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China Digital TV Announces Unaudited Second Quarter 2017 Results

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BEIJING , Aug. China Digital TV Holding Co., Ltd. (OTC STVVY) ("China Digital TV" or the "Company"), a leading provider of cloud platforms, with gaming and other applications embedded, to PRC digital television and telecommunication network operators, today announced its unaudited financial results for the second quarter ended June 30, 2017 .

Mr. Jianhua Zhu , China Digital TV's chief executive officer commented, "We experienced solid progress in the second quarter of 2017 as both our registered and covered user counts maintained growth momentum, primarily driven by our ability to effectively leverage our expanded geographic footprint. We were also pleased with our business development efforts in content diversification and product innovation during the quarter. To ensure steady future growth, we will continue to strategically focus on user base expansion, further content diversification, and brand recognition in order to enhance the paid user conversion rate. Furthermore, we will continue to evaluate opportunities for innovative business expansion and potential asset acquisitions. We remain committed to driving further growth of our business and creating value for our shareholders going forward."

Mr. Zhenwen Liang , China Digital TV's chief financial officer, stated, "In the second quarter of 2017, the number of covered users on our cloud platform increased to 160 million. The growth was primarily attributable to the partnership we established with Taiyuan Radio and Television, enabling our expansion into the Shanxi province. We continue to evolve our strategic focus and positioning to maximize the performance of our operations and are confident we will further solidify our position as China's leading provider of cloud platforms."

Update on NYSE Continued Listing Status

As previously disclosed, China Digital TV received notification on July 10, 2017 from New York Stock Exchange ("NYSE") that the average trading price of its common stock had fallen below the NYSE's continued listing standard. The Company has responded to the NYSE to confirm its intent to regain compliance within the required period. The Company will actively monitor its stock price and evaluate all available options to resolve the deficiency and other listing standards that the Company may be in risk of non-compliance.

Also announced previously, the Company has appealed the NYSE's commencement of its delisting proceedings, which focus on its compliance with other listing standards related to lack of operating assets. The Company remains subject to all NYSE listing standards while that appeal is pending. The NYSE is currently scheduled to hold an appeal hearing in October 2017 . The NYSE notification does not affect the Company's business operations or its SEC reporting requirements. The Company's stock has been trading on the OTC market under the ticker symbol "STVVY" since the NYSE suspended trading in May 2017 .

Second Quarter 2017 Results[1]

China Digital TV's net revenues increased by 34.5% to USD1.3 million from USD0.9 million in the prior year period. The increase in net revenues was primarily due to the increased product revenues during the quarter.

Cost of revenues increased by 125.0% to USD0.7 million from USD0.3 million in the prior year period. The increase in cost of revenues was primarily due to the increase of net revenues in the second quarter of 2017.

Gross profit in the second quarter of 2017 was USD0.6 million , which was slightly lower than the prior year period. Gross margin, which is equal to gross profit divided by net revenues, was 47.9% in the second quarter of 2017, as compared with 68.9% in the prior year period. The decline in gross margin was mainly due to an increased proportion of revenues from products during the quarter, which have a relative lower gross margin than services.

Operating expenses in the second quarter of 2017 decreased by 13.3% to USD2.3 million from USD2.6 million in the prior year period.

Loss from continuing operations in the second quarter of 2017 decreased by 15.5% to USD1.7 million from USD2.0 million in the prior year period.

Income tax expenses in the second quarter of 2017 was USD0.05 million , as compared with an income tax benefit of USD0.03 million in the prior year period.

Net loss attributable to China Digital TV Holding Co., Ltd in the second quarter of 2017 decreased to USD0.9 million from USD1.6 million in the prior year period. The decrease was primarily due to a combination of decreased operating expenses and increased interest income.

Non-GAAP net loss[2] attributable to China Digital TV Holding Co., Ltd in the second quarter of 2017 was USD0.7 million , as compared to net income of USD2.4 million in the prior year period[3].

