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YOUR LOGO
Safe Harbor
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Hollysys Automation Technologies Ltd. Investors Presentation August - - PowerPoint PPT Presentation
Hollysys Automation Technologies Ltd. Investors Presentation August - - PowerPoint PPT Presentation
Automation for Better Life Hollysys Automation Technologies Ltd. Investors Presentation August 2016 YOUR LOGO Safe Harbor This presentation may contain forward-looking statements within the meaning of the private securities litigation reform
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- NASDAQ: HOLI
- Approximately 60MM shares outstanding
- Founded in 1993
- The leading provider of automation & control technologies in China
- Headquartered in Beijing
- Nationwide presence in 60 cities
- Worldwide subsidiaries and offices in Singapore, Dubai, Malaysia,
India, etc.
- Proprietary technologies and products tailored to Industrial, Rail,
Subway and Nuclear Industries Market Data History Operation Offerings
Corporation Overview
- 3,600 employees world wide
- 800 in R&D
Headcounts
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Highly Attractive Markets Market Leadership Position Scalable Business Model Proprietary Technology & Strong R&D Capability Effective and Efficient Marketing through Partnership and Alliance Solid Financial Performance
Investment Highlights
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1 2 Business Overview Industrial Automation Rail Transportation 3 Overseas 4 Management & Market Leadership Position 5 Financials 6
Agenda
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33.6% 44.1% 17.5% 4.7% Revenue by sector for FY2016 Industrial Automation Rail Transportation M&E Solution Miscellaneous
Business Overview
Industrial Automation:
- Total solution: DCS, PLC, etc;
- Nuclear power automation
HOLLiAS-NMS Rail Transportation:
- High-speed rail signaling
system: ATP, TCC, and etc.
- Subway SCADA
Mechanical & Electrical Solution and others:
- Design, electrification and
engineering service
- Other businesses
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Safety Concern Environment Protection Energy Conservation
Industrial Automation Growth Drivers
Accelerated Automation and Control Technologies Demand Production Efficiency
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- Offering:
Proprietary technologies in solution, design, manufacture and installation.
- Products:
DCS, Batch, MES (Manufacturing Execution System), AMS (Asset Management System), SIS (Safety Instrumentation System), etc.
- Track record:
More than 20,000 projects completed.
- China market share:
Around 13 -15%
- Clients:
6,000 customers, including SOEs, Multinationals, and SMEs.
- Competitors:
ABB, Siemens, Emerson, Honeywell,Supcon
DCS (Distributed Control System)
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Industrial Automation – Process Control
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Distributed Control System
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Industrial Automation – Competitive Advantages
Items HOLI Multis Local Brand Name Pricing Service Customization Quality
- Industry leading brand name recognition
through more than 20 years’ operation.
- Continuous investment in R&D to deliver
advanced technology.
- Extensive service network in more than 60
industrial cities across China, focusing on service and long-term client relationship.
- Cost structure advantage enables Hollysys
deliver pricing competitive solution and products. Advantages of Hollysys
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16 20 24 30 36 43 50 57 65 China Nuclear Market
In # reactors Nuclear Electricity (TWh) Total Electricity (TWh) Nuclear Utilization (%) France 418 544 76.9% World 2,410 20,956 11.5 % China 123.8 5,158 2.4 %
(As of May, 2015. Source: World Nuclear Association, IAEA)
76.9% 11.5% 2.4% France World China
Industrial Automation – Nuclear Power Control
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Projects
- Qin Shan I/II/III, Da Yawan, Ling Ao, Tian Wan, Hong Yanhe, Ning De, Yang Jiang
Offerings
- Proven proprietary nuclear power plant control systems.
- Engineering design, procurement, integration, installation, support, and specialized services
for the safe, reliable, and economical operation of the nuclear power plant
- The only proven domestic company to supply control systems to nuclear power automation
market in China
- J/V with the China’s largest nuclear station operator: China General Nuclear Power Group
(CGNPG)
Market Position Competitors
- SIEMENS/AREVA
Nuclear Power – Business Overview
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- Improved Production
Procedure Management
- Energy Conservation
- Enviroment Protection
- Product Quality
Improvement
Software Advanced Control Solutions
Process Control
- DCS, PLC, SIS, etc.
Instrumentation
- Transmitters, Actuators, Valves, Analyzer, etc.
Industrial Automation – Turn-key Solution
Achievements
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- AMS, MES, Batch,
EMS, APC, etc.
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PLC (Programmable Logic Controller)
Chinese Medicine Dispensing Machine Sewage Treatment Coal Mining Safety
- According to doctor’s
prescription of medication, automatically complete the traditional chinese medicine granules dispensing .
- Leader & founder
- Participation in the formulation
- f this industry standard
- Supply intergrate solution of
sewage treatment, including SCADA, LM PLC, LK PLC etc.
- Major player
- Plenty of successful
completed projects
- Provide SCADA application
in coal mining industry, as well as intrinsic safety device, explosion-proof switch etc.
- JV with Shenhua Group
- Safety management
Industrial Automation - Discrete Control
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8,358 19,000 30,000 38,000 45,000 2010 2015 2020E 2025E 2030E
KM
China High Speed Railway Market Growth
High-speed Rail Market of China
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High-speed Rail – Signaling System
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High-speed Rail Signaling System
HSR signaling products: ATP , TCC, LEU and etc. In China: Market Position: 1 of the only 2 approved providers in 300-350km/h segment; 1 of the only 3 approved providers in 200-250km/h segment,
more than 60% of 200-250km/h ATP Market share of China.
Competitors: China Railway Signal & Communication Corp.
