TBYH...Letter to TBAY Shareholders
Wednesday April 26, 7:30 am ET
From the Office of the President
BOISE, Idaho, April 26 /PRNewswire-FirstCall/ --
Dear Shareholder:
As we have just finished our fiscal year which ended on March 31, 2006, I would like to take this opportunity to give you a brief review of our achievement during this past year.
Our operating subsidiary, Shanghai SunPlus Communication Technology Co., Ltd. (OTC Bulletin Board: TBYH - News), made a strategic decision at the beginning of the fiscal year just completed to shift the corporate focus from production and distribution of cell phones in the China market which brought in higher revenues but lower profits, to the high end, high profit, intelligent design solutions services market. Now, with over 170 highly qualified design and support engineers on staff, we have seen the wisdom of this decision.
* In fiscal year 2005 (year ended 03/31/2005), net revenues were
US $33.9 million. Gross profits increased by 50%, and net profit
increased 215.8% to about US $5.7 million.
* T-BAY expects net income to further increase by over 75% to
US$10.0 million ($0.35 EPS) for fiscal year 2006 (year ended
03/31/2006).
* Preliminary numbers for the 4th Quarter (year ended 03/31/2006) show an
increase of 6.5% over the same period in term of revenue in FY2005.
* We have a strong cash position of $4.5 million at the end of FY2006; an
increase of 40 times as compared with the previous quarter.
Further, as gratifying as these numbers are for us, which we expect will be fully supported when the final year-end audit is completed and published sometime next month, we have no intention of allowing our Company to simply rest on these accomplishments.
We are confident that if we do nothing more than what we did during Fiscal 2006, we will be able to report on a conservative basis an increase of 10 percent in Fiscal 2007 over Fiscal 2006. Current internal growth supports that, as do our constant market assessment reports. However, there are several reasons why we believe that this estimate is particularly conservative, and could be as much as 30 percent:
* Good Response to New Models. In January 2006 we announced that our
9701, 9702 and 9901 models were booked by Hisense, Diwangda,
Zhichengye, while still at their early design stage. The three design
solutions, two of them with new function of video output, easily
cross-communicate with both television and PCs. The total number of
these three products already sold is 215,000 through March 2006, with
an additional 350,000 sets anticipate to be sold by July 2006, which
would bring SunPlus a gross profit of as much as $4.5 million
collectively in their wholesale stage. And, they are just three of our
97 and 99 series models currently on the market through SunPlus
customers.
* Award Winning Designs. We are on track to produce 30-35 new products
in FY2007. These are highly desirable designer products that are on
the cutting edge of market trends. Wu Wei, our famous designer in the
Mobile Design area, led his team to win the "Best Fashion Color
Nominated Award" (Electronic Product) in "Color China Awards" sponsored
by China Fashion Color Association (CFCA) engaged in fashion color
research, forecast, design and application. He also led his team to
successfully win the "top 104 iF excellent designs" in the 3rd iF China
Design Contest in May 2005.
* New Investment. SunPlus is on schedule to invest $5-10 million in new
product development plant and equipment in FY2007. This includes
investment from settlement of about $4.5 million in accounts receivable
previously announced in February 2006. It is anticipated that this
will provide immediate return on investment, and long-term growth and
increased market share.
* Royalty Income. Our award-winning models of this past year reinforce
that our design engineering combined with our market know-how are
widely acclaimed and accepted. One model, for example, has already
sold 300,000 units for a gross profit of $2.2 million, ($7-8/set) and
we expect it to sell another 150,000 in the next two months for a gross
profit of $1.0 million. ($6-7/set) Given that SunPlus receives
royalties for most of the design services it provides, this is also
encouraging for our other models as well.
* Worldwide Market. Our management and marketing team just returned from
the CeBIT, one of the world's largest IT and telecommunications events
held March 8 to 15 in Hannover, Germany; and, an equally successful
trip to Japan, where we began to reach out to other markets around the
globe. Even though the China market is the largest in the world, with
about 50 million new phones sold each year, one of our FY2007 goals is
to aggressively design mobile phones for the Eastern Europe and South
America market for our customers. These are markets where our design
technology is extremely competitive, and where our contacts to date
have been very productive. We expect to see this flourish for us, and
we have assigned specific marketing professionals in our Company to
follow up those relationships immediately.
* New Customers. We are adding new partners (from whom we buy components
and technology) and new customers (for whom we design solutions) every
month. These are some of the best-known technology suppliers and
providers in the world, and have been reported by us in many forums.
We may add 10-12 more customers in the coming year.
Because of these competitive advantages, our continuing emphasis on executive and engineering training and education, our aggressive marketing, and our respect in the Chinese market we are confident that this internal growth target could well be significantly below the actual growth as reported quarterly in our SEC filings.
Finally, TBAY is not content with just the products or technologies that are so successful for us today. We are already investing profits in China's next wave -- 3G -- that has the full support of the Chinese government, industry and people.
3G is a term for the 3rd generation of mobile telecommunication technology of broadband, packet-based transmission of video, music, digitized voice, text, data, etc. As China prepares for the 2008 Olympics, it is expected to build the world's largest 3G wireless network with more than 100 million subscribers expected within just five years. We are determined to be in the forefront of this new revolution, and are currently in negotiation with platform providers to complete cooperative agreement by mid-2006. If our design progress remains on schedule, we expect to complete 3G phone designs by end of 2006, and have products on the market by mid-2007.
All of this should add significantly to our bottom line each year for the foreseeable future.
Please feel free to contact us with any questions you may have at: zeng888888@hotmail.com.
With best regards,
Xiaofeng Li, Chief Executive Officer
T Bay Holdings, Inc., and Shanghai SunPlus Communication Technology Co.,
Ltd.
AI
