Investor Presentation May 2010
Safe Harbor Statement This 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 on Exhibit 99. 1 to Sino. Hub’s Current Report on Form 8 -K filed on September 28, 2009. 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. 2 www. sinohub. com
Company Profile ● Sino. Hub provides a Web-based supply chain management (SCM) platform that is open to third parties and connects facets of the electronics industry: § Manufacturing § Finished Product Distribution § Design § Component Purchasing ● Sino. Hub’s SCM platform offers a free, open and robust network operating in China’s booming electronics industry ● Sino. Hub generates sales of electronic components throughout China and of electronics products (currently mobile phones) throughout South East Asia from information and relationships derived from its SCM business 3 www. sinohub. com
Select Financials Millions Revenue $128. 4 Millions $140 $120 Net Income $79. 5 $80 $12. 4 $12 $100 $8. 5 $8 $6 $60 $40 $20 $14 $3. 5 $4 $29. 0 $19. 1 $1. 2 $2 $0 $0 2006 2007 2008 2006 2009 2007 2008 2009 Flexibility and leverage in business model allows for solid profitability Superior revenue growth despite global economic turmoil 2010 Revenue Guidance of 40% Growth to $180 MM Founded: 2000 NYSE Amex Ticker: SIHI 4 HQ: Shenzhen, China www. sinohub. com
Strong Customer Relationships More than 120 companies utilize Sino. Hub’s SCM platform … Product Manufacturers Design Houses Product Distributors Sino. Hub Customers Component Suppliers & Manufacturers 5 www. sinohub. com
Investment Highlights ● Strong demand for mobile computing devices drives growth for Sino. Hub. ● Business model is capital-efficient and asset-light, minimizing risk. ● High barrier to entry: Sino. Hub’s SCM platform is a customer-designed solution created over 6 years. ● Sino. Hub’s SCM platform solves mission critical, costly supply-chain problems for the electronics industry in China. ● Sino. Hub has a proprietary database of 50, 000 electronic components, enabling arbitrage and brokering opportunities. ● Five consecutive years of high growth with profitability. ● Strong management team and solid governance by five independent board members. 6 www. sinohub. com
Industry Problem: Closed Model XYZ Manufacturing Corp. Design Purchasing Supply Chain Mgmt. Manufacturing Sales ● Lack of flexibility ● High system costs ● Supply chain only as strong as weakest link ● Difficult to outsource any step due to lack of information flow ● Inventory management issues ● Drain on working capital 7 www. sinohub. com
Sino. Hub’s Solution: SCM Platform Product Distributors (Global) Electronics Design Houses (China) Finished Goods Manufacturers (China) Electronic Component Suppliers (Global)* ü Flexible, open model ü Open access to best providers ü Reduces cost & time to market ü Transparent information source * 85% of the components consumed in Chinese electronics manufacturing are imported into China; Source: China Customs 8 www. sinohub. com
Business Model Three inter-related business units leveraging SCM’s proprietary data assets: Provides supply chain application and services to electronics industry clients in China BUSINESS UNITS 1) SCM: 2)ECP: Sales of electronic components throughout China Electronic Component Purchasing (ECP) Supply Chain Management Electronic Component Purchasing Virtual Contract Manufacturing (SCM) (ECP) (VCM) 3)VCM: International sales of electronic finished products (1) Represents recently-developed business segment in early stages focusing on mobile phone production and sales, which was not material to results of operations in 2009. VCM Subsidiary known as Topology Electronic Company (Shenzhen) Ltd. 9 www. sinohub. com
Market Opportunities China Electronics Market: ● China is world’s largest consumer of Business Unit Market ● China consumed over US $100 B+ of SCM $3 B ECP $20 B VCM $24 B electronic components in 2009, producing US $400 B+ of finished goods Reed Electronics Research (RER), November 2007 SCM, ECP and VCM Markets: ● SCM: serves design houses, manufacturers and suppliers in China ● ECP: serves design houses and manufacturers in China ● VCM: serves “white box“ mobile phone resellers in the developing countries 10 www. sinohub. com
