing revenues and profits quarter by quarter in next year. Strong cash inflow from operation and net cash balance to fulfill business demand and dividends payout. Stable business cycle at around 125 to 130 days and cash conversion at between 50 to 55 days. Solid financial position, liability ratio back to <40% in 2011. Strategic Alliance to create more business opportunity through equity investment on supply chains and customers Challenges and risksEconomic bubble or inflation risk, Strong revaluation on NT and CNY, continuing Shortage of Labor and rising Labor Cost in China, Price of Raw Material. -23- KYE Advantages · One of Taiwan's top 20 Global Brands in 6 consecutive years since 05 · Red dot, IF, G-Mark & CES Design Award Winner · Owner of 1,124 patents around the world as of Feb. 2011 First scrolling mouse patent in the world. (Pat. US5530455) First OPTO-Touch scrolling mouse (Pat. US7298362) · Ranked 88/54 for applied/approved patents in Taiwan for 2010 · The world's leading and Taiwan's best PC peripheral brand · The world's leading ODM/OEM for card readers · Professional ODM/OEM service and 1ST-tier IT Corps' partner -24- Brand Awards 2010 Taiwan Top 20 Global Brand Financial result Brand position Brand awareness Brand Net Value -25- Thank You!Acrobat Distiller 7.0 (Windows) Eric Lai