1 1

2016/17 Annual Results

Updated by 10 Oct 2017

Forward Looking Statement

This presentation and subsequent discussion may contain

certain forward-looking statements with respect to the

financial condition, results of operations and businesses of

Skyworth. These forward-looking statements represent

Skyworth’s expectations or beliefs concerning future

events and involve known and unknown risks and

uncertainties which could cause actual results,

performance or events to differ materially from those

expressed or implied in such statements.

2

Year ended 31 Mar (HK$ million) 2016/17 2015/16 Change

Revenue 42,845 42,695 0.4%

Gross profit 8,567 9,363 (8.5%)

Gross profit margin 20.0% 21.9% (1.9pp)

Operating profit (EBIT) 2,339 3,389 (31.0%)

Operating profit margin 5.5% 7.9% (2.4pp)

Profit for the year 1,529 2,527 (39.5%)

Net profit margin 3.6% 5.9% (2.3pp)

Attributable to non-controlling interests 219 357 (38.7%)

Attributable to owners of the Company 1,310 2,170 (39.6%)

(HK$ cents)

Basic EPS 44.64 75.89 (41.2%)

Diluted EPS 44.14 74.88 (41.1%)

Dividend per share 14.6 24.0 (39.2%)

Dividend payout (%) 33.6% 32.4% 1.2pp

3

Operating Expenses

S&D: Raise basic salary and benefits for frontline staff as incentives to mitigate brain drain, input more A&P for OLED TV promotion and secure high-end market positioning. Declined ASP limited revenue growth.

G&A: R&D expenses (3.4% of sales) increased in investing in overseas acquisitions, application software, smart TV users data collection and analysis, developing high-end, smart, energy-saving and health-caring products to sustain market leading position, cope with the consumption upgrade trend as well as to cultivate smart home era.

Year ended 31 Mar (HK$ million)

(% to sales) 2016/17 2015/16 Change

1H

2016/17

Selling and distribution 11.9% 11.1% 0.8pp 11.7%

General and administration 6.7% 6.0% 0.7pp 6.9%

Total expense rate 18.6% 17.1% 1.5pp 18.6%

4

Higher Inventories to Cope with Rising Panel Cost and Tight Supply

(HK$ million) Mar 17 Mar 16 Change Sep 16 Change

Inventories

- Total

- Finished goods

6,666

3,878

5,494

3,509

21.3%

10.5%

6,075

3,676

9.7%

5.5%

Liquid bills receivable

- On hand - Discounted to banks#

6,057

420

6,945

300

(12.8%)

40.0%

4,552

463

33.1%

(9.3%)

(cash equivalent) 6,477 7,245 (10.6%) 5,015 29.2%

Pledged bank deposits 290 493 (41.2%) 595 (51.3%)

Cash and bank balances 4,336 4,621 (6.2%) 4,004 8.3%

Trade receivables 5,671 5,290 7.2% 6,537 (13.2%)

5

Net Cash

(HK$ million) Mar 17 Mar 16 Change Sep 16 Change

Borrowings

1. Financial liabilities

- for bills discounted#

2. Other loans

- Current

- Non-current

420

7,572

4,979

3,013

300

7,805

4,950

3,155

40.0%

(3.0%)

(0.6%)

(4.5%)

463

6,484

4,229

2,718

(9.3%)

16.8%

17.7%

10.9%

Total borrowings (1+2) 7,992 8,105 (1.4%) 6,947 15.0%

Trade payables 4,847 5,027 (3.6%) 5,569 (13.0%)

Bills payable 5,409 5,195 4.1% 5,194 4.1%

Total trade & bills payable 10,256 10,222 0.3% 10,763 (4.7%)

Net assets 16,813 16,700 0.7% 16,991 (1.0%)

6

Mar 17 Mar 16 Change Sep 16

Return on equity holders of the Company 8.5% 14.4% (5.9pp) 10.9%

Current ratio (times) 1.4 1.5 (6.7%) 1.5

AR turnover (days) - excluded bills receivables - with discounted bills - without discounted bills

47

105 102

45

108 106

4.4%

(2.8%) (3.8%)

53

109 105

Inventory Turnover (days) - Total - Raw materials - Finished goods

65 25 40

55 19 35

18.2% 31.6% 14.3%

67 26 41

AP Turnover (included Bills Payables) (days)