Supply Chain Management – Powerful Differentiation SCM Sino. Hub’s SCM platform is a proven resource for some of the largest electronic component distributors in the world Electronic Component Procurement Logistics SCM Software Platform Open to 3 rd Parties Sino. Hub Vendors (TI, Motorola) Distributors (Avnet, Arrow) Express Forwarders (UPS, DHL, Fed. Ex) Local Import/Export Companies (Shenzhen Eternal Asia) *Chart based on Sino. Hub’s internal research. 11 www. sinohub. com
SCM Supply Chain Management US$ millions 7 % of Total Revenue 12 www. sinohub. com
ECP Electronic Component Purchasing Proprietary ECP platform & database to broker components: Sales not Minimum Sales Force not Minimum Database from Minimum Database Dedicated to Sales Inventory Core SCM Dedicated to Engineers from SCM Product Requirement Business Requirement Product Line. Requirement Lines ü by substituting suppliers Sino. Hub ü by aggregating orders to secure volume discounts Vendors (TI, Motorola, etc. ) (TI, Motorola) Distributors ü cost-effective and capital efficient to lower customer costs and create revenue source for Sino. Hub (Avnet, Arrow) (Avnet, Arrow, etc. ) Independent stocking Stocking distributors Distributors Traders Original Buyer Cost Buyer Savings Sino. Hub profit is a portion of the savings our lower cost delivers New Buyer Cost Sino. Hub Profit Sino. Hub Cost 13 www. sinohub. com
Electronic Component Purchasing US$ millions ECP 93 % of Total Revenue 14 www. sinohub. com
VCM Virtual Contract Manufacturing Sino. Hub is uniquely positioned to become the most flexible, costeffective contract manufacturer by: Mobile Handset Unit Sales by Geography (millions) ü Leveraging 3 rd party design house and manufacturing capacity from SCM and ECP customers 2009 North America 2010 201 1 151 166 176 36 38 40 Western Europe 147 151 155 Developed Countries 335 356 373 China 190 205 226 Korea 12 11 11 India 151 193 233 92 92 105 Japan ü Achieving low breakeven volume due to small investment in R&D and manufacturing Database Assets: ü 50, 000+ unique electronic components Rest of Asia Pacific ü Detailed profiles on buyers’ projects, Latin America 127 128 138 225 266 302 ü Detailed information on suppliers’ E. Europe, Middle East, Africa needs, shipping, payment record capabilities, terms, and prices Developing Countries 15 797 895 1015 www. sinohub. com
VCM Virtual Contract Manufacturing* Sino. Hub’s VCM business allows customers to place small orders for their markets, while generating a profit based on low fixed overhead R&D Open to 3 rd Parties Manufacturing Open to 3 rd Parties Small Minimum Order Size Sino. Hub Web-based Platform Key Does Not Apply OEMs (Nokia, Samsung) Tier 1 Contract Mfgs. Partially Applies (Foxconn, Flextronics) Local Contract Mfgs. (TCL, Skyworth, Konka) Applies Design Houses (Longcheer, Wintech) Chart based on Sino. Hub’s internal research. * Represents recently-developed business line in early stages of revenue, which is not yet material to results of operations. 16 www. sinohub. com
Synergistic Service Network System of warehouses, trucking and freight equipment add value to physical logistics Beijing Regional Office (300 sq. ft. ) Shanghai (Wai Gao Qiao) Regional Service Center + Warehouse (5, 300 sq. ft. ) Beijing Hangzhou Regional Service Center (500 sq. ft. ) Shanghai Hangzhou China Shenzhen Hong Kong 17 Shenzhen Headquarters + Regional Service Center + Warehouse (27, 600 sq. ft. ) Hong Kong Procurement - Fulfillment Hub Bonded Warehouse Transportation Hub (79, 500 sq. ft. ) www. sinohub. com
Case Study: Hua. Qin Annual Shipments (‘ 000 pieces) ● Founded June 2005 ● Dedicated to R&D of leading mobile handsets ● August 2008: license agreement with Qualcomm to introduce advanced 3 G CDMA-2000 products throughout China ● Achieved ~100% CAGR in shipment volumes ● Annual revenue ~ $250 MM (2009) Hua. Qin began utilizing Sino. Hub SCM in March 2009 for: • Inventory Management • Import / Export Results • Just-in-Time Delivery • Electronic Parts Movement Between Projects 18 14000 12, 000 10000 8000 7, 6000 4, 800 4000 2000 1, 800 0 2006 2007 2008 2009 “Sino. Hub SCM has enabled us to reduce our production cycle by 33%. We regard Sino. Hub SCM as an indispensable tool to enhancing our efficiencies and increasing our profitability. ” Mr. Jiang Qinlin Director of Purchasing of Hua. Qin www. sinohub. com
