See the last page for Pag disclaimer

FY17F FY16F FY15F FY13A FY14A 03/31 年结 Year End       Source: the Company, Guotai Junan International. Shares in issue (m) Market cap. (HK$Market cap. m) 3 month average vol. 3 52 Weekshigh/low 52 (HK$) 公司报告：创维数码 公司报告：创维数码 DigitalHoldingsLtd.(00751HK) Report:Skyworth Company

一间领先的电视及其他电器生产商 A LeadingManufacturerofTV

财年收入为 组件、显示器、网络通信硬件以及其它电子产品研发与生产的大型高科技企业。公司 创维数码是一间领先的电器制造商。 FY15 PER, 9.2x FY16 PER, 0.9x FY15 PBR and 0.8x FY16 PBR. PBR. FY16 0.8x FY15 PBRand FY16 PER,0.9x FY15 PER,9.2x 10.8%, respectively.Our and 4.1%, 8.8% FY15-FY17,up in 0.560 and 0.506 0.465, HK$ EPStobe expect Skyworth’s We andsteady inthefuture. toreporthealthy growth earnings areexpected and itsrevenue will both position bemaintainedand dominant market with competitiveproducts,wethe marketleader expect theCompany’s industry Chi within appliances in home 4.65. TP ofHK$ and “Accumulate” with Initiate potential. with broad strategy stillmakeitatop-tiercontender Skyworth’s R&Dcapacity, brandi both traditionalappliancem from isexpected severecompetition although transformation, Along with the stage. intothesmart appliances and other TVs of conventional the upgrade products andbeinganoverallindustry l set-top ofitsTVand advantage recognition Utilising thescaleandbrand beendevotingresourcestoR&Dforinternetappliances. Company has appliances. home for ofinternet theera into Well participated respectively. 6.4%, 10.5% and appliances were white and fromdigitalset-topboxes sales ofTVs,andthecontribution wasFY14the Company in HK$39,480million,of which from 74.7%came el other and communication hardware, boxes, white appliances, LCD modul manufacturi and engaged inthedevelopment manufacturer. appliance home a leading is Limited Holdings Digital Skyworth 盈率、 入以及利润可以录得健康稳定的增长。 数码等拥有竞争性产品的龙头企业，我们认为公司的行业领先地位将会得到维持，且其收 场策略确保公司在竞争中仍处于优势地位且前景广阔。 以及跨行业参与者的竞争将会日趋激烈，但创维数码的研发水平、品牌以及历经考验的市 过程中将可以占据有利地位。虽然在家电产品演变的过程中，来自于其他传统家电制造商 借助其电视和数字机顶盒业务的规模以及品牌优势，在电视以及其他电器步入智能时代的 拥抱市场家电互联网时代。 献分别为 0.506 首予

“ 收集 及 9.2 0.560 10.5% ” Turnover (HK$ m) 倍 投资评级，目标价 39,480 52,850 1,586 0.560 7.2 10.8 48,072 1,431 0.506 8.0 8.8 43,685 1,316 0.465 8.7 4.1 37,824 1,501 0.549 7.3 15.5 39,480 1,254 0.446 9.0 (18.7) 总股数 16 市值 收入 港元，分别增长 及 财年市盈率、 个月平均成交股数 Skyworth isa large-scale (00751 HK) HK) (00751 6.4% (HK$ m)

(m) 百万港元，其中 周高 。

公司持续对互联网家电进行研发投入。创维数码作为行业翘楚， Net Profit Profit Net / 低 (HK$ m) 股东净利 4.65 0.9

4.1% anufacturers andthecross-industry competitors, 倍 港元。 (‘000)

公司是一间主要从事电视、数字机顶盒、白电、 15

74.7% ， 我们预计公司 8.8% 财年市净率及 ng, and proven successful marketing successfulmarketing ng, andproven 国内家电行业整合的持续推进，将会有利于创维 每股净利 由电视机业务所带来，数字机顶盒及白电的贡 na is expected to benefit Skyworth. As Skyworth. tobenefit na isexpected 及 (HK$) ectronics products. Total revenue of of revenue ectronics products.Total eader, Skyworth is well prepared for iswell for eader, Skyworth prepared EPS 10.8% TP for Skyworth representing 10.0x representing TP forSkyworth es, display devices,network

ng of TV products, digital set-top TVproducts,digital ng of 15

high-tech corporation mainly high-tech corporation 0.8 每股净利变动 。目标价相当于

至 倍 17 The industry consolidation 4.800/ 3.420 16 ( 财年的每股盈利分别 △ EPS 11,409.3 财年市净率。 %) 2,831.1 7,803.3

10.0

s andOtherAppliances

市盈率 倍 PER

Major shareholder Free float (%) FY15 Netgearing (%) FY15 FY 15Est.NAV (HK$) FY15 (x) 15

财年市 0.465 The LCD 每股净资产 14 、 (HK$) .2 07 .8 . 9.7 7.0 0.280 0.7 5.927 .8 07 .5 . 9.3 6.3 0.253 0.7 5.580 .8 08 .7 . 10.0 6.7 0.272 0.8 5.283 .4 11 .7 . 15.9 4.2 0.170 1.1 3.743 .4 10 .9 . 11.6 4.8 0.195 1.0 4.040 BPS 自由流通比率

Source: Bloomberg, Guotai Junan International. Bloomberg, Guotai Junan Source: 股价表现 performance Stock -10% 大股东 10% 15% 20% 25% 30% 35%

Share price 评级： Rating: 平均股价（港元） Avg. share price(HK$) 相对恒指变动 index %toHS Rel. 绝对变动 Abs. % 股价变动 Change in Share Price 6-18m TP -5% 0% 5% e/3Dc1 a/4Jn1 Sep/14 Jun/14 Mar/14 Dec/13 Sep/13 % of return % of

市净率

% PBR (%) 净负债 每股估值

(x)

%

目标价 股价： /

股东资金 (HK$) 每股股息 (HK$) 00751 HK :

DPS 34 78 3.6 7.8 (3.4) (%) . . 4.0 4.0 4.5 9.8 4.2 3.9 1

个月 1 M

[email protected] 30 September 2014 2014 30 September 股息率 +86 75523976725 Frank Xu Yield 3 Wei Ping Lin 35.9% Accumulate (%)

个月 HSI Index HSI 3 M

收集

HK$ 4.65 净资产收益率 e 1of23 HK$ 4.03 ( 首次研究 許智程 1 Initial 1 Y 年 ROE 63.2 26.3 (%)

4.9 )

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) GTJA Research 国泰君安研究

INDUSTRY CORE COMPETIT COMPANY ANALYSIS See the last page for Page disclaimer 2 APPENDI MAJOR RI VALUATION ...... FINANCIAL ANAL Comment on Comment on August monthlysales ...... Net profitanalysis ...... Costs andexpenses analysis ...... Revenue analysis Revenue analysis ...... driversforthehomeapplianceindustryMain growth ...... 9 Economic andconsumerexpenditureinChina ...... 8 CES ...... SKS ...... ANALYSI YSIS ...... 13 IVE EDGE ...... 5 S ...... 3 TABLE OFCONTENTS

...... 16 ...... 13 ...... 17 .... 18 .... 15 ... 18 of23 16 8

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 consecutive years in China with amark inChina years consecutive value, the Company’s TV sales revenue in mainland China ma China mainland in revenue sales theCompany’s TV value, iue1 edure fSyot in Shenzhen Figure-1: Headquarter ofSkyworth position. marketleading the shares and marketinsights,asa result andadequate innovation technology with “focalhealthtechnologies”, by integrating brandings (ended 31 March 2014), ranked first in China forfourconsecut firstinChina ranked 2014), March 31 (ended Precisely,March 2014. Skyworth ofsalesvolume, interms Skyworth’s localandforei shares cametopamong market focu company consulting marketing and a marketresearch 711market surveycovering with retailterminals 6,023 cities the on salesdatabased TV China’s domesticsmarket. in brand theextrapolated atop and According to brandsglobally TV market. Chinese the in manufacturer TV largest isthe Skyworth for74.7%oft accounted million HK$ 29,484 ofaggregat sales line, theCompany’s mi ofHK$32,739 market China inthemainland Company’s sales world. However, inthe continents five covers all ma domestic Valleyin Silicon facilities centres orproduction R&D now has of income. of the mainfocus Company, isthe market domestic Chinese source major line, TV is the of product in terms and products. electronics other and hardware, communication network set-top products,digital ofTV manufacturing and development ala becomes Atpresent,Skyworth April 2000. in Exchange was and develop to continued Company The technologies. ofadvanced manufacturing and research Skyworth-R formedShenzhen Corporation, Devices Electronics thro Group, In1993,Skyworth otherproducts. and receivers colour-TV,producing andbegan approval production TV obtained with producers. 1992, in Later forTV remote controllers was Co.,Ltd,theCompany Industrial asSkyworth in 1988 home and electronics consumer multinational isa Skyworth Skyworth Digital Holdings Limited (the “Company”, “Skyworth”) is a dominant home appliance manufacturer. ANALYSIS COMPANY See the last page for Page disclaimer 3 Source: www.Google.com, Guot www.Google.com, Source: Skyworth entered overseasmarketsshor Skyworth entered ai Junan International. International. ai Junan et share of15.7%.Throughout e TV products from both mainland Chin productsfrombothmainland TV e eCmaysttltroe nF1. FY14. in he Company’s totalturnover cathode ray tube (CRT) monitors, and signal transmission and recording recording and transmission (CRT) ray signal cathode tube monitors,and t after it started production. t afteritstartedproduction. Apar the establishment ofSkywor establishment the and to orient consumers’ needs by mobilising and utilising andtoorientconsumers’ utilising and by needs mobilising gn TV brands in mainland China for the 12 months ended 31 31 forthe12monthsended China brandsinmainland gn TV appliances corporation headquartered in Shenzhen. Founded Founded Shenzhen. in headquartered corporation appliances in mainland China performed by performed China in mainland ViewAll Co.,Ltd., Consulting , U.S, Hong Kong, Mexico, Russia Russia Mexico, , U.S,HongKong, sold over 8.6 million LED LCD TVs in China during its FY14 itsFY14 inChinaduring TVs LCD LED million over 8.6 sold sing on consumer electronic and home appliance industry,appliance home and electronic onconsumer sing rket is still the main focus of theCompany. focus main rket isstillthe the FY14, During

initially a small appliances manufacturer mainly producing producing mainly manufacturer appliances asmall initially rket reached HK$ 26,244 million million 26,244 HK$ rket reached Figure-2: ugh a joint venture with China TV Corporation and China China and Corporation TV with China venture joint a ugh eventually listed on the main board of Hong Kong Stock Stock of HongKong mainboard onthe listed eventually Source: the Company, Guotai Junan International. ive years with a market share amarket with years ive boxes, white appliances, LCD modules, display devices, devices, display LCDmodules, white appliances, boxes, rge-scale high-tech corporation mainly engaged in the in engaged mainly corporation high-tech rge-scale of which, it helped the Company to maintain its market itsmarket theCompany tomaintain which, ithelped of llion accounted for 82.9% ofitstotalturnover. for82.9% accounted llion product By GB Electronics Co., Ltd, whic Co.,Ltd, GB Electronics VCD& home DVD players, Skyworth has grown to be a popular and well-known well-known and popular a tobe grown has Skyworth the years, the theCompany A n example of Skyworth’s 3D LED T 3DLED Skyworth’s of example n a market and overseas markets of of markets overseas a marketand t from mainland China, the Company theCompany China, t frommainland th Group Co., Ltd, the Company Ltd,theCompany GroupCo., th theatre system and satellite andsatellite theatre system of 16.8%; in terms of sales intermsofsales of 16.8%; in FY14, ranked fist for two two rankedfistfor FY14, in and etc. Its sales presence etc.Itssalespresence and h laid the foundations of thefoundations h laid continues to position its to position continues V

