Beijing Beida Jade Bird Universal
Sci-Tech Company Limited
Strategic Development
May 2002
1
Content
Part (I)
About the Company
Part (II)
Strategic Investment in SMIC
Part (III) Prospects & Outlook of Semiconductor
Industry
Part (IV) Proposed Placing of New H Shares
2
Part (I)
About the Company
3
Company Background
29 Mar 2000
27 Jul 2000
• Incorporated as a joint stock limited company
• Registered capital : RMB 96,400,000
• The first H Shares Listed on the Growth
Enterprise Market of the Stock Exchange of
Hong Kong
• Stock Code : 8095
• Capital raised : Approx. HK$300 million
18 Dec 2000
• Company subdivided each of the Promoters’
shares and H shares into ten shares`
4
Shareholder’s Structure
Peking
University
Jade Bird
Group
32.16%
Employees of
Jade Bird Group
& the Company
Strategic
Investors from
Hong Kong
93.37%
Strategic
Investors from
HK& Singapore
17.63%
6.63%
Dynamic
Public
Win
(H Shares)
22.82%
27.39%
The Company
5
Company Structure (1)
The Company
100%
Beida Jade Bird Universal
Sci-Tech (Cayman)
Development Co Ltd
75%
Hebei Beida Jade Bird
Universal Fire Alarm
Device Co Ltd
51%
Beijing Jade Bird Hao Di
Electric System Co Ltd
100%
Beida Jade Bird Universal
Sci-Tech (Cayman)
Investment Co Ltd
5.29%
SMIC
6
Company Structure (2)
• JBU (Cayman) Development
: engaged in the sales of computer products
• JBU (Cayman) Investment
: holding the investment in SMIC
• SMIC
: an IC foundry factory located in Shanghai Pudong
• Hebei JBU Fire Alarm Device
: engaged in the manufacture and sales of fire alarm
devices
• Jade Bird Hao Di
: engaged in the manufacture and sales of electric
meter remote reading system
7
Principal Activities
• One of the leading software developers and
integrated circuit designers in the PRC
• Engaged in the design, manufacture, marketing,
distribution and sale of proprietary embedded
products including:
 Application Specific Integrated Circuit (“ASIC”)
 Network Security Products
 GPS Application System
 Smart Card Application System
 Wireless Fire Alarm System (“WFAS”)
8
Awards & Qualifications (1)
PRODUCT
QUALIFICATION
AUTHORITY OF CERTIFICATE
Jade Bird
Firewall JBFW1
Sales Certificate
Ministry of Public Security
Certificate of Information
Security Product
China National Information Security
Testing Evaluation and Certification
Center(CNISTEC)
Certificate of Military
Information Security Product
People’s Liberation Army Information
Security Testing Evaluation and
Certification Center (PLAISTEC)
Certificate of Technological
Examination
China State Cryptography Control
Authorities Office (CSCCAO)
Passed the JB151A-97 antielectromagnetic release
national standard examination
One of the short-listed
authorized products
People’s Bank of China
9
Awards & Qualifications (2)
PRODUCT
QUALIFICATION
AUTHORITY OF CERTIFICATE
JB-SG2 Security
Gateway
Certificate of Military
Information Security
Product
PLAISTEC
SZD02 Bank Terminal
Certificate Card
Passed system security
review
CSCCAO
SJY-A Data
Encryption Card
Passed system security
review
CSCCAO
Four Fire Alarm Devices
from Hebei Jade Bird
Universal Fire Alarm
Device Company Limited
ISO9002 Certificates for
the Fire Products Safety
Certification
China Certificate Committee for Fire
Alarm Products Quality
10
Awards & Qualifications (3)
PRODUCT
QUALITY
AUTHORITY OF CERTIFICATE
GPS 230M
Vehicle Box
Acceptance quality
certificate
Ministry of Public Security & National
Radio Monitor and Examination Center
JB-DT1 GPS
Vehicle Box
Security Technology
Safeguard Product
Manufacture Certificate
Security Technology
Safeguard Certificate
Public Security Department of
Guangdong Province
The Security Technology Safeguard
Management office of Shenzhen Public
Security Bureau
JB-DT1 Data
Transmitter
Certificate for Wireless Radio
Transmitter
Ministry of Information Technology
Shenzhen
Branch of the
Company
Certificates for Sale,
Manufacture and Network
Forming of Radio
Communication Equipments
Shenzhen Radio Management Office
11
Major Products (1)
ASIC
• Develop embedded microprocessor and specific
