Good Morning Ladies and Gentlemen. I am Fan Zhou, China TransInfo’s Investor relations director. Joining us today is our Chief Financial Officer Troy Mao. I am happy to be here today to explain our business and the exciting market opportunities which we are taking advantage of in China’s transportation industry.
Please remember that that today’s meeting may contain forward looking statements within the meaning of federal securities laws. Please review the safe harbor statement, which explains the risks and uncertainties associated with forward looking statements.
To give you a brief financial overview, we currently trade on the NASDAQ Global Market under the ticker of CTFO and have a market capitalization of roughly $157 million. Our revenues for the Trailing Twelve Months were $35.7 million and we had net income during that period of $11.5 million, providing our shareholders with earnings of 51 cents per share.
We are currently the largest traffic information processor, traffic volume surveyor, and real time traffic information provider in China. Established in Oct 2000 as a GIS company, China TransInfo is dedicated to transportation information services and solutions based on GIS custom software. Our operations are conducted entirely through our indirect subsidiary located in Beijing. At present, we have roughly 400 employees in China and 30 plus PhDs in the Peking University GeoSIS Laboratory. Our transportation products and solutions are targeted for transportation management authorities under the management of the Ministry of Communication and the general public. Through subsidiaries and branch offices, we now have 11 locations throughout China.
Here are some of the main services and solutions we provide to government agencies and individual consumers. We target our service to urban transportation and intercity transportation. Within cities, we provide transportation planning systems, traffic flow surveying solutions, passenger flow statistic, detecting and analysis systems, and traffic management platforms for government agencies. For consumers in cities, we provide real time traffic data via the internet, mobile services, and directly within taxis. With regard to intercity highway networks, we provide highway traffic surveying systems and intelligent traffic monitoring systems to government transportation authorities. In addition, we have capabilities to install electronic toll collection systems for government authorities and provide the related toll tags to consumers.
There are a number of reasons why we are so excited about the future growth of our transportation products and services. To start, China has recently completed a series of large-scale highway infrastructure projects. As a result, China now has the second largest highway network in the world. Based on China’s highway network development plan, highway kilometers will almost double to 85,000 by 2020. Meanwhile, China’s transportation management capability is currently low and therefore requires advanced solution services, such as the ones we provide. In developed countries, about 7-10% of highway investments relate to IT solutions while in China this percentage is only 1%. In addition, MOC has announced a new budget of 730 billion for next 3-5 years on transportation, with over 5% of that total for intelligent transportation systems. In fact, the market size for transportation solutions and Electronic Toll Collection from the public sector alone is about $7.3 billion, based on the Chinese government’s 11th five-year budget for transportation upgrades. We believe all of these developments signify that China’s transportation information services is at very early stage and will see very strong growth over the next few years.
With the rapid economic growth and urbanization, car ownership has increased dramatically, leading to unprecedented transportation challenges in most cities. As a drastic measure, China’s Ministry of communication has limited vehicle use in some cities to decrease traffic jams. Motorists are eager to gain access to real time traffic information to better navigate busy roadways. Meanwhile, public transportation passengers also want to access traffic information to optimize commuting times. The application of real time data is expected to be driven by cell phone manufactures and wireless carriers. The GPS function will become a standard feature in handsets. This will encourage more dynamic services like traffic monitoring to be added and utilized based on GPS feature. China commercially launched 3G service in 2009 thus all the carriers are looking for more value added services to attract subscribers, such as real time traffic data.
China TransInfo has developed the most technologically advanced transportation solutions available in China today. Our solutions are custom-designed software, based on national communication network data and GIS technology. By integrating a variety of transportation models, our solutions aim to provide advanced, real time data tools for transportation planning to the transportation management authorities. The revenue from these projects are generated through contracts, which are often extended or expanded. Our solutions have many important competitive advantages. Although we are a private company, we have strong customer relationships, particularly with public sector clients. Furthermore, we are not only one of the first companies to provide real time traffic reporting information, but our technology has also been used by the government as a national standard.