Balance Sheet

As of June 30, 2017 , China Digital TV had cash and cash equivalents and term deposits totaling USD27.6 million , as compared to USD125.5 million as of March 31, 2017 . The decrease was primarily due to the payment of a special dividend of US$1.5 per ordinary share, representing a total cash dividend paid in June 2017 of USD100.3 million .

Conference Call Information

China Digital TV's management will host an earnings conference call at 8:00 p.m. on Thursday, August 10, 2017 , U.S. Eastern Time (8:00 a.m. on Friday, August 11, 2017 , Beijing /Hong Kong Time).

Conference Call Dial-in Information:

United States Toll Free: +1-888-346-8982 International: +1-412-902-4272 Hong Kong: 800-905945 China Toll Free: 4001-201203 Conference Name: China Digital TV Holding Co. Ltd. call.

United States Toll Free:

+1-888-346-8982

International:

+1-412-902-4272

Hong Kong:

800-905945

China Toll Free:

4001-201203

Conference Name:

China Digital TV Holding Co. Ltd. call.

A replay of the call will be available for one week between 9:00 p.m. on August 10, 2017 and August 17, 2017 , U.S. Eastern Time.

Replay Dial-in Information:

United States: +1-877-344-7529 International: +1-412-317-0088 Replay Access Code: 10111189

United States:

+1-877-344-7529

International:

+1-412-317-0088

Replay Access Code:

10111189

Additionally, a live and archived webcast of this call will be available on the Investor Relations section of China Digital TV's corporate website at http://ir.chinadtv.cn.

About China Digital TV

Founded in 2004, China Digital TV is a leading provider of cloud platforms, with gaming and other applications embedded, to PRC digital television and telecommunication network operators, enabling them to bring these applications to household television sets and other mobile devices.

For more information please visit the Investor Relations section of China Digital TV's website at http://ir.chinadtv.cn.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. Such forward-looking statements are made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "may," "should" and similar expressions. Such forward-looking statements include, without limitation, statements regarding the outlook and comments by management in this announcement about trends in the cloud computing, cable television and related industries in the PRC and China Digital TV's strategic and operational plans and future market positions. China Digital TV may also make forward-looking statements in its periodic reports filed with the Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about China Digital TV's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from projections contained or implied in any forward-looking statement, including but not limited to the following: competition in the cloud computing, cable television and related industries in the PRC and the impact of such competition on prices, our ability to implement our business strategies, changes in technology, the progress of the television digitalization in the PRC, the structure of the cable television industry or television viewer preferences, changes in PRC laws, regulations or policies with respect to the cloud computing, cable television and related industries, including the extent of non-PRC companies' participation in such industries, and changes in political, economic, legal and social conditions in the PRC, including the government's policies with respect to economic growth, foreign exchange and foreign investment.

Further information regarding these and other risks and uncertainties is included in our annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. China Digital TV does not assume any obligation to update any forward-looking statements, which apply only as of the date of this press release.

For investor and media inquiries, please contact:

China Digital TV Holding Co., Ltd. Investor Relations Tel: +86-10-6297-1199 x 9780 Email: ir@chinadtv.cn

ICR, Inc. Xueli Song Tel: +1 (646) 328-1950 Email: stv@icrinc.com

[1]Unless otherwise stated, all financial statement measures stated in this press release are based on generally accepted accounting principles in the United States ("U.S. GAAP").

[2] Non-GAAP net loss is defined as net loss excluding share-based compensation expenses, and amortization of acquired intangible assets from business acquisitions.

[3] For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP measures" set forth at the end of this release.

