ACE — Investor Presentation 2019

Nov 22, 2019

Jinan Acetate Chemical

4763 TT 3Q19 Investor Presentation November 2019

The Little Giant in a Global Oligopoly Industry

• Jinan Acetate is a fully-integrated, independent manufacturer of superior quality acetate tows and flakes in an oligopoly market . Acetate tows are the key raw material used in making cigarette filters. Acetate flakes are primarily used in the production of acetate tows and optical frames.

• The industry has very high entry barriers , particularly in securing raw materials and customers. Jinan Acetate has successfully built strategic alliances to align its interests with key suppliers and customers. Advanced R&D and production expertise keep our costs significantly lower than our global peers , who are reducing and repurposing their capacity while we target double digit annual capacity growth over the next 5 years.

• We continue to invest while producing robust cash flows . In order to stay ahead of industry trends, we are developing new biodegradable products and new applications for existing products. We have also been investing in cost-saving equipment to maintain our cost advantage.

• We aim to double our market share for acetate tows within 5 years from 1.5% currently (2019E). Our focus clients are mid-to-small sized brands located in emerging market countries , which have greater growth potential than the established global brands. We also hope to gain business from one or more Tier-1 Tobacco players within the next 12-24 months.

• We aim to maintain an 80% cash dividend payout ratio and ROE in excess of 20%.

2

Jinan Acetate Chemical @ a Glance

• Ticker: 4763 TT

• Market Cap – 31 Oct 2019 : US$ 207 mn

• 2018 Revenue : US$57 mn

• ROE : Averaged 20% in 2015 thru 1-3Q19

• 2018 Dividend : DPS NT$4.0, Payout 82%

• Business Scope : Exports to more than 50 countries

• Client Diversification : Top 5 are less than 40% of sales

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Acetek Material
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Jinan Acetate
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• Jinan, Shandong

• Zaozhung, Shandong

• Acetate Tow Production

• Acetate Flake Production

• • Employees: 100

• Employees: 170

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NT$m Sales Breakdown by Products
2,000
1,600
17%
25%
28%
1,200
800
400 83% 75% 72%
0
2017 2018 1-3Q19
Acetate Tow Acetate Flake
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Products - Applications

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Fiber Grade
Acetate
Diacetate Cigarette Filter
Tow
Flake
Plastic Grade
Optical Frames
Diacetate Flake
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3

Company Milestones

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2019
Annual Capacity of Acetate Tow and Acetate Flake
Strategic
Year-End Design Capacity, Tonnes 2017 alliances
Mass production with LA/ES
2016
of acetate flake:
Established
2015 5,530 tonnes
Acetek
2014 Listed on
Material
Taiwan Stock
Established
2012 Jinan Acetate Exchange 17,000 17,000 17,000
Obtained Chinese
Chemical
high-tech
2006 (Cayman)
enterprise 13,000
Began
certification
1999 Production of 11,000 11,000
Established acetate tow 10,000
9,000 9,000
Jinan Julong
8,000
Fiber
4,000 4,000 4,000
3,000 3,000
2,000 2,000
1999 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 e
Acetate Tow Acetate Flake
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Annual Capacity of Acetate Tow and Acetate Flake

Year-End Design Capacity, Tonnes

4

Jinan Acetate Formula for Success

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Building a Better Moat

 R&D and Production Team have strong technical skills, extensive industry experience

 Lowest production cost in the industry

• Securing a stable market position through industry alliances

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Strategic Alliances

• Marketing & Distribution

• Vertical Integration

• Plastic Acetate Flake and the Plastic Eyeglass Frame Market

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Market Fundamentals

• The cellulose acetate tow market is an oligopoly market with a favorable pricing environment

• Demand is stable, and improves in hard economic times due to the ‘lipstick and cigarettes‘ effect

• Larger players have been rationalizing capacity, opening up opportunities for Acetek

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New Markets and Capacity Expansion

• We expand in line with new order visibility and have historically maintained capacity utilization of

• 90% or above.

