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Initial public offeringpresentation
WONHE MULTIMEDIACOMMERCE LIMITED
ACN 607 288 755
ASX : WMC
November 2015
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Wonhe Multimedia Commerce Limited
This presentation has been prepared by Wonhe MultimediaCommerce Limited for professional investors. The informationcontained in this presentation is for information purposes only anddoes not constitute an offer to issue, or arrange to issue, securities orother financial products. The information contained in this presentationis not investment or financial product advice and is not intended to beused as the basis for making an investment decision. Thepresentation has been prepared without taking into account theinvestment objectives, financial situation or particular need of anyparticular person.
No representation or warranty, express or implied, is made as to thefairness, accuracy, completeness, or correctness of the information,
opinions and conclusions contained in the presentation. To themaximum extent permitted by law, none of Wonhe MultimediaCommerce Limited, its directors, employees or agents, nor any otherperson accepts any liability, including, without limitation, any liabilityarising out of fault. In particular, no representation or warranty,express or implied is given as to the accuracy, completeness or correctness, likelihood of achievement or reasonableness of anyforecasts, prospects or returns contained in this presentation nor isany obligation assumed to update such information. Such forecasts,prospects or returns are by their nature subject to significant
uncertainties and contingencies.
Before making an investment decision, you should consider, with orwithout the assistance of a financial adviser, whether an investment isappropriate in light of your particular investment needs, objectives andfinancial circumstances. Past performance is no guarantee of futureperformance.
Wonhe Multimedia Commerce Ltd was incorporated on 27 July 2015.The Company does not have any current operating or investmentactivities. As the Company forms part of Kuayu and the WonheGroup, comprising the Chinese subsidiaries, financial informationcontained in this Investor Presentation has been extracted fromSection 7 of the Prospectus.
Application for shares can only be made pursuant to the Prospectusissued by the Company and available from the Companys website(www.wonhe.net), the Lead Manager, Beer and Co Pty Ltd and fromthe ASX website.
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DISCLAIMER
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Wonhe Multimedia Commerce Limited
IPO SUMMARY (all $A)ASX : WMC
Capital Raising $3.0m (min) $4.0m (max)
Number of Existing Shares 135m 135m
Number of IPO Shares 15m (min) 20m (max)
Total Issued Shares 150m 155m
Offer Price of IPO Shares $0.20 per share
Capitalisation on List ing $30m $31m
Group Net Assets 30 June 2015 $45.9m $45.9m
Group Cash 30 June 2015 (pre IPO) $53.1m $53.1m
Offer Price PER (Price Earnings ratio)- based on Full Year 2014 NPAT $2.1m 14.3 times 14.8 times- based on annualised June 6 mths 2015 NPAT $6.3m 2.4 times 2.5 times
Proposed Annual Dividend based on payout of at least 10% of group NPAT - to
be paid approx Sept / Oct 2016 3
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Wonhe Multimedia Commerce Limited
Leading edge producer of internet relatedproducts
CEO, Jack Tong a leader of the ITcommunity in Shenzhen, the IT leader inChina
The Wonhe Commercial Router isbecoming a leading edge product
The Wonhe Router is sophisticated, usedwith free WiFi in large retail areas toaggregate data from consumers able tobe commercialised
Profits growing rapidly
NPAT for 6 months to June 2015 $6.3m Group cash 30 June 2015 $53.1m cash
per 20c share approx 35c
Planned unfranked annual dividends
An Australian listing will enable biggercontracts with SOEs
Strong future growth, profits, cash onhand and dividends is compelling
INVESTMENT HIGHLIGHTS
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Wonhe Multimedia Commerce Limited
Mr Qing Tong, Executive Director
Deep experience in capital investment,
capital raisings, enterprise management,marketing and Team building
Mr Jack Tong, Executive Director
Deep understanding of computertechnology, innovation and a Leader in IT inShenzhen
Mr Jun Li, Non-Executive Director
Considerable experience in cross borderfinance, international marketing and project
marketing
Mr Frank Cannavo,Non-Executive Director
Experienced Company Director, strongcapital raising skills and experience andstrong investor networks
Mr Raymond Lim,
Non Executive DirectorHolds qualifications in accounting, financeand law. Raymond is a Chartered
Accountant and Solicitor. He is also aChartered Tax Advisor of the TaxationInstitute of Australia
BOARD OF DIRECTORS
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Wonhe Multimedia Commerce Limited
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CORPORATE STRUCTURE
WONHE High-Tech International Ltd(a Nevada company)
World Win International Holding Ltd(a British Virgin Islands company)
100%
Investors under ProspectusCapital Raising
WONHE Multimedia Commerce Ltd(an Australian company)
Existing MinorityShareholders
52.26%
Kuayu International Holdings Group Ltd(a Hong Kong company)
12.90% 34.84%
Shengshihe Management Consulting (Shenzhen) Co Ltd(a wholly owned foreign enterprise in China)
Shenzhen WONHE Technology Co Ltd(a PRC limited liability company)
100%
100%
100%PRC
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Wonhe Multimedia Commerce Limited
Shenzhen Wonhe China registered inNovember 2010
In 2012 launched the first home multimedia centre HMC 660
2013 High Speed Growth Award andInnovation Award by the Shenzhencomputer industry
Advanced Home Media Centrelaunched 2014
Domestic Router YLT-100Slaunched 2015
Commercial Router YLT-300Slaunched 2015
Following its ASX listing Wonhe willbe able to bid for major Chinese ITcontracts, backed by its leadingCommercial Router YLT-300S
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KEY MILESTONES OF WMC
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Wonhe Multimedia Commerce Limited