110

106

3.8%

121

Net Debt/Equity Ratio - Exclude discounted bills and foreign exchange hedging arrangements

Net Cash

Book value per share (HK dollars) 5.53 5.68 (2.6%) 5.68

7

China TV

48.3% (56.5%)

Overseas TV

20.9% (14.0%)

HK$42.8bn

0.4%

Digital Set-top box and LCD

Modules 15.3% (15.7%)

Group Revenue Breakdown by Products 2016/17 (2015/16)

* White Appliances are mainly refrigerators; washing machines and tablet PC

** Others included rental collection, property development, financial services, air conditioner, security systems, lighting products and other consumer electronic products

Others 10.6% (8.3%)**

White Appliances

4.9% (5.5%) *

8

Gross Profit Margins

China TV: Margin declined due to rising cost of panel and other raw materials

Overseas TV: Growth driver, improving margin by scale, product mix and self-

owned brands revenue

Digital STB (000810.SZ): China margin declined due to mix shift and rising

cost of raw materials. Stronger high-end overseas market after acquisition.

White Appliances: Higher cost of raw materials weakened margins

Group

2016/17 2015/16 Change 1H2016/17

20.0% 21.9% 1.9pp 20.6%

China Market Overall 22.3% 23.9% 1.6pp 24.2%

Overseas Market Overall 14.5% 13.2% 1.3pp 12.4%

TV (China) 23.1% 24.8% 1.7pp 24.5%

(Overseas) 11.8% 10.1% 1.7pp 9.8%

Set-top box & LCD Modules

(China) 14.4% 21.1% 6.7pp 17.6%

(Overseas) 25.5% 22.6% 2.9pp 26.7%

White Appliances (refrigerator and washing machine)

20.0% 27.6% 7.6pp 22.6%

9

China TV

47.0% (63.1%)

Overseas TV

21.2% (4.8%)

HK$2,019m

37.2%

Digital Set-top box and LCD

Module 23.8% (23.8%)

Others -0.2% (-3.0%)

White Appliances

- 1.7% (5.9%)

Segmental Profit Breakdown 2016/17 (2015/16) Diversification of Business to Sustain Growth

Property Holding

9.9%(5.4%)

10

Others

Property Holding

White Appliances

Digital STB & LCD Modules

Overseas TV

China TV

Total

-96

174

190

765

154

2,028

3,215

- 5 (+94.8%)

201 (+15.5%)

- 35 (-118.4%)

481 (- 37.1%)

428(+177.9%)

949 (-53.2%)

2,019(-37.2%)

(HK$m)

2016/17

2015/16

11

China TV: Higher operating expenses to avoid further market shares loss

Overseas TV: Significant growth in scale, segmental profit margin 4.8%

White Appliances: Included depreciation cost of $78m

Segmental Profit by Operating Segments

2016/17 TV Sales Volume

In China 4K Smart TV Reached 46% vs 28%

Smart TV 85% vs 70% YoY

(‘000 units)

2016/17 (Apr 16 –

Mar 17)

2015/16 (Apr 15 –

Mar 16)

Change

%

China TV comprises: 9,339 10,036 (7%)

- Smart TV (4K) 4,291.2 2,793.8 54%

- Smart TV (non-4K) 3,632.1 4,249.3 (15%)

- Other Flat TV 1,415.2 2,992.8 (53%)

Overseas TV 6,941 4,410 57%

Total 16,280 14,446 13%

12

2017/18 TV Sales Volume Target

4K TV will reach 55% vs 46% YoY

4K TV reached 59% in Sep 17

(’000 units)

2017/18 (Apr – Sep 17)

2016/17 (Apr – Sep 16)

Change%

2017/18

Target

YoY Growth

Target %

China TV comprises: 3,499 4,416 (21%) 10,000 7%

- 4K 1,880.2 1,858.0 1% 5,500 28%

- Non-4K 1,618.6 2,557.6 (37%) 4,500 (11%)

Overseas TV 3,855 3,803 1% 9,000 30%

Total 7,354 8,219 (11%) 19,000 17%

Targeted volume achieved 2017/18 Apr-Sep: China TV 35% Overseas TV 43% Overall 39%