China Digital TV Holding Co., Ltd.   Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands of U.S. dollars, except share and per share data)     For the three months ended June 30, March 31, June 30, 2017 2017 2016 Total revenues $ 1,270 $ 675 $ 933   Taxes and surcharges (8) (8) 5 Net revenues 1,262 667 938 Cost of revenues (657) (202) (292)   Gross profit 605 465 646 Operating expenses:   Research and development expenses (1,018) (927) (1,174)   Selling and marketing expenses (514) (546) (549)   General and administrative expenses (741) (843) (898) Total operating expenses (2,273) (2,316) (2,621) Gain from disposal of assets - 822 - Loss from continuing operations (1,668) (1,029) (1,975) Interest income 477 641 7 Gain from disposal of an equity method investment - - 95 Other income, net 33 687 190 (Loss)/income before income tax expenses (1,158) 299 (1,683)   Income tax (expenses)/benefits (53) (143) 30 Net (loss)/income from continuing operations (1,211) 156 (1,653)   Discontinued operations Loss from the operations of discontinued      operations, net of income taxes - (389) (106)   Net loss (1,211) (233) (1,759) Less: Net loss attributable to noncontrolling interest (341) (383) (140) Net (loss)/income attributable to China Digital TV       Holding Co., Ltd. $ (870) $ 150 $ (1,619) Amounts attributable to ordinary shareholders of       China Digital TV Holding Co., Ltd: Net (loss)/income from continuing operations (870) 539 (1,398) Net loss from discontinued operations - (389) (221) Net (loss)/income attributable to China Digital TV       Holding Co., Ltd. $ (870) $ 150 $ (1,619) Net loss $ (1,211) $ (233) $ (1,759) Other comprehensive income/(loss), net of income       taxes      Foreign currency translation adjustment 202 125 (3,085)   Comprehensive loss (1,009) (108) (4,844) Less: Comprehensive loss attributable to       noncontrolling interest (298) (398) (230)   Comprehensive (loss)/income attributable to        China Digital TV Holding Co., Ltd. $ (711) $ 290 $ (4,614) Earnings/(loss) per share: Basic earnings/ (loss) per share attributable to       ordinary shareholders of China Digital TV       Holding Co., Ltd.: Net (loss)/income from continuing operations (0.014) 0.009 (0.023) Net (loss)/income from discontinued operations - (0.006) (0.004) Net (loss)/income $ (0.014) $ 0.003 $ (0.027) Diluted earnings/ (loss) per share attributable to       ordinary shareholders of China Digital TV       Holding Co., Ltd.: Net (loss)/income from continuing operations (0.014) 0.009 (0.023) Net (loss)/income from discontinued operations - (0.006) (0.004) Net (loss)/income $ (0.014) $ 0.003 $ (0.027) Weighted average shares used in calculating       earnings/(loss) per ordinary share: Basic 62,134,950 60,288,300 60,190,497 Diluted 62,134,950 60,689,982 60,190,497

China Digital TV Holding Co., Ltd.  

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands of U.S. dollars, except share and per share data)

    For the three months ended

June 30,

March 31,

June 30,

2017

2017

2016

Total revenues

$

1,270

$

675

$

933

  Taxes and surcharges

(8)

(8)

5

Net revenues

1,262

667

938

Cost of revenues

(657)

(202)

(292)

 

Gross profit

605

465

646

Operating expenses:

  Research and development expenses

(1,018)

(927)

(1,174)

  Selling and marketing expenses

(514)

(546)

(549)

  General and administrative expenses

(741)

(843)

(898)

Total operating expenses

(2,273)

(2,316)

(2,621)

Gain from disposal of assets

-

822

-

Loss from continuing operations

(1,668)

(1,029)

(1,975)

Interest income

477

641

7

Gain from disposal of an equity method investment

-

-

95

Other income, net

33

687

190

(Loss)/income before income tax expenses

(1,158)

299

(1,683)

 

Income tax (expenses)/benefits

(53)

(143)

30

Net (loss)/income from continuing operations

(1,211)

156

(1,653)

 

Discontinued operations

Loss from the operations of discontinued      operations, net of income taxes

-

(389)

(106)

 

Net loss

(1,211)

(233)

(1,759)

Less: Net loss attributable to noncontrolling interest

(341)

(383)

(140)

Net (loss)/income attributable to China Digital TV       Holding Co., Ltd.

$

(870)

$

150

$

(1,619)

Amounts attributable to ordinary shareholders of       China Digital TV Holding Co., Ltd:

Net (loss)/income from continuing operations

(870)

539

(1,398)

Net loss from discontinued operations

-

(389)

(221)

Net (loss)/income attributable to China Digital TV       Holding Co., Ltd.

