sino hub investor presentation aug 2011

August 2011

Capturing Opportunities in Emerging Mobile Device Markets

Investor Presentation

2Copyright 2011 SinoHub

Safe Harbor Statement

This presentation contains “forward‐looking statements” within the meaning of the “safe‐harbor” provisions

of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks,

uncertainties and other factors that could cause the actual results of the company to differ materially from

the results expressed or implied by such statements, including changes of anticipated sales levels, future

international, national or regional economic and competitive conditions, changes in relationships with

customers, access to capital, difficulties in developing and marketing new products and services, marketing

existing products and services, customer acceptance of existing and new products and services, and other

factors, including those factors described in SinoHub’s Annual Report on Form 10‐K/A filed on May 24, 2011.

Any statements that are not historical facts and that express, or involve discussions, as to expectations, beliefs,

plans, objectives, assumptions or future events or performance (often, but not always, through the use of

words or phrases such as "will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,”

“intends,” “plans,” and “projection”) are not historical facts, may be forward‐looking statements and may

involve estimates and uncertainties. Accordingly, although the company believes that the expectations

reflected in such forward‐looking statements are reasonable, there can be no assurance that such

expectations will prove to be correct. The company undertakes no obligation to update the forward‐looking

information contained in this presentation.

Contents

Company Overview

Complementary Business Lines

ICM

ECSS

Financial Highlights

Growth Strategy


Contents

Company Overview


ICM

ECSS


Growth Strategy


SinoHub – Facilitating the Mobile Device Revolution

Exchange/Ticker: NYSE Amex: SIHI

Market Cap: $20.47 million

Shares Outstanding: 33.45 million

Insider Ownership: Approx. 39% of shares outstanding

2010 Sales: $196.7 million

Headquarters: Shenzhen, PRC

Employees: 1100 (as of June 30, 2011)

Website: www.sinohub.com


* Share data as of Aug 23, 2011

Investment Highlights

Complementary business lines with robust long‐term industry growth catalysts

Strong customer and supplier relationships

Newly launched initiative to develop self‐branded mobile phones for sale in China, the world’s largest mobile phone market

Proprietary platforms and extensive know‐how provide barriers to entry

Established track record of financial and operational performance

World‐class corporate governance, transparency and disclosure practices; top 10 auditor



SinoHub 10‐year Growth & EvolutionMarkets

Served

Busine

ss Seg

men

ts2000

CHINACHINA

2005 2010

SCMSCM

Supply Chain Management

ECPECP

Electronic Component Purchasing

ICMICM

Integrated Contract Manufacturing

WorldwideWorldwide

Complementary Business Lines in Fast Growing Markets


Electronic component brokerage and supply chain management services (SCM)

SCM services include delivery, customs handling (import/export) and warehousing for electronic component suppliers, design houses and electronics product manufacturers

Proprietary web‐based SCM application to track customer orders and manage business with SinoHub

77.4% of 2Q 2011 Sales

Production and sales of private label, custom design mobile devices

Unique “joint design” process leverages customers' knowledge of local markets and SinoHub's relationships with over twenty top‐tier Chinese design houses.

Customers include mobile phone distributors and operators located around the world

22.6% of 2Q 2011 sales

Newly launched initiative to develop self‐branded line of mobile phones Focus on China – world’s largest mobile phone marketMobile phones to be sold under the Topolo™ brand nameLong‐term opportunity, but still in development phase

Branded Mobile PhonesWhite Box Phones

ICM ECSS

Strategic Adjustments to Drive Shareholder Value

Objective : Shifting focus of business model to growing opportunity in white‐box mobile device sales worldwide

Strategic Initiatives: 2011

ECSS: Reducing exposure to electronic component trading and focusing on growing electronic component brokerage

Long‐term Benefits:

More efficient use of cash and lower capital requirements

Increased resources to focus on development of ICM segment and establish TopoloTM brand mobile phones

Near Term Challenges:

Decrease in ECSS revenue because only commissions on components brokered by SinoHub will be recorded as revenue instead of the price of the components



Strong Customer Relationships

Vendors, Distributors

DesignHouses

Distributors,Operators

State of the Art Manufacturing Facility

• Approximately 10,000 m² overall

• 8 surface mount (SMT) lines and 8 assembly lines

• 900 employees

• 300,000 mobile phones and 900,000 PCBAs(motherboards) per month

• Standardized operational flow

• ISO certified

• Complete control over product quality and delivery time



Synergistic Service Network ‐ Capability

Hong Kong

China

Shenzhen

Shanghai

Beijing

BeijingRegional Office & Support Center

ShanghaiRegional Service Center

Hong Kong Warehouse (5,200 square meters)

2 .5 – 3 million phones

Per month

Shenzhen1) Headquarters

Warehouse

2) ICM Factory

(300K phones/month)

(900K PCBA boards/month)

3) Customs Office

4) ICM Sales Office


Experienced Management Team

Henry T. Cochran – CEO and Chairman of the Board

30+ years founding and managing companies

Former CEO and president – Content Integrity & Advanced Visual Systems

Former VP – Sybase

Strong MIS background

Lei Xia – President

15 years in electronics industry in China

Significant senior management experience in the Chinese electronics industry

First sales manager of Arrow Electronics’ Shanghai office

Founded RGL Beijing (high‐end distributor and solution provider) and NEFAB China (manufacturer and packaging solution provider)

Willa Li – CFO (De Hai Li)

Deep experience working with Chinese banks

Significant knowledge of electronic components industry

Prior CFO of Shenzhen Excellence Investment Development Co. where he helped to raise RMB 120 million

Prior CFO of Hong Kong B&D Engine Company


World‐Class Corporate Governance

* Chairman, Audit Committee

BOARD OF DIRECTORSAudit

Committee

Harry Cochran – Chairman of the Board and CEO

Lei Xia – President

Ted Shen – Senior Associate, Austen Morris Associates, ShanghaiExperience in finance, investment management, manufacturing and sales

Daniel Lui – CEO, Porcheers ConsultantsFormer CFO of U.S. listed Chinese company, significant experience with internal controls, MBA

Jeff He – Director. Commercial Operations, China, Saint‐Gobain Abrasives, Shanghai Extensive business experience in the USA and China; M&A experience; background in Finance; MBA

*

EXECUTIV

EINDEPEN

DEN

T

Contents

Company Overview


ICM

ECSS


Growth Strategy



Growth in White‐box Phones Continues

0

100

200

300

400

500

600

700

2009 2010E 2011E

Sources: JP Morgan & Nokia, 2010

Worldwide White‐box Phones Sales

37%20%


White‐box Market ‐ Product Cycle

Technology changes every2‐3 months

Marketing life‐time for a new design is

~ 3 months

Average volume for new design is

200‐300K

12

3


Distribution Channels for White‐box phones

local brand

TianyuTianyu Sells China’s #1 White‐box Brand:

K‐Touch

SinoHub ICM Focus

100,000 units/month

Thousands of small companies

#1#1 #2#2

#3#3 #4#4

Local Chinese Brand NamesLocal Chinese Brand Names Local Chinese Non‐Brand NamesLocal Chinese

Non‐Brand Names

OverseasOverseas“Local Kings” in Developing Countries

“Local Kings” in Developing Countries

Non‐brand Names


Who is Producing White‐box Phones?