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Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 refrigerators, becameatop-t refrigerators, High-Tech“National years afterfounde two in2012, Enterprise” history, short relatively oft division white the appliance products mainly homeappliance anddistributes manufactures hub fortheCompan the Ltd, being a lateinitiation. despite rapidly isgrowing business appliances White was 2,297million, HK$ China from mainland which of sales kwrhsofca lghpsoeo ml.o Tmall.com on store officialflagship Skyworth’s on machines best the selling of One washing Figure-3: markets. overseas and China mainland both in player white appliance aleading strivetobecome and development channel white the itisbelieved Going forward, ofrefrigerator capacity itsproduction extended has Company was market), fromoverseas while rest29.8% the market white appliances total delivered theCompany FY14, During from sales aggregate the FY14, During created. been has boxes standard-definiti including products box Sincethein systems. television Set-topboxe device. display screen orother Skyworth’s digitalset-top boxes have o been See the last page for Page disclaimer 4 satellite broadcastings stimulated digital TVs inbothmain TVs digital stimulated broadcastings satellite with acceleration years, the recent During rights. property TV,integrated for modules set-topbox decoders, satellite et and intoc signal source thatturnsthe external device appliance Source: www.Tmall.com, Guotai Junan International. GuotaiJunan www.Tmall.com, Source: en refrigerator manufacturerinthemainland en refrigerator ception, Skyworth’s digital set-top box divi set-topbox Skyworth’sception, digital y’s white appliances, was founded only in Augu was only founded y’swhiteappliances, appliance division of Skyworth will continue to invest heavily on R&D, production and production on R&D, toinvestheavilywill ofSkyworth continue division appliance on set-top boxes, high-definition multi- high-definition set-top boxes, on s could be compatible with cable television, satellite television, andover-the-air television, satellite with television, cable becompatible could s ccupying the leadingposition consecutively. he Company was developing fast, it won the honorary title of title won fast,it thehonorary was developing he Company land China and overseasmark and China land ersnig5.%o h oa ae lbly globally. ofthetotalsales 55.2% representing representing aYoY representing of49.7%.Atthemoment, growth of replacement ofold-versi ofreplacement ontent inaformthatcanthen

turnover of HK$ 2,532 million (70.2% from mainland China China mainland from (70.2% million ofHK$2,532 turnover and washing machine to 2 million and 1 million respectively.1 million and million to2 machine washing and kwrhsofca lghpsoeo ml.o Tmall.com on store officialflagship Skyworth’s on refrigerators best the selling of One Figure-4: Source: www.Tmall.com, Guotai Junan International. GuotaiJunan www.Tmall.com, Source: including refrigerators and washing machines. Though with Though machines. washing and refrigerators including set-top boxes of theCompan set-topboxes d; in 2013, the division achieved sales of over one million million overone of sales achieved the division d; in2013, c., all of which Skyworth owns independent intellectual intellectual independent owns which Skyworth of c., all sion launched few hundreds of different few set-top hundreds sion launched Skyworth Electrical Appliances Technology Co, market, which is an industrial phenomenon. which market, isanindustrialphenomenon. st 2010. The division designs, develops, develops, designs, division The st 2010. channel set-top boxes, live broadcast livebroadcast set-topboxes, channel on TVs with high-definition and and with high-definition on TVs ets, huge demands for set-top forset-top ets, hugedemands be displayed on the television onthetelevision be displayed y reached HK$ 4,162 million, million, HK$ 4,162 y reached A is set-top box an of23

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 design and outstandi domesti both in Company’s recognition efforts, ithasgained thelatest components, other centres and building, facilities on spent substantially accessibility, internet systems, control electrical science, cl consists Company system ofthe Strong proprietary R&Dcapabilities. CORE COMPETITIVEEDGE See the last page for Page disclaimer 5 controlordist inthe involved without being companies media willbe able platforms thecontent agreements, cooperative signing however, ma standalone, cloudTV oftheleading majority adv recognition andbrand Utilise thescale appliances, TV istheproductcategory that TV appliances, appl home almost all across popularised willbe eventually and by Itisagreeable t appliances. internet appliance. home for internet eraof the Well into participated environment. customers’ consumer inanever-changing needs that appliances productsandotherhome TV industry-leading onitsstrongR&Dcapaci (CESI). Leveraging Rec Definition High “4KUltra the toobtain products few TV under of Skyworth models fiveTV 2013, Alsoin position. it which increased consequently (aka.4K TV), Cloud TVs instance,Skyworth For new stormedthemarketbyproducts. can be expected between content provider content between can beexpected wi forward, contents). Going (over-the-top) soiscontent inChina, regulated heavily Cooperation potential with exp thengradually and India, America and th business. Goingforward, officeshas regional acrosstheglob inallfivecontinents es with storesand largescalechain the strategic partnership in particularly points, retail expand strategy to be along-term 4t 3rdand inthe appliances andother TVs at whitethe moment. appliances Skyworth selling points ar There inChina. regions provincial Working together, closely network. wh distribution and theTV cities,Skyworth seizestheopportunity low-tier in especially inmainland process urbanisation on-going the and decade Building a comprehensivedistribution and marketing network. strategy marketing still successful proven and branding, in LeTV and Xiaomi as competitors, such cross-industry isexpect competition severe although transformation, TV conventional of fortheupgrade well prepared is Skyworth barriers for TV manufacturing industry as content provider barriers for industry ascontent manufacturing TV media value chain, somehowit ishard valuechain, media de dedicated cables,and thenfromsatellites, signals, radio ng products, the Company insists to enhance its products, theCompany toenhance insists ng e Company willmark e Company on continuetoemphasise playersintheentertainm of modules ofproductoffering ofmodules strategy,indu e over 20,000 retail points selling Skyworth selling points e over20,000retail he industry participants that participants he industry at present it owns leading specialised l specialised leading itowns atpresent Skyworth weights on research anddevel weights onresearch Skyworth providers. From the ofevolut providers. From perspective for the manufacturerstobreakinto TV n t otrnsi te ein. otherregions. itsfootprintsin and th the continuing development of internet home appliances, more cooperation more cooperation appliances, home ofinternet development thecontinuing th updates being a newly-added software research centre in FY14. With the the With FY14. in centre research software anewly-added being updates h-tier markets of China and is working on management optimisation and it will andit optimisation onmanagement working is marketsofChinaand h-tier s and leading cloud TV manufacturers, wh manufacturers, cloudTV andleading s has made significant breakthrough, larg breakthrough, hasmadesignificant antage ofits antage TV andset- ties, we theCompanyties, tocontin expect make it a top-tier contend make itatop-tier series “65E900U”, “65/55/50E790U” and “58E780U” became the the became “58E780U” and “65/55/50E790U” “65E900U”, series ent andmedia industry. s are likely to only work with the quality manufacturers. manufacturers. workwith quality the to only s arelikely ed from both traditional appliance manufacturers and the andthe manufacturers appliance frombothtraditional ed The Company has been strengthening beenstrengthening has The Company oud technology, content application and etc. The Company has technology,oud has Company etc.The and content application e and the Company is actively expanding its white appliance white its appliance is actively expanding e andtheCompany the smart TV segment, however, segment, the smartTV Skyworth’s capacity, R&D nufacturers have already set up content platforms. Through upcontentplatforms. Through already set nufacturers have ognition” from the China Electr fromtheChina ognition” s TV market share and strengt s marketshareand TV ribution ofthecontent ribution to quickly build up a prestigious branding as well as asastrong branding upaprestigious build to quickly launched its 4Kx2K ultra high definition (UHD) panels Cloud Cloud panels (UHD) definition its4Kx2Kultrahigh launched coders (such as a set-top box). As the terminal ring on the onthe (suchasaset-topbox).Astheterminalring coders the low-tier markets. Also, the Company maintained a close aclose maintained markets. Also,theCompany the low-tier tablished retailers. For the retailers.For markets,Skyworthoverseas TV tablished s and other appliances into the smart ones. Along with the thesmartones.Along into s andotherappliances c and overseas markets with respect to its sophisticated itssophisticated to with respect markets overseas c and China which creates extra demand for home appliances home appliances for demand createsextra which China are more advanced, efficient, intelligent and better meet efficient, andbettermeet aremoreadvanced, intelligent The Company has been devoting resources in the R&D of of intheR&D resources devoting has been Company The iance categories. At present, amongst traditional home home traditional Atpresent,amongst categories. iance ite appliance divisions’ distribution network covers all covers divisions’network distribution ite appliance to broadcast contents owned by the entertainment and and entertainment by the owned contents tobroadcast the “Internetisation” Benefiting fromtheeconom competitive advantagesand competitive top products and being an overall industry leader, industry anoverall top andbeing products strial design, framework structure, material frameworkstrial design, structure,material ets in South-eastern Asia, Russia, South Russia, Asia, ets inSouth-eastern er with broadpotential. er (these contents are referred astheOTT arereferred (thesecontents the entertainment and media industry industry and media theentertainment aboratories, research research aboratories, TV products and almost 10,000 retail 10,000retail almost productsand TV ion, TVs initially access to contents via tocontentsvia access initially ion, TVs opment since its inception. The R&D sinceitsinception. The opment Entertainment and Media industry is is industry Media and Entertainment ely due to its content-based nature. nature. toitscontent-based ely due ue to lead the market by introduce by introduce toleadthemarket ue ich consequently raising the entry theentry raising consequently ich of home appliances is inevitable isinevitable ofhomeappliances onics Standardisation Institute Institute onics Standardisation hened its top market leader itstopmarketleader hened ic boom during the past duringthepast ic boom its market positions for its marketpositionsfor branding by promoting institutes, testing of23

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 Moreover, speed with the in China, forward going andTe Film ofRadio, State Administration turnover. bids won theoverall drove up several Company The increm a significant recorded needs,thedivision market detailed sele a introduced by and boxes, (HD)set-top definition on high market consecutively. of division set-topbox digital The China mainland in position leading occupying been have boxes set-top Skyworth’sdigital its“i.Kan”brand, through Mainly mark the China in especially Skyworth’s set-topboxes, digital Comp ofthe thetotalturnover of for12.7% accounted only fromChinamark 2,297million (HK$ million HK$4,162 reached Vast segment. box set-top digital the from potential easier. approvals and licenses to getrelevant which them ensure with resources more generally are Skyworth players like asdominant copycats, purely or small players tostrictcontro subject are providers will Internet and be trend. contents hardware the inevitable our view, big infrastructure, ofnetwork with thedevelopment is expected to supported by favourable polic by favourable tosupported is expected and networks TV cable networks, of telecommunication integration platform. smartTV on the contents not programmes, totheir timeshiftfunctionalities and playback fromtheinte shift functionalities time and playback integrated of approval and theexamination tightening andTelevisionFilm ( of China to italso market. purifyhelps but the boxes, set-top Tightening control over thecontents ofinternet TVdoes have an industry-wide impact onsmart TVs and digital Home PopularProduct”. China Most Shopping On-line Appliance wi Brand” together Most Popular Shopping Online Appliance Home China won “2013 the ofSkyworth TV “Coocaa” SummitForum”, Shopping On-line Appliance Home of “China aturnover with Haier behind stores,only flagship appliance 187 of RMB a turnover reached having by platform setarecord on11 fiesta shopping on-line Day” the November2013, innovation. Since its launch, the “Coocaa” series quickly gain quickly series itslaunch,the“Coocaa” Since innovation. plat thepartnership resourceswill help ecosystem internet capacity,R&D, manufacturing logist and channel distribution will toaccessmore able be platform, thepartnership through market and also avery competit market andalso was backthen, only TVs of thedebut one seamlessly. community platform and the worth that Itis noting appl integrated utility Alibaba’s cutting-edge “C associated three and platform“Coocaa” TV internet new which thelargestinternet-bas is Group, offerings. ex product For and itsproductions partners toboost elite. internet the with Collaborated See the last page for Page disclaimer 6 toA-shar business boxes set-top digital inject theentire while fora business box its digitalset-top an company.A-Share listed into business boxes set-top its digital off of Spin thefuture. sharein itsmarket to solidify 中國國家新聞出版廣電總局 ive producttofacethecom Conventional TV and radio broadcasting is he broadcasting andradio TV Conventional l. However, arest participants dominant While continuing to improve its business, Sk toimproveitsbusiness, continuing While ed e-commerce company in the world turnover, by the in company abrand ed e-commerce released togetherthey , the latest update being the announcement on 24 on beingthe announcement latestupdate , the levision as well as successfully extended its presence in new provincial regions. regions. provincial new in itspresence extended successfully well as as levision RMB 1,999, became one of the mostinex ofthe one 1,999,became RMB contents available to internet-access TV tointernet-access available contents ications and payment system, and will be able toaccess able will be and system, Alibaba’se-commerce payment and ications ies and as the leading manufacturer int manufacturer ies andastheleading up in the promotion of “Triple promotion in the ( up Play Services” the Company has been taking adv beentaking has Company the In FY14, the turnover fromSkyworIn FY14,theturnover e listed company China Resources Jinhua Co., Ltd (000810 CH), CH), Co.,Ltd (000810 Jinhua Resources China company e listed ) repeatedly issued instructions to instructions issued ) repeatedly Recently, the Administration State Group’s storeon Alibaba’swww.tmall.com flagship “Coocaa” form to build unique strengthin tobuildunique form oocaa” TV series in September 2013. The “Coocaa” platform platform “Coocaa” The 2013. September seriesin TV oocaa” data and cloud computing technology,computing cloud of data and integration high-level of RMB 206 million. Consequently,of RMB206million. ceremony awarding in the end users by leverage Skyworth’s competitive advantages in in advantages Skyworth’s endusersby leverage competitive et, where the sales in FY14 recorded a recorded YoYwhere inFY14 et, thesales of21.0%. growth ed favour with customers,for ed favour Therefore, smart TV industry TV smart Therefore, ic services. On the other hand, Alibaba’s e-commerce and ic services.Ontheotherhand,Alibaba’se-commerce and petition broughtby rnet TV platforms (i.e. only t platforms(i.e.only rnet TV th the “Coocaa” TV 42K1 Dream Version, Dream 42K1 TV “Coocaa” the wonth “2013 the for the programs oflivebroadc for theprograms ample, the Company strategica Company the ample, the platforms). The purposeof The theplatforms). selling price of “Coocaa” 42K1Y of“Coocaa” Youth price selling Version, was which ets and HK$ 1,865 million from ets andHK$1,865million ction of different HD digital set-top box products based on based products set-topbox different digital HD of ction any,however, of futuregrowth inthe wepotential see ent fromthesalesofHD million within 24 hours, ranked second amongst the home thehome amongst second ranked 24 hours, within million the internet), the organic grow theorganic the internet), ill in a better position when compared with with when compared ill inabetterposition avily regulated in China at the moment, in in themoment, at China in regulated avily Actually Skyworth is intended to spin off tospin intended is Skyworth Actually yworth is also actively looking for quality forquality looking yworth isalsoactively the cross-industry competitors.Alibaba s and set-top boxes, and to prohibit any any andto prohibit s andset-topboxes, he industry,what has ittakes Skyworth pensive 42 inches internet TVs on the onthe TVs internet inches 42 pensive th’s digital set-top box products th’s products set-topbox digital contents, services and model contents,servicesandmodel he content providers canoffer providers he content antages of the strong demand demand ofthestrong antages instance, during the “Bachelor the“Bachelor during instance, participants including content content including participants products, which products, consequently th the relevant participants to participants therelevant of Press, Publication, Radio, Radio, of Press,Publication, Sept 2014 thatSkyworth Sept2014 to ast satellite launched by the by launched ast satellite lly cooperated with Alibaba with Alibaba cooperated lly overseas markets), overseas though the controls is to purify the istopurify the controls th of set-top box products products ofset-topbox th 三網融合 , means the , meansthe of23

