ACE — Investor Presentation 2021

Apr 21, 2021

Jinan Acetate Chemical

4763 TT Investor Presentation April 2021

The Little Giant in a Global Oligopoly Industry

• ü Jinan Acetate is a fully-integrated, independent manufacturer of superior quality acetate tows and flakes , participating in a highly profitable oligopoly market with high entry barriers . 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.

• ü We continue to invest while producing robust cash flows . 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. 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.

• ü We are optimistic on the prospects for demand growth in our core markets over the next five years. Southeast Asia and Africa & the Middle East are characterized by younger, growing populations with rising incomes. Cigarette consumption is projected to grow in these markets, while consumption in the developed world remains flat to slightly down.

• ü We aim to grow our capacity of acetate tows and flakes by at least 10% annually over the next five years to drive top line growth and to expand our market share. 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.

• ü We aim to maintain a cash dividend payout ratio between 60-80% and ROE in excess of 20%.

2

Jinan Acetate Chemical @ a Glance

• Ticker: 4763 TT

• Market Cap – 31 March 2021 : US$236 mn

• 2020 Revenue : US$80 mn

• ROE : Averaged 23% in 2016 through 2020

• 2020 Cash Dividend : NT$5.50 per share

• 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: 183

• Employees: 134

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NT$m Sales Breakdown by Products
2,500
28%
2,000
29%
17%
1,500 25%
72%
71%
1,000 83% 75%
500
2017 2018 2019 2020
Acetate Tow Acetate Flake
Products - Applications
Fiber Grade
Acetate
Diacetate Cigarette Filter
Tow
Flake
Plastic Grade
Optical Frames
Diacetate Flake
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3

4Q20 Performance

Key 4Q20 Performance Metrics

4Q20 and 2020 Highlights

• ü 2020 sales grew 8% YoY to NT$2,353m.

• ü Revenue from acetate tows rose 9% YoY, and acetate flake revenue rose 6% YoY.

• ü Key Performance Highlights were:

• Gross margin was 33.5% versus 31.0% in 2019.

• Operating margin was 21.2% vs 18.0% in 2019.

• Net Income adjusting out the MTM effect of Acetek’s CB was NT$449m, up 36% YoY.[1]

• EPS adjusted for CB MTM effect was NT$8.95.[1]

• ü 4Q20 revenue hit a record high as acetate tow and flake revenue grew 4% and 21% YoY respectively.

• ü We successfully raised tow prices by 1% across customer groups.

• ü Continuous optimization of our manufacturing process, greater economies of scale and production efficiency improvements led to margin improvement.

• ü On April 15[th] , a cash dividend of NT$5.50 and a stock dividend of NT$1.50 was approved at Jinan Acetate’s Annual General Shareholders Meeting.

Note 1: Mark-to-market paper gain/loss from the 2Q17 and 3Q20 CB issue are not included in these calculations, to better reflect core earning capability.

4

Capacity Utilization Remained High in 2020

Secure Demand from Key Customers

• ü Since 2015, our utilization rate for acetate tows has averaged above

• 90%. During that time, our capacity increased by 78%.

• ü 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

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

• ü 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 2019 2020
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Our Plant Construction Cost is 50% Lower than Peers

• ü Vertical integration has enhanced our cost competitiveness,

• especially since our construction costs are 50% lower than peers.

5

Investing in our Future Through R&D

The Current Focus of our R&D spending is biodegradable products

• ü R&D spending was roughly 4.1% of sales in 2020. We have been developing several types of biodegradable products, including tows, non-woven material and straws.

• ü We plan to increase in R&D spending by 10% YoY in 2021, as we gear up for initial mass production of our green products, in particular disposable straws for sale in the China domestic market.

It takes 12 to 24 months for R&D spending to create earnings growth

• ü R&D as a percent of sales was 5-6% of sales in 2017 and 2018 as we built, tested, debugged and began production of acetate flakes.

• ü In 2019 and 2020, R&D spending has remained close to peak levels in absolute terms, while falling as a percent of sales.

R&D Expense as % of Revenue (%)

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6.4%
5.6%
4.4%
4.1%
2.9%
1.3%
2015 2016 2017 2018 2019 2020
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6

The Acetate Tow Industry’s Little Giant – Market Share Increased Further in 2020

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

Jinan Acetate's tow shipments (tonnes) (LHS) Jinan Acetate's market share (RHS)

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20,000 2.0%
15,000 1.5%
10,000 1.0%
5,000 0.5%
0 0.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
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Source: Tobacco Merchants Association & Bloomberg

7

Outlook for 2021

1Q21 sales were NT$631m, up 20% YoY because of strong demand for flakes both from fiber-grade flakes from China Tobacco and plastic-grade flakes for optical frames.