$

(870)

$

150

$

(1,619)

Net loss

$

(1,211)

$

(233)

$

(1,759)

Other comprehensive income/(loss), net of income       taxes

     Foreign currency translation adjustment

202

125

(3,085)

 

Comprehensive loss

(1,009)

(108)

(4,844)

Less: Comprehensive loss attributable to       noncontrolling interest

(298)

(398)

(230)

 

Comprehensive (loss)/income attributable to        China Digital TV Holding Co., Ltd.

$

(711)

$

290

$

(4,614)

Earnings/(loss) per share:

Basic earnings/ (loss) per share attributable to       ordinary shareholders of China Digital TV       Holding Co., Ltd.:

Net (loss)/income from continuing operations

(0.014)

0.009

(0.023)

Net (loss)/income from discontinued operations

-

(0.006)

(0.004)

Net (loss)/income

$

(0.014)

$

0.003

$

(0.027)

Diluted earnings/ (loss) per share attributable to       ordinary shareholders of China Digital TV       Holding Co., Ltd.:

Net (loss)/income from continuing operations

(0.014)

0.009

(0.023)

Net (loss)/income from discontinued operations

-

(0.006)

(0.004)

Net (loss)/income

$

(0.014)

$

0.003

$

(0.027)

Weighted average shares used in calculating       earnings/(loss) per ordinary share:

Basic

62,134,950

60,288,300

60,190,497

Diluted

62,134,950

60,689,982

60,190,497

China Digital TV Holding Co., Ltd. Unaudited Condensed Consolidated Balance Sheets (in thousands of U.S. dollars) June 30, December 31, ASSETS 2017 2016 Current assets: Cash and cash equivalents $ 25,216 $ 117,292 Restricted cash - 4,753 Term deposits 2,349 2,344 Notes receivable 31 81 Accounts receivable, net 521 500 Inventories 147 4 Prepaid expenses and other current assets 6,320 1,611 Total current assets  34,584 126,585 Property and equipment, net  495 421 Intangible assets, net 229 258 Goodwill 671 655 Deferred income tax assets - 52 TOTAL ASSETS 35,979 127,971 LIABILITIES AND EQUITY Current liabilities: Accounts payable 371 445 Accrued expenses and other current liabilities  2,023 2,557 Deferred revenue and deferred income - current 2,189 1,382 Income tax payable 19 - Government subsidies - current 71 81 Total current liabilities 4,673 4,465 Deferred revenue and deferred income - non-current 182 125 Government subsidies - non-current 282 310 Total liabilities   5,137 4,900 Ordinary shares 32 30 Additional paid-in capital 29,642 45,273 Statutory reserve 88 88 (Accumulated deficit)/Retained earnings (870) 75,104 Subscription receivable (975) (596) Accumulated other comprehensive income/(loss) 10 (289) Total China Digital TV Holding Co., Ltd. shareholders' equity 27,927 119,610 Noncontrolling interest 2,915 3,461 Total equity 30,842 123,071 TOTAL LIABILITIES AND EQUITY $ 35,979 $ 127,971

China Digital TV Holding Co., Ltd.

Unaudited Condensed Consolidated Balance Sheets

(in thousands of U.S. dollars)

June 30,

December 31,

ASSETS

2017

2016

Current assets:

Cash and cash equivalents

$

25,216

$

117,292

Restricted cash

-

4,753

Term deposits

2,349

2,344

Notes receivable

31

81

Accounts receivable, net

521

500

Inventories

147

4

Prepaid expenses and other current assets

6,320

1,611

Total current assets 

34,584

126,585

Property and equipment, net 

495

421

Intangible assets, net

229

258

Goodwill

671

655

Deferred income tax assets

-

52

TOTAL ASSETS

35,979

127,971

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

371

445

Accrued expenses and other current liabilities 

2,023

2,557

Deferred revenue and deferred income - current

2,189

1,382

Income tax payable

19

-

Government subsidies - current

71

81

Total current liabilities

4,673

4,465

Deferred revenue and deferred income - non-current

182

125

Government subsidies - non-current

282

310

Total liabilities  

5,137

4,900

Ordinary shares

32

30

Additional paid-in capital

29,642

45,273

Statutory reserve

88

88

(Accumulated deficit)/Retained earnings

(870)