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 furtheroptim it may promote we belie and Skyworth into tobeconsolidated Jinhua Resources of by shareholders toapproval aresubject which changes name ofassociati articles and memorandum the tochange proceed s issued enlarged ofthe 58.54% RGB holds 26 on commenced Deali Jinhua. Resources ofChina capital share issued appro representing shareholders itsminority and to Skyworth will new A issue which it Th asameansofpayment. Shares See the last page for Page disclaimer 7 Source: the Company, Guotai Junan International. Coocaa platform platform Coocaa Figure-5: An advertisement ofSkyworth’s TV with th Sept 2014. Subsequent tothei Subsequent Sept2014. sto frsucs ofresources. isation hare capital of China Resources Jinhua in total; China Resources Jinhua will will Jinhua Resources China total; in Jinhua Resources ofChina hare capital ssue ofthesenew A Skyworth throughitssubsidiary Skyworth Shares, ngs in these Angs inthese t Shares on e new A Shares in China Resources Jinhua have been issued e new A issued havebeen Jinhua Resources inChina Shares on, the composition ofitsboar on, thecomposition

ximately 48.93% and 25.10% respectively of the enlarged enlarged ofthe respectively 25.10% and 48.93% ximately Source: the Company, Guotai Junan International. Figure-6: ve such business repartition is positive to the Company as totheCompany ispositive repartition business ve such China Resources Jinhua. We Jinhua. ChinaResources theresultsofChina expect A n exampleofSkyworth’s digitalset-topbo n he Shenzhen Stock Exchange StockExchange he Shenzhen d of directors and the company company and the d ofdirectors of23 x

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 I S ofapproximat aCAGR representing in 2013, fromapproximat rose China in expenditure the totalconsumer Consumer expenditure in China is to expected GDP RMB70.4 nominal expectedtoreach is world. CAGRofChina’s GDP the The in nominal economies peri the during 12.6% CAGRofapproximately a representing from increased ofChina product domestic from Nati data on surveillance Trade Based in 2001. Organisation Economy inChina has been expanding fast. andconsumerexpenditureinChina Economy ANALYSIS INDUSTRY See the last page for Page disclaimer 8 ar of rural capita per total income the and 2013, in RMB 26,955 in households ofurban percapita income disposable annual The asre haveimproved, livingstandards development, economic rapid retailsales social and income disposable Rising Figure-7: Nominal GDP and its growth in China especially forhomeappliances, spurdemand to are expected econ Chinese tothe contributor important representing in2016, RMB 28.1trillion products. appliance onhome tospend income discretionary more who have income risingdisposable The assured. largely are retail sales To services. and consumption mid-to we the consider conclude, fr away economy ofthe thefocus toshift ought government theeconomy, boost and domestic consumption the in especially anditsgr toRMB in2013, 2008 23.4 trillion capita. Total per income disposable annual sales socialretail China’s Ontheotherhand, 2013. reta to RMB8,896in social nternational. nternational. ource: National Bureau of Statistics of RMB Trillion 10 20 30 40 50 60 70 80 0 18.0% 31.4 2008 8.6% 34.1 Nominal(left GDPaxis) 2009 17.9% 40.2 2010 17.7% 47.3 2011 9.8% 51.9

China, Euromonitor, Guotai Junan 2012 9.5% 56.9 2013 7.4% 61.1 YoY growth (right axis) (right growth YoY 2014F omy.China’s of growth sustainable The a CAGR of approximately 11.3% CAGRofapproximately a increasingly an becoming 2013-2016, during approximately RMB 31.4 trillion in 2008 to in2008 31.4trillion RMB approximately ely 12.7% during the period, and is expected andisexpected theperiod, during 12.7% ely 7.4% 65.6 owth is expected to outpace GDP to outpace isexpected owth inthe trillion in 2016, according to Euromonitor. to according in2016, trillion 2015F The economy in China has been expanding since its accession totheWorld its accession since beenexpanding has inChina economy The 7.3% increase along theriseofeconomy.with 70.4 2016F to back the consumption of home appliances. appliances. home of consumption the back to 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

between 2013 and 2016 is expected to reach 7.4% and China’s and toreach7.4% expected is 2016 and 2013 between il sales have expanded rapidly amid strong growth inGDPamid strong and rapidly expanded il saleshave has led to the emergence ofa totheemergence hasled demand for whitewares and basic blackwares, suchas basicblackwares, whitewares and TVs. for demand ely RMB 11.2 RMB ely trillion RMB 20.4 to approximately 2008 in trillion ea in China grew at a CAGR of at aCAGR grew in China ea Source:Euromonitor, Guotai Junan International. in China reported aCAGRof15.3%fromRMB11.5 reported in China in trillion om export & investment oriented growth towards domestic towards growth oriented &investment om export -long term rising trends in both disposable income and social social and income disposable both in trends rising term -long iue8 Consumer Expenditure in China Figure-8: China grew at aCAGRof11.3% grew China to 2008 in from RMB15,781 RMB Billion od, enabling China to become one of the fastest growing thefastestgrowing of one become to China enabling od, context of diminishing of demographic dividend in China, the the inChina, dividend demographic of diminishing of context 10,000 15,000 20,000 25,000 30,000 5,000 flected in the increases in income and consumption level. level. consumption and inincome theincreases flected in 0 onal Bureau of Statistics of China, the nominal gross gross thenominal ofChina, ofStatistics Bureau onal 11,202

Social Retail Sales (left axis) (left Sales Retail Social 2008 12,348 10.2%

2009 14,028 13.6% economy and rising consumer expenditure expenditure consumer rising and economy

2010 2013, in 56.9trillion RMB approximately mid tolongterm.Inorderenhance 16,380 16.8%

2011 grow to to continue toapproximately 18,207 11.2% 13.3% from RMB 4,761 in 2008 2008 in RMB4,761 from 13.3% significant group of consumers groupofconsumers significant 2012 20,381 11.9% AccordingtoEuromonitor, 2013 22,835 12.0% As aresultofChina’s YoY growth (right axis) (right growth YoY 2014F 25,347 11.0%

2015F 28,094 10.8%

2016F of23 0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 S S vehicles and computers, and believe the lo believe computers,and and vehicles basis”appli tomore“perperson appliances basis” household thanth withmore functions and more personalised customisable, evolution and techniques manufacturing However, of hasplenty of TV rate penetration the we stillbelieve lookhigh of TV rates penetration the atfirstglance, Though ever of2012, asend ofChina, Bureau households in China Figure-9: Disposable income per capita ofurban See the last page for Page disclaimer 9 was andforevery residents area 30.13, 100 Together theim ratesfor TVs, penetration with thehousehold fo residents and2.86 residents permanent 3.88 average were on There isstillroomforthepenetr Main growthdriversforth China in itsgrowth retailsalesand Social Figure-11: area. urban especia toadvance, basis onaperresident rateofTVs penetration in our view, TVs, of smarterandhandier availability itisfa lifestyl personalised accelerating standard, living of improving uc:Ntoa ueuo ttsiso hn,Goa ua nentoa. ource: National Bureau of Statistics of China, Guotai Junan International. ource: National Bureau of Statistics of China, Guotai Junan International. RMB RMB Billion Billion RMB 10,000 15,000 20,000 25,000 10,000 15,000 20,000 25,000 30,000 5,000 5,000 0 0 8,472 0320 0520 0720 0921 0121 031H14 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 10.0 11,483 22.7% 11.2 YoY growth (right axis) (right growth YoY Disposable income per capita of urban households (left axis) Social Retail Sales (left axis) (left Sales Retail Social 13,268 10,493 15.5% 11.4 12.1 15,700 18.3% 13,786 17.2 14.5 18,392 17.1% 17,175 8.8 ation rateofTVtoadvance, 20,717 12.6% 11.3 e home appliance industry e homeapplianceindustry y 100 rural and domestic households own 116.90 own households respectively. TVs, domestic and colour 136.07 rural and 100 y YoY growth (right axis) (right growth YoY 21,810 14.1 in content broadcasting model, TVs are TVs model, contentbroadcasting in 23,438 gic will be applicable to TVs. to TVs. will to beapplicable gic According 13.1% 12.6 in the urban area, they own 47.58 in theurbanarea,they47.58 own on TVs 26,955 9.7 12,420 12.1% 14,959 9.6 0% 5% 10% 15% 20% 25% 0 2 4 6 8 10 12 14 16 18 20 % ances. We have seen similar transformations with of transformations We the demand ances. seensimilar have

and if compared with other home appliances, they actually are. are. actually they appliances, with home other ifcompared and ir and appropriate to assumethat ir andappropriate plied number of TVs per 100 permanent residentsinthe rural per of 100 permanent TVs plied number Source: National Bureau of Statistics of China, Guotai Junan International. Source: National Bureau of Statistics of China, Guotai Junan International. potential to advance. Firstly, advance. to potential with ofR& development as the enterprise ofhousehold electricvideo & appliance size above designated Retailsalesof Figure-12: China Total income per capita ofrural households in Figure-10: RMB RMB Billion e and evolving consumption pattern, plus with pattern,plus rise the in consumption e evolving and 10,000 100 200 300 400 500 600 700 800 especially inruralareas. 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 r each household in the rural and urban area, respectively. area, urban ruraland inthe r eachhousehold 0 ey used to be, thus TVs are transforming from more “per frommore aretransforming tobe,thusTVs eyused lly in the rural area, as it is nearly 40% lower than that o than lower 40% asitisnearly area, rural in the lly 0

Apr-09 Total income per capita of ruralarea (left axis) YoY growth (right axis) (right growth YoY appliance abovedesignatedof householdRetail videoenterprise sizeof electric sales & 2,622 0320 0520 0720 0921 0121 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

Jul-09 5.9 Oct-09 Jan-10 12.0 Apr-10 3,255 Jul-10 10.9 National Statistics Bureau of China, ther ofChina, StatisticsBureau National becoming thinner,becoming lighter, cheaper, more Oct-10 10.2

average as of end 2012. In the context asofend2012.Inthecontext average Jan-11

Apr-11 4,140 15.4 Jul-11

Oct-11 15.0 According to National Statistics Statistics toNational According Jan-12 5,153

thereisstillroomfor the Apr-12 8.2 Jul-12

Oct-12 14.9 Jan-13 6,977 Apr-13 17.9 YoY growth (right axis) (right growth YoY Jul-13

Oct-13 13.5 Jan-14 8,896 Apr-14 12.4

of23 Jul-14 -10 0 10 20 30 40 50 60 0 2 4 6 8 10 12 14 16 18 20 % % D,

e f

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 S N S and popular,which consequently, thesalesgrowth will support itis upgrade, fair toassume ofol products thereplacement Together tointernet. the accessibility with ofpart restrain the 100 householdsinruralareaChina every of appliances home of major Ownership Figure-13: See the last page for Page disclaimer 1 Accord inurbanisation. lies domestic demand for China’s dev theimpetus tobecome isexpected demand asChina’s growth economy term, real estate.Overthelonger tr involving program construction amassive proposed government ( in China. sales growth fuel process will Urbanisation suchassmart functionalities, TVs. incr running them inkeeping costs associated w wasn't technology conservation andenergy principle working for couple another offunctioning be capable of years even 20+ or with 10+ home appliances working-order The needfor replacementisanotherdiver tosu China areain urban Figure-15: No.ofresidents per household in rural and are showing distinct difference inthepenet distinct are showing fromrura totransform year each populations million than 13 will be which there means level, current 54% potential sales growth of home appliances in in appliances growth ofhome sales potential 國家新型城鎮化規劃 ource: National Bureau of Statistics of China, Guotai Junan International. ource: National Bureau of Statistics of China, Guotai Junan International. ote: Including both black & white TV and coloured TV. 100 120 140 20 40 60 80 0 1 2 3 4 5 0