China TransInfo’s superior technological capabilities and cutting edge products have translated into a win rate of approximately 90 percent for the last 3 years. To give you an example of our projects, I’d like to briefly talk about one of the recent contracts that we signed to develop the Beijing transportation planning system by providing road planning and security monitoring based on transportation data analysis. In 2007 and 2008, we were awarded the only two Olympic transportation projects in Beijing to support the Beijing Summer Olympic Games by improving Beijing’s transportation information management and service capabilities. Those successful projects enabled us to win the contract to develop Beijing’s transportation planning system. In August 2009, we launched a new product called the TransPLE passenger flow statistic, detecting and analysis system, which targets metro stations, railway stations, and airports. This product can assist government authorities to develop and expand high-traffic transportation centers with optimal configurations for pedestrian flow, as well as supporting public safety with crowd control, emergency response, and anti-terrorism activities. With the highest accuracy in the industry , we think TransPLE brings us a huge potential market.
As mentioned before, In China, like in so many other countries, traffic congestion is having an adverse impact on the economy. As a result there is an urgent demand by the government and individuals for real-time traffic information. China is at very early stage to collect, process and provide accurate real time data, one of the factors are lack of source. CTFO is proud that we have the best technology in China in real time data process. Our data source are from, 1) our government projects, from these projects we calculate and accumulate data, 2) direct survey system which focus on real time data, 3) floating vehicles like cabs in the streets. We believe the taxis in China can be the best source of real time data as they are all continuously running in streets. Those real time data can be broadcasted to customers via cell phones, websites, PDA’s and on onboard receivers installed directly in cars. Aside from providing real time traffic information, our systems can provide route mapping and guidance, pointing out the best way to a specific address or other landmarks or points of interests while avoiding traffic congestion.
In August, we also launched China’ largest real-time traffic information service on the website www.palmcity.cn. with initial coverage in 5 cities, including Beijing and Shanghai. At the same time, we launched mobile phone software which can be downloadable and pre-installed in mobile handsets to access the five cities’ real-time traffic conditions. We plan to cover 10 cities in 2009 and 20 cities in 2010. Real-time traffic data is updated every 2-5 minutes and currently is provided to cell phones users with Nokia, Motorola and Lenovo devices. We charge handsets manufactures by number of pre-installed devices. Currently, we are also actively discussing with wireless carriers, including China Unicom and China Mobile, potential agreements for local markets. We would share the subscription service fees.
Another area we are looking at very closely is Electronic Toll Collection, which is expected to be a major focus of governmental investment over the next several years. Many countries in the world are developing or have already begun using ETC systems that can to be used on highways, bridges and tunnels. E-Z Pass in the Northeast US is an example. These systems use roadside ETC antennas that receive signals from electronic tags in vehicles to automatically deduct payments without stopping or slowing down. ETC systems can also be used in traffic information collection systems, automatic parking management systems, gas stations, fast food restaurants, and public transportation. China TransInfo will manufacture and sell the electronic tags placed in cars and roadside antennas to highway authorities and individual consumers.
At the end of June 2008, China had almost 129 million vehicles and the number is expected to grow at least 5% annually over the next several years. China has plans for 850,000 km of highways, and has 70% of the world’s toll highways, according to the highway management department of the Ministry of Communication. In May of 2007, the Ministry of Technology defined national standards for ETC system and trial systems were put in place in late 2008 and early 2009 in the Yangtze River Delta and the Beijing-Tianjin corridor. ETC has been elected by the Ministry of Technology as the “backbone technology” of the national toll highway network. We were awarded our first win of ETC in Zhejiang Province this summer, now we are actively talking with other provinces highway authorities for ETC bidding.
China TransInfo has invested significant resources to develop the highest quality solutions in the transportation sector and has worked with the Chinese government to assist in setting national technical standards. The transportation information system is a major national initiative, which will rollout GIS technology to 600 municipalities in China. China Transinfo is establishing its technology as the national standard as it develops key relationships with the MOC. Meanwhile, the company continues to improve its technology and customize its solutions to meet specific client requirements. The company also continues to leverage its relationship with Peking University to aid in its research and development efforts and is considering strategic acquisitions to supplement its technology and business relationships. Further opportunities for revenue exist after the initial technology rollout due to recurring needs for application and data services. China Transinfo plans to become a transportation information service provider in such areas as GPS, mobile phones, radio stations and automobile manufacturers. For example, a customer who purchase the company’s processed data service in Beijing can easily determine the best route to a particular destination, the nearest parking lot, and the best restaurants or sightseeing destinations. All of these different technologies and services represent several layers of revenue, all of which should grow exponentially with each additional win. We are currently devoting additional R&D funds to develop proprietary real time applications for consumer use.