integrated circuits
• Provide ASIC technologies and customized
engineering design, strives to improve the system
with optimal performance, smaller size and lower cost
• Design and develop ASIC synthesized with
cryptographic logic (“Security ICs”) for commercial
information security systems
12
Major Products (2)
Network Security Products
• Security gateway, firewall and network monitor
systems are applied in government branches,
financial institutions, large enterprises and the army
• Begin mass production of SJY01- A, SZD02 and
SJY04 encryption cards
• Emphasize security services such as risk evaluation,
system optimization, security alarm and consulting
• Strengthen cooperation with SYMANTEC and other
famous information security providers
13
Major Products (3)
GPS Application System
• Box unit installed in moving or static target sending longitude
and latitude information via wireless communication network,
thus allowing remote monitoring facility and control center to
keep track of target
• Apply JB-230M GPS system in fleet management monitoring,
dispatch and theft alarm of all kinds of vehicles
• Strengthen R&D on emerging applications such as logistics
distribution and navigation
• Strengthen ties with regional governments, and strive to
establish markets in Beijing, Guangdong, Sichuan and Southeastern part of the PRC
14
Major Products (4)
Smart Card Application System
• Provide contact and contactless smart cards
• Products cover intelligence household management system,
logistics management system, POS and access control system
• Major customers include universities, hotels, financial
institutions and large enterprises
15
Major Products (5)
WFAS
• Accurate fire detecting and fire alarm functions
• More reliable, economic and versatile
• Apply in Haikou Fire Alarm Control Center, Zhongnanhai,
Yuquan Mountain, the Summer Palace and other projects
• Manufacture fire alarm sensors and controllers through
subsidiary Hebei Beida Jade Bird Universal Fire Alarm
Devices Limited
• Strengthen support for upstream R&D and flexible applications
of wire and wireless fire alarm solutions
16
Major Clients
Financial Institutions
Business Enterprises
Universities
Government
Authorities
Army &
Police Force
17
Financial Highlights (1)
RMB’000
2002 Q1
(unaudited)
2001
2000
1999
27,733
124,617
60,843
10,419
4,469
37,510
31,067
(4,486)
11,678
40,641
27,301
(3,237)
Earnings (Loss) per share
- basic (RMB cents)
0.46
3.9
3.8
(0.64)
Dividend per share
- (RMB cents)
N/A
0.5
0.5
N/A
Total assets
N/A
831,372
386,800
26,299
Shareholders’ equity
N/A
403,997
371,307
11,379
Turnover
Profit (Loss) attributable to
shareholders
Earnings (Loss) before interest, tax,
depreciation, amortization and
minority interest
18
Financial Highlights (2)
RMB’000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
-20,000
1998
1999
Turnover
2000
2001
Profit
19
Part (II)
Strategic Investment in SMIC
20
Reasons for & Benefits of
Investing in SMIC
• Strengthen and enhance the Company’s technology in the
design and development of ICs
• Enable the Company to obtain more market intelligence about
ICs manufacturing technology, which in turn benefit our design
of ICs which are key components of the Company’s products
• Ensure stable supply of ICs at competitive price by
subcontracting ICs manufacture to SMIC
• Enable the Company to receive other support from SMIC in
technologies and techniques enhancement
21
JBU’s Involvement in the
Management of SMIC
• The Company has an active role in setting up and running of
SMIC
• As one of the promoters of SMIC, the Company has participated
in SMIC’s feasibility study and taken up an important role in its
liaison with PRC government authorities
• Two of the Company’s directors have been actively participating
in the management and operation of SMIC
22
JBU’s Investment Highlights
• Investment vehicle : Beida Jade Bird Universal (Cayman)
Investment Company Limited, wholly owned subsidiary