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l to urban dwellers. At the moment, urban and rural households households andrural moment, urban Atthe dwellers. l tourban s availability, with the rise in income and acceleration with s availability, acceleration and income in with rise the households in rural and urban area inChina of 100residents per No.of TVs Implied Figure-16: 100 householdsin urban areainChina every of appliances home of major Ownership Figure-14: of brand new home appliances, par home appliances, new of brand Source: National Bureau of Statistics of China, Guotai Junan International. Source: National Bureau of Statistics of China, Guotai Junan International. history in normal households, and those appliances may well may appliances those and households, normal history in elopment, and we believe the main potential for expanding for expanding potential themain webelieve and elopment, will be more reliant onservices reliant willbe more 100 120 140 160 10 20 30 40 50 60 hat itis today, gettingolder, thusas home appliances the 20 40 60 80 0 0 ansportation networks, urban infrastructure and residential residential and urbaninfrastructure networks, ansportation

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Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 S was forthesameyear. 13.5% house commodity Nevertheless, ro house of commodity area new construction The 2013. during realestatesa and construction in new aslowdown witnessed of3Q10,theChinese beginning Housing markettopromotecont See the last page for Page disclaimer 1 shift hasgradually industry forceforthehomeappliance driving fo thesalesgrowth years ago, with several control. Compared of consist mainly tohomeappliances applicable technologies on- theappliance from feedback receive and maintain manage, capacity,connecting consumers that so thatfeatur home appliance Smart appliance as the breakthrough for product upgrade. However, 2014. ofApril theend since buying despiteshort-te started have cities of Chinese least couple thatat an ease, into flowed less money tight;consequently 1) creditsbecome housing market in China in the next couple next inthe inChina market housing commodity house inChina and its YoY growth Figure-17: Cumulative construction newly area of market. withthe housing associated demand will benefitfromrising Skyworth and appliances, ye few thenext Overall, during 2010, since housing government 10million about of construction Moreover, process. urbanisation hous inordertomeetlower-end 2011 all 15categories. was rateamongst growth thelowest and was 2012 during andvideoappliance” electric of“household category home for the policies favourable of the of majority termination has increas policy onthe while dependence decreased, has subsidies Actually,years offa afterseveral we forconsumers, believe thehomeapp to policy subsidy government’s applianc home in boom a resulted directly have and generous, and transformation industry and conservation Government ischangingthe it how way developm era,itsvisionand internet effo continuous Company made The distribution. and development insmartappliance pioneer a been has Skyworth growth. sales in potential great equally has our opinion, in appliances smart universal, popularity, in became rise rapid already sees which are lifestyle intellectual to smartphones similar Million Sq.m. ource: National Bureau of Statistics of China, Guotai Junan International. 1,000 1,500 2,000 2,500 500 0

Oct-09

YoY Growth (left axis) Cumulative newly commodityconstructionof areaaxis) house(right Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 es one or more intelligent technology or smartfunc technology es oneormoreintelligent Oct-11 Jan-12 ars, the supply of housing in China will be in China ofhousing ars, thesupply

Apr-12 asa estateregulation real launched government Jul-12 ent of smart appliances has provided it with long-term growth potential. with growth it potential. hasprovided long-term ent ofsmartappliances inuous demandforhome Oct-12 Jan-13 can perceive the specific intelligence cont intelligence specific the perceive can and consumption stimul consumption and

Apr-13 be will asthere of years; subsidises thehomeappliancesindustry.

liance industry,liance the thatsomebelieved Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 -40 -20 20 40 60 80 0 % vourable policies for the homeappl policies vourable

les since then. However,les sincethen. arecovery marketrecorded thehousing relaxing local curbs on speculative and investment-driven home home investment-driven and speculative curbson local relaxing the housing market; and 2) potential home buyers are waiting for are buyers home potential market;and2) the housing fuzzy control, neural network c neuralnetwork fuzzy control, the housing market in China we the housingmarketinChina Source: National Bureau of Statistics of China, Guotai Junan International. appliance industry at the end of 2011, of end atthe industry for appliance growth thesales ed to product and consumption upgr andconsumption ed toproduct house in China and its YoY growth itsYoY growth and inChina house Cumulative completed GFA of commodity Figure-18: Million Sq.m. rm turbulence, werm turbulence, arenot too ing demand and improve citizen livelihood, China initiated the the initiated China citizenlivelihood, improve and ing demand r home appliances has returned to a steady level, the core core the level, toasteady returned has r homeappliances The YoYThe recovered 2013 during of the category growth sales 1,000 1,200 these houses will be completed in the period of 2013-2017. of2013-2017. period inthe will completed be thesehouses ation, government subsidies of recent years has been active been years has of recent subsidies government ation, appliances even short-term turbulence. with Smart appliance (aka intelligence appliance) referstothe appliance) (akaintelligence Smart appliance 200 400 600 800 e consumption. However, controversy engendered over the the However, over engendered e consumption. controversy site orremotely. Atthemo persistent demands arise from newly-married couples and and couples fromnewly-married arise demands persistent 0 se 13.46% in 2013 and the increase of sales area of of area ofsales increase and the 2013 in 13.46% se rt in response to changes in consumer demand inthe demand inconsumer tochanges rt inresponse merely 7.2% merely 7.2% YoY, was in which pptlower that 14.4 than ed. From an analysis of the social retail sales, with the sales, retail ofthesocial ananalysis From ed. Oct-09

YoY Growth (left axis) Cumulative newly commodityconstructionof areaaxis) house(right Jan-10 Apr-10 home for which opportunities creates abundant, tionalities, and is normally come withcome theinterne andisnormally tionalities, Jul-10

Oct-10 we bubble; therefore curbproperty mean to subsidies have overdrawn future demand. futuredemand. haveoverdrawn subsidies

ent and will typically be able beable to monitor,will ent and typically Jan-11 Apr-11 Jul-11 To energy andpromote encourage Oct-11 ontrol, genetic control and expert controlandexpert ontrol, genetic

Jan-12 in 2014,fortwoakens reasons: iance industry,iance thesensitivity ment, the intelligence control control intelligence the ment,

Apr-12 of thegrowth worried about Jul-12 ades. This istheerathat This ades. Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Since the Apr-14 Jul-14 1 of23 -20 -10 0 10 20 30 40 50 % of

t

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 in the hands of the leading companies with companies theleading of in thehands industry, the within composition theproduct tooptimise help growth. spontaneous through development sustainable achieve impl will gradually industry forthehomeappliance policies ener promote spending, improve consumer The most recent large-scale subsidy to The mostrecentlarge-scale announced yet at the nation-wide level, howe level, at the nation-wide yet announced theenergy-effic Since period. year theone during revenue app home energy-efficient million than65 more subsidise of Finance Ministry theChina to According level. nationwide forenergy-eff program subsidy and etc.).The were offeredthe retailpriceofnew totrade-inTVs, appliances June new” (from for appliances old etc.), “Swap and machines thepric towards subsidy a13% received residents which rural overthepast of couple stimulus policies 2012. June in launched appliances home energy-efficient ontheotherhand, demand, consumer hom forthe subsidies direct although up, to 14.5%.Summing See the last page for Page disclaimer 1 Source: ChinaMinistry ofFinance, Guotai Junan International. Inverter airconditioner airconditioner Non-inverter Plasma TV LCD TV Gas water heater heater Split solarwater water heater Integrated solar washing machine Front-load washingmachine Double drivetop-load Top-load washing machine freezer refrigerator freezer or refrigerator Product Table-1: appliances home for 2013) 2012-June (June subsidy energy-saving selected Detailof

the subsidies did reveal the thesubsidiesdidreveal years, such as “Home appliances go rural” (From December 2007 to January 2013, in 2013, toJanuary 2007 rural”(From December go suchas“Homeappliances years, thehomeapplianceindustryinChina stronger R&D and innovation capabilities. innovation and R&D stronger gy-saving and stimulate industrial upgra industrial stimulate and gy-saving 7,100 kW20kW 14 kW 0.25 m^3 0.14 m^3 0.08 m^3 0.25 m^3 0.14 m^3 0.08 m^3 level1 Label China Energy level Label China Energy level1 capacity Label ChinaEnergy >3.5kg, capacity volume >300L 240 L300L 120 L

≥ de, we believe subsequent favourable favourable subsequent we believe de, 2 ators, mobile phones, washing washing phones, mobile ators, e industry is expected to isexpected e industry Subsidy standard per Subsidy standard ent will to ent continue appliance (RMB) (RMB) appliance 330-400 330-400 280-350 240-300 250-330 200-280 180-240 350-400 250-300 350-400 250-300 100-150 450-550 330-430 200-300 300-350 210-260 100-150 2 of23 300 200 260 200 100 400 330 260 180 130 70 70

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 Table-2: Skyworth’s business by itsmajor revenue market. on China businessand reliant tohighly tocontinue TV years few in thenext the totalturnover. forthe BasedonSkyworth’s plan strategic theturnoverfromCh FY14, during channel, accoun business other and appliance white theCompany’s to contributed74.7% business electronics,ot automobile moulds, including and4)Whit 3)LCDmodules, set-top box; Count onTV business andChinamainlandmarket. FINANCIAL ANALYSIS See the last page for Page disclaimer 1 salesoftheCompany. TV 11.0% ofall for accounted re salesinFY14 TV the overseas LCDTVs; wereLED 92.4% theoverseas For 69.5%. fortheremaining accounted TVs panel total for30.5%of accounted TVs ofcloud volume sales By type, salesofSkyworth dropp TV However, 30.4%, respectively. FY during rapidly, growing from the businesshasbeen TV inFY14. except rapidly, growing been has business TV analysisRevenue Source: the Company, Guotai Junan International % oftotalturnover: Sum Growth Total Overseas market market China appliances: White Growth Total Overseas market market China Digital set-topbox: Growth Total Overseas market market China TV: by Revenue business (HK$ million) market has been risen strongly by 64.8% YoY in FY14 to2. inFY14 YoY by 64.8% strongly risen been market has positiv we see also hand, other but onthe subsid of energy by saving expiryimpacted the was negatively

e element, that the sales volume of cloud TVs (including 4K cloud TVs) in China inChina TVs) cloud 4K (including TVs ofcloud volume the sales that element, e e appliance. In addition, the Company In theCompany addition, e appliance. her electronic products andrentalproper products her electronic ina and overseas markets were account markets overseas and ina ted for 7.7%and1.5%of the Company’s 22,435 22,435 20,539 19,247 2010A 2010A 98.5% 98.5% 44.8% 48.8% total turnover of HK$ 39,480 million, million, ofHK$39,480 total turnover 1,896 1,896 1,186 1,292 710 710 0 0 0

Skyworth has 4 major businesses segments namely 1) TV; 2) Digital 1)TV; namely segments major businesses has4 Skyworth 12 and FY13, the TV division recorded YoY growth of 17.3% and YoYgrowth of17.3% divisionrecorded theTV 12 andFY13, ed 4.4% YoY during FY14to HK ed 4.4%YoYduring Leverage on its resources and leading position, Skyworth’s sales sales Skyworth’s position, leading and itsresources on Leverage 62 million, which pushed the proce the pushed which 62 million, foreseeable future, we expect the development of the Company oftheCompany thedevelopment we future, expect foreseeable ies in China, which largely slackened demand since June 2013, 2013, sinceJune demand which slackened largely China, ies in market, the Company sold 2.75 million TVs in FY14, of which of which inFY14, TVs 2.75million sold theCompany market, 20,163 20,163 19,103 23,859 23,859 (1.8%) 2011A 2011A volume in China of 8.6 million and sales volume of other flat ofother flat volume sales and of8.6million China volume in 98.0% 98.0% 94.9% ached HK$ 3,240 million, rose million, HK$ 3,240 ached 1,060 1,060 3,696 3,696 1,020 2,676 0 0 0

(11.3%) (11.3%) 23,648 23,648 22,029 27,397 27,397 2012A 2012A 97.4% 97.4% 17.3% does have some other minor businesses minorbusinesses have someother does 1,619 1,619 3,280 3,280 1,317 1,963 ties, etc. During FY14, revenue from TV from revenue TV etc.DuringFY14, ties, ed for 81.4% and 18.6% respectively of of 18.6%respectively ed for81.4%and while digital set-top box, LCD modules, modules, LCD box, set-top digital while 469 469 254 215 total turnover, respectively. By sales

$ 26,244 million. Ononehand,it million. $ 26,244 ss of product upgrade further. further. upgrade of product ss steadily by 4.2% YoY and and 4.2% YoY by steadily 260.6% 260.6% 30,845 30,845 27,737 36,442 36,442 2013A 2013A 96.3% 96.3% 19.1% 30.4% 3,108 3,108 1,691 1,691 1,093 3,906 2,008 1,898 598 598

29,484 29,484 26,244 36,178 36,178 (4.4%) 2014A 2014A 91.6% 91.6% 49.7% 3 of23 3,240 3,240 2,532 2,532 1,778 4,162 1,865 2,297 6.6% 6.6% 754 754

