August 2011Capturing Opportunities in Emerging Mobile Device MarketsInvestor Presentation
2Copyright 2011 SinoHubSafe Harbor StatementThis 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 in SinoHub’s Annual Report on Form 10‐K/A filed on May 24, 2011. 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.
SinoHub – Facilitating the Mobile Device RevolutionExchange/Ticker: NYSE Amex: SIHIMarket Cap: $20.47 million Shares Outstanding: 33.45 millionInsider Ownership: Approx. 39% of shares outstanding2010 Sales: $196.7 millionHeadquarters: Shenzhen, PRCEmployees: 1100 (as of June 30, 2011) Website: www.sinohub.com5Copyright 2011 SinoHub* Share data as of Aug 23, 2011
Investment HighlightsComplementary business lines with robust long‐term industry growth catalystsStrong customer and supplier relationshipsNewly launched initiative to develop self‐branded mobile phones for sale in China, the world’s largest mobile phone marketProprietary platforms and extensive know‐how provide barriers to entry Established track record of financial and operational performanceWorld‐class corporate governance, transparency and disclosure practices; top 10 auditor6Copyright 2011 SinoHub
Complementary Business Lines in Fast Growing Markets 8Copyright 2011 SinoHubElectronic component brokerage and supply chain management services (SCM)SCM services include delivery, customs handling (import/export) and warehousing for electronic component suppliers, design houses and electronics product manufacturersProprietary web‐based SCM application to track customer orders and manage business with SinoHub77.4% of 2Q 2011 SalesProduction and sales of private label, custom design mobile devicesUnique “joint design” process leverages customers knowledge of local markets and SinoHubs relationships with over twenty top‐tier Chinese design houses. Customers include mobile phone distributors and operators located around the world22.6% of 2Q 2011 salesNewly launched initiative to develop self‐branded line of mobile phones Focus on China – world’s largest mobile phone marketMobile phones to be sold under the Topolo™ brand nameLong‐term opportunity, but still in development phase Branded Mobile PhonesWhite Box PhonesICM ECSS
Strategic Adjustments to Drive Shareholder Value Objective : Shifting focus of business model to growing opportunity in white‐box mobile device sales worldwideStrategic Initiatives: 2011 ECSS: Reducing exposure to electronic component trading and focusing on growing electronic component brokerage Long‐term Benefits: More efficient use of cash and lower capital requirementsIncreased resources to focus on development of ICM segment and establish TopoloTM brand mobile phonesNear Term Challenges: Decrease in ECSS revenue because only commissions on components brokered by SinoHub will be recorded as revenue instead of the price of the components 9Copyright 2011 SinoHub
State of the Art Manufacturing Facility • Approximately 10,000 m² overall• 8 surface mount (SMT) lines and 8 assembly lines• 900 employees• 300,000 mobile phones and 900,000 PCBAs(motherboards) per month• Standardized operational flow • ISO certified • Complete control over product quality and delivery time11Copyright 2011 SinoHub
12Copyright 2011 SinoHubSynergistic Service Network ‐ CapabilityHong KongChinaShenzhenShanghaiBeijingBeijingRegional Office & Support CenterShanghaiRegional Service CenterHong Kong Warehouse (5,200 square meters)2 .5 – 3 million phonesPer monthShenzhen1) HeadquartersWarehouse2) ICM Factory(300K phones/month)(900K PCBA boards/month)3) Customs Office 4) ICM Sales Office
13Copyright 2011 SinoHubExperienced Management TeamHenry T. Cochran – CEO and Chairman of the Board30+ years founding and managing companiesFormer CEO and president – Content Integrity & Advanced Visual SystemsFormer VP – SybaseStrong MIS backgroundLei Xia – President15 years in electronics industry in ChinaSignificant senior management experience in the Chinese electronics industryFirst sales manager of Arrow Electronics’ Shanghai officeFounded RGL Beijing (high‐end distributor and solution provider) and NEFAB China (manufacturer and packaging solution provider)Willa Li – CFO (De Hai Li)Deep experience working with Chinese banksSignificant knowledge of electronic components industryPrior CFO of Shenzhen Excellence Investment Development Co. where he helped to raise RMB 120 millionPrior CFO of Hong Kong B&D Engine Company
14Copyright 2011 SinoHubWorld‐Class Corporate Governance* Chairman, Audit CommitteeBOARD OF DIRECTORSAuditCommitteeHarry Cochran – Chairman of the Board and CEOLei Xia – PresidentTed Shen – Senior Associate, Austen Morris Associates, ShanghaiExperience in finance, investment management, manufacturing and salesDaniel Lui – CEO, Porcheers ConsultantsFormer CFO of U.S. listed Chinese company, significant experience with internal controls, MBAJeff He – Director. Commercial Operations, China, Saint‐Gobain Abrasives, Shanghai Extensive business experience in the USA and China; M&A experience; background in Finance; MBA*EXECUTIVEINDEPENDENT
16Copyright 2011 SinoHubGrowth in White‐box Phones Continues01002003004005006007002009 2010E 2011ESources: JP Morgan & Nokia, 2010 Worldwide White‐box Phones Sales37%20%
17Copyright 2011 SinoHubWhite‐box Market ‐ Product CycleTechnology changes every2‐3 monthsMarketing life‐time for a new design is~ 3 monthsAverage volume for new design is 200‐300K123
18Copyright 2011 SinoHubDistribution Channels for White‐box phoneslocal brandTianyuTianyu Sells China’s #1 White‐box Brand: K‐TouchSinoHub ICM Focus100,000 units/monthThousands of small companies#1#1 #2#2#3#3 #4#4Local Chinese Brand NamesLocal Chinese Brand Names Local Chinese Non‐Brand NamesLocal Chinese Non‐Brand NamesOverseasOverseas“Local Kings” in Developing Countries“Local Kings” in Developing CountriesNon‐brand Names
19Copyright 2011 SinoHubWho is Producing White‐box Phones?Local ChineseBrand NamesLocal Chinese IntegratorsTwo Options TianyuTianyu Produces China’s #1 Brand: K‐Touch>1000 small companies
20Copyright 2011 SinoHub“Local Kings” – Problems with Existing SuppliersWith Local Chinese Brand Names:High Minimum Order QuantitiesLong Lead‐timesWith Local Chinese Integrators:Quality ControlFinancial Resources
21Copyright 2011 SinoHubICM Competitive Advantage – “Joint‐Design”*If motherboard modifications are required, SinoHub works with design house for R&D costsCustomer chooses reference image design & specs from SinoHub’s online platformCustomer contacted by SinoHub to work through specific design features*Market‐Specific NeedsSinoHub buys motherboards from design houseSinoHub produces motherboards in‐houseCustomer ChoiceABOrder & deposit processed, phones produced & shippedMoulds, Production, & TestingSinoHub Model
22Copyright 2011 SinoHubBenefits of Joint‐Design ModelFlexibility of DesignCompetitive features for local marketsFlexible Minimum Order QuantityAbility to profitably deliver low‐volume orders which eliminates inventory riskReliabilityConsistent qualityFinancial Strength
ECSS ‐ Electronic Component Sales & Services 24Copyright 2011 SinoHubElectronic Component TradingElectronic Component Brokerage How do we achieve the shift?2011 Strategic InitiativeOnline platform to support brokerage business Utilize solid supply chain and efficient warehouse in Hong Kong as volume increases10+ years’ experience in the electronics industry with good client database
28Copyright 2011 SinoHubFinancial Highlights (Q2 2011)*Audited, USD millions, except EPS Q2 2011 Q2 2010 YOYRevenue $40.9 $43.9 (6.8%)Gross Profit $ 4.4 $ 7.6 (42.1%)Net Income $ 1.0 $ 3.4 (70.6%) Earnings per share (fully diluted) $0.03 $0.12Number of shares (millions) (diluted)33.5 28.8* Second quarter 2011 results impacted by significant decline in sales from our ICM segment as our largest customer faced inventory issues relating to phones purchased from another supplier. This impact is expected to be temporary, and does not alter the company’s long‐term strategic focus on ICM
31Copyright 2011 SinoHubGrowth Strategy Grow Customer Base: Mobile Phone Distributors & Operators worldwideInitial Focus on Expansion in Southeast Asia: Indonesia, India, Vietnam, Thailand & PhilippinesDevelop solid North/South American channels in late 2011Develop and launch Topolo™ line of mobile phones in China ICM: Deepen MarketPenetration
32Copyright 2011 SinoHubThank you for your time!SINOHUBGrace WangSinoHub, Inc.+86‐755‐2661‐firstname.lastname@example.orgEXTERNAL IR FIRMMahmoud SiddigTaylor Rafferty (Hong Kong)+852‐3196‐3712sinohub@taylor‐rafferty.comBryan DegnanTaylor Rafferty (US)212‐889‐4350sinohub@taylor‐rafferty.comFacilitating the Mobile Device Revolution
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