During the past 9 years, China TransInfo has developed many unique advantages tht will foster sustained corporate development. With 92 software copyrights issued by the China Software Testing Center and 9 product awards, China TransInfo is a technological leader in its field. Our software is all developed in-house specifically for our target markets. In China, we were the first to develop technology for processing and broadcasting real-time traffic data. China TransInfo has been recognized for technology leadership in the GIS field with a number of industry awards. We have a proven track record of success with a high win rate for model cases; from 2005 to 2008, we were awarded 5 of 10 MOC model cases designed to address transportation management efficiency. In the first half of 2009, we achieved a win rate over 90% for our bids.
The key to our technological development is our partnership with Peking University, which has enabled us to take advantage of the University’s GeoGIS Research Laboratory with over 30 Ph.D.s and researchers. We also have research cooperation with Tongji University, Beijing Jiaotong University and Beijing University of Aeronautics & Astronautics. We have a very strong and loyal customer base, including the Chinese Ministry of Communication, the country’s top transportation regulator. Private clients include internet companies, real estate management companies and transportation industry institutes.
We have a very dedicated management team which is experienced in both GIS technology development and transportation solutions. Mr. Xia, Mr. Zhang, and Mr. Lai are the founders of the company and graduates of the prestigious Peking University. Our CEO, Mr. Xia, Has a PhD in GIS technology.
CTFO also maintains a majority independent board, the members of which bring with them years of experience in the IT/telecom and finance fields.
China TransInfo is currently projecting that our compounded annual growth rate will continue at about 65.5% with estimated revenues growing to about $45 million in 2009.
Our net income compounded annual growth rate is projected at 56% going forward through 2009. As you can see we are projecting $13 million in net income this year.
Looking a summary of our financials, we are confident to maintain our gross margin at 50% and net margin at around 30% in the future.
To summarize, China TransInfo is the leading provider of transportation information service and comprehensive solutions in China. We pioneered the technology for processing & broadcasting real-time traffic data and are currently the exclusive providers of real-time traffic flow data to several cities as well as the national highway network. We have a strong record of project wins and have a stable and growing client base. Our early wins on prototype cases for the Ministry of Communication will likely result in continuing contracts for the foreseeable future, and our recurring revenue model for data services is proving to be both profitable and sustainable.
Should you want additional information in the future, please feel free to contact us.
I want to thank you for listening and I hope you enjoyed the presentation on China TranInfo Technology Corporation.
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China TransInfo Investor Presentations 2009 - Presentation Transcript
Fall 2009
Safe Harbor
Any statements set forth above that are not historical facts are forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but not limited to, factors related to China TransInfo’s anticipated growth strategies, future business development, ability to attract and retain new clients, ability to develop new GIS software and hardware, expand to other related industries or markets in other geographical locations, and other information detailed from time to time in the filings and future filings with the United States Securities and Exchange Commission. Anyone interested in obtaining information on China TransInfo should contact China TransInfo or CCG, as set forth above, to receive the China TransInfo’s most recent financial reports. This presentation was developed by China TransInfo and is intended solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy the Company’s stock. This profile is based upon information available to the public, as well as other information from sources which management believes to be reliable, but is not guaranteed by the Company as being accurate nor does it purport to be complete. Opinions expressed herein are those of management as of the date of publication and are subject to change without notice.