• We are developing new market opportunities in the Middle East and Africa

5

Building a Better Moat

6

Building a Better Moat

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Strategic Alliances
Vertical Integration
 Secure Customers
 Secure Raw Materials
Emerging Market
Focus
 The Low-Cost Producer
 Better Growth Prospects
Advanced R&D Skills
Experienced Technical Team
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7

Strategic Alliances and Vertical Integration

Secure Demand from Key Customers

• Since 2015, our utilization rate for acetate tows has averaged above 90%. During that time, our capacity increased by 44%.

• Strategic alliances with key customers have secured a market niche in South America and stable business from downstream suppliers to Tier 1 eyeglass frame makers Luxottica and Safilo.

Self-sufficient in Acetate Flake Production

• Access to key raw materials is one of the most difficult barriers to entry and survival in this industry.

• Acetate flakes account for almost 90% of acetate tow raw material cost. We completed the construction and ramp up of our acetate flake plant in 2017-2018.

Acetate Tow Utilization Rate Averages above 90%

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100%
90%
80%
70%
60%
2015 2016 2017 2018 1-3Q19
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Our Plant Construction Cost is 50% Lower than Peers

• Vertical integration has enhanced our cost competitiveness, especially since our construction costs are 50% lower than peers.

8

Emerging Markets Focus

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Better growth prospects

• Many of our customers are reliant on Acetek for supply of tows. We help them get bigger so we can grow bigger.

• Our target customers are mostly mid-to-small sized brands located in emerging market countries. They have greater growth potential than international brands.

• Regulations on tobacco use are more relaxed in our target markets. Other vice products may be prohibited.

Offering customized products

• We offer products in small quantity and with specialized packaging based on customer requirements, creating a strong bond with our clients.

A Dedicated Acetate Flake and Tow Producer

• Acetate tow is only a fraction of our peers’ revenues.

• The payoff to them of driving us out of the market – with measures such as price cuts – are not worth the cost.

Over 90% of Our Shipments are to Emerging Markets Develop

ed

% of shipments by volume

Markets

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7%
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Emerging Markets 93%

9

Chemical Fiber Production Expertise Drives Our Competitive Edge

Patented Technology

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• Acetek Founder and President Wang Ke-Zhang is a over

• formally trained chemical fiber engineer with 35 years of technical production experience.

• Acetek is the only fully-integrated, independent manufacturer of superior quality acetate tows and flakes with proprietary intellectual property rights in China.

Industry Leader in Cost Competitiveness

• The ability to design machines ourselves results in at least 50% cost-saving in building a new plant.

R&D Expense as % of Revenue (%)

6.4%

5.6%

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4.6%
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2.9%

1.3%

• We continue to improve our production process through measures such as reducing steam usage and improving water treatment & RM recovery techniques. We expect to achieve further cost reductions over the next 2-3 years.

2015 2016 2017 2018 1-3Q19

10

Production Process for Acetate Flakes

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Plastic Grade
Diacetate Flake
Fiber Grade
Diacetate Flake
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11

Production Process for Acetate Tows

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Fiber Grade
Diacetate Flake
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12

Strategic Alliances Planting a Flag and Staking Our Claim

13

Jinan Acetate Chemical Corporate Structure

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Jinan Acetate Chemical
Co., Ltd. (Cayman)
Listed Entity
100%
My Parents Living
Technology Limited
(Hong Kong)
Hong Kong Holding
Company
80% 100% 80%
Acetek Chemical Co., Jinan Acetate Chemical Acetek Material Co., Ltd.
Ltd. (Hong Kong) Co., Ltd. (China) (China)
Investment Holding Acetate Tow Acetate Flake
Company for ELEUNG Manufacturer Manufacturer
25%
ELEUNG Limited
(Hong Kong)
Parent Company of Taly
Plastic Extrusion
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14

Acetate Tow Strategic Alliances

Marketing & Distribution Strategic Alliances

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Macrifer Wang
Trading S.A. Family
Affiliate Company
Chairman Wang and
of GlobalFilters SAF
family
and TH
Jinan Acetate
25.4% Chemical (Cayman) 40%
Listed Entity
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 South America Market:

The owner of Macrifer owns GlobalFilters and Tabacalera Hernandarias (TH). GlobalFilters is the largest cigarette filter producer in South America. TH is a Top 5, branded cigarette producer in South America. Both are customers of Acetek.

