August 2008
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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 from anticipated levels of sales, future
national or regional economic and competitive conditions, changes in
relationships with customers, access to capital, difficulties in developing
and marketing new products, marketing existing products, customer
acceptance of existing and new products, and other factors. 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 has no obligation
to update the forward-looking information contained in this presentation.
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Mission Statement and Core Values
China Display’s mission is to become the #1 manufacturer of LED backlights to
electronics manufacturers in China and the world while entering the High Powered LED
lighting industry.
We plan to achieve this goal by diversifying and broadening our customer base,
aggressively pursuing new market opportunities, investing heavily in Research and
Development.
The Company strives for excellence in all facets of its business, seeking to deliver the
highest quality products in the industry while developing the most cost effective and
efficient production systems.
Our commitment to superior customer service is reinforced by a corporate culture that
places a high priority on training and creating a disciplined and innovative work force.
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Company Overview
China Display Technologies Electronics established in
November 2004
Headquarter: Shenzhen, China
China Display became a publicly traded company, listed
on the OTC market, through a reverse merger in
September 2007
Fifth largest backlight unit (BLU) developer &
manufacturer in China
800 employees as of July 2008
Hi-Tech Enterprise recognized by Shenzhen Government
ISO9001:2000 Certification
China Display designs, manufactures and markets small to mid sized light emitting diode
(LED) and cold cathode fluorescent lamp (CCFL) backlights for various types of liquid
crystal displays (LCDs) and is entering the billion dollar High Powered LED lighting industry.
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Equity Snapshot
*Includes 6.9 million shares of series A convertible preferred stock,
includes 3,796,700 million warrants
** Excludes $2.2 million non-cash deemed preferred stock dividend
CDYT AT A GLANCE
TICKER
CDYT
SECTOR
EMERGING
TECHNOLOGY
FISCAL YEAR
DECEMBER
MARKET CAP
36.8M
CURRENT PRICE (8/01/08)
$1.60
52-WEEK LOW
$1.10
52WEEK HIGH
$3.50
REVENUE (TTM)
$34.7M
PRICE/EARNINGS (TTM)
6.8
PRICE/SALES (TTM)
.96
NET INCOME** (2007)
5.04M
EPS* (TTM)
$0.22
SHARES OUTSTANDING*
23M
FLOAT
3M
INSIDER OWNERSHIP
56%
Capitalization Structure as of 6/30/2008
Share Type
Number of Shares
Common Shares Outstanding:
12,316,406
Common Stock issuable upon conversion of
series A preferred stock:
6,860,296
Shares issuable upon exercise of warrants
at $1.30:
3,796,700
Total:
22,973,402
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Investment Highlights
FY 2007 Revenues up 104% over FY 2006 to $32.5 million
FY 2007 Earnings up 100% over FY2006 to $4.8 million
Q1 2008 Revenues up 45% over Q1 2007 ( $4.6 million, to $6.7 million)
Q1 2008 Earnings up 32.3% over Q1 2007 ($626K to $826K)
Revenue guidance FY 2008E $44M-$55.4M, 35%-70% annual growth
Earnings guidance FY 2008E: $6.16M-$7.8M, 28%-62.5% annual
growth
Substantially Undervalued among Peer Group
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Undervalued Among Peer
Group
DGNG REV: 55.3M (ttm) EPS -0.07 (ttm) P/E N/A
Diguang International Inc.
CREE REV: $468.5M (ttm) EPS 0.36 (ttm) P/E 48.45
Cree Inc.
ASY REV: $23.4M (ttm) EPS 0.20 (ttm) P/E 34.0
Elecsys Corp.
CDYT REV: $34.6M (ttm) EPS 0.22 (ttm) P/E 6.96
China Display Technologies Inc.
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Valuation Metrics
If CDYT Trades at Peer Group Multiples
Stock Price
At 20 P/E 08 EPS 0.30-0.34 $6.00-$6.80
At 30 P/E 08 EPS 0.30-0.34 $9.00-$10.24
Potential ROI 280%-704%
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BLU Application Overview
Small backlights ( < 10.4”) for:
Cell phones
Car navigation systems
DVD, GPS, PDA & CD players
Digital cameras
Camcorders
MP3 & MP4 players
Appliance displays
Medium backlights (15”-19”) for:
Computer monitors
Large backlights (20”-47”) :
Televisions
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What is a Backlight Unit?
Backlight units (BLU) provide the light source to LCD units.
