China Digital TV Holding Management Discusses Q4 2010 Results - Q&A Transcript
03/01/11 - 11:42 PM EST
China Digital TV Holding Co. Ltd. (STV
Q4 2010 Earnings Call
March 1, 2011 7:00 PM ETExecutives
Eric Yuan – IR Officer
Dong Li – President and Chief Marketing Officer
Henry Fraser – Brunswick Group
Zhenwen Liang – CFOAnalysts
Philip Wan – Morgan Stanley
Jie Liu – Auriga
Michael Olson – Piper JaffrayQuestion-and-Answer SessionOperator
[Operator Instructions] Our first question comes from the line of Philip Wan of Morgan Stanley. Please proceed.Philip Wan – Morgan Stanley
Hi, good morning, Mr. Li, Mr. Liang and Eric. Congrats on a very strong quarter. I have three questions, first of all could you please help us to understand the big gap between the guidance and actual smart card shipment in the fourth quarter and also for the first quarter, could you share with us that what percentage of your smart card shipment guidance has been shipped up-to-date? Thank you.Eric Yuan
Okay. Thank you, Philip. I’ll ask our President Mr. Li to answer your question.Dong Li
[Interpreted] Okay, Philip, there are two – a couple of reasons to expand the gap between our guidance in the fourth quarter and the fourth quarter of 2010. The main reason is seasonality factor; normally the fourth quarter is better season in the industry. While the fourth quarter is actually the slowest season in the industry because of the Chinese New Year factor and also in March there is a big industry show which also will distract some attention from operators.
Now, the second reason is the December of last year is deadline of setting up a province level cable company and each province ordered by the Central Government, Chinese Central Government. So, smaller cable operator in that period, in the fourth quarter who were aggressive increasing their spending on convergence project to position themselves better in the further in a possible consolidation.
So, that factor lead to some unexpected surge in the market demand. So, we do not think that we can repeat that growth rate in the 2011. But if you look at our guidance for Q1, on year-over-year basis we will see that we can still achieve more than 35%, actually increase in that revenue. We think it is also still a very healthy signal.
I don’t know if we answered your question, Philip.Philip Wan – Morgan Stanley
Sorry, I think I was in – my question was I would like to understand the gap between your guidance in the fourth quarter, I mean the last, just on guidance terms, 3.7% at the end of the fiscal year?Unidentified Company Representative
[Interpreted] So, Philip we make, the China Digital TV is making its guidance based on the information we collect from our customer by summing up their own budget expectation, but actually in the fourth quarter a lot of our customers, their actual investment in those projects even in the past that their own expectation at the quarter beginning so that’s why we said that with various unexpected search in the marketing. I don’t know if that answers your question.Philip Wan – Morgan Stanley
Okay, that’s helpful, thank you. And then my second question is about your integrated chip business. Looks like it is going to be a new book riser for your company in 2011 and you mentioned that it will contribute around 46% of your total revenue and just want to get some color from you, what is your expectation in terms of revenue contribution in the first quarter and also your expectations in terms of shipment volume for ASP and even if you can share with us your expected margin compared with smart card business going forward? It will be very helpful, Thank you.Eric Yuan
Sure. Okay. I will also let our President to answer this question.Dong Li
[Interpreted] The first quarter shipment will be relatively more.
For the full year of 2011 we expect the card shipment to be in the range of 500,000 to 600,000 and but the [inaudible] will be we think will the momentum will start from the second half.
Okay. For the standard definition format chip, we expect the average selling price will be between RMB90 to RMB100 and for the format of the high definition, we expect we can have higher FD margins.
Okay. So, the gross margin will be lower than that of smart cards. We expect it could be about 50%. Thanks.Philip Wan – Morgan Stanley
Thank you.Dong Li
Thank you.Eric Yuan
Operator next question please.Operator
Please proceed, caller with your question from Globus Capital.Henry Fraser
Hello, anybody have any questions?Operator
We have one question from the line of Jie Liu of Auriga, USA. Please proceed, ma’am.Jie Liu – Auriga
Okay. I am a guy, by the way. Hi, good morning everybody, a very good quarter and very good guidance. A few questions, the first one is yield for your ship in the guidance for 2011, did you include any international shipments and does the guidance include your chip solutions also?Eric Yuan
Okay. Thank you, Jie. First of all we do not actually issue any formal guidance for the full year 2011. And in our earnings release, we’ve said we made the shipments in line with 2010 level that’s our actually preliminary forecast, but that’s another formal guidance. But anyway, I would let Mr. Li to give you some more color on [inaudible] rates.Dong Li
[Foreign Language]Eric Yuan
Yes. It is already included.Jie Liu – Auriga
Okay. In that case, could you give us a ballpark estimate of your international shipments in 2011?Read the rest of this transcript for free on seekingalpha.com