Company Snapshot Revenue ($ Millions) Net Income ($ Millions) Listed on NASDAQ CTFO Price( August 21, 2009) $7.03 Shares Outstanding 22.4 M Market Capitalization $156.8 M Revenue (TTM) $35.7 m Net Income (TTM) $11.5 m EPS (TTM) $0.51
Company Overview
China’s largest traffic information processor, traffic volume surveyor, and real time traffic information provider
Founded in October, 2000
Products target transportation authorities under the management of the Ministry of Communication as well as the general public
Nationwide presence – 11 offices in China with headquarters in Beijing
Geographic Coverage
China TransInfo Subsidiaries
396 employees nationwide, 30 PhD researchers in PKU labs
2009 guidance of $45.0M in revenue and $13.0M in net income
What We Do Government Authorities Individual Consumers Urban Transportation Transportation Planning Information Systems Real Time Traffic Data Traffic Flow Surveying Solutions Passenger Flow Statistic, Detecting, and Analysis System Taxi Media Platforms Intelligent Traffic Management Platform Intercity Transportation Intelligent Highway Traffic Monitoring Projects Highway Traffic Surveying Systems Electronic Toll Collection Systems Highway Transportation Holiday Traffic Reports
Large Growth in Transportation Sector
China has the second largest highway network in the world , which will reach 85,000 kilometers by 2020 with an additional RMB 100 billion to be invested annually from 2010 to 2020.
The government plans to improve transportation management, using advanced IT solutions
Roughly 1% of highway investment in China is related to IT solutions compared to 7-10% in developed countries
The MOC has budgeted $730 billion for next 3-5 years for transportation infrastructure upgrades, with over 5% directed for Intelligent Transportation Systems .
The public sector market is worth $7.3 billion, based on
the Chinese government’s 11 th 5-year plan for transportation information system upgrades.
Long-Term Government Demand
Vast Market for Real-Time Traffic Information Solution * Traffic Management Bureau of Ministry of Public Security
The number of vehicles in China is currently more than 129 million and this figure is expected to grow at least 5% annually over the next several years*.
Since the increasing number of car owners has led to unprecedented transportation challenges in most cities, real-time traffic information solutions can optimize drivers and pedestrians’ commuting times.
The number of mobile internet users in China reached 117 million at year-end 2008 and is expected to grow 100% in 2009 and exceed 200 million users. ( Source: CNNIC, MIIT, 04/09 )
China’ LBS users reached 13 million in 2008 and this number is expected to grow substantially in the next several years. ( Source: In-Stat, 04/09 )
LBS with real-time traffic information is one of the most appealing services for wireless carriers to attract subscribers and increase average revenue per user (ARPU).
3G was commercially launched in China 2009. With 3G, real-time traffic info distribution becomes faster and easier.
China’ LBS subscribers forecast (Million)
Government Agency Services Application Solution Advantages
Solution Overview
Custom ized software based on proprietary technology
Applications convert complex traffic data into easily digestible graphics with a user-friendly interface
Used throughout China by the Ministry of C ommunication
Revenue generated through contracts, which are often extended or expanded
Our advantages
Strong customer relationships with local government transportation agencies
Pioneer in real-time traffic reporting technology
Developed national technological standards
Government Agency Services Application Solutions
Case Study - Beijing Transportation Planning System
Systems designed for road and aqueduct planning & security monitoring
Provides various data points to support transportation planning
Performs information search queries, statistical data analysis and module calculation
New Product – TransPLE Passenger Flow Statistic, Detecting, and Analysis System (TransPLE)
Detects and analyzes pedestrian flow quantity, density, speed, and direction in high density areas
Supported by CTFO-developed multimodal sensor networks composed of laser scanners and cameras
Assists government to optimize the pedestrian flow configurations in transportation centers and support public safety with crowd control, emergency response, and anti-terrorism activities
Individual Consumer Services Real-Time Traffic Information Platforms
Real-Time Information Source
Comprehensive government transportation information solutions
Traffic survey system
Floating Vehicles
Features
Access real-time traffic conditions
Custom mapping and route calculation
Find parking lots or sightseeing destinations
Individual Consumer Services Real-Time Traffic Information Solution
Largest real-time traffic information provider in China
Provides highway real-time traffic information for 20 provinces throughout China
Officially launched in 5 cities (Beijing, Shanghai, Chongqing, Chengdu, and Wuhan)
Expect to reach 10 cities by end of 2009 and 20 cities by year-end 2010
Provider of real-time traffic data to
Cell phone and wireless carriers --- plan to generate revenue through customer subscriptions.