Maintained at top tier high-end TV market share in China

13

68%

25%7%

49%33%

18%

0%

20%

40%

60%

80%

100%

Smart TV (4K) Smart TV (Non 4K) Others

2016/17 2015/16

GP Margin 2016/17 2015/16 1H2016/17

Blended TV 23.1% 24.8% 24.5%

Smart TV (4K) 28.3% 31.9% 29.7%

Smart TV (Non 4K) 12.7% 19.2% 15.0%

Others 10.3% 15.9% 12.0%

% of China TV Sales

4K Smart TV 46% sales volume in 2016/17, 55% in May 2017 4K OLED HDR TV is the latest product and put under Smart TV (4K) category

China TV Revenue Mix Upgrading to High-End Pushed Star Models to Offset Pressure on GP Margin

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ASP 2016/17 2015/16 1H2016/17

Blended TV 2,217 2,404 2,123

Smart TV (4K) 3,261 4,197 3,324

Smart TV (Non 4K) 1,424 1,863 1,359

Others 1,084 1,499 1,012

China TV Blended ASP Raise Price on New Models and Larger Size Proportion

Display Technology Upgrade Era CRT LCD OLED

15

-

500

1,000

1,500

2,000

2,500

3,000ASP (HK$, net of tax and rebate)

Other Electronic

Shops cover 2nd to 3rd tier cities 35.8%

(33.0%)

Large Scale Chain Stores

22.5% (26.8%)Hypermarket 4.2% (4.9%)

Online 23.6% (20.0%)

Others4.5% (4.1%)

Skyworth Community

Stores in major cities

7.8% (10.6%)

Commercial 1.6 (0.6%)

One layer from our 36 branches, 208 sales offices to 20,000+ retail customers

Other electronic shops and Skyworth community stores highest profitability

Large scale chain stores sustains market shares and brand building

China TV Revenue Breakdown 2016/17 (2015/16)

Nationwide Well Built Distribution Channels Strong in Rural

Ongoing Reforms to Enhance Customers Loyalty and Suit

Diversified Consumer Behaviors

16

17

O2O Community Stores Synergistic Partner with TMALL Around 5,000 Stores located in Major to 3rd and 4th Tier Cities

Products + Experience + Community Service

18

Strategic Retail Customers and Flagship Stores in 3rd 4th Tier Cities

2017E Global 32% panel and 63% TV will be produced in China

1Q17 Panel price started to stablise, ASP trending up. China TV sales volume 13.8% YoY, demand weaker than expected

2017E China TV sales revenue 5.1%, raise selling price, more high-end mix and consumption demand upgrade

China TV average size 2015 44.5”, 2016 46.5”, 2017E 48.4”

2017E vs 2016: 55” 3pp 65” 2.3pp 32” 2.2pp 39”/40” 4.9pp

Mix 32”15% 39/40”8% 42/43”15% 48/49”12% 50”10% 55”28% 65” 6%

2017E Technology 4K 56% HDR 19%; Ultra-slim, Borderless or Curved design

2016 market shares: Traditional TV brands 67% Internet brands 19% Foreign brands 14% ; 1Q17 Internet brands market shares declined.

Source: AVC (Jan 2017) , Sigmaintell (May 2017)

TV Volume

(m units) 2012 2013 2014 2015 2016 YoY 2017E YoY

Total 44.46 47.79 44.61 46.74 50.89 7.8% 53.01 4.2%

China TV Market

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4K UHD TV (Volume) 4K UHD TV (Revenue)

Rank Brand % Rank Brand %

1 Skyworth 19.2% 1 Hisense 17.9%

2 Hisense 19.0% 2 Skyworth 17.3%

3 TCL 15.4% 3 TCL 12.8%

4 Changhong 10.3% 4 Samsung 11.7%

5 Konka 8.8% 5 Changhong 8.8%

6 Samsung 6.2% 6 Sharp 7.2%

7 Sharp 4.5% 7 Konka 6.7%

8 LeTV 3.5% 8 Sony 4.8%

9 Sony 2.9% 9 LeTV 3.4%

10 Philips 2.0% 10 LG 2.6%

11 LG 1.7% 11 Philips 1.7%

11 Xiaomi 1.7% 12 Xiaomi 1.6%

13 Haier 1.4% 13 Haier 1.2%

14 coocaa 0.7% 14 coocaa 0.5%

15 Whaley 0.6% 15 Whaley 0.4%

Source: AVC April 2017 (1,505 cities; 6,700 retail terminals)