• Market Expansion:

GlobalFilters is expanding geographically and will begin production in Argentina and Miami, Florida (USA) in 2020. TH is developing products for Asia and the Middle East.

Vertical Integration Strategic Alliances

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Yankuang Lunan Jinan Acetate Thy Glory
Chemical Chemical (Cayman) Limited
Parent Company of
Acetic Anhydride
Listed Entity Acetate Granules
Manufacturer
Factory
80%
Acetek Material
12%
8% (China)
Acetate Flake
Manufacturer
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• Upstream:

Yankuang Lunan, an upstream supplier of acetic anhydride, contributed the land on which Acetek Material is built.

 Downstream: Thy Glory owns an acetate granules factory which is Acetek’s customer.

• Vertical Integration – 100% self-sufficient in flakes for tow: 70% of the acetate flake that Acetek Material produces is supplied to Jinan Acetate for production of acetate tow.

15

Plastic Grade Flake Strategic Alliances

• Strike Alliances with Downstream Acetate Granule and Plate Manufacturers

Thy Glory, JINLIANG, and TALY are cellulose acetate plate and granules manufacturers. All are downstream customers of Acetek’s plastic grade acetate flake.

• Access to Tier 1 Suppliers to Luxury Optical Frame Brands

LA/ES is a strategic partner of Acetek. It supplies cellulose acetate plates to Luxottica and Safilo, who between them hold a dominant market share for all luxury optical frame brands. Luxottica’s share amongst luxury optical frame and sunglass brands is 80%. Safilo is the No. 2 player.

• Order Commitments

70% of granules Taly buys are made from Acetek flake.

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Plastic Grade Plastic Colored
Optical
Diacetate Acetate Plastic
Frames
Flake Granules Acetate Sheet
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Jinan Acetate
Ken Chen
Chemical
Owner of Thy
Listed Entity
Glory Limited
20% 80%
JINLIANG Acetek Chemical
LA/ES
Acetate (Hong Kong)
Investment
Acetate Plates Acetate Plates
Holding Company
Manufacturer Manufacturer
for ELEUNG
25%
ELEUNG Limited
20% (Hong Kong) 55%
Parent Company
of Acetate Plates
Factory
100%
TALY Plastic
Extrusion
Acetate Plates
Manufacturer
16
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Market Fundamentals

Plastic Grade Cellulose Diacetate

Acetate Tow Industry – An Oligopoly Market

*Acetate Tow Industry Market Share

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Jinan
1.5%
Acetate,
2.0%
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Daicel, 14%
Solvay
(Rhodia),
Celanese,
15%
39%
Eastman,
30%
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*2019 Estimate

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Profitable Industry The very profitable acetate fiber industry has consolidated to six major companies.

01

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Entry Barriers

02

New entrants are deterred by barriers, such as technology, raw materials, legal complexity, etc.

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Rising Operating Rates

03

Driven by the closure of higher cost Western facilities.

*The sixth major company is China Tobacco who has Joint Venture plants in China with Celanese, Eastman and Daicel.

18

Source: Company data, JPMorgan Industry Report

Acetate Flake Market

Acetate Flakes Industry Products Applications

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Optical Frames,
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2%
Cigarette Filter,
90%
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Cigarette Filter, 90% Pen Refill, 1% Optical Frames, 2% Sewage Treatment, 1% Hemodialysis, 1% Nonwoven Facial Mask, 1%

Other, 4%

The major acetate flake producers are 01 expanding their product scope

Optical frames are the top non-cigarette 02 application for acetate flakes

19

The Industry Outlook is Improving

Capacity Rationalization

• From 2014 to 2018, the industry utilization rate dropped from nearly 100% to around 80%.

• In March 2015, Eastman announced the closing of its UK acetate tow manufacturing site.

• June 2018, Celanese announced plans to discontinue acetate tow production at its Mexico facility.

Asset Repurposing

• Celanese is repurposing manufacturing capacity from acetate tow to new products.

• The company is pursuing growth opportunities in textile and nonwoven applications.