Tows

1Q21 tow revenue grew 1% YoY. Demand remains robust, with excellent order visibility. We successfully raised tow prices by 1% in 4Q20 and by 1% again in 1Q21 across our client base. Our peers have also raised prices. On Celanese’s 4Q20 Results Call, CEO Lori Ryerkerk commented, “As we've been negotiating in '20 for '21, I'd say the prices are stable and, in some cases, a little bit up…We saw less decline in smoking last year than expected. In some areas, even an increase in smoking.”

Flakes

Flake sales grew 88% YoY in 1Q21, as shipments of plastic grade flakes for eyewear frames rebounded strongly. We are now in low season for sales of flakes for eye wear, but demand has remained strong; and shipments of fiber grade flakes to China Tobacco have contributed strongly to 1Q21 acetate flake sales. Order guidance from customers for 2021 for plastic and fiber grade flakes is robust, and we expect flake revenues to grow strongly as we begin to utilize the 5k tonnes of acetate flake capacity that we added in 2H20. In 1Q21, we have achieved price increases of 2-3% for plastic grade flakes across our client base.

Sales Growth & Profitability

Based on current order visibility, double digit growth in revenues appears likely in 2021. Regarding the outlook for margins, a strong demand environment for tows and flakes has created a favorable pricing environment, and further price hikes are possible. We have also negotiated a 2-3% reduction in wood pulp prices and will benefit from improved economies of scale in flake production. Furthermore, we will see a considerable reduction in costs in 2H21 when our Acetic Anhydride plant begins commercial production. However, the NT$:US$ average rate was 28.24 in 1Q21 versus 30.13 in 1Q20, an appreciation of 6.7%; and acetic anhydride prices have jumped 85-90% from their 2H20 lows. Shipping costs also remain high but appear likely to moderate moving into 2H21.

8

Sales Breakdown

January through March 2021

January through March 2020

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Acetate Flake
34%
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Acetate Flake
22%
Acetate Tow
Acetate Tow
66%
78%
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Acetate Tow Acetate Flake

Acetate Tow Acetate Flake

9

Company Milestones

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2019
Annual Capacity of Acetate Tow and Acetate Flake
Strategic
2017
Year-End Effective Capacity, Tonnes alliances
Mass production
with LA/ES
2016
of acetate flake:
2015 Established 5,530 tonnes 25,000
Acetek
2014 Listed on
Material
Established Taiwan Stock 21,000
2012
Jinan Acetate Exchange
Obtained Chinese
Chemical
17,000
high-tech 17,000 [17,000 17,000 ]
2006 (Cayman)
enterprise 15,000
Began
certification
1999 Production of 13,000
Established acetate tow
Jinan Julong
Fiber 8,000 [9,000 9,000 10,000 11,000 11,000 ]
2,000 2,000 [3,000 3,000 4,000 4,000 4,000 ]
1999 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E
Acetate Tow Acetate Flake
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Annual Capacity of Acetate Tow and Acetate Flake

Year-End Effective Capacity, Tonnes

Note: Tow capacity on this slide is design capacity. Flake capacity is stated in terms of effective capacity because roughly 70% of our production is fiber grade flakes for tows and 30% is plastic grade which consumes more capacity. Design capacity for 100% fiber grade flake production was 25k tonnes at y/e 2020.

10

Item Details We are on schedule to begin test runs in early June and we aim to begin commercial Land Area 100 Chinese Mu production in July. Leasing Cost, Land NT$38m Vertical We expect to spend roughly NT$213m to build 60,000 tonnes of design Plant and Equipment NT$175m Integration capacity. into the Est. Annual About NT$14m Depreciation Production of We expect this vertical integration into Acetic the production of acetic anhydride to Construction Begins 2020 Q4 greatly reduce the impact of acetic Anhydride anhydride spot price movements, Completion Date 2021 Q2 resulting in a more stable bottom line. Design Capacity 60,000 tonnes The factory site is big enough to provide for future expansion. Current Internal Use 35,000 tonnes

11

Revenue and Margin Trend

• 4Q20 revenue reached a record high of NT$665m, increasing 10% YoY and 7% QoQ.

• Gross margin reached 33.8%, surpassing 30% for the seventh quarter in a row, while operating margin was 21.4%. Gross and operating margins have been trending up since 2Q18, on production efficiency improvements, vertical integration into acetate flakes and strong top line growth.

• 4Q20 mark-to market paper gain on our CBs was NT$87mn. 4Q20 Net margin was 16.9%, not including the MTM paper gains.

