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CONFIDENTIAL         China Digital TV Holding Co., Ltd         China’s Digital TV Industry Enabler         November 2011
China Digital TV At A GlanceLeading Provider of CA Systems in China’s Digital TV Market                   Company Informat...
Agenda   I. Investment Highlights   – China’s rapidly expanding digital TV market   – STV: China’s No. 1 conditional acces...
Fast Growing Digital Cable Market in ChinaQuick Facts of China’s Cable Industry     China possesses the world’s largest ca...
Fast Growing Digital Cable Market in China       ‘Full-scale Migration’ to Digital TV in China is Underway                ...
STV is China’s No. 1 CA System ProviderStrong Smart Card Shipments and Market Share           2010 Market Share           ...
STV is China’s No. 1 CA System ProviderA Broad and Diversified Customer Network        Number of Domestic Customers   315 ...
Over a Decade of Industry Leadership                                                                  Market              ...
Highly Experienced Executives & Directors                          Management Team                                        ...
Agenda   I. Investment Highlights   –China’s rapidly expanding digital TV market   – STV: China’s No. 1 conditional access...
Financials SummaryUS$ million unless otherwise indicated                                         Q3 2011   Q2 2011        ...
Financial Summary (cont’d)US$ million                            Q3 2011   Q2 2011   Q3 2010   Cash                      1...
Cable Industry Transformation in the Long RunSignificant Potential in ARPU Upside for Cable Operators ARPU                ...
Cable Industry Transformation In the Long Run3-Network Convergence and Cable Network Consolidation                 Three n...
A “Gatekeeper” During Convergence PeriodProvide a full suite of content protection technologies        Satellite          ...
Multiple Long-term Growth OpportunitiesExamples of Recent Initiatives for TV Screens                       Cloud Video Del...
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201111 stvir presentation