Acetate tow pricing has rebounded recently

Celanese Acetate Tow Price YoY Change

4% 0% (4%) (8%) (12%) 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19

Acetic Anhydride Prices have Normalized

Acetic Anhydride Price (RMB$/tonnes)

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10,000
8,000
6,000
4,000
2,000
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Median Price
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Source: Celanese Quarterly Reports & Company Data

20

The Acetate Tow Industry’s Little Giant

 Acetek has rapidly increased its market share, and is now undeniably a ‘member of the club’

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Global Acetate tow produced (tonnes) (LHS) Jinan Acetate's tow shipments (tonnes) (RHS) Jinan Acetate's market share
900,000 15,000
600,000 10,000
1.3% 1.3%
1.2%
1.0%
0.9%
300,000 5,000
0.5%
0.4%
0.2% 0.2% 0.2%
0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
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Source: Tobacco Merchants Association & Bloomberg

21

Claiming More Market Share

Spinning Grade Cellulose Acetate

Capacity Expansion to Support Our Growth

5-Year Targets for Capacity Growth

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26,000
22,000
21,000
17,000
14,000
13,000
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2019E
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2020E

2024E

Acetate Tows Acetate Flakes

23

Gain Share by Developing New Markets

Key Target Markets Next Year

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• Middle East, North Africa and South East Asia

• The China market is an important new market for acetate flakes. We target new orders by 2020.

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One Belt, One Road

Taking Advantage of One Belt, One Road

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• We are expanding in sync with China’s One Belt, One Road initiative.

• Yankuang Lunan Chemical, strategic shareholder in Acetek Material and supplier of upstream RM, is a State-Owned Enterprise in China.

Breaking into Tier-1

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• We hope to gain business from one or more Tier-1 Tobacco players within 12-24 months.

• Until now, Big Tobacco has mostly partnered with the ‘Big Four’ filter acetate tow producers. This would be a huge milestone, opening up opportunities for rapid growth.

• Key Target Markets

• • Egypt • Syria • Iran • Tunisia • Turkey • Thailand • Algeria

24

Staying ahead of Industry Trends and Developing New Revenue Sources

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Biodegradable
cigarette filters
Acetate film for
agriculture
Biodegradable cellulose acetate film
•
Sun houses for agriculture
Other plastic •
Heated tobacco Agricultural and consumer packaging
products
products to meet EU requirements
•
Diaphragm membranes for lithium
batteries.
Biodegradable flakes for other products
•
Recyclable straws
•
Recyclable Facial Masks
•
Other Non-Woven Products
25
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Biodegradable cigarette filters

By 2025 all cigarettes sold in the EU will be required to have filters that will biodegrade within 45 days after use.

Heated tobacco products

Acetate tow for heated tobacco products, such as IQOS, GLO, and Ploom Tech.

25

Our 5-Year Targets

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Double our share of the acetate tow market and increase our 01 share of the acetate flake market by 50%

Be an industry leader in the development of biodegradable 02 acetate flakes

03 Maintain a cash dividend payout ratio in excess of 80%

Sustain ROE in excess of 20% 04

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ESG
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27

Raw Material Reuse & Recycling, Developing Greener Products

1 Developing Eco-Friendly Products

Developing EcoFriendly Products

• Biodegradable products

• Recyclable products

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Improving Waste

Management

2 Improving Waste Management

• Enhancing our sewage treatment and water recycling processes.

3 Increasing Reuse of Manufacturing Inputs

Increasing Reuse of Manufacturing Inputs

• Improving the efficiency of our acetone and acetic acid regeneration processes.

28

Financial Performance

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Revenue and Margin Trend

• 3Q19 revenue reached NT$561 mn, the highest level since 4Q17, increasing 33% YoY and 2% QoQ.

• Gross and operating margins have been trending up since 2Q18, on production efficiency improvements, vertical integration into acetate flakes, strong top line growth, and stabilization in raw material prices.

• 3Q19 operating margin was 17.5%, slightly down from 19.6% in 2Q19. Gross margin reached 30.4%, the second quarter in a row above 30%, but OPEX rose to 12.9% of sales versus only 11.3% in 2Q19.