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NT$m Quarterly Revenue Trend Quarterly Margin Trend
750 50% 40.0% 40.0%
500 30% 30.0% 30.0%
250 10% 20.0% 20.0%
0 -10% 10.0% 10.0%
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20
Revenue (NT$m) Growth(YoY) Gross Margin Operating Margin Net Margin
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• Note: On this page, Net Margin numbers exclude the mark-to-market paper gain/loss from the 2Q17 and 3Q20 CB issue.

12

Earnings and Growth Trend

• 4Q20 Operating Income hit a record high NT$142m, rising 7% YoY.

• 4Q20 Net Income rose 15% YoY to NT$112m. 4Q20 EPS was NT$2.25. Net Income and EPS have shown positive YoY

• growth for 10 consecutive quarters.

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NT$m Earnings & Growth Trend NT$ EPS
150 200% 3.00
100 125% 2.00
50 50% 1.00
0 -25%
0.00
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20
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 and 3Q20 CB issue. 20

13

Consolidated Statements of Income - Quarterly

Unit: NTD million	4Q20	3Q20	4Q19	QoQ (%)	YoY (%)
Net Revenue	665	621	607	7	10
Gross Profit	225	199	214	13	5
Gross Margin	33.8%	32.0%	35.2%
Operating Expenses	82	70	81	18	2
OPEX/Sales	12.4%	11.3%	13.3%
Operating Income	142	129	133	10	7
Operating Margin	21.4%	20.8%	21.9%
MTM Gain (Loss) on CB (non-cash)	87	(51)	5
Other Non-Operating Income (Loss), Net	(18)	17	(4)
Pre-Tax Income	211	95	133	123	58
Income Tax Expense	11	10	32
Minority Interest	0	3	(0)
Net Income to Parent	199	81	102	146	95
Net Margin	30.0%	13.1%	16.8%
EPS (NT$)	3.98	1.62	2.02	146	97
ROE – not annualized	31.7%	6.7%	8.4%
Depreciation	28	27	25
CAPEX	132	36	38

14

Consolidated Statements of Income – 2020 vs 2019

Unit: NTD million	2020	2019	YoY(%)
Net Revenue	2,353	2,175	8
Gross Profit	789	673	17
Gross Margin	33.5%	31.0%
Operating Expenses	289	282	3
OPEX/Sales	12.3%	13.0%
Operating Income	499	391	28
Operating Margin	21.2%	18.0%
MTM Gain (Loss) on CB (non-cash)	56	0
Other Non-Operating Income (Loss), Net	(2)	(13)
Pre-Tax Income	553	378	46
Income Tax Expense	43	47
Minority Interest	5	2
Net Income to Parent	505	330	53
Net Margin	21.4%	15.2%
EPS (NT$)	10.07	6.52	54
ROE	36.7%	27.0%
Depreciation	105	98
CAPEX	221	105

15

Consolidated Balance Sheet – 2020

Unit: NT$ million	2020/12/31	2020/12/31	2020/09/30	2020/09/30	2019/12/31	2019/12/31
	$	%	$	%	$	%
Cash and Cash Equivalents	831	27	1,020	33	589	23
Notes and Accounts Receivable, Net	661	21	571	19	438	17
Inventories	220	7	207	7	243	9
Other Current Assets	200	6	135	4	260	10
Fixed Assets	898	29	851	28	827	32
Other Long-term Assets	298	10	276	9	230	9
Total Assets	3,109	100	3,061	100	2,586	100
Current CB Payable	474	15.2	469	15	457	18
Other Current Liabilities	442	14.23	600	20	748	29
Non-Current CB Payable	514	16.52	509	17	0	0
Other Non-Current Liabilities	71	2.27	109	4	9	0
Total Liabilities	1,501	48	1,688	55	1,214	47
Common Stock	511		511		511
Total Equity	1,608	52	1,373	45	1,373	53
Book Value per Share (NT$)	29.8		25.1		24.9
Key Indices
Current Ratio ( Current Assets / Current Liabilities)	209%		181%		127%
Net Cash (Debt) to Equity	-13%		1%		-5%

16

Jinan Acetate Formula for Success

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Building a Better Moat

ü R&D and Production Team have strong technical skills, extensive industry experience ü Lowest production cost in the industry

ü Securing a stable market position through industry alliances

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Targeting an Attractive Market Niche

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

ü Demand is stable, and improves in hard economic times due to the ‘lipstick and cigarettes‘ effect ü Larger players have been rationalizing capacity, opening up opportunities for Acetek

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New Markets and Capacity Expansion

ü We expand in line with new order visibility and have historically maintained capacity utilization of 90% or above.

