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China Digital TV Holding Co. Ltd. 04 July 2008

Update Report – 1Q 08 Results

Commendable performance in face of rising competitive pressure

ADR BUY Fundamental research indicates an 89% upside in the ADR over the next 6-24 months. We have
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Fundamental Stock obtained through DCF and comparative valuation methodologies.
http://www.iirgroup.com/researchoracle/viewreport/show/20203
Ticker: STV
Target price: US$23.00
Current price: US$12.14 We reiterate the ADR (1 ADR = 1 common share1) a BUY with a 6-24 month target price of US$23.00.

European BUY The European ADR is expected to appreciate approximately 111% over the next 6-24 months as the
89% fundamental upside is supported by approximately 22 percentage points upside attributable
ADR2 purely to the anticipated appreciation of the US dollar against the Euro over the same period.

Ticker: STVy.F
Target price: €17.03
We reiterate the European ADR (1 European ADR = 1 common share) a BUY with a 6-24 month target
Current price: €8.06 price of €17.03.

Supervisor: Meera Patil

Analyst: Namrata Chheda Investment horizon- short term actionable trading strategies
Editor: Shem Pennant This report addresses the needs of strategic investors with a long-term investment horizon of 6-24 months. If
Global Research Director: this report is provided to you by your broker under the Global Settlement, you may now also access (free of
Satish Betadpur, CFA charge) the short-term trading outlook that we publish from time to time for this issuer, looking at the coming
5-30 days for readers with a shorter trading horizon. These are available on-line only at
Next news due: www.researchoracle.com
2Q 08 results, July 2008
Report summary
China Digital TV Holding Co. Ltd. (China Digital TV) reported an encouraging set of results in 1Q 08.
Strong smart card sales volumes led to robust top-line growth, surpassing our and Management
guidance. Smart card sales volume remain the fundamental growth driver as digital TV penetration
continues to grow at an accelerated pace, supported by a favorable operating environment. However,
competitive pressures are negatively impacting ASP. However, as China Digital TV is the market leader
in Conditional Access System (CAS) Smart cards volumes shipped, the company has been able to
withstand this pressure supported by economies of scale. Sustained R&D efforts for developing value-
added services businesses further demonstrates commitment to ensure a healthy revenue stream in
future. Therefore, our outlook for the company remains positive.

Currency impact for US investors

The company reports in US dollars. Earnings forecast are therefore also expressed in US dollars.
Although the company has costs as well as revenues in other currencies, we assume the net risk is
minimized through implementation of effective hedging strategies. As a result the impact of currency
movements on the price of the ADR is assumed to be neutral. Where specific currency risks are
identified these will be highlighted in the report.

Currency impact on the European stock

The impact by itself of the anticipated currency movements on the European stock (now €8.06),
without considering changes in the share price, is broadly positive and is expected to be:

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