Local ChineseBrand Names

Local Chinese Integrators

Two Options

Tianyu

Tianyu Produces China’s #1 Brand:

K‐Touch

>1000 small companies


“Local Kings” – Problems with Existing Suppliers

With Local Chinese Brand Names:

High Minimum Order Quantities

Long Lead‐times

With Local Chinese Integrators:

Quality Control

Financial Resources


ICM Competitive Advantage – “Joint‐Design”

* If motherboard modifications are required, SinoHub works with design house for R&D costs

Customer chooses reference image

design & specs from SinoHub’s online

platform

Customer contacted by SinoHub to work through specific design

features*

Market‐Specific Needs

SinoHub buys motherboards from design

house

SinoHub produces

motherboards in‐house

Customer Choice

A

B

Order & deposit

processed, phones produced & shipped

Moulds, Production, & Testing

SinoHub Model


Benefits of Joint‐Design Model

Flexibility of Design

Competitive features for local markets

Flexible Minimum Order Quantity

Ability to profitably deliver low‐volume orders which eliminates inventory risk

Reliability

Consistent quality

Financial Strength

Contents

Company Overview


ICM

ECSS


Growth Strategy


ECSS ‐ Electronic Component Sales & Services


Electronic Component Trading

Electronic Component Brokerage

How do we achieve the shift?

2011 Strategic Initiative

Online platform to support brokerage business

Utilize solid supply chain and efficient warehouse in Hong Kong as volume increases

10+ years’ experience in the electronics industry with good client database

Contents

Company Overview


ICM

ECSS


Growth Strategy



Consistent Track Record of Profitable Growth

2011 Guidance at $195MM Revenue


Financial Highlights – Annual Figures

YOY Growth

Revenue 51% 176% 62% 53%

Gross profit 68% 142% 38% 69%

Net income 192% 143% 46% 54%

Audited, USD millions, except EPS 2007 2008 2009 2010

Revenue $28.8 $79.5 $128.4 $196.7

Gross profit $6.7 $16.2 $22.4 $37.8

Net income $3.5 $8.5 $12.4 $19.1

Earnings per share – dilutedNumber of shares (millions) – diluted

$0.2215.9

$0.421.5

$0.4825.7

$0.6728.4

*2010 Q4 unaudited


Financial Highlights (Q2 2011)*

Audited, USD millions, except EPS Q2 2011 Q2 2010 YOY

Revenue $40.9 $43.9 (6.8%)

Gross Profit $ 4.4 $ 7.6 (42.1%)

Net Income $ 1.0 $ 3.4 (70.6%)

Earnings per share (fully diluted) $0.03 $0.12

Number of shares (millions) (diluted)

33.5 28.8

* Second quarter 2011 results impacted by significant decline in sales from our ICM segment as our largest customer faced inventory issues relating to phones purchased from another supplier. This impact is expected to be temporary, and does not alter the company’s long‐term strategic focus on ICM


Healthy Balance Sheet – June 30, 2011

(Audited, USD, millions)

Assets:

Cash & Cash Equivalents $7.2

Restricted Cash $91.7

Accounts Receivable $51.3

Inventories $31.5

Property, Plant & Equipment $12.9

Prepaid & Other $0.9

Deposits with Suppliers $0.7

Total Assets $196.2

Liabilities & Shareholders’ Equity:

Net Debt $10.1

Total Liabilities $113.2

Total Shareholders’ Equity $82.9

Total Liabilities & Shareholders’ Equity $196.2

Contents

Company Overview


ICM

ECSS


Growth Strategy



Growth Strategy

Grow Customer Base: Mobile Phone Distributors & Operators worldwide

Initial Focus on Expansion in Southeast Asia: Indonesia, India, Vietnam, Thailand & Philippines

Develop solid North/South American channels in late 2011

Develop and launch Topolo™ line of mobile phones in China

ICM: Deepen Market

Penetration


Thank you for your time!

SINOHUBGrace WangSinoHub, Inc.+86‐755‐2661‐[email protected]

EXTERNAL IR FIRMMahmoud SiddigTaylor Rafferty (Hong Kong)+852‐3196‐3712sinohub@taylor‐rafferty.com

Bryan DegnanTaylor Rafferty (US)212‐889‐4350sinohub@taylor‐rafferty.com

Facilitating the Mobile Device Revolution