China TV Market Shares 2016 (Domestic Brands 82%)

20

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

Total 3,696 3,270 3,906 4,162 5,019 6,685 6,554

China 2,676 1,953 1,898 2,297 2,876 3,990 4,110

Overseas 1,020 1,317 2,008 1,865 2,143 2,695 2,444

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000(Sales HK$ million)

Digital Set Top Box 創維數字

(000810.SZ Spin-off Listed in Shenzhen A Share Market in Sep 2014)

No.1 in China Operators & Export Market, No. 2 in Global Market

Market Cap HK$12bn by June 2017, Skyworth holds 59.4%

21

China No.1 in cable operator market for 9 years (peers: 银河，同洲); First tier in

telecom IPTV market (peers: Huawei, ZTE); Top 3 in consolidating OTT retail market

After speedy growth in 10 years, China product mix is shifting from cable to IPTV

and OTT boxes with lower margins. Focus to strengthen efficiency and

management, more stringent cost and expenses control

Overseas No.2 market share after Arris, competing with Technicolor, sales in 95

countries and regions. Highlighted markets are Europe and North America high-

end operators, strengthening India, Africa and South America emerging markets

Source : Guideline Research 格蘭研究 (Mar 2017), SNL Kagan (Feb 2017) 22

18% 16%

44%

13%9%

20%14%

45%

13%8%

0%

10%

20%

30%

40%

50%

60%

America Europe Asia Middle East Africa

% overseas sales 2016/17 2015/16

TV – Skyworth brand revenue 18.9%, ramping up to 50% by 2020

TV – Product mix is upgrading to 4K, smart and large size TV

Overseas Revenue Geographical Summary Skyworth Brand Entering Emerging and European Markets

TV Acquired Toshiba TV in ASEAN in early 2016

TV Acquired Sinoprima in Africa in 2014 & METZ in Germany in 2015

Set-top Box Acquired STRONG MEDIA in Europe in Sep 2015

23

24

Skyworth Metz OLED 4K HDR TV into European Market

2016 Acquired Toshiba TV Plant in Indonesia to Expand in ASEAN Countries

Internationalization – Growth Driver

2017 Strategic Partnership with Google to push smart TV in the overseas markets (GoogleTV、 CastTV、Netflix TV)

25

Skyworth & Internet Largest Smart TV Household Entrance with Self TV OS “coocaa”

Large Panel and Opened Platform to Distribute Internet Content and Products at Home

Coocaa (Skyworth holds 72% )

Invested by Tencent in Jun 2017 Given Valuation at RMB$3.9bn

Invested by Baidu iQIY in Sep 2016 Given Valuation at RMB$3bn

Best Hardware + Best Content + Smartest Memberships

Strategic Partners with Synergies to Boost the Numbers of Paid Users,

Subscription Revenue per user, Membership Conversion and Renewal Rate

26

27

Internet TV installed since 2012 24.35m units Penetration in

2017/18 >90%

(Up to 31 August 2017) Conversion Rate

Smart TV Daily Active Users 9.50m 41%

Smart TV Weekly Active Users 11.97m 49%

China Market in 2017E

Smart TV Installed Base 165m units 28%

Smart TV Activated Households > 100m > 300m people

Turn-on TV Ad CPM 50 70 (2018E)

Potential Turn-on TV Ad Market RMB1.3bn RMB2.8bn (2018E)

Content Members 22m (2015) 75m (2016) >100m (2017E) (Only 5% members paid)

Skyworth Smart TV Users in China Additional 8m – 10m Smart TV Households Entrance in 2017

Source: AVC, CITICS (Mar 2017)

28

Advertising (RMB160bn market)

Gaming (RMB100bn market)

Education

E-commerce: Shopping/ Health Care/ Music/ KTV

Travel

Content

Apps Store

Monetisation of Smart TV Users

2017/18 Revenue Target HK$300m

HK$50m in 2015/16 HK$166m in 2016/17

2016/17 Content 63% Ad 28% 2017/18 Content 40% Ad 30%

29

Smart TV Activated

Households

Content Paid

Users

Annual ARPU (RMB)

Potential Content Revenue

(RMB)

Content Revenue

Split to TV Platforms

(RMB)

2015 40m 3% 200 120m 30m

2016 69m 5% 250 684m 171m

2017E 105m 7% 350 2.14bn 535m

2018E 143m 10% 500 6.23bn 1.56bn

Paid Content Market Estimates in China

Source: AVC, CITICS (Mar 2017)

30

Turn On TV Loading Ad

(Static ) 56%

Front Page Block Ad 12%

Others 8%

Turn On TV Content Ad

(Dynamic) 12%

Ad before or during Content

12%

Advertising on Big Panel Revenue Breakdown Coocaa Highest CPM in the Market

31

coocaa Shopping coocaa Sports and Health

Gaming on Big Panel Alliances with Geek Box,

Ministation (Tencent)

32

coocaa Online Education For different age segments

coocaa Travel Abundant demand in domestic

and global travel link up with content on TV

Paid Education Apps

1. 果果乐园 2. 义方快乐学堂 3. 才智小天地 4. 百映生活学苑 5. 乐学名师课堂

Appendices

TV Technology Leader (34 - 36)

Land and Recurrent Rental Income in Shenzhen (37)

Production Capacity and Chain Management (38)

Global OTT TV & Video Revenue Forecasts by Region (39)

16Q1 – 17Q2 China Internet Brands Sales Volume and Market Shares (40)

LCD TV Replacement Demand in China (41)

China Settop Box Product Mix (42)

2016 -2022 Global Settop Box Sales Volume (43)

33

34

Wallpaper OLED TV

TV Technology Leader

AR TV – Gaming and Education Apps

Global

Technology & Industrial Design Standard

35

Globally first OLED 4K HDR TV launched in 2016

Strategic panel supply from LGD and BOE

National Technology Top Award to bring up DTMB as international and industry standard for terrestrial digitalisation

36

New 4colours 4K Ultra Slim LED TV Series

Smart Home

37

Shiyan

Nanshan

Qianhai

Land and Recurrent Rental Income in Shenzhen

Upstream supply chain management

Logistics investments in regional

logistic centers in Chengdu, Jiangxi and Nanjing

Strategic partnerships with LG Display, Innolux and BOE

Investments in panel (LGD 8.5G fab in Guangzhou), module production

Shiyan, Shenzhen 10m units

Guangzhou 6m units

Lishui, Nanjing 2.5m units

Inner Mongolia 1m units

TV Production Capacity 2017/18 (19.5m units )

Downstream inventory and logistics management

Production Capacity and Chain Management

38

39 Source: Digital TV Research (Jul 2016)

40

16Q1 – 17Q2 China Internet Brands Sales Volume and Market Shares

17Q1 Market Shares Decline QoQ Due to

Cash Flow Difficulty, Rising Cost and Shortage of Raw Materials

Source: Sigmaintell (May 2017)

(Unit: K, %)

Urbanisation

New Properties

Demand sustains, given low TV penetration rate,

lower TV price, increasing affordability and new

technology eg. Smart, OLED Urban TV penetration

(1.6 TV /household)

TV Demand

• 75% Replacement • 15% More TV/ household • 10% New TV (properties • and new family) •

Source: AVC Ltd. TV (Jan 2017), Chinese Statistics Yearbook (State Statistics Bureau)

Rural TV penetration

(1.2 TV /household)

Digitalisation

2015 - 20

Middle Class and Consumption Upgrade

LCD TV Replacement Demand in China 66% Penetration at the end of 2016

First Generation LCD started in 2004 > 10 years old

41

42 Source: Guideline Research 格蘭研究 (Mar 2017)

China Settop Box Product Mix 2018 OTT Box 16m units, IPTV Box 45m, Cable Box 16m

OTT Box

IPTV Box

Cable Box

43

296

308 315

321 326

331 334 337

2.70

2.80

2.90

3.00

3.10

3.20

3.30

3.40

2015年 2016年 2017年 2018年 2019年 2020年 2021年 2022年

2016-2022 Global Settop Box Sales Volume

Source: Grand View Research (2016)

(m units）

ir@skyworth.com.hk http://investor.skyworth.com

Vision

To create a globally

prominent

brand of consumer

electronic products