Equity Snapshot-
Ticker (exchange): JNGW (NASDAQ) Stock price (31/03/11): $3.13 Market cap: $63.5M Shares outstanding (31/03/11): 20.3 M 52-week range: $2.90 - $4.01 Avg. daily volume (3-month): 8,105 Fiscal year end: Dec 31 Corporate headquarters: Shenzhen, China Year established: 1999 Business segments: Data Mining (“DM”)
Software Services (“SS”)
Investment HighlightsTechnology and Market leadership with relatively high barrier to entry – Jingwei’s strategic assets and its solid customer relationships were developed over time. It can require years of experience to establish a leadership position in this industry, and Jingwei has a significant first mover advantage in China’s telecom and power verticals that is difficult to duplicate. The Company invests an average of 7% of its revenue into R&D every year to meet new market demands and stay ahead of the competition.
Beneficial long-term customer and partner relationships – Jingwei has established multiple long-term customer relationships in both the telecom and power sectors, including with high-profile clients such as: China Telecom, China Mobile, China Unicom, Huawei and the State Grid of China. These companies are not only Jingwei’s customers but also its strategic partners in providing services and solutions to business enterprises and to consumers.
Strategic assets and technologies, with an unparalleled database of >400M consumer profiles and a national ISP license – Jingwei’s proprietary database includes detailed biographical, demographic and spending behavior information on more than 400 million consumers in China. Beyond this invaluable asset, Jingwei has a portfolio of: 30 technology patents, 33 software products, Mobile VAS assets and a National ISP license. By leveraging these assets, Jingwei can: (1) help companies to more effectively reach their target audiences and (2) provide clients with high quality software solutions for business critical applications.
Experienced and credible management team – Jingwei’s management team has global leadership experience at successful businesses in both China and the US, such as China Wireless Technologies Group, ZTE Corporation and Deloitte & Touche LLP. The Company’s top executives share 60+ years of combined industry experience and most of them have extensive overseas work experience.
Strong financial performance, positive cash position, and robust growth – the Company has five solid years of profitable growth; and at the end of FY2010, Jingwei’s net cash position totaled $7.5M. In 2010, revenue and net income increased 24% and 66% respectively to $37.6M and $9.9M; with diluted EPS increased 54% to $0.52 from $0.34 in 2009.
Favorable industry trends support Company growth initiatives – Jingwei’s core business entails a balanced portfolio of data mining, interactive marketing and software services which are well positioned to benefit from the undisputable growth of consumer spending and the robust growth of 3G, mobile and mobile Internet marketing applications; which have plenty of room to grow in China compared to other developed countries. In the software services segment, we also expect to reap benefit from the country’s 3-network convergence program and the Chinese government’s commitment to invest more than $150 billion over the next 10 years to overhaul the national electric grid network in China.
Business Overview-
Favorable Macro and Industry Drivers in China Impacting Jingwei’s Two Business Segments Driver Data Mining Software Services Large & Growing Mobile User Population
900 million mobiles users (April 2011)1
Increased by 41 million from January to April 2011 (April 2011)1X Large & Growing Internet User Population
450 million total internet users (Jan 2011)2
+34.3% y-o-y growth (Jan 2011)2X X Large & Growing e-Commerce Market
E-commerce sales for 2010 was more than $615billion (2011)3X X Rising Consumer Spending
+15.8% y-o-y growth in consumer goods retail sales (March 2011)4X X Nationwide 3G Rollout and 3G User Growth
0.6million total 3G users with 7% penetration (as of March 2011)5X X 3-Network Convergence
Estimated $100 billion boost to China’s economy over next 3 years6X X Intelligent Power Grid Program
Largest Smart Grid program in the world8
Estimated $150 billion government investment over next 10-years7X Sources: 1Ministry of Industry and Information Technology; 2China Internet Network Information Center; 3Ministry of Commerce; 4National Bureau of Statistics of China; 5China Mobile, China Unicom, and China Telecom company reports; 6DIGITIMES; 7ZPryme Data Mining Segment
Jingwei’s Data Mining services include market segmentation, customer churn analysis, fraud detection, trend analysis, self-service reporting, mobile value-added services (MVAS) and multi-media, multi-channel marketing, among other offerings. Jingwei leverages its proprietary consumer database, data mining competencies and predictive analysis technologies to help companies:
- (1) improve product development and marketing effectiveness;
- (2) increase operational efficiency and profitability;
- (3) identify new market trends, target audiences and opportunities;
- (4) deliver effective marketing messages to targeted consumers; and
- (5) provide interactive, proactive and personalized marketing for optimal results.