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 S respectively. 62.7%and49.7%, growth of6.6%, set- thedigital For di For example, well inFY14. performed Other businesses performed in well FY14. See the last page for Page disclaimer 1 to Skyworth, that the industry was withstanding the effect of the withstanding was to Skyworth, thattheindustry maintain. salesto TV and scale theirproduction toexpand continue divisions appliance expansion continuing and enjoying programs satellite broadcast Figure-19: Revenue trend of the Company respectively, FY15-FY17, during repres regions’we Skyworth’sexpect turnover market, new overall and respectof With environment. competitive Skywor Overall,we believe TVs. foritscloud growth the sales but it field, inthetraditional not only The CAGRoverall of turnover is expected tobe 10.2% during FY14-FY17. a YoYrepresenting of 40%. rose Skyworth thesalesofvolume forexample, division, appliance of than 5years withhistory, formed less industry,what it has Skyworth tosupport isexpected products ofset-topbox growth organic industry consolidation and upgrade andupgrade consolidation industry industry thehomeappliance that anticipation potential from the digital set-top set-top fromthedigital potential business. appliance and box white set-top digital for expected be can growth Fast flatinFY15. largely ASP toremain and marginally (e.g. tosellmore structuretransform isundertaking division As the termscope. a long on salesofSkyworth TV will underpin rate urbanisation and level income in rising continually HK$ million ource: the Company, Guotai Junan International. 10,000 20,000 30,000 40,000 50,000 60,000 0 03 04 05 06 2017F 2016F 2015F 2014A 2013A 34.4% 37,824 Revenue (left axis) 39,480 4.4% The Company’s business TV experienced some headwinds 10.7% 43,685 takes to solidify itsmarketsh takes tosolidify box business, especially from the speed up int up thespeed from especially business, box

also achieved outstanding results in new business areas or cutting-edge products, suc products, orcutting-edge areas business resultsinnew outstanding also achieved is ample. Moreover, we is ample.Moreover, believe 10.0% 48,072 YoY Growth (right axis) enting a FY14-FY17 CAGRof10.2%. aFY14-FY17 enting it is still in the fast growing phase, t phase, growing thefast in it isstill the capability of maintaining the markets the of themaintaining capability gital set-top box, LCD modules and white appliance divisions recorded YoY recorded divisions white and appliance LCDmodules set-topbox, gital sales will continue to draw favourable polic todrawwill continue favourable 52,850 In contrast to sales drop forthe In contrasttosalesdrop TV 9.9% 0% 5% 10% 15% 20% 25% 30% 35% 40% % are in the future. For the white appliance division, since ithas since division, appliance white the For future. are inthe

ed by favourable policies and as the leading manufacturer inthe manufacturer astheleading and policies ed by favourable the phase out oft thephase cloud TVs and LCD LED TVs), we expect unit sales torise we unitsales expect TVs), LED andLCD TVs cloud th will be able to realise outstanding sales despite complicated complicated despite sales outstanding torealise able willbe th Source: the Company, Guotai Junan International. to reach HK$ 43,685 million, 48, million, 43,685 HK$ toreach branded refrigerators are targeted to reach 2 million in FY15, in 2million toreach are targeted refrigerators branded iue2:Gross profittrend ofthe Company Figure-20: HK$ million 10,000 12,000 of development into new regions; LCD modules and white and modules LCD intonewregions; ofdevelopment 2,000 4,000 6,000 8,000 capacity, results. theirsales improved which significantly top box business, the division the division business, top box the under-saturated penetration theunder-saturated 0 19.58% 03 04 05 06 2017F 2016F 2015F 2014A 2013A 7,406 he Company has detailed plan to solidify the the tosolidify plan detailed has he Company Gross profit (left axis)Gross profit (left

The Company has been in the leading position position theleading in been has Company The he promotion of“Triplehe promotion he government with however, subsidy, he government the hare tocapturebothlow-tie and theability in FY14, but it wasn’t butit FY14, in 19.32% ies from the government andtheroomfor ies fromthegovernment 7,629 business, Skyworth’s other businesses business,Skyworth’s otherbusinesses We have discussed earlier the vast thevast We earlier discussed have 19.23% 8,401 072 million and 52,850 million million 52,850 and million 072 has been winning bids of live bids winning has been rate in rural areas and the rateinruralareasand 19.26% Gross margin (right axis) (right Gross margin 9,259 Play Services”, that Play Services”, really a specific issue issue aspecific really 19.31% 10,205 4 of23 19% 19% 19% 19% 19% 20% 20% 20% white white only only h as % the

r

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 difficult and expensive to transport) are becoming more popular, more arebecoming totransport) difficult expensive and Moreover, expenses. theadvertising which raised influence, heavily resources devoted also Also,theCompany andetc. internet vari through promotions dedicated various launched Company turnover to ra expenses Operating respec million and10,205 million 9,259 million, HK$ 8,401 Takingrevenues. fo grossmargin and oftherevenue account into theCompany’s in about strategy anddi theTV for margin gross the anticipate of t white business the we appliance thegrossmarginof expect efficiency, ofdifferent anddevelopment research strengthening respectively. inFY15-FY17, and19.31% 19.26% 19.23%, Th Expect a gradual pick up in overall grossprofit margin ahead. in ofpolicies tocarry outaseries expected an effort margin,ap toimproveitsgross lately,products Cloud TV high-end launched theboosttoitsovera an overheads tothelabour an increment wage leve andoverall wage thresholds theminimum Furthermore, ontheir putpressure onehand, which on butto with nochoice them and leave manufacturers TV traditional em internetthinking, strategies, pricing FY11-FY14. assump &expenses andcosts Basedonourtop-line CAGR of operating profit is expected to be 10.6% during FY14-FY17. respec 16.6%, and 16.6% 16.6%, representing FY In to16.6%. points ppt by 0.9 increased toturnover expense by10.6% Yo rose expenses administrative the S&D and general & administrative exp &administrative the S&Dandgeneral warranty, on logistics, costs, maintenance quality,product improve reliability,and technologica branding FY during turnover than growth expenses administrative & general turnover.with similarpace at rise to expected are expenses Operating increased by HK$32million, or8.5% YoYa 23.6% recorded the Company co intransportation growth fromcross-i competition attracted severe a revolu thatitisreally given too bad thegr that for FY12-FY14, trend, dropping pessimistic. isnot inFY14, yet situation dropped margin Overall gross Costs andexpensesanalysis See the last page for Page disclaimer 1 of10.6%. CAGR FY14-FY17 and2,548 2,303 million million, HK$ 2,048 strengthening sales in low-tier markets,pr salesinlow-tier strengthening duetotheincreaseinminimum tion period fortheindustry. period tion TVs tointernet TVs conventional transformationfrom The tio rose 0.9 ppt during FY14. FY14. during 0.9ppt rose tio phasise on user experience, value-chain in value-chain experience, onuser phasise ndustry competitors. competitors. ndustry new i entrants Those art from devote major efforts art fromdevotemajor promoting on gross profitmargins,ont gross oss margin was 21.2%, 19.6% and 19.3% re 19.3% was and 19.6% 21.2%, margin oss Y to HK$ 6,570 million, consequently the consequently Y million, toHK$6,570 million in FY15-FY17, up 8.8%, 12.4% and 10.7% YoY, 10.7% 12.4%and up8.8%, FY15-FY17, in million respectively, a representing marketing promotion, as well as salesand well as as promotion, marketing d thus the production cost d thustheproduction respect of effective cost and quality control. control. ofeffectivequality respect costand enses to be HK$ 7,252 million, 7,985m enses tobeHK$7,252million, gital set-top box businesses to expand gradually,expand to businesses we are positive set-topbox gital because mainly tively to their associated turnover. associated tively totheir tively in FY15-FY17 with a FY14-FY17 CAGR of 10.2%. withof 10.2%. CAGR aFY14-FY17 in FY15-FY17 tively l advancement, we expect the Company will spend generously generously will spend we theCompany expect l advancement, with the advance in technology,with in advance the panels(more TV size larger ous channels, such as outdoor mega boards, TV programs, programs, TV boards, mega as outdoor such ous channels, iated and high-end products to products andhigh-end iated rough adopting a modular approach to improve production production toimprove approach amodular rough adopting together with thefactofgrowi together 14, in order to match with the in with the tomatch order 14, in he Company is able to maintain its current level. Next, we itscurrentlevel.Next, he Company tomaintain isable ll gross margin is limited in the short-term. Going forward, Goingforward, intheshort-term. gross marginislimited ll sts during FY14. Furthermore, the staff salary and welfare thestaff and salary Furthermore, FY14. during sts l in China have been increased substantially, increased been have l inChina whichcaused recasts, the gross profit of thegrossprofit recasts, cope with the trends so as to maintain their market shares, theirmarket so astomaintain with thetrends cope 14, going forward, with theant forward, 14, going he other hand, transformation he otherhand,transformation We expected the overall gross margin for Skyworth to be tobe forSkyworth margin We gross overall the expected tions, the Company’s operating operating theCompany’s tions, in low-tier regions as a means of reinforcing its brand brand its ofreinforcing as ameans regions in low-tier wages andtheperformancerelatedbonus. has also gone up inevitably. up has alsogone has Skyworth Although During FY14, the Company’s S&D and general & & general S&Dand theCompany’s FY14, During CAGR of Skyworth operati CAGR ofSkyworth omoting high-end products products high-end omoting Although the Company recorded a faster S&D and and afasterS&D recorded Company the Although The Company’s gross margin has been on a on been has margin gross Company’s The nduced market with new logic - aggressive with market -aggressive newnduced logic ratio of S&D and general & administrative &administrative ofS&Dandgeneral ratio novation and etc., all of which impacted which etc.,impacted and all of novation high-end products, the Company is also also is theCompany products, high-end marketing related salaries. We salaries. related marketing forecast illion and 8,784 million in FY15-FY17, inFY15-FY17, million and8,784 illion spectively. However, isn’t thesituation the Company is expected to be tobe isexpected the Company ng in sales of white of appliances sales ng in enhance its competitiveness, itscompetitiveness, enhance itiation of 4K Cloud TVs, the TVs, of 4KCloud itiation icipation of endeavouring to ofendeavouring icipation improves business outlook. outlook. business improves ng profit wasng profit 5.5% during profit isexpectedtobe and generating content content generating and 5 of23 in

,

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 S are accreditedas high and newtechnology enterprises andt High andnew technology enterprisescertificat Net profitanalysis See the last page for Page disclaimer 1 of4KCloud prospect arising Skyworth, therefore year, oflast the sameperiod with together respectively,2014, sa forapprox.13%ofTV itaccounted and of recorded agrowth CloudTV”) (“4K panel (4Kx2K) definition Hot salesof4KCloud TVs enhance profitability. rest of2014. and compact Ov InternetTVs. TVs in thesalesofsmallerTVs, in down 16% ASP YoY YoY (23% in down ASP reason main inJuly), However, June2013. before terminated efficiency simi subsidy energy YoY increase the 90% as aftera base tonormal returned comparison wasan easier due to which inJune was recorded 62% YoY markets(overall andoverseas growth inChina volume base. comparison easier an Company’s on The improved August salesin TV Comment on August monthly sales respective 0.560 0.506and HK$0.465, toreach expected YoY,10.8% and 8.8% up 4.9%, respectively,a FY andrepresent profitof shareholder’s we the forecast Skyworth’s set-topbo of digital interests fromtheinjection was FY11-FY14. during 2.2% profit Summ Basic EPSof the Company is 15.0%, respectively. respectively. FY12-FY14, in 15.7% and and 15.0% 17.2% be 12.0%, to WeFY15-FY17 Skyworth’s ratein effective expect tax co normal topay ought Company ofthe subsidiaries some other HK$ million ource: the Company, Guotai Junan International. 1,000 1,200 1,400 1,600 1,800 Figure-21: Shareholders’ profit of the Company 200 400 600 800 0 03 04 05 06 2017F 2016F 2015F 2014A 2013A 4.0% 1,501 Shareholders' profit (left axis) 3.2% 1,254 3.0% 1,316 expected to grow expectedtogrow at a FY14-FY17 of CAGR 7.9%. the Company to reach HK$1,31 toreach the Company 3.0% 1,431 Net margin (right axis) (right Net margin the fact that the gross margin of 4K Cloud TV is the highest among all TV series of TV all is among thehighest TV 4KCloud of factthatthegross margin the ing up the profit & loss assumptions a &lossassumptions profit the ing up 3.0% 1,586 TV sales will enhance the Company’s profitability. the Company’s will sales enhance TV ion for certainSkyworth subsidiaries. In more detail, the Company’s sales volume of Cloud TV with ultra-high withultra-high TV ofCloud volume Company’s the In moredetail, sales 0% 1% 1% 2% 2% 3% 3% 4% 4% 5% ly in FY15-FY17, represent a FY14-FY17 CAGR of7.9%. CAGR aFY14-FY17 represent inFY15-FY17, ly % x business into A-share listed company China Resources Jinhua, Jinhua, Resources China company A-sharelisted into business x

herefore are entitled to the pref tothe are entitled herefore les volume in April to August 2014 compared to around 3% in toaround 2014compared ApriltoAugust les volumein Source: the Company, Guotai Junan International. erall, weerall, ri seelimiteddownside 109% and 277%YoY 109%and toAugust inApril and inAugust2014 iue2:EPSoftheCompany Figure-22: HK$ 14-FY17 CAGR of 8.1%. The Basic EPS of the Company is is oftheCompany BasicEPS CAGR of8.1%. The 14-FY17 0.0 0.1 0.2 0.3 0.4 0.5 0.6 rporate income tax rates. The effective tax rate was 19.5%, was19.5%, effective rate tax The rates. tax income rporate growth 21%). July and August sales growth of TVs in China inChina growth of August sales TVs July 21%). and growth for the down in down forthe ASP ourview in lar toJuly,lar growth in thesales wascost of August atthe 6 million, 1,431 million and and million 1,431 6 million, 03 04 05 06 2017F 2016F 2015F 2014A 2013A 15.5% 0.549 Basic EPS (left axis)Basic EPS -18.7% 0.446 Skyworth’s TV division recorded 8% and and 8% Skyworth’s recorded division TV nd considering the increase of minority minority of increase the considering nd The CAGRofSkyworth’sThe shareholders’ 4.1% 0.465 Certain Skyworth’s subsidiaries Certain Skyworth’s subsidiaries erential tax treatments of 15%, of15%, treatments tax erential sks of the sales of TVs in the sks ofthesalesTVs in the 1,586 million in FY15-FY17, in FY15-FY17, million 1,586 s, is the result of increase ofincrease is the result s, 8.8% 0.506 YoY Growth (right axis) 10.8% 0.560 6 of23 -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% %