75,104

Subscription receivable

(975)

(596)

Accumulated other comprehensive income/(loss)

10

(289)

Total China Digital TV Holding Co., Ltd. shareholders' equity

27,927

119,610

Noncontrolling interest

2,915

3,461

Total equity

30,842

123,071

TOTAL LIABILITIES AND EQUITY

$

35,979

$

127,971

China Digital TV Holding Co., Ltd. Unaudited Condensed Consolidated Statements of Comprehensive Income (in thousands of U.S. dollars, except share and per share data ) For the six months ended June 30, June 30, 2017 2016 Total revenues $ 1,945 $ 2,473   Taxes and surcharges (16) (8) Net revenues 1,929 2,465 Cost of revenues (859) (709)   Gross profit 1,070 1,756 Operating expenses:   Research and development expenses (1,945) (2,960)   Selling and marketing expenses (1,060) (1,290)   General and administrative expenses (1,584) (1,934) Total operating expenses (4,589) (6,184) Gain from disposal of assets 822 - Loss from continuing operations (2,697) (4,428) Interest income 1,118 13 Gain from disposal of an equity method investment - 95 Other income, net 720 154 Loss before income tax expenses (859) (4,166)   Income tax expenses (196) (17) Net loss from continuing operations (1,055) (4,183)   Discontinued operations  (Loss)/income from the operations of discontinued        operations, net of income taxes (389) 3,534   Net loss (1,444) (649) Less: Net loss attributable to noncontrolling interest (724) (189) Net loss attributable to China Digital TV Holding Co., Ltd. $ (720) $ (460) Amounts attributable to ordinary shareholders of China Digital TV Holding       Co., Ltd: Net loss from continuing operations (331) (3,879) Net (loss)/income from discontinued operations (389) 3,419 Net loss attributable to China Digital TV Holding       Co., Ltd. $ (720) $ (460) Net loss $ (1,444) $ (649) Other comprehensive income/(loss), net of income       taxes      Foreign currency translation adjustment 327 (2,519)   Comprehensive loss (1,117) (3,168) Less: Comprehensive loss attributable to       noncontrolling interest (696) (267)   Comprehensive loss attributable to        China Digital TV Holding Co., Ltd. $ (421) $ (2,901) Earnings/(loss) per share: Basic earnings/ (loss) per share attributable to       ordinary shareholders of China Digital TV       Holding Co., Ltd.: Net loss from continuing operations (0.005) (0.064) Net (loss)/income from discontinued operations (0.006) 0.057 Net loss $ (0.011) $ (0.007) Diluted earnings/ (loss) per share attributable to       ordinary shareholders of China Digital TV       Holding Co., Ltd.: Net loss from continuing operations (0.005) (0.064) Net (loss)/income from discontinued operations (0.006) 0.057 Net loss $ (0.011) $ (0.007) Weighted average shares used in calculating       earnings/(loss) per ordinary share: Basic 61,216,730 60,183,853 Diluted 61,216,730 60,183,853

China Digital TV Holding Co., Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income

(in thousands of U.S. dollars, except share and per share data )

For the six months ended

June 30,

June 30,

2017

2016

Total revenues

$

1,945

$

2,473

  Taxes and surcharges

(16)

(8)

Net revenues

1,929

2,465

Cost of revenues

(859)

(709)

 

Gross profit

1,070

1,756

Operating expenses:

  Research and development expenses

(1,945)

(2,960)

  Selling and marketing expenses

(1,060)

(1,290)

  General and administrative expenses

(1,584)

(1,934)

Total operating expenses

(4,589)

(6,184)

Gain from disposal of assets

822

-

Loss from continuing operations

(2,697)

(4,428)

Interest income

1,118

13

Gain from disposal of an equity method investment

-

95

Other income, net

720

154

Loss before income tax expenses

(859)

(4,166)

 

Income tax expenses

(196)

(17)

Net loss from continuing operations

(1,055)

(4,183)

 

Discontinued operations

 (Loss)/income from the operations of discontinued        operations, net of income taxes

(389)

3,534

 

Net loss

(1,444)

(649)

Less: Net loss attributable to noncontrolling interest

(724)

(189)

Net loss attributable to China Digital TV Holding Co., Ltd.