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NT$m Quarterly Revenue Trend
Quarterly Margin Trend
600 75%
40.0% 40.0%
450 50% 30.0% 30.0%
300 25% 20.0% 20.0%
150 0% 10.0% 10.0%
0 -25% 0.0% 0.0%
4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19

Revenue (NT$m) Growth(YoY) Gross Margin Operating Margin Net Margin
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• Excluding the mark-to-market impact from the convertible bond issued in 2Q17.

30

Earnings and Growth Trend

• 3Q19 Operating Income rose 88% YoY and decreased 9% QoQ to NT$98m.

• 3Q19 Net Income rose 57% YoY to NT$81m. 3Q19 EPS was NT$1.59, up 45% YoY. Our Net Income and EPS have shown positive YoY growth for 5 consecutive quarters.

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NT$m NT$
Earnings & Growth Trend EPS
120 300% 2.50
2.00
90 200%
1.50
60 100%
1.00
30 0%
0.50
0 -100% 0.00
4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
*
Operating Profit Net Income to Parent Net Income Growth(YoY) EPS
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• Note: On this page, all Net Income & EPS numbers, as well as related growth calculations, exclude the mark-to-market paper gain/loss from the 2Q17 CB issue.

31

FCF and Net Cash Trend

• Despite high capex spending for expansion and vertical integration, our free cash flow has been mostly positive in the previous 8 quarters.

• We have a healthy balance sheet with a Net Debt to Equity ratio of 6% in 3Q19. The NT$500m convertible bond is the only source of debt.

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NT$m
Free Cash Flow & Capex
250
150
50
-50
-150
4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
FCF Capex
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NT$m
Net Debt & Net Debt/Equity
400 40%
300 30%
200 20%
100 10%
0 0%
4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Net Debt Net Debt / Equity
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32

Consolidated Statements of Income - Quarterly

Unit: NTD million	3Q19	2Q19	3Q18	QoQ (%)	YoY (%)
Net Revenue	561	549	423	2	33
Gross Profit	171	169	113	1	50
Gross Margin	30.4%	30.8%	26.8%
Operating Expenses	72	62	61	17	19
OPEX/Sales	12.9%	11.3%	14.4%
Operating Income	98	108	52	(9)	88
Operating Margin	17.5%	19.6%	12.4%
MTM Gain (Loss) on CB (non-cash)	21	(36)	(3)
Other Non-Operating Income (Loss), Net	(9)	(0)	(6)
Pre-Tax Income	110	71	44	55	151
Income Tax Expense	5	12	(9)
Minority Interest	4	3	4
Net Income to Parent	102	56	48	81	110
Net Margin	18.1%	10.2%	11.4%
EPS (NT$)	2.01	1.22	0.94	65	114
ROE – not annualized	8.9%	4.7%	4.2%
Depreciation	25	24	22
CAPEX	25	20	27

33

Consolidated Statements of Income – 1-3Q19 vs 1-3Q18

Unit: NTD million	1-3Q19	1-3Q18	YoY(%)
Net Revenue	1,568	1,273	23
Gross Profit	460	288	59
Gross Margin	29.3%	22.6%
Operating Expenses	201	184	9
OPEX/Sales	12.8%	14.5%
Operating Income	258	104	148
Operating Margin	16.5%	8.2%
MTM Gain (Loss) on CB (non-cash)	(5)	53
Other Non-Operating Income (Loss), Net	(9)	(7)
Pre-Tax Income	245	150	64
Income Tax Expense	16	(13)
Minority Interest	2	3
Net Income to Parent	228	160	43
Net Margin	14.5%	12.5%
EPS (NT$)	$4.50	$3.12	44
ROE – not annualized	19.3%	13.2%
Depreciation	73	65
CAPEX	76	117

34

Consolidated Balance Sheet - Quarterly

Unit: NT$ million	2019/09/30	2019/09/30	2018/12/31	2018/12/31	2018/09/30	2018/09/30
	$	%	$	%	$	%
Cash and Cash Equivalents	408	17	369	16	297	13
Notes and Accounts Receivable, Net	444	18	312	13	343	15
Inventories	272	11	321	14	329	15
Other Current Assets	241	10	232	10	236	11
Fixed Assets	842	34	864	37	829	37
Other Long-term Assets	238	10	219	9	211	9
Total Assets	2,445	100	2,317	100	2,245	100
Current CB Payable	452	18	0	0	0	0
Other Current Liabilities	698	29	529	23	479	21
Non-Current CB Payable	0	0	440	19	436	19
Other Non-Current Liabilities	10	0	56	2	58	3
Total Liabilities	1,160	47	1,025	44	973	43
Common Stock	511		465		465
Total Equity	1,285	53	1,291	56	1,272	57
Book Valueper Share(NT$)	22.92		25.67		24.95
Key Indices
Current Ratio ( Current Assets / Current Liabilities)	119%		233%		252%
Net Debt to Equity	6%		14%		16%

35

Key Financial Performance Metrics

NT$m

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40%
2,000 375
1,748 1,739
1,586 1,568 29.3%
1,600 1,439 300 30% 26.8% 27.5% 27.6%
1,376 287
24.4% 24.2%
265
1,200 232 225
224
20%
170
800 188 150 19.2%
16.8% 16.5% 16.5%
10%
400 75 11.9%
9.3%
0 0 0%
2014 2015 2016 2017 2018 9M19 2014 2015 2016 2017 2018 9M19
Revenue (LHS) Net Income (RHS) * GPM OPM
NT$ NT$
8.00 40.0% 8.0 160%
37%
6.33 6.17 135%
5.60
6.00 30.0% 6.0 120%
4.59
4.04 82%
4.00 25% 3.66 20.0% 4.0 81% 80%
88%
21%
20%
15% 14%
2.00 10.0% 2.0 40%
0.0 5.0 5.0 5.0 4.0
0.00 0.0% 0.0 0% 0%
2014 2015 2016 2017 2018 9M19 2014 2015 2016 2017 2018
EPS (LHS) * ROE (RHS) * Dividend per share (LHS) Payout %
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• Excludes the mark-to-market impact from the convertible bond issued in 2Q17.

36

Income Statement Highlights

NT$ million	2014	2015	2016	2017	2018	1-3Q19		YoY (%)	YoY (%)	YoY (%)	YoY (%)	YoY (%)
								2015	2016	2017	2018	9M19
Sales Revenue	1,376	1,439	1,586	1,748	1,739	1,568		5	10	10	(1)	23
Gross Profit	369	396	437	426	421	460		7	10	(3)	(1)	59
Operating Profit	264	242	261	207	162	258		(8)	8	(21)	(22)	148
MTM Gain (Loss) on CB	0	0	0	(16)	55	(5)		-	-	-	-	-
Other Non-Operating Income (Loss), Net	(1)	61	58	(23)	(7)	(9)		-	-	-	-	-
Pretax Income	263	303	319	169	210	245		15	5	(47)	25	64
Net Income to Parent	224	265	287	172	225	228		18	8	(40)	31	43
EPS (NT$)	$5.60	$6.33	$6.17	$3.70	$4.85	$4.50		13	(3)	(40)	31	44
Gross Margin	26.8%	27.5%	27.6%	24.4%	24.2%	29.3%
Operating Margin	19.2%	16.8%	16.5%	11.9%	9.3%	16.5%
Net Margin	16.3%	18.4%	18.1%	9.8%	12.9%	14.5%
ROE	37.2%	25.1%	21.2%	13.3%	18.4%	19.3%

37

Balance Sheet Highlights

NT$ million	2014	2015	2016	2017	2018	9M19			Percent of Total Assets (%)	Percent of Total Assets (%)	Percent of Total Assets (%)	Percent of Total Assets (%)
								2014	2015	2016	2017	2018	9M19
TOTAL ASSETS	1,016	1,858	1,604	2,437	2,317	2,445		100	100	100	100	100	100
Cash	153	623	364	206	369	408		15	34	23	8	16	17
NR & AR	178	289	128	378	312	444		17	16	8	16	13	18
Inventory	135	220	375	416	321	272		13	12	23	17	14	11
Fixed Assets	282	261	320	832	864	842		28	14	20	34	37	34
TOTAL LIABILITIES	290	477	235	1,062	1,025	1,160		29	26	15	44	44	47
CB Payable	0	0	0	424	440	452		0	0	0	17	19	18
NP&AP	84	346	85	289	245	188		8	19	5	12	11	8
TOTAL EQUITY	726	1,381	1,368	1,375	1,291	1,285		71	74	85	56	56	53
A/R turnover days	37	59	48	53	72	66
Inventory turnover days	46	62	95	109	102	73
A/P turnover days	18	75	69	52	74	53
Cash conversion cycle	66	46	74	110	100	86