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 distribution, logistics and after-sales services for both Haie services after-sales and logistics distribution, with focus business main Group isthecompany Electronics More importantly, prim income generate bothofthecompanies Electronics Group. -Others -Cloud -4K panelTV Flat China market: (‘000) Unit Table-3: Monthly TVsales ofSkyworth See the last page for Page disclaimer 1 ElectricalHold Kelon We Hisense Believe VALUATION Source: the Company, Guotai Junan International. change China ASP growth China Revenue Total YoY China MoM China YoY Volume Total TV TVCRT Flat TV market: Overseas Skyworth deserves a premium in valuati in Skyworth apremium deserves thecompany’s net inFY13, 3.3% respectively and were 14.7% respectively. 1.5% were7.7% and only heater business Mor whichwas of from 90.8% coming million, Total engine. growth main isthe business service channel re washing ma services, channel namely integrated segments, the di appliance home comprehensive most owns the also company Electronics theHaier For China. mainland in in markets Haier electronics via aredone functions production appliance posit andhasdominant inChina brand appliance home well-known (01169 Group Haier Electronics Skyworth. to company acomparable HK)isalso income. YoY, 72.6% rose inFY13, at RMB1,239.0million arrived main forSkyw respectively 4.0% and (versus19.6% inFY13 and 5.1% Moreover,business. was comingfrom air-conditioner and 41.6% the company’s YoY salesrose27.9% million, 22,186.9 toRMB andte ithasafter-salemaintenance andoverseas; both inChina freezers,air-conditioners, refrigerators, most isthe Kelon Hisense we believe nature, terms ofbusiness Aug-13 (3%) 38% 934 155 340 260 179 779 4% 8% 4% 23

Skyworthwith Keloninterm hassimilarsize Hisense Sep-13 (13%) (14%) (14%) 1,174 1,174 19% 248 397 345 184 926 1% 5

Oct-13 (13%) (15%) (30%) (15%) 799 151 285 219 144 648 2% 20

washing machines, plastic parts, small household appliances and related accessories accessories and related appliances household plasticparts, washing small machines, Nov-13

integrated channel services, and thecont services,and channel integrated 1,119 (7%) (5%) (9%) 37% 230 431 265 193 889 2% ings-H (00921 HK) is the most comparable peer company listed in HKEx. in listed company peer comparable most HK)isthe (00921 ings-H 1 on over HisenseKelon itwhile should

Dec-13 (10%) (21%) (13%) 1,317 1,317 1,013 (8%) 14% 304 544 325 144 1

Jan-14 Jan-14 r and non-Haier brand electronic and home appliance products in products and homeappliance brand electronic r andnon-Haier (25%) (15%) (19%) 1,229 1,229 (7%) (9%) Group, it produces washing machines and water heaters; the waterthe and washing heaters; machines Group, it produces 303 505 294 127 926 venue of the company in FY13 rose 12.0% YoY12.0% rose FY13 in company ofthe venue 62,263 toRMB eover, net margin Group’s and Electronics Haier grossmargin Group’s ParentCo, Qingdao Haier (600690 CH) which is listed listed which is CH) (600690 Group’s Haier Qingdao ParentCo, arily from manufacturing of home appliances. Differently, ofhomeappliances. manufacturing arily from Haier profit in reached RMB2,036. profitinreached

comparable peer with Skyworth. Hisense Kelon mainly offers mainly Kelon with Hisense Skyworth. peer comparable

of which 45.5% was coming from the refrigerators business was business which fromtherefrigerators coming 45.5% of chine and water heater, and chine Group’s HaierElectronic integrated ly due to prosperous air-conditioner sales and investment investment and sales air-conditioner prosperous to due ly on the channel services, its income mainly comes from comes itsincomemainly services, on thechannel chnology consultation servicesascomplimentary.chnology consultation FY13, In Hisense Kelon’s gross margin and net margin were margin 21.7% Kelon’s net marginand Hisense gross stribution network in China. Amongst its three operating itsthreeoperating Amongst China. in network stribution Feb-14 Feb-14 orth in its FY14), respectively. itsFY14), in orth Kelon’s Hisense profit net (23%) (32%) (12%) (69%) (12%) 420 132 185 288 ion in the world. the However, in ion home most of theHaier’s 79 24

s ofmarketcapitalisation, Mar-14 (22%) 115% 115% (9%) 20% 17% 845 227 403 169 618 46

ribution from washing machine and water and washing machine from ribution Apr-14 (22%) (15%) (8%) (4%) 10% 897 220 358 319 677 valuedbe atadiscount toHaier Similar to Skyworth, Haier is also a a also is Haier Skyworth, Similar to -

9 million, rose20.2% 9 million, YoY. May-14 (45%) (22%) (25%) (38%) (11%) 759 249 235 212 510 63

revenue and netprofit. and revenue Jun-14 Jun-14 (29%) 34% 52% 25% 90% 888 249 294 274 639 71

Jul-14 Jul-14 (23%) (9%) 23% 18% 956 292 360 225 664 4% 79

7 of23 Aug-14 (16%) (10%) 1,126 1,126 21% 26% In 288 452 274 838 112 8%

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 premium. On the other hand, Haierhas premium. Ontheotherhand, posit also,thedomination concept, internet becaus mainly over thatofHisenseKelon were thanthatofHis Skyworth’s bitlower margins profitability with HaierElectronicsGroup, compared market capitalisati muchlarger has company the also, China, egtdAeae 17.5 12.3 0.18 2.75 4.03 HKD 8.28 See the last 22.30 page for 449HK Page disclaimer 1 HKD 20.35 HKD Weighted Average HKD 1070 HK HKD 751HK Simple Average 921HK Chigo Holding Ltd 669 HK HKD Tcl Multimedia Technology Skyworth Digital Hldgs Ltd 1169 HK Hisense Kelon Elec Hld-H Techtronic Industries Co Haier Electronics Group Co HK - Listed household appliances company Company Table-4: Valuation Peers Comparison APPENDICES only not isexpected competition appliances, atop-tier it make strategy still marketing Competition from other cross-industry competitors. necessary adjustments to its products. ofthe competence competitive that thecompetitors’ pr however,gover upgrade, ofthe policies andfavourable subsidies will conti that thegovernment areaffe Demandforhome appliances support. industry. appliance home to policy risk Macro MAJOR RISKS the future.We expect Skyworth’s EPSto be HK$0.4 and ofitsrevenue ofthat,both because largely and maintained leader asthemarket Skyworth benefit industry The consolid invaluation. potential hasupside Skyworth HK$4.65. of price target and “Accumulate” Initiate with respectively). and 17.9%, 12.9%, 17.3% up 2014-2016, forecast(We expect Haier growth fasterincome has a distinct competit a undoubtedly with pr markets, plusafastgrowing e-commerceunit alluring just like the impact that Xiaomi and LeTV broug andLeTV that Xiaomi just liketheimpact PBR. FY17 and 0.8x FY16 10.0x HK$4.65,representing with of a target price Skyworth PER, FY15 at 8.7x trading isnow EPR.Skyworth FY15 consensus respectively. at istrading Kelon Hisense Stock Code oducts fulfil more requirements and consequently andconsequently fulfilmorerequirements oducts Currency nue to improve home appliance spending, promot spending, appliance home improve nue to ive edge and a valuation differentiator interm a valuation and ive edge Company’s willCompany’s products be weakened, at least

with competitive products, we the with expect products, competitive 5.2x of its consensus FY15 PER and Haier Elec PERandHaier FY15 ofitsconsensus 5.2x contender with broad potential. However, potential. with broad contender Hisense KelonandSkyworth Digital Hisense a comprehensive distribution network that network distribution a comprehensive ions ofSkyworth’s set-t ions anddigital TV e the products of Skyworth are in better positions take the advantage ofhome advantage takethe ofSkyworth inbetterpositions e theproducts are from traditional appliance manufacturers but but manufacturers appliance from traditional Last price cted by government subsidies andotherpolic subsidies cted by government ht tothesmart segment, forexample. TV Home appliance industry in China is to some degree reliant on government ongovernment istosomedegreereliant in China industry Home appliance

Though Skyworth’s capacity,Though R&D successful proven and branding, 65, 0.506and0.560inFY15-FY17, 65, 20.4 20.5 13A n.a. 13.0 6.2 7.4 6.9 Electronics Group’s EPS to be RMB 0.905, 1.062 and 1.252 in in 1.252 and 1.062 Group’s0.905, Electronics be RMB EPSto

ense Kelon, we believe Skyworth should be valued at a premium atapremium valued be should we Skyworth believe ense Kelon, FY15 PER, 9.2x FY16 PER, 8.3x FY17 PER, 0.9x FY15 PBR, PER, 0.9xFY15 8.3xFY17 PER, 9.2x FY16 PER, FY15 on than Skyworth and Hisense Kelon. Also, in our view, inour Also, Kelon. Hisense and when Skyworth on than PE (fiscalyear) Based on our analytics, we come up with a conclusion that aconclusion with weup come analytics, our Based on ospect, the integrated channel services business of Haier is ofHaieris business services channel theintegrated ospect, 15.5 12.8 17.2 18.0 earnings are expected to report healthy and steady growth in in growth and steady report healthy to expected are earnings 14F ..na n.a. n.a. n.a. ation within home appliances industry in China is expected to to isexpected in China industry homeappliances within ation 9.1 6.5 nment always come with terms and conditions. In the event event Inthe with termsandconditions. come nment always

we initiate with an investment rating of “Accumulate” on on of“Accumulate” rating investment withan we initiate 12.7 10.2 14.1 14.9 15F 9.5 7.5 5.2

10.9 11.9 12.9 16F 8.8 7.9 6.7 4.3 s of competence, also, Haier Electronics Group ElectronicsGroup also,Haier s ofcompetence, obtain more subsidies or favourable policies, policies, orfavourable subsidies more obtain

Company’s dominant market position will be be will marketposition Company’s dominant op box products should give the Company a a givetheCompany should products op box 3.8 2.3

going forward in the internet era for home era for internet the in forward going in the short-term before it can make any any make itcan short-termbefore in the are lagbehindinbr e energy-saving and stimulate industrial stimulateindustrial and e energy-saving 13A 0.4 0.9 1.1 3.1 2.9 5.4

already well penetrated into low-tier intolow-tier well penetrated already tronics Group is trading at14.9x ofits trading is Group tronics

PB (fiscalyear) also the cross-industry competitors, competitors, also thecross-industry 14F n.a. n.a.n.a. 3.1 2.2 0.8 1.1 2.2 2.6 4.3

ies. While it is widely anticipated widely itis ies. While anticipated

15F up 4.1%, 8.8% and 10.8%, 8.8%and10.8%, up4.1%, . . 2. 21.7 18.4 2.1 2.5 1.5 1.8 0.7 0.8 0.9 1.0 1.1 1.5 2.0 2.3 2.7 3.4

16F

and value.Though

ROE(%) 12.1 30.5 16.2 26.4 14F n.a. 6.9

Market Cap Cap Market 8 of23 HKD mil HKD mil 11,551 14,007 39,644 55,540 1,552 3,841