$

(720)

$

(460)

Amounts attributable to ordinary shareholders of China Digital TV Holding       Co., Ltd:

Net loss from continuing operations

(331)

(3,879)

Net (loss)/income from discontinued operations

(389)

3,419

Net loss attributable to China Digital TV Holding       Co., Ltd.

$

(720)

$

(460)

Net loss

$

(1,444)

$

(649)

Other comprehensive income/(loss), net of income       taxes

     Foreign currency translation adjustment

327

(2,519)

 

Comprehensive loss

(1,117)

(3,168)

Less: Comprehensive loss attributable to       noncontrolling interest

(696)

(267)

 

Comprehensive loss attributable to        China Digital TV Holding Co., Ltd.

$

(421)

$

(2,901)

Earnings/(loss) per share:

Basic earnings/ (loss) per share attributable to       ordinary shareholders of China Digital TV       Holding Co., Ltd.:

Net loss from continuing operations

(0.005)

(0.064)

Net (loss)/income from discontinued operations

(0.006)

0.057

Net loss

$

(0.011)

$

(0.007)

Diluted earnings/ (loss) per share attributable to       ordinary shareholders of China Digital TV       Holding Co., Ltd.:

Net loss from continuing operations

(0.005)

(0.064)

Net (loss)/income from discontinued operations

(0.006)

0.057

Net loss

$

(0.011)

$

(0.007)

Weighted average shares used in calculating       earnings/(loss) per ordinary share:

Basic

61,216,730

60,183,853

Diluted

61,216,730

60,183,853

Reconciliation of Non-GAAP Measures

Non-GAAP net income attributable to China Digital TV Holding Co., Ltd. shareholders excludes share-based compensation expenses, and amortization of intangible assets acquired from business acquisitions. The Company believes that the Non-GAAP net income provides meaningful supplemental information regarding the Company's performance by excluding certain non-cash expenses that may not be indicative of its operating performance from a cash flow perspective. The Company believes that both management and investors benefit from referring to this additional information in assessing the Company's performance and when planning and forecasting future periods.

However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company's net income for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measure in isolation from or as an alternative to the financial measure prepared in accordance with U.S. GAAP.

For the three months ended   June 30, March 31, June 30, 2017 2017 2016 (in thousands of U.S. dollars) Net (loss)/income attributable to China Digital TV       Holding Co., Ltd. shareholders - GAAP $ (870) $ 150 $ (1,619) Share-based compensation expenses 128 465 3,988 Amortization of intangible assets from business       acquisitions 10 10 12 Net (loss)/income attributable to China Digital TV       Holding Co., Ltd. shareholders - Non-GAAP $ (732) $ 625 $ 2,381

For the three months ended  

June 30,

March 31,

June 30,

2017

2017

2016

(in thousands of U.S. dollars)

Net (loss)/income attributable to China Digital TV       Holding Co., Ltd. shareholders - GAAP

$

(870)

$

150

$

(1,619)

Share-based compensation expenses

128

465

3,988

Amortization of intangible assets from business       acquisitions

10

10

12

Net (loss)/income attributable to China Digital TV       Holding Co., Ltd. shareholders - Non-GAAP

$

(732)

$

625

$

2,381

 

View original content:http://www.prnewswire.com/news-releases/china-digital-tv-announces-unaudited-second-quarter-2017-results-300502667.html

SOURCE China Digital TV Holding Co., Ltd.

http://ir.chinadtv.cn

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