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

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Strategic Alliances

ü Marketing & Distribution

ü Vertical Integration

ü Plastic Acetate Flake and the Plastic Eyeglass Frame Market

17

Building a Better Moat

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18
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Building a Better Moat

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Strategic Alliances
Vertical Integration
ü Secure Customers
ü Secure Raw Materials
Emerging Market
Focus
ü The Low-Cost Producer
ü Better Growth Prospects
Advanced R&D Skills
Experienced Technical Team
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19

Emerging Markets Focus

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Better growth prospects

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

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

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

Offering customized products

• ü 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

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

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

Almost 95% of Our Tow Shipments are to Emerging Markets

% of shipments by volume

Developed Markets 6%

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Emerging Markets 94%

20

Chemical Fiber Production Expertise Drives Our Competitive Edge

Patented Technology

• ü Acetek Founder and President Wang Ke-Zhang is a formally trained chemical fiber engineer with over 35 years of technical production experience.

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• ü 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

• ü The ability to design the plant and machines ourselves results in at least 50% costsaving in building a new plant.

• ü 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.

21

Production Process for Acetate Flakes

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Plastic Grade
Diacetate Flake
Fiber Grade
Diacetate Flake
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22

Production Process for Acetate Tows

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Fiber Grade
Diacetate Flake
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23

Targeting an Attractive Market Niche

Plastic Grade Cellulose Diacetate

The Structure of the Global Cigarette Market

We Partner with Emerging Market Brands

Cigarette Market Share - World

Cigarette Market Share - World ex-China

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Philip Morris
British American
13.4%
Tobacco Japan Tobacco
British American 22.6% Inc
Tobacco 16.0%
12.7%
Imperial Brands
7.5%
Japan Tobacco Inc
9.0%
China National
Tobacco Corp Altria Group
43.9% 3.6%
Imperial Brands Philip Morris
4.2% 23.9%
Altria Group
2.0%
Other
Other
26.4%
14.8%
Acetek Niche
Acetek Niche
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Source: Tobacco Merchants Association & Bloomberg

25

Acetate Tow Industry – An Oligopoly Market

2020 Acetate Tow Industry Market Share

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Jinan Acetate 2.0%1.8%
Daicel
14%
Cerdia
15%
Celanese
39%
Eastman
30%
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• Company name was Rhodia Acetow prior to 2019.

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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 Driven by the closure of higher cost Western facilities.

03

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

Source: Company data

26

Acetate Flake Market

Acetate Flakes Industry Products Applications

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Optical Frames,
2%
Cigarette Filter, 90%
Pen Refill, 1%
Optical Frames, 2%
Sewage Treatment, 1%
Hemodialysis, 1%
Cigarette Filter, Nonwoven Facial Mask, 1%
90%
Other, 4%
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01

02

03

The global market for cellulose acetate is projected to grow at a 5.7% CAGR, reaching US$5.7Bn by 2025.

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

The major acetate flake producers are expanding their product scope

27

Global Optical Frame Market

Global Optical Frame Production By Region

Global Optical Frame Market By Material Type

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Other Other
8% 5%
Injection
Molding
Xiamen,
27%
China Guangdong, Plastic Sheet
19% China 27%
RMB 41% RMB
$37bn $37bn
Zhejiang,
China Metal
32% 41%
＊Plastic grade acetate flakes are used to produce injection-
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• ＊Plastic grade acetate flakes are used to produce injectionmolded and plastic sheet optical frames.

Source: Company Estimates

28

Tow Prices Have Stabilized and Begun to Trend Upwards Due to Cost Push and Capacity Rationalization

Celanese Acetate Tow Price YoY Change

Capacity Rationalization

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

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

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

4%

0%

-4%

-8%

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1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20

Acetic Anhydride Prices at Higher End of Historical Range

Asset Repurposing

Acetic Anhydride Price (RMB$/tonnes)

• ü Celanese and Eastman are repurposing manufacturing capacity from acetate tow to new products.

• ü Celanese and Eastman are also pursuing growth opportunities in textile and nonwoven applications.

Source: Celanese Quarterly Reports & Company Data

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10,500
8,000
5,500
3,000
2009 2011 2013 2015 2017 2019 2021
Median Price
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29

Claiming More Market Share

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Spinning Grade Cellulose Acetate
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Capacity Expansion to Support Our Growth

5-Year Targets for Capacity Growth

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34,000
25,000
24,000
21,000
17,000
15,000
2020 2021E 2025E
Acetate Tows Acetate Flakes
10%
Acetate tows CAGR 10%
Acetate flakes CAGR
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31

Gain Share by Developing New Markets

Key Target Markets

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• