1530 t g2 china cache - jefferies group · source: akamai’s third quarter 2012 'state of the...
TRANSCRIPT
Investor Presentation
(NASDAQ: CCIH)
Content-aware Network Services
ChinaCache International Holdings Ltd.
Disclaimer
This presentation has been prepared by ChinaCache International Holdings Ltd. (the “Company”). This presentation is being presented solely for your information and is
subject to change without notice. The information included herein was obtained from various sources, including certain third parties, and has not been independently
verified. No representation or warranty, expressed or implied, is made and no reliance should be placed on the accuracy, fairness or completeness of the information or
sources presented or contained in these materials. By viewing or accessing the information contained in these materials, you hereby acknowledge and agree that neither
the Company, nor any of their respective directors, officers, employees, agents, affiliates, advisers or representatives accepts any responsibility for or makes any
representation or warranty, express or implied, with respect to the truth, accuracy, fairness, completeness or reasonableness of the information contained in, and
omissions from, these materials and that neither the Company, nor any of their respective directors, officers, employees, agents, affiliates, advisers or representatives
accepts any liability whatsoever for any loss howsoever arising from any information presented or contained in these materials.
This presentation contains forward-looking statements, including statements about industry development and the Company’s business outlook, strategy and market
opportunity, and statements about the Company’s historical results may suggest trends for its business. These statements are forward-looking statements within the
meaning of the U.S. securities laws. These forward-looking statements are made only, and are based on estimates and information available to the Company, as of the
date of this presentation. These forward looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are
difficult to predict. You are cautioned that actual results of the Company may differ materially from those set forth in the forward-looking statements herein.
NOTHING HEREIN CONSTITUTES AN OFFER OF OR THE SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY STATE OR JURISDICTION WHERE SUCH OFFER OR
SOLICITATION OR THE SALE OF THESE SECURITIES IS UNLAWFUL.
These materials are highly confidential and are being given solely for your information and for your use only in connection with this meeting. The information contained
herein may not be copied, reproduced, redistributed, or otherwise disclosed, in whole or in part, to any other person in any manner. By viewing or accessing the
information contained in these materials, you hereby acknowledge and agree to keep the contents of this presentation and these materials confidential.
2
Stock Summary
As of April 26, 2013
NASDAQ: CCIH
Share Price (4/8/2013) $ 3.64
Basic ADS Outstanding 22.8 million
52 Week Price Range $3.50 - $6.00
Market Cap $83.0 million
Enterprise Value $32.1 million
Adjusted EBITDA* (TTM*) $11.1 million
EV/adjusted EBITDA (TTM*) 2.9
Auditor Ernst & Young
• Defined as EBITDA before share-based compensation expense, foreign exchange loss or gain, post acquisition settlement consideration and impairment of goodwill, if any, and
acquired intangible assets
• Enterprise Value based on 4/8/13 closing market cap and cash balance as of 12/31/12
• TTM refers to the period from January 1, 2012 to December 31, 2012
3
Historical Milestones
The First Company to
Obtain CDN License
Obtained CDN
pilot operation
license from MIIT
2000
1998 2002
2004
2007
2008
2009
2010
2011
2012
Company
establishedGranted the first
CDN operation
license by MIIT
Exclusive provider
for CCTV for the
Athens Olympic
Games
Official CDN
service provider
for the Beijing
Olympic Games
Entered
international
market
Expanded into
mobile Internet
business
October 1, 2010
Successful NASDAQ
IPO
Exclusive CDN
provider to
Premier Wen
Jiabao’s online
chat with
netizens
Established R&D center
in Silicon Valley
Exclusive partnership
with Innovation Works
Content-Aware Network
Services
Joint Lab with
Beijing University
of Post and
Communications
2012
Investment Highlights
5
Location
Network
Growth
� Nation’s largest network with #1 market share in China
� Broad global presence; 14,000 servers and switches in 110+
cities across 14 countries
� Leadership position in the world’s largest Internet market
� Overseas peers are prohibited to operate in China
� Revenue 5-year CAGR 38.4% (2007-2012)
� Favorable Internet population growth trends in China: 356mil in
2011; expected to double by 2015.(1)
� Sizeable opportunity in enterprise and mobile Internet
(1) Source: iResearch 2012
Our Business
Internet and
Software ServicesEnterprises and
E-commerce
Mobile
Internet
Government
Agencies
Total Network
Solutions
Media and
Entertainment
Standard CDN Cloud and MIDS CCIndex Application Dynamic
Acceleration
Mobile Internet
Optimization
6
Total Network
Solutions
Content-aware Network Services
Network-aware Device-aware Application-aware
32%
10%
2%6%
50%
Market Leader
Dnion
FastWeb
Others
ChinaNetCenter
Source: iResearch China CDN Industry Research Report 2012
China Market Share by Revenue Global Market Share by Revenue
56%
8%
10%
5%
15%
3% 3%
Level 3
Limelight
Others
Edgecast
Amazon
Akamai
Source: MarketsandMarket 2012 and company financials
7
Strong Financial Position
8
No debt
RM
B m
il
21.2 USD
RMB
37.2 38.1
58.4
98.3
Highly Liquid Strong Top-line Growth Debt Free
Cash and cash
equivalents of RMB
317mil (US$50.9mil)
+
Liquid investments
RMB 82mil
(US$13.2mil)
millions
*Calculation of USD amount is based on the average exchange rate during the corresponding period.