BLUs present data and images in mobile phones, car navigation systems &
medical devices
Larger displays used in flat panel televisions and computer monitors
A BLU is one of the most expensive components used in LCD products,
accounting for 20 to 30% of the overall costs
As a light source for LCD screens, a BLU
is one of the most expensive components
of LCD products
* Data Source: “Large Area TFT LCD Backlight Market
Outlook” by Display Search
Material/Component Costs
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Backlight, 26%
Other
Materials, 26%
Glass, 8%
Color Filter,
19%
Driver ICs, 6%
Polarizers, 15%
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Backlight Unit Industry Growth
$90 Billion Industry Growing at 15% Annually
Unit:
$ Million
Revenues for Flat Panel Displays
(PIDA, Nov 2006)
LCD
(TFT)
46434
57158
58749
68304
77678
86004
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0
10000
20000
30000
40000
50000
60000
70000
80000
90000
2004
2005
2006
2007
2008
2009
LCD Thin Film
Transistor (TFT)
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The Emerging High Power LED Lighting Market
Green Technology LED (Light Emitting Diode)
LEDs use 90% less electricity than traditional incandescent light sources
LED light bulbs last 100 times longer (50,000 Hours) than traditional incandescent
light sources
LEDs contain no mercury and remain cool to the touch
Historically restricted to niche markets (flashlights, accent lighting and automobile lights)
Advances in LED technology have led to increased light output with higher efficiency,
driving costs down to dramatically broaden acceptance and applications
The high-power LED market is gaining ground in the general lighting market and steadily
driving mainland China's LED production
China is the largest producer of LED lighting products, accounting for an estimated 70%
of the industry’s global output
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The Emerging High Power LED Lighting Market, cont.
According to Photonic Industry Development Association (PIDA), China's LED lighting exports
in 2007 were estimated at $1 billion and is expected to reach $2 billion in 2008, and 3.9 billion
in 2009
High power LEDs offer high brightness and energy-efficient benefits, driving their adoption by
lighting and electronics manufacturers worldwide for general illumination
Country specific mandates banning traditional incandescent lighting will drive the High
Powered LED light growth worldwide
According to Digitimes, Australia & Japan in 2012 will ban traditional incandescent light
sources
Anchorage, AK announced (August 2008) initiative calling for the retrofit of all 16,000
municipal roadway lights with high-efficiency LED fixtures
Other cities already participating in testing and deployment of High Power LED technology are
Raleigh, NC; Toronto, Ontario; Ann Arbor, MI; Austin, TX; Tianjin, China and Torraca, Italy
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LED Technology Gains Widespread
Media Attention
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July 28, 2008 New York Times article
LED lighting is showing up in more prominent
spots
Times Square New Year’s Eve Ball
Marcus Center in Milwaukee, WI
Empire State Building considering LEDs for
lighting exterior
LEDs dominated the exhibits at Lightfair, lighting
industry’s largest trade event in May 2008
Corporate Adoption
Sentry Equipment Corporation
Will save $7000 a year in energy costs
Won’t need to replace a bulb for 20 years
Will recoup its investment in less than 2
years
Source: Eric A. Taub, “Fans of L.E.D.’s Say This
Bulb’sTime Has Come”; July 28, 2008 New York Times
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Competitive Advantages
Experienced Management Team
Working in conjunction with the Guangdong Flat Panel Display Association (GFPDA)
GFPDA is drafting the standards for the High Power LED lighting industry in China
Superior Product Design
Dot matrix design and optical simulation program confirms customer’s designs at
least 7 days faster than our competitors
Our software improves the light guide brightness performance by 20%-25% and
uniformity by 5%-8%
Twin screen displays are a breakthrough in mobile phone design, while also a
challenge for BLU design
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Strategic R&D Initiatives
Continuous improvement of our copyrighted software
Close technology partnership with Guangdong Flat Panel Display Association
Strategic vision in 2008 to develop large-size back light unit, targeting the LCD-TV
market
OLED (Organic Light-Emitting Diodes) feasibility research – for next generation
Display Illumination Technology
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2007 Revenue Breakdown
Zhujiang Delta and other
areas in China
Hong Kong
Europe
Japan
The United States
Mobile Phone (1.8’’-3.2’’)
Medical Equipment
MP3/MP4
LCD Monitor
Communication Devices and Others
By Region
By End Products
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Customer Overview
42 LCM module manufacturers customers in over 17 countries
Yassy Technology (Shenzhen) Co., Ltd.
Sinopex Enterprise Company
Shenzhen Xinjiuding Optronics Technology Co., Ltd.
Viewtron Technology Ltd.
BYD Company Ltd.