• Subscribe for 54,000,540 SMIC Preference Shares at
US$1.1111 per share
• Subscribe for 54,000,540 SMIC Series A-1 Preference
Shares at US$0.00001 per share
• Total investment amounting to US$60 million
• Hold approximately 5.29% of the total issued voting share
capital of SMIC
23
Pro Forma Financials after the Investment
(Based on the actual financials of year 2001)
RMB’000
Turnover
Current
Upon Completion of
Investment and Share
Placing **
124,617
124,617
-
39,840
37,510
77,350
Income Dividend*
Profit attributable to
shareholders
Profit per share
- (RMB cents)
Total assets
3.9
6.7
831,372
787,764
Bank loans
390,000
-
Shareholders’ equity
403,997
787,764
* Assumed the preference shares dividend rate at 8%
** Based on issuing the additional 192,800,000 H shares and the current market price of
HK$1.5 per share (total placing proceeds amounting to HK$289 million or US$37
million)
24
SMIC’s Competitive Advantages (1)
• Strong base of strategic partners and investors
• Enormous market potentials
• Lower costs :
- Building/facilities
- Workforce/operations
- Supplies/material
• Strong government support
• Experienced management
25
SMIC’s Competitive Advantages (2)
• Import tax (tariff) exemptions
 Equipment
 Raw Material
• Value added tax (VAT) rebates
 17% Vs <5%
• Corporate tax discounts
 First profitable year = “5 exempt-5 halves”
• Accelerated depreciation (tax purposes)
• Preferential treatment for Fabless design houses
 Same treatment as software industry (3% VAT)
26
SMIC’s Initial Financing
• Registered Capital : US$1 billion
• First phase investment amount : US$ 1.4 billion
• Major investors include
Strategic Partners
Institutional Investors
Jade Bird Universal
Goldman Sachs
Shanghai Industrial
Holdings
H&Q Asia Pacific
Walden International
Vertex Management
27
SMIC’s Capability
• Low power static random access memory (SRAM) technology
transfer from Toshiba
• 0.18-micron baseline logic process technology transfer and
patent license rights from Chartered, one of the world's top
three silicon foundries
• Manufacture 0.22um and 0.18um FCRAMTM (Fast Cycle RAM)
Products for Fujitsu Limited
• Conclude a non-exclusive alliance with ChipPAC, Inc. (Nasdaq:
CHPC) for end-to-end solutions from wafer probe to packaging
and test and final distribution in China and global market
• Establish partnership in the area of advanced semiconductor
process technology with Europe's leading independent R&D
centre for microelectronics, IMEC
28
SMIC’s Development Plan
Photo mask
shop
cleanroom
completed
2000
Aug
Equipment
installation
begin
2001
Jun Aug Sep
Construction
ground
breaking
Pilot
production
begin
Dec
Initial
products/
processes
qualified
Half capacity
reaches 25,000
wafers/month
2002
Jan Jun Dec
Volume
production
commence
2003
June
Combined
production
to 85,000+
wafers/month
2004
Jan 1H
Possible 2nd
phrase
financing
(2H 2003)
SMIC has 1-2 year leads over its competitors in terms of entering into the China market
29
SMIC’s Employees
53
12
12
22
41
By Region
212
183
By Education
145
PRC
PhD
Taiwan
Master
Singapore
Bachelor
152
USA
College
Italy
Others
Others
721
41
511
60
151
Over 15 yrs
10 - 15 yrs
5 - 10 yrs
3 - 5 yrs
By Experience
60
677
43
1 - 3 yrs
0 - 1 yr
30
Total: 1032 employees as at August 27, 2001
Part (III)
Prospects & Outlook of
Semiconductor Industry
31
Supply & Demand of ICs in China
30
China IC Revenue
China IC Revenue (E)
China Demand
China Demand (E)
25
24.18
Billion $
20
20.56
15
10.8
8.46
10
16.93
13.3
6.63
5
2.35
2.61
3.35
4.38
0.41
0.47
0.63
0.71
95
96
97
98
0.96
1.27
1.63
2.12
2.78
00
01
02
03
3.63
4.84
0
99
04
05
Year
Source:CCID
32
Semiconductor Market :
Worldwide and China
400
World IC Sales
World IC Sales (E)
China IC Sales
China IC Sales (E)
China Demand
China Demand (E)
350
300
346.5
336.9
Billion $USD
264.9
250
226.2
213.3
200
170
151
142 147 140
2.35
3.35
150
188.4
188.4
110
86
100
50
24
35 31 39 38
60 65
51 54 55
24.18
16.93
10.8
6.63
0
0.41
83
84
85
86
87
88
89
90
91
92
93
94
95
96
0.63
97
0.96
98
99
00
1.63
01
4.84
2.78