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 8.42 22.22 2.70 11.62 4.33 27.55 CNY CNY 15.80 CNY CNY 002071 CH 002429 19.89 CH 000100 CH 600060 CH CNY CNY Great Wall Movie And Tele-A 27.73 CNY Shenzhen Mtc Co Ltd -A 002241 CH 600839 CH Hisense Electric Co Ltd-A CNY 600690 CH Sichuan Changhong Electric-A 000333 CH Tcl Corp-A CNY Qingdao Haier Co Ltd-A 000651Goertek CHInc -A Midea Group Co Ltd-A Gree Electric Appliances I-A PRC - Listed household appliances company ii n 044 S R 1,0.0 12,600.00 60.80 KRW 34.65 17.25 044340 KS 6.76 25.75 TWD 154.00 TWD See 2497 TT TWD the 15,150.00 last page 14.45 for Page disclaimer 1 8.88 1614 TT AUD TWD 37.3 TT 2374 TWD Winix 28.8 Inc 18.50 GUDAU 3059 TT E-Lead Electronic Co Ltd KRW 1558 TT 84,300.00 Taiwan Sanyo Electric Co TWD 014470 KS Co Ltd Enterprise Ability TWD 65,700.00 Zeng Hsing 2312 Industrial TT Co Ltd TWD KRW 2371 TT Ltd G.U.D. Holdings Lihom-Cuchen Co Ltd 2489 TT 021240 KS KRW 785.00 Altek Corp 066570 KS Kinpo Electronics Inc 1,020.00 Amtran Technology Co Ltd 659.00 Tatung Co Ltd JPY 176.00 Coway Co Ltd 5951 JP Lg Electronics Inc 1,578.00 274.00 JPY 1,163.00 JPY Other Asia Pacific developed - Listed household appliances company 1,150.00 5982 JP JPY 7965 JP 1,123.00 Weighted Average 949.00 JPY JPY JPY Simple Average 480.00 6445 JP JPY Dainichi Co Ltd 6794 JP 5909 JP 6632 JP 2,107.00 301.00 Janome Sewing Machine Co Ltd JPY 6809 JP JPY Maruzen Co Ltd JPY 6839 JP Zojirushi Corp 7955 JP 1,807.00 JPY Foster Electric Co Ltd JPY 6796 JP Jvc Kenwood Corp 1,346.00 312.00 2,985.00 7740 JP Corona Corp 6773 JP Funai Electric Co Ltd 9,110.00 JPY 1,828.00 1,585.00 Toa Corp 15.9 JPY 1,991.00 19.4 Cleanup Corp JPY JP 6816 JPY Clarion Co Ltd JPY 6755 JP JPY 1,304.50 5946 JP Tamron Co Ltd 6753 JP JPY Pioneer Corp JPY 5947 JP 6952 JP Alpine Electronics Inc 7731 JP 6758 JP Chofu Seisakusho Co Ltd JPY Fujitsu General Ltd Casio Computer 6752 JP Co Ltd Sharp Corp Rinnai Corp 20.63 Nikon Corp 11.45 11.52 Sony Corp 11.78 11.15 Panasonic Corp 22.86 Japan - Listed household appliances company CNY HKD CNY Weighted Average CNY 300083 CH CNY 14.18 200418 CH Simple Average 002543 CH CNY 13.00 000418 CH Janus Dongguan Precision-A 002242 CH 9.08 Guangdong Vanward New-A 29.98 002131 CH Wuxi Little Swan Co-B CNY Wuxi Little Swan Co-A CNY Joyoung Co Ltd -A 600983 CH CNY Leo Group Co Ltd-A CNY 002444 CH Hefei Rongshida Sanyo Ele-A 000921 CH 002508 CH Hang Zhou Great Star Indus-A Hangzhou Robam Appliances-A Hisense Kelon Electrical-A

126.8* 758.0* 393.5* 45.8 32.2 20.5 13.9 17.9 17.8 20.5 31.0 24.7 20.9 39.4 10.9 10.7 31.7 11.4 11.4 20.4 41.0 16.3 11.8 14.8 26.9 13.3 26.3 67.9 12.1 27.9 11.3 33.4 11.1 16.3 17.6 99.6 18.3 72.1 24.5 11.7 40.7 23.3 15.1 n.a. 25.3 n.a. 22.3 n.a. 9.5 n.a. 8.9 n.a. n.a. n.a. 123.6 n.a. 208.1* n.a. 38.9 9.9 9.6 7.7 8.9

60.1* 54.1* 13.0 15.8 22.6 15.9 10.3 13.3 15.6 15.6 24.3 17.4 15.4 10.3 45.6 21.9 13.9 38.2 12.0 26.4 16.6 11.4 23.2 11.7 24.2 25.6 29.9 23.9 13.9 16.2 18.6 14.7 40.5 13.6 13.6 11.3 30.3 20.2 13.7 ..na 16.5 n.a. n.a. ..na n.a. n.a. n.a. n.a. n.a. n.a. n.a. 48.0 n.a. n.a. n.a. 8.4 8.7 9.6 8.1 6.2 8.0 8.9

51.3* 41.3* 18.8 10.2 12.4 15.5 12.9 10.6 13.6 12.0 20.1 13.0 12.2 32.1 15.9 11.8 39.1 11.2 13.1 12.7 19.7 18.8 18.3 11.1 12.2 12.6 12.5 28.3 12.2 25.6 18.1 20.6 19.0 19.7 17.1 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 8.2 6.7 9.4 7.5 8.3 6.8 5.3 9.0 7.8 9.6

41.5* 35.5* 14.8 11.6 12.4 16.6 10.1 11.0 21.7 12.4 11.9 17.5 16.1 20.1 10.6 14.1 11.1 11.6 21.9 10.9 17.4 16.9 10.1 18.0 14.1 18.7 15.0 n.a. n.a. n.a. 8.3 9.9 9.9 6.8 8.8 9.4 5.7 8.5 6.4 7.3 5.6 4.5 9.4 8.1 7.2 9.4

3.0 3.0 2.0 1.6

13.3* 5.7* 0.9 2.4 2.9 2.0 1.4 1.9 2.9 3.9 3.7 4.7 4.5 3.5 1.5 1.4 1.6 3.1 6.6 2.5 2.4 2.2 3.9 1.8 0.8 2.5 2.0 3.1 0.9 1.4 1.0 0.6 6.8 0.9 0.6 2.2 0.9 0.9 0.9 0.6 0.5 0.3 1.2 0.8 6.2 1.2 1.3 1.2 0.9 3.3 3.0 2.9 2.6 1.3

5.4* 8.4* n.a. n.a.n.a. n.a. n.a.n.a. n.a. n.a.n.a. n.a. n.a.n.a. n.a. n.a.n.a. 0.9 2.0 2.4 2.4 2.6 1.7 1.3 1.6 2.7 3.2 3.3 3.7 3.1 2.7 1.4 1.4 1.3 2.4 5.2 2.0 1.9 3.2 1.3 2.4 2.2 2.7 0.9 1.4 0.6 5.9 0.9 1.7 1.5 0.6 2.0 0.8 0.8 0.7 0.5 0.3 1.1 0.7 4.9 1.2 1.6 1.0 2.7 2.6 2.7 2.2 1.2

.* 4.5* 5.0* 5.9* 7.0* n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. . . 2. 0.9 1.0 1.6 1.8 23.1 18.1 1.6 2.0 1.7 2.0 2.0 2.3 1.5 1.7 1.0 1.1 1.3 1.5 2.0 2.5 2.2 2.0 2.6 2.9 2.3 2.9 1.7 2.2 1.9 2.2 1.1 1.3 n.a. 1.4 1.0 1.2 1.7 2.0 3.1 4.1 1.3 1.6 1.2 1.5 . n.a. 3.0 n.a. 1.3 n.a. 2.0 2.1 2.1 1.8 2.2 4.3 5.0 0.8 0.9 5.2 6.2 1.5 1.6 1.4 1.5 0.7 0.7 0.7 0.8 0.7 0.7 0.3 0.3 1.0 1.1 3.6 4.2 1.0 1.1 1.4 1.5 0.9 1.0 1.8 2.1 2.2 2.4 2.0 2.4 1.8 2.0 1.1 1.1

(11.0) (5.8) (5.8) (5.7) (5.7) 15.5 10.9 12.6 12.6 17.1 19.4 13.6 21.8 34.3 17.7 12.8 16.6 24.2 24.4 26.7 32.1 24.5 19.4 17.9 12.4 28.1 10.4 13.5 26.3 11.8 n.a. n.a. n.a. n.a. n.a. n.a. 8.7 8.6 9.8 1.8 3.3 7.9 4.9 7.9 1.9 8.8 5.4 2.6 8.0 8.5 8.9 0.7 7.9 9.2 7.2 9.0

9 of23 150,625 228,923 105,348 105,932 49,003 79,697 10,840 34,268 37,943 33,977 45,912 10,693 10,729 16,641 12,021 14,007 15,072 16,854 19,278 25,214 32,312 62,413 52,565 1,616 1,854 2,356 2,125 2,366 3,136 3,758 1,692 5,326 3,939 5,288 1,062 2,502 1,408 3,403 2,681 2,716 2,443 2,916 2,856 3,151 9,609 4,147 8,170 8,919 7,630 5,231 6,399 8,641 8,641 9,389

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 46.4 51.87 22.2 192.30 148.88 USD SEK USD GRMNUS ELUXB SS WHR US 39.90 12.60 20.85 ElectroluxAb-Ser B Ltd Garmin TWD TWD Whirlpool Corp TWD 1527 TT Rest of the world - Listed household appliances company 1604 TT 9911 TT Weighted Average Simple Average Basso Industry Corp Taiwan Sakura Corp Sampo Corp See the last page for Page disclaimer 2 31.0 26.4 5.59 7.00 USD 1.60 5.71 ZAGGUS 1,847.00 EUR 29.65 294.00 7.96 * excluded from calculation SV GRVG 0.76 EUR Source: Bloomberg, Guotai Junan International. EUR ILs Weighted Average 13.84 ELC IM EUR Simple Average BIGFP GBp ECP IT Zagg Inc 162.00 USD EIN3 GR EUR 107.00Gorenje Velenje 3,629.00 SPRP PZ SKUL USElectra Consumer Products 19 EUR EM IM Einhell Germany Ag-Vorzug GBp SABIM Bigben Interactive ILs PLN 7.16 Elica Spa AGALN Sprue Aegis Plc 9.40 AMC PW ELCO IT 5.93 Skullcandy Inc 49.95 58.00 Aga Rangemaster Group Plc Emak Spa USD 614.50 Sabaf Spa TRY 30.91 HEARUS Amica Wronki Sa TRY USD 50.45 DKK DLC Delclima TI VESBE NCUS TI VESTL GBp Elco Ltd 0.85 30.11 BODC 10.65 Vestel BeyazEsya Sanayi Ve USD VTC LN Corp Beach Turtle USD Vestel Elektronik Sanayi IRBT US 2,520.00 UEICUS A 53.68 Industries-Cl Nacco USD BRL EUR Bang &Olufsen 4.00 15.81 A/S 59.75 12.10 IM SODA US Vitec Group Plc/The BMTO4 BZ IND IM CHF Inc Electronics Universal USD Sodastream International Ltd METN SW EUR Irobot Corp BRL EUR TRY HELE US 49.64 Brasmotor Sa-Pref EUR IM DLG 102.03 WHRL4 BZ FP SK Metall Zug Ag-Shs B-Reg ARCLKTI Indesit Co Spa 1.50 Tomtom TOM2 SEK Helen Of Troy Ltd USD Whirlpool Sa-Pref HUSQBsS De'Longhi Spa HAR US Arcelik As Seb Sa Husqvarna Ab-B Shs NA Harman International EUR 6.32

355.7* 134.2* 19.3 34.0 15.2 32.5 68.8 14.8 19.9 13.4 14.6 31.8 50.6 84.0 16.6 14.5 11.3 11.9 15.8 35.2 11.6 53.8 72.2 27.1 12.0 19.1 31.1 n.a. n.a. 89.0 n.a. 19.6 n.a. 33.4 n.a. 13.9 n.a. n.a. n.a. n.a. n.a. 72.4 n.a. 8.8 6.9 9.1 7.5 6.4 9.1 9.2

11.2 21.3 16.1 26.9 15.1 30.5 23.4 20.1 18.3 11.7 15.9 18.5 30.7 18.8 16.9 13.0 15.9 16.5 11.1 13.0 13.3 18.3 20.0 10.4 16.6 38.3 16.9 17.5 12.9 20.3 10.5 15.2 ..na n.a. n.a. n.a. n.a. n.a. n.a. ..na n.a. n.a. n.a. n.a. n.a. n.a. 9.5

10.7 18.3 14.7 20.9 14.3 18.3 22.0 12.2 15.4 10.3 13.7 14.7 19.8 13.8 16.3 11.0 13.4 15.7 13.3 11.8 15.1 16.6 13.3 11.0 10.9 14.7 23.7 10.0 17.5 10.8 12.7 16.7 13.1 11.2 n.a. n.a. 8.3 8.1 8.4

194.7* 25.9 10.0 13.0 14.5 13.4 20.1 11.2 13.6 12.3 12.3 15.2 11.9 15.8 10.1 15.9 18.5 11.7 22.3 14.2 11.0 10.9 18.8 15.6 11.6 11.6 11.7 n.a. n.a. n.a. n.a. 9.2 8.3 9.0 6.7 8.4 7.5 7.2 7.2