Growth Strategy Grow customer base ¡ Further enhance SCM services ¡ Deploy ECP and VCM platforms Expand Existing Relationships Enter New Products & Adjacent Markets Pursue International Expansion ¡ Convert more SCM customers into ECP customers ¡ Increase number of products per VCM customer ¡ Grow presence in networking equipment and expand into other verticals through acquisition ¡ VCM for mobile phones in Vietnam, Malaysia, Indonesia, and India ¡ VCM for mobile phones in US – Mobile Virtual Network Operators (e. g. Virgin Mobile) ¡ Acquire overseas distribution channels (ECP / VCM) 19 www. sinohub. com
Financial Highlights (Audited, $ in US millions, except EPS data) Revenue 2007 2008 2009 $28. 8 $79. 5 $128. 4 Gross profit $6. 7 $16. 2 $22. 4 Net income $3. 5 $8. 5 $12. 4 $0. 22 15. 9 $0. 40 21. 5 $0. 48 25. 7 Revenue 51. 1% 176. 0% 61. 5% Gross profit 65. 0% 143. 1% 38. 3% Net income 191. 7% 142. 3% 45. 9% Earnings per share – diluted Number of shares (millions) – diluted Year-Over-Year Growth Rates 20 www. sinohub. com
Balance Sheet ($ millions) December 31, 2009 Assets: Cash & Cash Equivalents $8. 3* Working Capital Total Assets $39. 4 $59. 3 Liabilities & Shareholders’ Equity Total Debt, including current portion $11. 8 Total Liabilities $15. 2 Total Shareholders’ Equity $41. 7 Total Liabilities & Shareholders’ Equity $59. 3 * Does not include recent equity raise completed in March 21 www. sinohub. com
Experienced Management Team ● Henry T. Cochran – CEO and Chairman of the Board § § ● Lei Xia – President § § ● 30+ years founding and managing companies Former CEO and president – Content Integrity and Advanced Visual Systems Former VP – Sybase Strong MIS background 15 years in electronic industry in China Significant senior management experience in the Chinese electronics industry First sales manager of Arrow Electronics’ Shanghai office Founded RGL Beijing (high-end distributor and solution provider) and NEFAB China (manufacturer and packaging solution provider) Willa Li – CFO § Years of experience working with Chinese banks § Significant knowledge of electronic components industry § Prior CFO of Shenzhen Excellence Investment Development Company where he raised RMB 120 million § Prior CFO of Hong Kong B&D Engine Company 22 www. sinohub. com
Building World-Class Corporate Governance Audit Committee EXECUTIVE BOARD OF DIRECTORS Harry Cochran – Chairman of the Board and CEO Lei Xia – President Will Wang Graylin – CEO, ROAM Data INDEPENDENT - Extensive operational and entrepreneurial skills in mobile phone industry Charles Kimball – Consultant - Significant Wall Street and financial management experience as 30 -year veteran of JP Morgan Dr. Richard King – Former All American Electronics Analyst and Investment Banker; Science Advisory Board, NYU - Extensive experience in financial markets as an electronics analyst and investment banker, advanced economic studies Robert Torino – COO, i. Payment - CPA, former CFO, significant public company experience Afshin Yazdian – EVP & General Counsel, i. Payment - SEC reporting knowledge, strong M&A experience 23 www. sinohub. com
Why Invest in Sino. Hub? ü Capitalizes on substantial and growing market opportunities ü Differentiated business model that delivers high profitable growth ü Exciting potential in VCM custom-phone supply for under-served markets ü Excellent corporate governance with experienced board, Top-10 Accounting Firm (Baker Tilly) and top US law firm (Seyfarth Shaw) ü Multiple expansion opportunities in the Company’s public valuation, given growth rate and profitability 24 www. sinohub. com
Contact Us COMPANY: Falicia Cheng Sino. Hub, Inc. Phone: +86 755 2661 1080 Email: falicia@sinohub. com Douglas Menelly Sino. Hub, Inc. Phone: +86 139 2524 -5053 Email: dmenelly@sinohub. com INVESTOR RELATIONS: Ted Haberfield HC International, Inc. Phone: +1 (760) 755 -2716 Email: thaberfield@hcinternational. net www. hcinternational. net 25 www. sinohub. com
Thank You 26 www. sinohub. com
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