THE IT INDUSTRY IN CHINA
In China, internet penetration moving todeepening of user content
Broadband in China becoming themacro development strategy
Broadband access in developed citiesnow 100 Mbps
Demand for networking of mobilephones, tablets, smart TVs and other
devices growing fast Internet online video business
developing fast
All these factors underpin and enhancethe wireless Router market
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Figures in 10,000 units
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Wonhe Multimedia Commerce Limited
WONHE SALES NETWORKNOW AND FORECAST
Wonhe sells its key products, theWireless set top box and the Commercialrouter mainly in Guangdong Province
Wonhe sells most of its set top boxes to12 Electronics companies in Shenzhen
60 Distributors sell Wonhes products
into the Guangdong marketCompany is planning to increase itssales reach to the entire east coast citiesof China
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Wonhe Multimedia Commerce Limited
WiFi provides free network services
3G / 4G charged by data flow
WiFi much faster than 3G and fasterthan 4G
Demand for cell phones in China ismassive
Very close link between cell phone
demand and market demand for WiFi
Wonhe Commercial router YLT-300Soffers free WiFi
Demand from Malls, Shopping centresand Business centres for Routersproviding free WiFi is huge
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CHINA WiFi AND 3G / 4G
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Wonhe Multimedia Commerce Limited
Intelligent hardware, researched anddeveloped by Wonhe
The router has an independent operatingsystem enabling the installation of variousapplications by users
The router also has a powerful USBsharing function
Uses cookies from users mobiles to builduser profiles
Strong encryption, and is very flexible inaccessing and delivering value for money
Users log on free to WiFi from the Router provides users with a shopping platform
Enables Users to assess real timeproduct availability, special offers, anddiscounts
Selling price around A$300
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WONHES KEY PRODUCTS COMMERCIAL ROUTER YLT-300S
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Wonhe Multimedia Commerce Limited
A data storage, management and controlcentre for household equipment
Uses remote wireless technology tocontrol household devices at home orremotely
Can access TV and video on demand
Game consol
Storage facility for data
Enables viewing of satellite programs
Read video files
Support WiFi
Sells for approx. A$715
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WONHES KEY PRODUCTS HOME MEDIA CENTRE HMC720
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Wonhe Multimedia Commerce Limited
Used for traditional router functions offlow forwarding and multi device access
Also has a variety of intelligent functions
Independent operating system
Store of information
Built in firewall and strong encryption and
security
Great value for money
Sells for approx. A$80
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WONHES KEY PRODUCTS DOMESTIC ROUTER YLT-100S
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Wonhe Multimedia Commerce Limited
WONHE FINANCIAL ANALYSISA. BALANCE SHEET A$M
30 June 2015 31 December 2014
Current Assets
Cash 53.1 42.2 Other 3.6 4.0
56.7 46.2
Non Current Assets 3.0 3.2
Total Assets 59.7 49.4
Current Liabilities 13.8 12.8
Net Assets 45.9 36.6
Shareholders Funds
Paid up Capital 9.4 8.8
Retained Earnings 29.7 22.5
Other 4.5 3.5
Minority Interests 2.3 1.8
Shareholders Funds 45.9 36.614
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Wonhe Multimedia Commerce Limited
WONHE FINANCIAL ANALYSISB. NET PROFIT BEFORE AND AFTER TAX A$M
6 months to June 2015 Full Year 2014
Sales 17.2 6.9 Cost of Sales (9.1) (3.6)
Gross Profit 8.1 3.3
Total Expenses (0.6) (0.8)
Net Profit before tax 7.5 2.5
Taxation (0.9) (0.3) Profit after tax 6.6 2.2
Non controlling interests (0.3) (0.1)
Net Profit After tax (NPAT) 6.3 2.1
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Wonhe Multimedia Commerce Limited
Current Wonhe sales only in GuangdongProvince through a sales network of 60
agents The YLT-300S will become a dominant
product which is sold by Yun Lu Tong(YLT) to over 400 agents in Guangdongand adjoining provinces
Wonhe is planning to extend its agentssignificantly in future years, initiallycovering all east coast provinces over thenext 2 to 3 years
Wonhe will expand its Commercial Routerinto more large commercial districts with
intelligent WiFi router installation at nocost or only at cost price
A listing on ASX combined with theCompanys technological strength plus astrong Balance Sheet will enable Wonhe
to bid for significant contracts in the future Using different applications of Wonhe
technology together with the Cloud, beingWonhes Router, Storage, Videos, Media,and Networking to gain a strategicadvantage in its IT space
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WONHE STRATEGIES FOR FUTURE GROWTH
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Wonhe Multimedia Commerce Limited
China has specific policies which supportthe development of domestic routers
Routers are a combination of hardwareand software; the key hardware is thechip and the key software is the protocol;both require expensive and complicateddevelopment platforms and equipment
China has issued a series of policies topromote the development of networkintelligent equipment
Like Australia, China is focused onincreasing its Broadband strategy and
implementation The increased network speed creates
significant opportunities for moreintelligent set top boxes
With the increasing internet penetration in
China, the official development mantra ischanging towards the deepening of usercontent, adding to the complexity ofinternet related products
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GOVERNMENT POLICIES AND BARRIERS TO ENTRY
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Wonhe Multimedia Commerce Limited
R&D is critical forWonhe to enable it tostay at the forefront of new IT
developments Wonhe employs young IT graduates to
develop the protocols for high classproducts.