Software Services Segment
Jingwei also operates a software services business, with proven leadership in quality billing, business intelligence, operations support and customer relationship management solutions. Jingwei’s software services streamline back-office operations for customers, enable accurate billing and provisioning, improve business operational efficiency, as well as enable intimate and personalized relationship management for end-customers. Jingwei’s data mining & BI software enables carriers to record all key user behaviors, like long-distance call, roaming, etc. Based on this information, the system can generate management reports to help analyze user behavior and spending profiles. By providing this software service for telecom operators, Jingwei is able to obtain valuable customer behavior information for its revenue sharing-based marketing services such as interactive marketing and mobile Internet marketing services. Therefore, the software services business and the data mining business have high synergy in that the software services business strengthens data mining sales opportunities and allows the Company to enhance its customer database to provide quality interactive marketing services to the operators.
Growth StrategyDrive Organic Growth and Invest in R&D – Jingwei aims to drive continued growth of its data mining and software services businesses by investing in new products and services as well as by expanding its geographic reach to provide enhanced, high quality services to its customers.
Capitalize on Attractive High Growth Segments – Jingwei is focused on several high growth segments including: (1) the rapid growth of mobile value-added services, mobile Internet marketing and the wide adoption of e-Commerce applications driven by the rollout of 3G in 2009; (2) the transformation of the telecom and the cable TV industries through the 3-network convergence program that started in 2010; and (3) the commitment by the central government to spend up to $150 billion to upgrade the smart grid network in China over the next 10 years.
3G Related Growth Opportunities – Riding on the rollout of 3G in China in 2009, Jingwei continues to invest in new MVAS applications and software tools to leverage its interactive marketing platform and to capitalize on strong growth of mobile internet applications and of the consumer market in China. Based on its vision that web-enabled mobile marketing and mobile commerce will become the norm of e-Commerce in China, Jingwei broadened its MVAS portfolio with the acquisition of intangible assets from Newway Technology in 3Q’09; then the acquisition of 100% equity interest of Shanghai Haicom Telecom Technology Limited in 4Q,10. As a result of these acquisitions, Jingwei strengthened its MVAS solutions, particularly on 3G related offerings and opened up additional channels to a dozen strategically important regional subsidiaries of China Unicom and China Telecom not previously served by the Company. Evolving mobile and MVAS markets, which have been influenced by full 3G deployment, have provided additional mobile marketing opportunities for Jingwei. China’s top operators are competing fiercely for new 3G users and enhanced MVAS offerings to drive up ARPUs for growth, which benefits Jingwei’s Data Mining segment. To promote the adoption of 3G products and services, carriers have, in some cases, partnered with Jingwei to develop and operate MVAS platforms for the consumers on revenue sharing basis; and, in other cases, carriers have outsourced to Jingwei the process of signing up new 3G subscribers, upgrading existing users from 2G to 3G, and selling mobile devices bundled with service plans. Using its database and advanced technology, Jingwei can efficiently target potential clients and subscribers. Jingwei typically receives an upfront payment for each subscriber signed up plus a percentage of monthly user billing over the course of a service contract. Jingwei performs these services through its interactive marketing platform including its call centers in the region (see below).
Interactive Marketing– Jingwei developed a web-enabled interactive marketing platform that leverages the Company’s unparalleled consumer database and national ISP license to generate sales leads and provide clients with a complete range of quote-to-cash offerings, including: (1) targeted outbound sales campaigns via multi-media delivery channels, (2) pre-sales support, (3) order fulfillment, and (4) post-sale customer care services at call centers. Jingwei’s integrated interactive marketing offering helps mobile operators sign up new 3G subscribers, while also upgrading existing users to create higher average revenue per user (“ARPU”). Entering into 2011, The Company is developing and operating Zhejiang China Unicom's mobile and mobile value-added services ("MVAS") Society Channel and marketing support system, to support its over 80,000 society channel depots in Zhejiang province for optimal marketing results on "revenue sharing" basis.