Website ( http://www.palmcity.cn )
Media terminals
Organizations and enterprises
Government and Consumer Services Electronic Toll Collection
Product Overview:
Technology used is similar to electronic toll collection technology in other countries
Tags in vehicles are read by sensors on highways as cars pass through toll booth
Tags can also be used for traffic information collection systems, automatic parking management systems, gas stations, fast food restaurants and public transportation
Tags are supplied to private individuals; antennas are supplied to highway authorities
Road side ETC antenna Toll computer Electronic v ehicle tag Back end system
Large ETC Market Opportunity
Development Plans
Taking first steps to enter the developed regions
In contact with planners in Shandong , Heilongjiang , Shanxi and Sichuan provinces
Market Opportunity:
At the end of June 2008, China had almost 129 million vehicles – the number is expected to balloon to 140 million by 2010
60 , 3 00 kilometers of highways in China, most of which are toll ways , or 70% of all toll highways globally
ETC will be the “backbone technology” of the national toll highway network
Several municipalities and provinces have recently begun preparations for installations
Growth Strategy
Two stage business development strategy:
Stage I: Continue high win rate of model cases and pilot projects launched by various governmental departments
CTFO won the largest number of contracts in the first round of bidding for construction projects by the National Transportation Information System
Target contracts with China’s 600 municipalities to further guide national standards
Improve technology to meet specific client requirements
Stage II: Convert established business into various consumer data services which will provide ongoing revenue streams
Increase R&D spending to $6.75M in 2009 from $2.6M in 2008 for the development of new consumer oriented solutions
Evolve into an ongoing transportation information service provider
Grow revenue from a diverse base of different technologies and services
Technological Leadership
China TransInfo has been honored with 9 achievement awards and has received 92 software copyrights
Proven track record of success with a high win rate for model cases; 90% win ratio for new bids in last 3 years
First domestic company to develop technology for processing and broadcasting real-time traffic data
First mover advantage in the 3D GIS segment
Developed the first and only three dimensional GIS platform software in China
Strong Partnerships & Client Base
Strategic partnerships with ESRI, Oracle and Cisco
Strong and loyal customer base, including the Chinese Ministry of Communication, the country’s top transportation regulator
Private clients include internet companies, real estate management companies and transportation industry institutes
Our research partnerships include Peking University, Tongji University, and Beijing Jiaotong University, and Beijing University of Aeronautics & Astronautics
GeoGIS Research Laboratory
Over 30 PhDs & researchers
Experienced Management Team Dedicated to the Transportation Information Industry Shudong Xia, Chairman of the Board & Chief Executive Officer
Founded China TransInfo in 2000
Since 1998, has been involved in several research projects at Peking University
In 2003, Mr. Xia received his PhD in Remote Sensing from Peking University
Serves on several government advisory committees for the development of GIS services for urban planning
Troy Mao, Chief Financial Officer
Joined China TransInfo in January, 2008
Previously worked for Deloitte & Touche in both the US and China
Holds a Master’s from UNC Chapel Hill in accounting
Zhiping Zhang, Vice President of R&D
Professor in Remote Sensing and Geography Information Institute at Peking University
Lead the development of the first Geo-info system software-Citystar - awarded the “Excellence Product Award”
Vice President of Research and Development since May 2007
Danxia Huang, Director & Vice President
Formerly Vice President of First City Investment Inc. of Hong Kong
Previously, CEO of an internet company for 3 years.