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201111 stvir presentation

  1. 1. CONFIDENTIAL China Digital TV Holding Co., Ltd China’s Digital TV Industry Enabler November 2011
  2. 2. China Digital TV At A GlanceLeading Provider of CA Systems in China’s Digital TV Market Company Information Major Products / Services Smart Cards Digital TV Listed Exchange New York Stock Exchange Application Software Head-end Stock Symbol STV Software Set-top Box Terminal-end Design Stock Price $3.61 (Nov 24, 2011) Software Market Cap. US $213M CA Systems Leading Market Position Headquarters Beijing, China 300+ carrier customers in China Employees 585 60.8 million smart cards shipped as of Sep 30, 2011 56.3% market share in year 2010 1
  3. 3. Agenda I. Investment Highlights – China’s rapidly expanding digital TV market – STV: China’s No. 1 conditional access (CA) system provider  – Company history – Highly experienced executives and directors II. Recent updates – Financial summary – Cable industry transformation in the long run – A “Gatekeeper” during convergence period – Multiple long‐term growth opportunities 2
  4. 4. Fast Growing Digital Cable Market in ChinaQuick Facts of China’s Cable Industry China possesses the world’s largest cable TV market in terms of subscribers  187 million cable TV households, increasing by approximately  10 million per year Highly fragmented cable industry ‐ over 1,900 legitimate operators Government targets completion of TV digitalization by 2015 As of September 2011, nearly 100 million households had gone digital  Average Subscription Fee: Basic cable service $2.2/Mo.  Digital Cable service $3.7/Mo. 3
  5. 5. Fast Growing Digital Cable Market in China ‘Full-scale Migration’ to Digital TV in China is Underway Around 50% digital penetration rate in 2010 Nationwide migration completed 4Source: SARFT, Company estimates
  6. 6. STV is China’s No. 1 CA System ProviderStrong Smart Card Shipments and Market Share 2010 Market Share Market Share Comparison (2007--2010) Based on Luoda data Cumulative Smart Card VolumeUnit: MM 5
  7. 7. STV is China’s No. 1 CA System ProviderA Broad and Diversified Customer Network Number of Domestic Customers 315 Local Cable TV Operators Across 27 Provinces Customer Profile Physical location of our customers 6 customer base as of March 31, 2011
  8. 8. Over a Decade of Industry Leadership Market Next Generation Building Business Leadership Products and VAS Feb. 2002 Jun. 2005 Oct. 2007 Feb. 2011 CCTV adopted our  1 Millionth Smart  Listed on the  50 Millionth Smart  CA system Card shipped NYSE Card shipped1998 2000 2002 2004 2006 2008 2010 1999 2001 2003 2005 2007 2009 2011 Aug. 2009 Jun. 2006 Partnered with  Signed contract with  Jul. 1998 Microsoft to  100th network operator Company founded market PC‐TV  tuner solutions Aug. 2007 Aug. 2011 10 Millionth Smart Card  Partnered with Intel to  shipped develop HD STB 7
  9. 9. Highly Experienced Executives & Directors Management Team Independent Directors Director of Advanced Info Service, a Thailand Company Co-founder Jianhua Zhu Independent director of Pacific Textiles Holdings 12 years with Company Ching Wah Ng Ltd., a Hong Kong listed company Chairman & CEO Former CEO of Hong Kong CSL Ltd. Tsinghua University Former CEO of SmarTone Telecommunications Holdings Ltd., a Hong Kong listed company Global Vice President, Asia Pacific President of Dong Li In charge of daily operations Synopsys, Inc. President & 12 years with Company Jianyue Pan 20 years experience in IT industry Tsinghua University M.S from Tsinghua University and EMBA from Chief Marketing Officer CEIBS In charge of financial control and Editor-in-chief of Global Business & Finance management . magazine Zhenwen Liang Former Chairman of a Nasdaq-listed Chinese 12 years with Company Songzuo Xiang company Chief Financial Officer MBA from Renmin University of Master from Columbia University and Ph. D from China Renmin University of China 11 years with Company Founding Partner of Ivy Capital Jian Han Experience with Microsoft China Former Senior Executive in IT and investment Research Institute Chaoyang Xia banking industry. Chief Technology Officer Ph.D, Tsinghua University Ph. D, Tsinghua UniversityNote: 8(1) The number of years with Company refers to the time spent with the business of the Company
  10. 10. Agenda I. Investment Highlights –China’s rapidly expanding digital TV market – STV: China’s No. 1 conditional access (CA) system provider  – Company history – Highly experienced management team II. Recent updates – Financial summary – Cable industry transformation in long run – A “Gatekeeper” during convergence period – Multiple long‐term growth opportunities 9
  11. 11. Financials SummaryUS$ million unless otherwise indicated Q3 2011 Q2 2011 QoQ Q3 2010 YoY Smart card volume (MM) 4.66 4.64 0.5% 3.95 18.1% Net revenues 25.9 24.7 4.7% 21.1 22.5% Gross profit 20.8 20.1 3.6% 16.5 26.6% Operating Expenses (9.6) (7.6) 26.0% (6.2) 55.6% Operating Income 11.2 12.5 (10.0%) 10.3 9.2% Income tax expenses (2.5) (2.6) (3.8%) (1.5) 66.7% Net income 10.8 11.3 (4.8%) 10.1 7.2% Diluted EPS (USD) 0.18 0.19 - 0.17 - Q3 2011 Q2 2011 Q3 2010 Gross margin 80.50% 81.40% 78.00% Operating margin 43.44% 50.60% 48.80% Net margin 41.70% 45.90% 47.50% 10
  12. 12. Financial Summary (cont’d)US$ million Q3 2011 Q2 2011 Q3 2010 Cash 187.0 159.2 209.4 Bank Deposits 44.0 43.5 - Short-term Investments - 19.5 43 Total Cash Position 231.0 222.2 252.4 Days Receivable 114 98 66 Days Inventories 75 78 64 Days Payable 36 43 21 Operating Cash Flow 5.8 2.5 12.8 11
  13. 13. Cable Industry Transformation in the Long RunSignificant Potential in ARPU Upside for Cable Operators ARPU ~30.0 Interactive multi-media (US$) platform 3D TV High-definition TV Rich value-added content, 10.0 incl. VOD,TV gaming Digitalization 3.0 1.5 Advanced CA / DRM/ Tracing Technology / VAS / Basic CA Advanced STB / Middleware / Shared Content Platform Pre-Digital Phase Current Phase Next Phase Long-Term 12
  14. 14. Cable Industry Transformation In the Long Run3-Network Convergence and Cable Network Consolidation Three network convergence policy In early 2010, China’s State Council announced a decision to promote the  advancement of three network convergence (telecom, broadcast TV and Internet) Multiple Service Operation time is coming Under the plan, qualified cable operators will be allowed to provide telecom and  internet services, and telecom operators will be allowed to broadcast TV programs.  vs. “Golden period” for cable industry Two trial periods are planned:  2010‐2012 for launch of convergent services at trial sites  2013‐2015 for launch commercial convergent services nationwide Cable network consolidation SARFT issued guidelines on local cable network consolidation in 2010, setting the  goal of “one province, one network”.  13
  15. 15. A “Gatekeeper” During Convergence PeriodProvide a full suite of content protection technologies Satellite Set‐top box/DVD Cable Netbook Terrestrial TV set Mobile Mobile phone IPTV Home gateway Secure premium content delivered to multiple devices via multiple networks 14
  16. 16. Multiple Long-term Growth OpportunitiesExamples of Recent Initiatives for TV Screens Cloud Video Delivery Service • Consumers access services from “cloud end” by using “thin” terminal devices; • Enable operators to offer new applications efficiently and cost‐effectively; • Solutions supporting advanced gaming/video/education applications are available  for trial Smart HD  STB Box Design • Advanced and reliable high‐definition home entertainment products  • Intel Capital made an investment in JoySee, a subsidiary of STV to develop smart  HD STB; • Product debut expected in early 2012 Integrated Chip Design for STB Box Makers  • All‐in‐one solution cuts production costs by 20% for STB makers; • 30,000 STB boxes with the integrated chips have been delivered to end users; • Plan to work with large cable operators to market the chips after product  verification mysupermovie.com • Deliver HD movies/TV shows via hard disks; • Built‐in content protection feature prevents illegal use • Cooperate with certain HDTV and 3D TV makers to market the service nationwide  15

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