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Dividend Payout & Capex

(NT$m)	2014	2015	2016	2017	2018
Net Income to Parent	224	265	287	172	225
Dividend Paid	0	232	232	232	184
DPS (NT$)	0.0	5.0	5.0	5.0	4.0
Payout ratio	0%	88%	81%	135%	82%
Dividend yield	0.0%	4.2%	2.8%	3.9%	2.7%
Capex	43	27	356	261	190
Capex/Sales	3.2%	1.9%	22.4%	14.9%	10.9%

*Yield calculated using market cap on the day prior to ex-dividend date for all years.

39

Appendix

CB Terms and Trading Information

Issue Date	2017/06/09
Maturity Date	2022/06/09
Maturity Term	5 years
Coupon Rate	0.00%
Issue Amount	NT$ 500,000,000
Issue Price	NT$ 101.0
Latest Conversion Price	NT$ 142.3
Conversion Premium	103.59%
Latest Trading Price	NT$ 107.50 (2019/10/29)

Latest Trading Price NT$ 107.50 (2019/10/29)	Latest Trading Price NT$ 107.50 (2019/10/29)	Latest Trading Price NT$ 107.50 (2019/10/29)
CB Holder Redemption Option
Date	Put Price (NT$)	Yield to Put
2020/06/09	101.5075	0.5%
2021/06/09	102.0151	1.0%

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Cigarette Markets

Global Cigarette Market By Region

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2005
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2017
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Australia, 0%
Eastern Europe,
13%
Latin America, 5% Asia Pacific, 55%
Middle East, 7%
North America, 8%
Western Europe,
12%
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Australia, 0%
Eastern Europe,
9%
Latin America,
3%
Middle East, 9% Asia Pacific, 64%
North America,
5%
Western Europe,
9%
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Source: Euromonitor

Cigarette Markets

2016 Cigarette Retail Volume, By Country (In Billion Sticks)

2017 Cigarette Retail Volume, By Country (In Billion Sticks)

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China 2350.5 China 2368.9
Indomesia 316.1 Indonesia 308.2
Russia 278.4 Russia 258.9
USA 263.4 United States 252.7
Japan 173.9 Japan 151.4
Turkey 105.5 Turkey 106.2
Egypt 90 Egypt 93.1
Bangladesh 86.1 Bangladesh 88.9
India 84.9 India 81.3
Philippines 79.1 Germany 79
0 500 1000 1500 2000 2500 0 500 1000 1500 2000 2500
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Source: Euromonitor

Disclaimer

•The information contained in this confidential document ("Presentation") has been prepared by Jinan Acetate Chemical Co., Ltd. (Cayman) (the "Company"). It has not been fully verified and is subject to material updating, revision and further amendment. While the information contained herein has been prepared in good faith, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers gives, has given or has authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision or supplement thereof, or of any other written or oral information made or to be made available to any interested party or its advisers (all such information being referred to as "Information") and liability therefore is expressly disclaimed. Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers takes any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of, the accuracy or completeness or injury of the Information or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this Presentation or the information.

•Neither the issue of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with any transaction and the right is reserved by the Company to terminate any discussions or negotiations with any prospective investors. In no circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent.

•This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient should satisfy itself in relation to such matters.

•This Presentation includes certain statements that may be deemed “forward-looking statements”. All statements in this discussion, other than statements of historical facts, that address future activities and events or developments that the Company expects, are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, continued availability of capital and financing, general economic, market or business conditions and other unforeseen events. Prospective Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in forward-looking statements.

44

Thank You

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