161.0
257.6 259.9
395.1
618.4
813.7
2007 2008 2009 2010 2011 2012
130.6
Diversified Customer Base
9
Media &
Entertainment
Enterprises &
E-commerce
Internet &
Software
Mobile
Internet
Government
Agencies
30% 29% 21% 17% 3%Revenue
breakdown,
Q4 2012
Competitive Advantages
Official CDN
Provider for
2008 Beijing
Olympics
China’s Leaders
Online Chat
with Netizens
since 2009
Obama’s Online
Chat with
University
Students
Company Strengths
� Scalability
� Service oriented culture
� Technology innovation
� Brand presence
� Longstanding customer relationships
� Peer relationships with carriers
Established Reputation as China’s Trusted
CDN Provider
10
Demand for Reliable CDN Platform
KR JP HK NL US FIN SP CN
KR JP HK NL US FIN SGP CN
Source: Akamai’s Third Quarter 2012 'State of the Internet' Report
Average Internet Speed (Mb/s)
Average Weekly Hours Spent on the Internet
14.4
13.2 13.1
12.2 12.111.7
China U.K. U.S.A. Canada Germany France Japan
Source: iResearch, IDC, CNNIC, Euromonitor, Screen Digest, Fleishman Hilliard International Communications and Harris Interactive, 2010
CN GB US CA GER FRA JP
14.7
10.59.0 8.7
7.28.5
4.9
1.6
20.5
11
� Despite spending more time
online than residents of any
other country, Chinese netizens
have the lowest average Internet
speeds among developed nations.
� Dynamics among China’s three
major state-run carriers pose
extra challenges for China’s
internet speed improvement,
creating needs for carrier-neutral
CDN platforms.
CDN Market Dynamics: China vs. U.S.
78%
40%
0%
20%
40%
60%
80%
100%
U.S. China
* Source: iResearch ; Internet World Stats; CNNIC
50%
7%
0%
20%
40%
60%
U.S. China
VAS
Basic
U.S.
China
12
Internet Penetration
CDN PenetrationCustomer Needs & Growth Drivers
� The CDN Industry in China is still in
the early stages of growth
� We believe it will be a winner-take-all
market
Our Growth Strategy
Enterprise
Customers
Mobile
InternetCloud
Big Data13
28.9%19.0%
12.3% 9.1% 8.5% 10.2% 9.3%
97.5%
30.0%17.5%
26.7%
15.7% 15.5% 18.1%
Growth Strategy 1 Mobile Internet
Mobile
Internet
Desktop
Internet
Infancy Growth Maturity Decline
*Source: iResearch 2012
Mobile Internet Users Expected to Surpass
Desktop Users in 2015Mobile Internet in Early Stages of Growth
300
380
460510
560610
670730
120
230
300360
450
520
600
710
0
200
400
600
800
2008 2009 2010 2011 2012 2013 2014 2015
China's Internet Population China's Mobile Internet Population
In millions
14
Enterprises increasingly rely on our solutions to improve the performance, speed and scalability
of their internal networks, as well as their customer and partner-facing online presence.
IssuerFinancial
Institutions
IssuerTravel and
Aviation
IssuerConsumer
Goods
and more … 15
Growth Strategy 2 Enterprise Customers
The Enterprise Opportunities
in R
MB
Bill
ion
2.9 3.6
4.8
6.3
8.4
10.6
13.0
15.7
0.0
5.0
10.0
15.0
20.0
2008 2009 2010 2011 2012e 2013e 2014e 2015e
E-commerce
Online
ResellersEnterprises
China’s Mobile E-commerce Market 2006 - 2015
16
Growth Strategy 3 Cloud Adoption
CDNCDN
17
� Ongoing growth in cloud creates increased need for intelligent distribution
platforms such as CDNs to guarantee quality end-user experience.
� ChinaCache is currently offering cloud service to over 100 customers as
part of total solutions.
*Source: Gartner 2012
1,563.40
2,712.50
3,698.80
5,117.10
6,524.10
8,485.10
10,461.10
0
2,000
4,000
6,000
8,000
10,000
12,000
2010 2011 2012 2013 2014 2015 2016
Public Cloud Services Forecast, China, 2010-2016 (USD in millions)
• Industry reports
• Commercial data analysis
• Comprehensive reports on the state of the Internet
• 24-hour real-time data
• Internet speed rankings by carrier and by province
• Website speed score system
• Test my speed
18
Growth Strategy 4 CCIndex/Big Data Development
CCIndex serves as a valuable reference for Internet
users, carriers, governments and website owners
CCIndex has the potential to create a number of new
value-added services for ChinaCache customers
CCIndex – APP download for iOS and Android-based
devices; Website: www.ccindex.cn
CCIndex produces Quarterly China Internet Report
and ranks carriers’ network performance by province
Industry Leading R&D to Capture Market Trends
3 Patents21 Patents
� Mobile Internet Solutions – Intelligent Traffic Reduction (US Patent-Pending)
� Content-aware Network Services – Network-aware; Device-aware; Application-
aware
� CCIndex & Data Analytics – www.ccIndex.cn
� Cloud Extension – Anti-Attack & Transparent Transport Acceleration
Featured
Technologies
Proprietary
Technology
Head of Silicon Valley R&D Center:
Dr. Alexei G. Tumarkin� Strong R&D team with over 350 engineers
� R&D Centers in Beijing, Guangzhou and Silicon Valley
� Joint Lab with Beijing University of Posts
Telecommunications and Hong Kong University of Science
and Technology
3 Patents31 Patent
Applications3 Patents
14 Software
Copyright
Registrations
R&D
Capabilities
19
Strong Organic Growth
Revenue Growth (in Millions) Active Customers
Enterprise & E-commerce
*Calculation of USD amount is based on the average exchange rate during the corresponding period. 20
129204
281
504
775
1265
2007 2008 2009 2010 2011 2012
470301
Total
21.2 USD
RMB
37.2 38.1
58.4
98.3
millions
161.0
257.6 259.9
395.1
618.4
813.7
2007 2008 2009 2010 2011 2012
130.6
2010 2011 2012
-56.3
-11.5
0.1
-60.0
-50.0
-40.0
-30.0
-20.0
-10.0
0.0
10.0
RMB
-1.8
-8.5
USD
RMB0.0
Improving Yearly Results
Path to Profitability
USD
RMB
USD
2.5
*Calculation of USD amount is based on the average exchange rate during the corresponding period.
*2011 net income excludes one-time disposal gain of RMB 11.1 million.
*2012 net income excludes special provision for bad debts of RMB 17.1 million.21
Stabilizing Gross Margin
30.3% 30.0%31.2%
25.0%
30.0%
35.0%
40.0%
2010 2011 2012
Gross Margin Net Income* (millions)
“ I believe that we are in the right market,
with the right product at the right time.
Mr. Song Wang, Founder, Chairman & CEO
“There is a tremendous need to improve the
speed, reliability and safety of users’ internet
connections both in China and internationally,
and this need is creating a significant, unmet
demand for solutions such as ours.”
Email: [email protected]
Website: ir.chinacache.com
en.chinacache.com
NASDAQ: CCIH
THANK YOU
Facebook: ChinaCache
Twitter: @ChinaCache_CCIH
Weibo: e.weibo.com/chinacachecc