China Display’s products are ultimately incorporated in NEC, General Electric,
Lenovo, and Panasonic applications
BLU
manufacturer
Design House
LCM
manufacturer
OEM Factory
Raw Material
Vendors
CDYT
End Product
Maker
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Experienced Management Team
Mr. Lawrence CHAN Chairman and CEO
Founded SUNY, wholly-owed subsidiary of China Display Technologies Inc. in 2004
General manager with Wai Chi Electronics Co. from 2000 to 2002
Distinguished engineer and knowledgeable in BLU industry and factory management
Graduated from Hong Kong Polytechnic University
Mr. Jason YE CFO
Served as Finance Manager of China Display since October 2007
Acted as the financial advisor for several foreign capital corporations and Hong Kong
exchange listed banking companies
Bachelor’s degree in International Finance from South China Normal University
Mr. Jason WONG Executive VP
Joined SUNY in 2005 as head of sales and internal operation
An experienced environmental specialist
Master’s degree in Environmental Science from City University of Hong Kong
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Income Statement
Year Ended December 31 Quarter Ended March 31
($ in Thousands) 2006 2007 2007Q1 2008Q1
Revenues $15,884 $32,554 $4,592 $6,723
Gross Margin 22.8% 23.8% 21.8% 22.3%
Total Operating Expenses 7.6% 7.1% 6.9% 6.6%
Operating Margin 15.2% 16.7% 14.9% 15.8%
Net income $2,412 $4,841 $626 $828
Net Profit Margin 15.2% 14.9% 13.6% 12.3%
Weighted avg. shares 11.4M 15.3M 11.4M 22.8M
EPS – diluted $0.21 $0.32 $0.05 $0.04
(Audited)
Note: 2007 results exclude $2.2 million non-cash deemed preferred stock dividend.
(Unaudited)
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Balance Sheet
Ended Dec 31, 2006 Ended Dec 31, 2007 Ended Mar 31, 2008
($ in Thousands) Audited Audited Unaudited
Cash and Cash Equivalents $135 $2,949 $4,600
Accounts Receivable, net $1,656 $5,279 $6,100
Inventory $1,460 $1,693 $2,362
Total Current Assets $3,579 $17,718 $18,807
Total Assets $5,508 $21,219 $22,331
Total Current Liabilities $1,540 $8,653 $8,075
Total Liabilities $1,588 $8,653 $8,075
Total Shareholders’ Equity $3,920 $12,566 $14,256
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Strong Revenue Growth
(USD $ in Millions)
*The ability of the Company to achieve 55.4M in 2008 Revenue depends on its ability to obtain proceeds of not
less than $5.3 million from exercise of 1,362,187 warrants in the second quarter and 2,708,013 warrants in the
third quarter of 2008. Without the exercise of the warrants, the Company should generate Revenue of $44.0M -
45.6M.
*
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44.0
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Rising Gross Profit
(USD $ in Millions)
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Rising Net Income
(USD $ in Millions)
Note: 2007 results exclude $2.2 million non-cash deemed preferred stock dividend.
*The ability of the Company to generate net income of $7.8M will depend on its ability to obtain
proceeds of not less than $5.3 million from exercise of 1,362,187 warrants in the second quarter and
2,708,013 warrants in the third quarter of 2008. The Company expects to generate net income of
$6.16M - $6.39M without the exercise of the warrants.
*
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6.16
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Strong EPS Growth
Note: 2007 results exclude $2.2 million non-cash deemed preferred stock dividend.
*The ability of the Company to generate 0.34 EPS will depend on its ability to obtain proceeds of not
less than $5.3 million from exercise of 1,362,187 warrants in the second quarter and 2,708,013
warrants in the third quarter of 2008. The Company expects EPS of 0.30-0.31 without the exercise
of the warrants.
*
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0.30
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The Future of China Display
Technologies
Enter High Power LED Lighting market with new products (Indoor and Outdoor Lighting)
Develop High Power LED Market Share
Seek AMEX Listing in Q1 2009
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Investment Summary
Q1 2008 Revenues up 45% over Q1 2007 ($4.6 million, to $6.7 million)
Q1 2008 Earnings up 32.3% over Q1 2007 ($626K to $826K)
Revenue guidance FY 2008E $44M-$55.4M, 35%-70% annual growth
Earnings guidance FY 2008E: $6.16M-$7.8M, 28%-62.5% annual growth
Substantially Undervalued among its Peer Group
At 20 P/E 08 EPS 0.30-0.34 $6.00-$6.80
At 30 P/E 08 EPS 0.30-0.34 $9.00-$10.24
Potential ROI: 280%-704%
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Contact
RedChip Companies, Inc.
Jon Cunningham, Director of IR
500 Winderley Place, Suite 100
Maitland, FL 32751
Tel: 1-800-733-2447, Ext. 107
Jon@RedChip.com
US Auditor
Kempisty & Company
15 Maiden Lane, Suite 1003
New York, NY 10038
US Law Firm
Sichenzia Ross Friedman Ference LLP
61 Broadway
New York, NY 10006
China Display Technologies
Jason Wong, Executive VP
12A Block, Xinhe Road, No. 3 Xinqiao
Industrial Zone, Shajing District,
Baoan Town
Shenzhen, China 150090
Tel: 86 138 237 96598 (China mobile)
852 – 9257 8928 (HK mobile)
jason@chinadisplaytech.com