02
03
04
05
Year
Source:Dataquest
33
Existing Suppliers in China
Company
Location
Technology
Capacity
SMIC
Shanghai
0.18/ 0.25 micron 8” wafer
85,000+ wafers/month
by 2004
NEC Shougang Beijing
0.35 micron
6” wafer
N/A
Huajing
Wuxi
1- 5 micron
4- 5” wafer
N/A
CSMC-HJ
Wuxi
0.5/ 0.6 micron
5- 6“ wafer
N/A
NEC HuaHong
Shanghai
0.25 micron
8“ wafer
20,000+ wafers/month
by end of 2001
ASMC
Shanghai
0.6/ 1.5 micron
5- 6“ wafer
N/A
Motorola
Tianjin
0.25 micron
8“ wafer
24,000 wafers/month
Grace, Belling, Hua Xia and others are either under the construction or at the planning stage
34
Existing Fab Technology in China
5%
5%
10%
14%
10%
61%
3"-4"
2.0-5.0
5"
0.8-1.2
6"
0.5-0.8
8"
0.25-0.35
24%
Unit: Inch
Unit: Micron
71%
Year 2000
Year 2000
40%
35%
30%
25%
20%
15%
10%
5%
0%
s
od
u
ct
te
rs
Pr
m
pu
Co
ns
um
er
Co
IC
tio
ca
un
i
Ca
rd
15.50%
m
Co
m
32%
25%
ns
Source: Computer World，
CLSA Emerging
Markets
35%
35
Market Outlook (1)
Expected Growth
• Rapid expansion of domestic market
• Current market = US$15 Billion (8% global market)
• 30.8% Growth p.a. 1998-2000
US$Billion
Source: Gartner Dataquest
36
Market Outlook (2)
Data Processing Semiconductor
Product
Revenue in 2000
(Unit :US$ million)
CAGR
(2000- 2005)
Motherboard / PC
4,945
12.7%
Optical Disk Drive
839
18.4%
Handheld PC
273
33.7%
Hard Disk Drive
237
4.6%
Server Appliance
174
34.3%
Growth drivers :
• Internet continues to drive growth
• Increase investment from Taiwanese motherboard/ notebook/ PC manufacturers
• Global OEMs are establishing production in China
• Local consumer electronics producers are venturing this sector
Source: Gartner Dataquest
37
Market Outlook (3)
Communications Semiconductor
Product
Cellular Phone
Revenue in 2000
(Unit: US$ million)
CAGR
(2000-2005)
7,608
29.8%
Mobile infra.
509
35.3%
LAN Switch
401
33.3%
Network Line Card
689
11.9%
Legacy Phone
593
8.2%
Cordless Phone
241
20.7%
Growth drivers :
• Government’s effort to enhance the information and networking system
• Strong foreign direct investment inflow in electronics and communications equipment sector
• Increase percentage of low to mid end communications production
Source: Gartner Dataquest
38
Market Outlook (4)
Consumer Semiconductor
Product
Revenue in 2000
(Unit :US$ million)
CAGR
(2000-2005)
DVD
819
17.4%
Color TV
806
13.1%
Appliance
545
5.2%
Digital Camera
489
95.4%
Net Audio Player
263
44.4%
Digital Camcorder
134
95.6%
Growth drivers :
• Robust GDP growth
• Critical mass of middle class consumers
Source: Gartner Dataquest
39
Market Outlook (5)
PC Market
• Only 1.9% PC penetration in 2000
• 48% growth Y/Y in Q1 2001
• Projected 26% CAGR 2001-2003
PC Shipment (units in million)
• Data processing electronics = 43% p.a. growth 1997-2000
Source: IDC, JP Morgan estimates
40
Market Outlook (6)
Mobile Phone Subscribers
No. of subscribers (in million)
(Accumulative)
Source: IDC, JP Morgan estimates
41
Part (IV)
Proposed Placing of New
H Shares
42
Proposed Transaction
Issuer
: Beijing Beida Jade Bird Universal Sci-Tech Co Ltd
(Stock code : 8095.hk)
Shares Offer
: 192,800,000 ordinary shares (H Shares)
Size of Offer
: US$ 37 million (estimated)
Use of Proceeds : Repayment of bank loan used for investment in
SMIC
Closing Date
: June 2002
43
Special Capital & Price
• Record High
:
• Record Low
:
HK$2.925 per H share
31 May 2001
HK$1.1 per H share (Placing Price)
27 July 2000 (IPO)
Nominal Value
RMB 0.1
Number of Promoters’ Shares
700,000,000
Number of H Shares
264,000,000
Total Number of Issued Shares
964,000,000
Total Issued Share Capital
Current Market Capitalization
RMB 96,400,000
HK$1,426,720,000
44
Apr-02
Mar-02
Jan-02
Dec-01
Nov-01
2.50
Oct-01
Sep-01
Aug-01
Jul-01
May-01
Apr-01
Mar-01
Feb-01
Jan-01
Dec-00
Nov-00
Sep-00
Aug-00
Jul-00
Price (HK$)
3.00
Volume
Price
2.00
100
1.50
80
60
1.00
40
0.50
20
45
Volume (in million)
Stock Performance
Stock Price and Volume Performance (IPO Date to Present)
- 140
- 120
Beijing Beida Jade Bird Universal
Sci-Tech Company Limited
Thank you!!
www.china-jbu.com
46