2.8 2.0 2.8 2.0

n.a. 1.9 1.4 2.3 2.8 1.9 2.8 2.3 1.5 2.6 1.6 1.9 2.6 3.5 2.0 2.2 2.6 4.3 4.0 2.8 2.4 2.2 1.5 0.9 1.4 0.4 0.8 0.7 0.9 0.9 8.1 1.5 0.9 0.8 1.3 1.7 0.9 1.2 3.1 1.6 1.3

n.a. n.a.n.a. n.a. n.a.n.a. n.a. n.a.n.a. n.a. n.a.n.a. n.a. n.a.n.a. n.a. n.a.n.a. n.a. n.a.n.a. n.a. n.a.n.a. n.a. n.a.n.a. n.a. n.a.n.a. n.a. n.a.n.a. 1.6 2.2 2.6 1.7 1.5 2.2 1.5 1.7 3.2 1.8 1.9 2.4 4.0 3.9 2.9 1.9 2.6 2.0 0.8 2.6 1.9 0.4 0.7 0.8 0.8 1.4 0.9 0.8 1.3 1.6 0.8 2.6

n.a. n.a. n.a. 1.5 . 1.3 1.4 1.8 2.0 n.a. 2.4 n.a. 1.5 1.3 1.4 2.1 2.0 1.5 1.5 2.5 2.8 1.5 1.6 1.6 1.8 2.0 2.2 2.9 3.5 2.9 3.3 2.6 2.8 15.1 13.5 2.1 2.4 2.2 2.2 n.a. 0.9 . . 1. 14.6 10.0 2.2 2.6 1.6 1.7 0.4 0.4 0.6 0.7 0.7 0.8 0.7 0.8 1.1 1.3 0.8 0.8 n.a. 0.7 1.2 1.3 1.3 1.4 0.8 0.8 2.5 2.5 1.4 1.7

(1.8) (1.8) 11.5 11.0 10.8 17.8 15.9 12.3 13.4 13.7 16.8 15.3 18.3 15.7 28.0 10.5 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 9.9 7.1 5.0 8.8 6.7 8.0 2.3 4.3 2.2 4.4 4.4 6.5 6.4 5.0

0 of23 11,992 13,588 11,900 18,899 22,810 27,343 29,917 31,572 55,116 65,171 77,538 91,288 1,325 1,676 1,104 1,686 1,703 1,405 1,226 1,551 1,943 2,204 2,108 5,653 2,312 6,662 3,000 3,313 3,422 6,249 4,945 7,226 7,705 9,391 1,512 1,460 1,752 851 929 999

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 Administrative expenses Selling&distribution expenses gains Otherincome& Gross Profit Costofsales Turnover (HK$ m) Yrend 31March Financial Statements and Ratios See the last page for Page disclaimer 2 Book valuepershare(HK$) MI's equity Shareholders’ Equity capital share ordinary Total Exchange reserve reserve Total Share capital Net assets Net current assets liabilities Total Liabilities Non-current Total Others Bank borrowings Current liabilities Others Bank borrowings Financial instruments Tax liabilities Account payables assets Total assets Current Others Cash &Equivalents Receivables &prepayments Investments Inventories assets Non-Current Others forsaleinvestment Available Interests inassociates&JVs Prepaid leases Invest properties PPE (HK$ m) Yrend 31March Basic EPS Shareholders' profit Non-controlling shareholders Net profit Tax PBT Associates & JVs Finance costs Operating profit

(30,418) (30,418) (1,388) (1,388) (4,554) 10,236 10,236 18,827 17,678 29,063 24,633 16,036 37,824 2013A 2013A 2013A 2013A 9,969 9,969 9,969 1,120 8,569 6,955 1,149 4,412 5,581 7,387 2,301 5,648 4,430 3.743 3,068 0.549 1,501 1,594 1,926 2,069 7,406 (332) (332) (133) (93) (93) (10) 225 288 623 369 305 232 445 605 267 280 924 10 25 11

Income Statement Statement Income Balance Sheet Balance Sheet (31,851) (31,851) (1,645) (1,645) (4,925) 10,822 10,822 10,822 11,348 20,796 19,501 32,144 26,180 16,107 39,480 2014A 2014A 2014A 1,112 1,112 9,427 6,679 1,295 5,209 5,156 8,899 1,572 3,023 4,844 5,964 4,436 0.446 1,254 1,433 1,700 1,883 7,629 4.040 (179) (179) (267) (163) (20) (20) 824 526 283 748 547 232 634 297 691 457 10 73 5

(35,284) (35,284) (1,813) (1,813) (5,439) 12,712 12,712 12,712 11,317 14,955 22,667 21,116 37,623 29,834 18,748 43,685 2015F 2015F 2015F 2,243 2,243 1,112 8,719 1,551 5,640 5,897 9,323 1,791 3,097 6,198 7,788 6,498 0.465 1,316 1,645 1,869 2,048 8,401 5.283 (329) (329) (224) (179) 899 283 896 655 255 388 350 470 10 73 0 0 0

(38,813) (38,813) (1,995) (1,995) (5,990) 13,428 13,428 13,428 12,033 15,798 25,856 24,149 10,922 41,654 33,502 18,840 48,072 2016F 2016F 2016F 2,370 2,370 1,112 9,353 1,707 6,451 6,490 2,012 7,309 5,341 8,152 6,831 0.506 1,431 1,789 2,105 2,303 1,029 9,259 5.580 (358) (358) (316) (198) 283 986 721 287 406 350 482 10 73 0 0 0

(42,644) (42,644) (2,193) (2,193) (6,590) 14,263 14,263 14,263 12,868 16,780 10,228 27,797 25,921 11,544 44,578 36,148 21,658 10,205 52,850 1 of23 2017F 2017F 2017F 2,517 2,517 1,112 1,877 1,084 6,924 7,135 2,171 5,617 6,703 8,429 5.927 7,082 0.560 1,586 1,983 2,333 2,548 1,126 (397) (397) (350) (215) 283 793 318 420 350 495 73 10 0 0 0

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 Operating Cash Flow Incometaxpaid & Others ChangeinWC WC Beforechangein Finance costs Depreciation&amortisation Profitbeforetaxation (HK$ m) Yrend 31March See the last page for Page disclaimer 2 Source: the Company, Guotai Junan International. Debt/equity ratio (%) Net gearing Interest cover (x) (x) ratio Current & Solvency: Liquidity Cash conversion cycle days A/C payable A/C receivabledays Inventory days Operating (days): Payout ratio (%) ROA (%) ROE (%) (%) Net profitmargin (%) EBITDA margin EBIT margin (%) (%) margin Gross Profitability: EPS Growth Net ProfitGrowth PBT Growth Growth Profit Gross Turnover Growth (%): Growth (HK$ m) Yrend 31March Cash at endof period changes EffectofFXrate Netcashincrease/(decrease) year Cashatbeginning Financing Cash Flow Other financing activities Dividend paid Share insurance Netloanrepayments Flow Cash Investing Other investing activities Investments PurchaseofPPE ProceedsondisposalofPPE Net interestincome 56.7 (1,111) (1,111) (2,603) 2013A 2013A 2013A 2013A 117.1 138.8 2,164 1,241 1,522 2,488 1,926 (117) (117) (177) (613) (524) (409) 2,301 2,301 37.1 13.0 74.7 53.0 29.1 15.9 19.6 15.5 19.9 22.2 24.3 34.4 311 104 490 133 5.9 4.0 5.2 4.4 (3) (3) 33 13 11

Cash Flow Statement Statement Cash Flow Key Financial Ratios Ratios Financial Key Net interestincome 50.3 (3,524) (3,524) (1,939) 2014A 2014A 2014A 2014A (18.7) (18.7) (16.5) (11.7) 2,301 4,507 2,548 2,414 1,700 115.4 148.6 (290) (290) (489) (638) (971) (455) 3,023 3,023 24.8 15.5 93.3 60.1 38.2 11.6 19.3 693 170 163 407 4.1 3.2 4.6 3.6 3.0 4.4 29 29 24 0

Net interestincome 43.8 (1,300) (1,300) (2,976) 2015F 2015F 2015F 2015F 3,023 2,346 1,869 108.5 145.6 (462) (462) (873) (244) 3,097 3,097 26.3 14.7 94.2 57.1 40.0 10.0 19.2 10.1 10.7 485 850 463 116 975 672 179 436 3.8 3.0 4.1 3.1 4.1 4.9 9.9 74 97 0 0

45.6 Net cash (1,143) (1,143) (1,200) 2016F 2016F 2016F 2016F 4,213 3,097 4,885 2,488 2,589 2,105 101.8 142.7 (282) (282) (192) 7,309 7,309 30.3 95.2 54.3 40.0 19.3 12.6 10.2 10.0 470 658 198 533 0.0 3.6 9.3 3.0 4.1 3.0 8.8 8.8 94 57 0 0 0 0

47.2 (1,692) (1,692) (1,500) (1,200) (3,234) 2 of23 2017F 2017F 2017F 2017F 139.8 7,309 2,919 2,333 (390) (390) (300) (600) (285) 5,617 5,617 14.2 21.7 95.2 96.1 51.5 40.0 19.3 10.8 10.8 10.8 10.2 408 717 215 582 0.0 3.7 9.7 3.0 4.2 3.2 9.9 82 0 0 0 0

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014 18months Time Horizon:6to SengIndex Hong KongHang The Benchmark: Definition Rating Company See the last page for Page disclaimer 2 The in theirassociates financial and do nothaveany Analysts (2) The theirassociates and do notserveasan Analysts (1) OF DISCLOSURE INTERESTS 18months Time Horizon:6to SengIndex Hong KongHang The Benchmark: Definition Sector Rating (4) Guotai Junan and its group companies have not had investment havenothad itsgroupcompanies and GuotaiJunan (4) Paper Hold Chenming ExceptforShandong (3) estimates and forecasts derived from the assumptions ofthefutu estimates andforecastsderivedfromtheassumptions accuracy completenessoftheinformationand the and not guarantee ofthein the accuracy toensure made hasbeen best effort Though orinvestment decisionsmade bybe contrary toopinions the executiv persons, dealersandotherprofessional be contrary inthisreportmayAny to differor opinionsexpressed investproprietarily). or underwriter an This ResearchReportdoesnotconstitute DISCLAIMER Website: www.gtja.com.hk Tel.: (852) 2509-9118 Fax: (852) 2509-7793 27/F., HongKong. Millennium Plaza,181Queen’s RoadCentral, Block,Grand Low Guotai JunanSecurities(HongK © 2014 subject Guotai Junan and its group compani subject GuotaiJunananditsgroup jurisdiction publication,avail in any where suchdistribution, fordistribut intended at,or isnot directed This ResearchReport where necessaryand ownfinancial consulttheir mutable situation,souncertaintymay contain.Investors research reports, including investmentbanking,serv research reports, co itsgroup Junanand Guotai Junan"). Limited ("Guotai (Hong Kong) Sell Relative Performance <-15%; <-15%; RelativePerformance is-5%to-15%; RelativePerformance is-5%to5%; RelativePerformance Sell is5%to15%; RelativePerformance Reduce Neutral Accumulate Relative Buy Rating Performance>15%; Neutral Relative Performance is -5% to 5%; is-5%to5%; RelativePerformance Relative Underperform Neutral Relative Outperform Performance<-5%; Rating Performance>5%; capitalization ofthe issuerment U-Tonand itsgroupcompani GuotaiJunan HoldingsLimited(06168), within the preceding 12 months. 12months. within thepreceding

or the fundamental outlook of the company or sector is unfavorable. outlookofthecompany sectorisunfavorable. or or thefundamental outlookofthecompany sectorisunfavorable. or or thefundamental outlookofthecompany sectorisneutral. or or thefundamental outlookofthecompany sectorisfavorable. or or thefundamental outlookofthecompany sectorisfavorable. or or thefundamental Definition Definition or the fundamental outlookofthesectorisunfavorable. or thefundamental outlookofthesectorisneutral. or thefundamental outlookofthesectorisfavorable. or thefundamental Definition Definition ioned in this Research Report. ioned inthisResearchReport. ong) Limited. ong) All RightsReserved. es to any registration or licensingr es toany or registration invitation or offer to acquire, purchase or invitationacquire, purchase orofferto advisers prior to any investmentdecision.advisers priortoany es of Guotai Junan group of companies. groupofcompanies. es ofGuotaiJunan ings Limited-H shares (01812), China All (01812),China ings Limited-Hshares should understand objectivesandits andcomprehendtheinvestment rel officer of the issuer mentioned in this Research Report. officer thisResearchReport. oftheissuermentionedin ability or use would be contrary to applicable law regulation or toapplicable contrary would be use ability or se aaeetadivsmn akn ruso utiJnn investmentbankinggroupsofGuotaiJunan. asset managementand ion to or use by, any person or entity who isacitizenorre entityperson or any oruseby, ion to opinions orinvestment strategiesexpressedorally or inwriopinions ices and etc. (for example, t example, ices andetc.(for formation and data containedinthis data and formation terests in relation to the issuer mentionedinthisResearch terests inrelationtothe re political andeconomicre conditions with unpredicta inherently banking relationships with the relationshipswith banking

data herein. This Research Report may contain someforward-l ResearchReport maydata herein.This contain mpanies may do business that relates to companiescoveredin businessthatrelatesto may do mpanies equirement within suchjurisdiction.equirement es do not hold equal to or more than 1% of the market ofthemarket 1% es donotholdequaltoormorethan subscribe forsecuriti Any expressedinthisreportma opinions Access (Holdings)Limited(00633)andChina he placing agent, lead manager, spo placing agent,leadmanager, he issuer mentioned in this Resear mentionedinthis issuer Research Report, GuotaiJ ResearchReport, es byGuotai Juna sident of or located or located sident of tten form by sales tten formby or which would which or Report. Report. n Securities unan does does unan ated risks, ch Report ch Report y differ or y or differ ble and ble and 3 of23 ooking nsor,

Company Report Skyworth Digital Holdings Ltd. 创维数码 (00751 HK) 30 September 2014