(CRSC)
Overseas: Market Position: First international contract win from Hong Kong
MTR for HongKong-Shenzhen High-speed rail line
Competitors: Bombardier, Siemens, Ansaldo, Hitachi.
High-speed Rail – Business Overview
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City In operation (km) Total Length by 2020 (km) Beijing 604 1,000 Shanghai 643 900 Tianjin 147 304 Guangzhou 247 700 Shenzhen 179 425 Nanjing 187 330 2014 2016 2020E 3,173 4,630 8,314
China Subway Market Growth
In # kilometers
China Subway Market
Page 18 (As of the end of 2015. Source: China Association of Metros)
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Placeholder for text
Clients: Beijing, Shenzhen, Guangzhou, Hong Kong MTR Market position: The leading SCADA(Supervisory Control and Data Acquisition) system supplier Competitor: Nanjing Automation Research Institute (NARI) SCADA Clients: China and international subway construction authorities Market position: One of the key proprietary subway signaling system provider Competitors: Siemens, Alstom, Thales
Signaling System SCADA
Subway Automation – Business Overview
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Beijing Headquarter Hangzhou Facility Bond Xi’an Facility Singapore Office Concord
Internationalization Presence
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Photo Name & Title Industry Working Years Previous Experience
- Dr. HE Jianfeng
Chairman 27 years
- General Manager of Hollysys Group
- PHD in Automation from South China University of
Technology
- Mr. SHAO Baiqing
CEO 22 years
- Vice President of Hollysys Group
- Master of Computer Science from the 6th Research
Institute of China Electronics Corporation and MBA from Peking University
- Ms. QU Herriet
CFO 22 years
- Financial controller for Hollysys
- Financial controller for Chum Capital Group Ltd.
(“Chum”)
- MBA degree from Oklahoma City University
Hollysys Management Team
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Market Leadership Position
6,000 customers 20,000 projects Serving a broad customer base Industry leading automation and
control brand name
JV with China General Nuclear
Power Holding Corp
JV with Shen Hua Group Successful integration of rail team Acquisition of Concord and Bond
Early entry to high-speed rail Early entry to nuclear Re-focusing in industrial automation Increasing R&D investment Wide range of core technologies Various industry expert solutions 800 R&D engineers
Market Leadership
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State of the Art Production Line
In-house Production
- State of the art production line
- Almost fully automated production process
- Enough capacity for accelerated growth
- Multiple round of precise testing
- Flexible and efficient in house production for different demand
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Solid Business Fundamentals Driving Robust Financial Performance
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174.1 262.8 321.7 349.1 521.3 531.4 544.3 565- 600 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017E
Revenue by Fiscal Year
In US$ million
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Solid Business Fundamentals Driving Robust Financial Performance
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26.2 42.0 57.4 57.6 86.9 103.3 121.5 130-140 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017E
Net Income by Fiscal Year
In US$ million
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10.0 14.3 16.7 20.5 43.0 50.4 66.5 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
After Sales Revenue
In US$ million
5.7% 5.4% 5.2% 5.9% 8.2% 9.5% 12.2%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%
FY2010FY2011FY2012FY2013FY2014FY2015FY2016
After Sales of Total Revenue
National Spread Service Network, Professional & High Quality Service
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Stable and Sustainable Gross Margin & EBIT Margin Performance
16.0% 17.8% 16.5% 16.7% 19.4% 22.3% 17.8% 20.5% 19.3% 21.3% 25.2% 26.7% 34.7% 39.3% 36.2% 34.9% 41.2% 37.9% FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 Non-GAAP Gross Margin Non-GAAP EBIT Margin Non-GAAP Net Margin
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Gross Margin of Each Business Sectors
Industrial Automation Total Solution 35% - 40% Nuclear 60% - 75% Rail Transportation High-speed Rail Signaling 40% - 50% Subway SCADA 15% - 20% M&E Solution and others Design, electrification, installation 15%- 20%
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13.1 20.1 25.6 32.5 36.5 35.8 36.6 FY2010FY2011FY2012FY2013FY2014FY2015FY2016
R&D Expenditure
Heavy R&D Investment to Continuously Deliver Leading Technologies
New Products Development
Motion Control Energy Conservation Environment Protection Subway Signaling Automated Food Production Safety Control
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7.5% 7.6% 8.0% 9.3% 7.0% 6.7% 6.7%
% of Total Revenue
In US$ million
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16.0 5.0 8.8 7.5 3.8 7.8 (1.8) 57.2 30.7 84.8 79.5 46.7
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
CAPEX Operating Cash Flow
Sufficient Cash On-hand & Solid Operating Cash Flow Performance
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In $MM 30.3 31.1 28 36.1 32.6 271.5 257.5 190.5 131.1 117.9 FY2016 FY2015 FY2014 FY2013
FY2012
Debt Cash
In $MM
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296.4 389.8 488.7 556 568.5 527.2
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Backlog
Historical High Backlog Ensures Another Strong Year Ahead
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198.6 216.5 112.1 Industrial Automation Rail Transportation M&E Solution Backlog Breakdown for FY2016
In US$ million In US$ million
Total Backlog: US$527.2 million
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Automation for Better Work , Life and Environment
Dedicated customized solutions
Customized control system:
- Alternative energies: Nuclear power, wind power etc.
- Water process
- Demographic Change, shortage
- f labor
- Environmental protection
- Urbanization Process of China
- Customer’s buying behavior
change
- Automation solutions to offset
labor cost increase
- Dedicated customized solutions for
energy conservation and efficiency improvment
- Leading position in China’s high-
speed rail and subway automation control market
- Customer- centric approach,
enlarge service team and enhance service capabilities
Striving to be a world leading automation and control system provider
Macro Enviroment Strategy
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