The Company also provides business intelligence and operational platforms to help clients retain customers prior to contract expiration, which leads to a continuation of recurring revenue to both Jingwei and its clients. Currently the Company has deployed interactive marketing call centers in three provinces to serve mobile operators. Jingwei envisions expanding its call center capacity in 2011 to support growing demand from regional operators, and will pursue opportunities to grow into new verticals such as financial services, securities and retail. Interactive marketing clients typically compensate Jingwei through a recurring revenue sharing model, reflecting the Company’s role as sales and services partner.
Mobile App Stores – Increased bandwidth associated with 3G technology has created greater demand for mobile phone applications in China. Leveraging its strong industry relationships, Jingwei has been awarded contracts to build mobile App stores in cooperation with a leading telecom equipment vendor for two major mobile operators. This is a high growth market and Jingwei expects App stores to be widely adopted by business enterprises and consumers. Jingwei’s first pilot system was deployed in Sichuan province for China Telecom in March 2010 with very favorable results. In addition to providing the full software capabilities, Jingwei also plans to collaborate with the operators to develop joint marketing initiatives to attract apps to the stores and increase downloads by end-users. Jingwei receives upfront fees to develop the platforms and envisions the possibility of future revenue sharing agreement to help the operators attract apps to the store and increase downloads by end-users.Other Software Services – On the Software Services side of the business, the nationwide rollout of 3G in China in 2009 requires new application solutions to support recently deployed infrastructure. Jingwei is well positioned to deliver major application services to help operators transition to this new framework.
3-Network Convergency – With the introduction of China’s 3-network convergence plan in 2010, similar to the “Triple Play” transformation of the telecom, cable TV and Internet networks in the US several years ago, operators have budgeted major spending programs to upgrade their support systems to introduce new services and sign up subscribers. A compelling opportunity for Jingwei is the deployment of IPTV/DTV (Internet Protocol TV / Digital TV) services by the telecom and cable operators. In 2010, Jingwei has already delivered billing and BSS software for a major telecom operator in 23 of China’s 31 mainland provinces. This year, we expect the program for DTV rollout for cable operators will accelerate and there is continuing high demand for our solutions in both the telecom and cable TV sectors. Apart from software services, Jingwei can help clients compete for IPTV/DTV customers by utilizing its data mining and interactive marketing competencies. Smart Grid Related Software Services – The Chinese government committed to upgrade the country’s entire power network in the Intelligent Power Networks improvement program announced in May 2009. This program involves a significant investment estimated at roughly $150 billion over the next ten years. Major spending will be made by energy companies on software services to make technical modifications. Jingwei expects to continue to be a major player in providing software services and systems integration solutions to the power sector by leveraging its history of technical competence and software expertise in these areas.
Select M&A to capitalize on the above opportunities - Jingwei will consider disciplined M&A, where appropriate, to accelerate profitable growth and to increase competitive advantages in the market, with an emphasis on the following areas:
New Verticals – Jingwei is evaluating expansion, through organic and/or external means, to reach into non-telecom sectors to diversify and grow its customer base. The Company initially is targeting consumer-focused segments such as the financial, retail, real estate and education sectors. On a similar note the Company aims to acquire more consumer data from different industries.
New Geographies – Jingwei is pursuing geographic expansion of its interactive marketing infrastructure and web-enabled call center network, through organic and/or external means, from its current presence in three provinces.
New Capabilities – Jingwei would like to better position its current offerings by adding capabilities to address the large smart grid spending opportunity and to strengthen our consumer interactive marketing expertise, among other areas.
SELECTED FINANCIALS AND MANAGEMENT BIOS

Forward-Looking Statements: This corporate profile contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, which can be identified by the use of words such as “believes,” “expects,” “may,” “will,” “intends,” “plans,” “estimates,” or “anticipates” or other comparable terminology as well as future or conditional verbs such as “will,” “should,” “would,” or “could.” 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 international, national or regional economic and competitive conditions, changes in relationships with customers, access to capital, difficulties in developing and marketing new products and services, marketing existing products and services, customer acceptance of existing and new products and services and the risks and uncertainties described in the Company’s most recent annual report on Form 10-K and the Company’s quarterly reports on Form 10-Q. 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 or reuse the forward-looking information contained in this presentation. All forward-looking statements are qualified in their entirety by this cautionary statement.