Wonhe uses the international advanced
CMMI-3 level management standard tomanage projects and establish a soundstandardized development system andtraining system
Internal R&D is structured in businessteams
The Company holds many Product designpatents for both hardware and softwaredesigns but more recently has focusedmore just on the design of new productswith less risk of copying by others
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WONHE RESEARCH AND DEVELOPMENT
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Wonhe Multimedia Commerce Limited
Jack Tong key to the continuingdevelopment of innovative products
Jack Tong sits on the ShenzhenComputing Association Board and is akey contributor
The Commercial router was released intothe market in the June Quarter of 2015
with strong demand
Strong focus on R&D to stay at theforefront of development
Balance Sheet with $53.1m cash on handat 30 June 2015
The smart router competes very wellagainst the similar products on the market
The Company intends to pay dividendsfrom profits earned
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WONHES COMPETITIVE STRENGTHS
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Wonhe Multimedia Commerce Limited
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Use of FundsMaximum
SubscriptionPercentage of
Funds (%)Minimum
SubscriptionPercentage of
Funds (%)
Total raised under Offer $4,000,000 $3,000,000
Equipment required for product development and testing(over a two (2) year period) $717,866 18% $493,222 16%
Development of hardware products $1,696,774 42% $1,165,796 39%
Development of software products $522,084 13% $358,706 12%
Expenses of Offer $713,276 18% $632,276 21%
Administration and overheads (over a two (2) year period) $350,000 9% $350,000 12%
Total Funds Applied $4,000,000 100% $3,000,000 100%
Under the Offer, the Company plans to raise up to $4,000,000. The Company intends to apply the funds raised from the Offer as follows:
Notes: *If the Company raises less than the Maximum Subscription amount offered under this Prospectus then the budgets set out above may be reduced proportionately.
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Wonhe Multimedia Commerce Limited
WONHE TIMETABLE (INDICATIVE)
Opening date of offer (expected) Tuesday 17th November 2015
Expected closing date Friday 4th December 2015
Securit ies issued and allotted Friday 11th December 2015
Shares expected to commence trading Wednesday 16th December 2015
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Wonhe Multimedia Commerce Limited
An Australian main board listing enablesWonhe to pursue much larger sales
contracts with large State OwnedEnterprises
An Australian listing gives much greatercredibility to this growing company in agrowth industry
Enables greater opportunity for access tocapital in future years as growthcontinues
The Australian market favors Technologylistings with strong growth potential, and
when that is coupled with a strongBalance Sheet and an intention to rewardshareholders with dividends, the Wonheinvestment opportunity is compelling
It is generally much quicker to achieve aListing than all the other Stock markets in
Asia
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WONHE WHY LIST ON ASX?
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Wonhe Multimedia Commerce Limited
HOW TO APPLY FOR WONHE SHARES
1. Complete the Application form at the back of the Prospectus and in accordance with theaccompanying instructions
2. Applications must be a minimum of 10,000 shares ($2,000) and then in increments of1,000 shares ($200)
3. Pay Application Monies in accordance with instructions set out on the Application form
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Wonhe Multimedia Commerce Limited
WONHE AUSTRALIAN ADVISORY TEAM
Lead Manager Beer and Co. Pty Ltd and its wholly ownedsubsidiary, Melbourne Venture Securities Pty Ltd
holding Australian Financial Services Licence No.224313
Legal Advisor Pointon Partners Pty Ltd
Independent Accountant HLB Mann Judd Corporate Finance Pty Ltd
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WONHE CONTACT LIST
Beer and Co. Pty LtdMichael Beer
T: +61 3 9600 3599
M: +61 412 945 818
Wonhe Multimedia Commerce Limited
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