Holds a MBA from Murdoch Univ. of Australia
Directors Jay Trien, Independent Board Director of Audit Committee
Senior partner of Trien Rosenberg Rosenberg Weinberg Ciullo & Fazzari, LLP, a certified public accounting and business consulting firm
Expertise on various business topics, including tax planning and strategies for financing growth for high tech companies
Zhongsu Chen, Independent Board Director of Nominating Committee
Over 20 years of professional experience in information technology, including nine years at Wall Street firms, such as DLJ and Standard & Poor's
Deputy chief technology officer of the Shanghai Stock Exchange from 2001 to 2005
Dan Liu, Independent Board Director of Compensation Committee
Over forty years of experience in the electronics and information sectors
Chairman of the board of Intel (China) from 1991 to 1997;
Senior advisor to Motorola (China) from 1994 to 1998 ;
Directors Dongyuan Yang, Independent Director
Over 26 years of experience in the research and application of urban transportation planning, transportation modeling, intellectual transportation systems, and logistic systems planning
Spearheaded a number of transportation and logistic planning projects
Vice chancellor of Tongji University since 2002 , the vice chairman of the Shanghai Transportation Engineering Committee and the vice director of the Transportation Engineering and Technology Center at the Ministry of Construction
Brandon Ho-Ping Lin, Director
A general partner at SAIF Partners, one of the largest and most successful growth venture capital funds focused on China with $2.2 billion under management
Vice president of investment banking with Credit Suisse / Donaldson, Lufkin & Jenrette (DLJ) in New York from 1997 to 2001
An Associate in M&A and securities law with Sullivan & Cromwell in Hong Kong and Los Angeles from 1994 to 1996
Increasing Revenue Growth CAGR = 69.1% Revenue ($ in Millions)
High Profitability CAGR = 56.0% Net Income ($ in Millions) Million
Summary Income Statement Summary Income Statement Three Months Ended June 31, Six Months Ended June 30, Year Ended December 31, ($ in million) 2009 2008 2009 2008 2008 2007 Revenues $9.6 $5.1 $ 16.1 $9.8 $29.4 $11.9 Gross Profit $4.7 $3.1 $8.0 $5.5 $16.5 $6.3 Gross Margin 48.9% 60.7% 49.7% 56.2% 56.2% 52.7% Operating Income $2.8 $2.3 $4.3 $4.0 $11.4 $4.9 Operating Margin 29.7% 44.5% 26.7% 41.1% 38.9% 40.9% Net Income $2.8 $2.2 $4.2 $3.9 $11.1 $4.4
Balance Sheet Summary ($ in millions) June. 2009 Dec. 2008 Dec. 2007 Cash and Equivalents $9.2 $16.1 $6.8 Total Current Assets $43.6 $43.8 $17.6 Total Assets $61.1 $58.7 $21.4 Total Liabilities $9.0 $12.5 $1.7 Total Shareholders’ Equity $52.0 $46.2 $19.7 Total Liabilities and Shareholders’ Equity $61.1 $58.7 $21.4
Concluding Remarks Rapidly Expanding Market
Attractive market opportunities in both government and consumer markets
Focused on most profitable opportunities
Direct beneficiary of $584 billion Chinese government stimulus package
Long Term Growth
Recurring revenue model for data services
Sustainable, accelerating growth model
Proven track record and strong client base
Strong Management and Staff
Knowledgeable management and skilled technical team positions CTFO well for future project wins
Committed to transparency, creating shareholder value, and reinvesting for growth
Leading Technology
Leader of GIS technology in transportation sector in China
1st mover in developing technology to process & broadcast real-time traffic data
Exclusive provider of real-time traffic data for several cities and the national highway network
Strong system delivery track record
Early wins on “model cases” with strong follow-up pipeline of projects
Contact Information Investor Relations Contact: CCG Investor Relations Mr. Crocker Coulson President 1325 Avenue of the Americas Suite 2800 New York, NY 10019 Phone: +1 646 213 1915 Email: [email_address]
China TransInfo, through China TransInfo Group and its operating subsidiaries, is primarily focused on providing transportation information services. The Company aims to become the largest transportation information product and comprehensive solutions provider, as well as the largest integrated transportation information platform and commuter traffic media platform builder and operator in China. China TransInfo is involved in developing multiple applications in transportation, digital city, land and resource filling system based on GIS technologies, which is used to service the public sector. In addition, the Company is developing its transportation system to include ETC technology. As the co-formulator to several transportation technology national standards, the Company has software copyrights for up to 75 software products and has won 5 of 10 model cases sponsored by PRC Ministry of Communications. The Company's affiliation with Peking University provides access to the University's GeoGIS Research Laboratory, including 30 Ph.D. researchers. As a result, the Company is currently playing a key role in setting the standards for electronic transportation information solutions. For more information please visit the company website at http://www.chinatransinfo.com . less
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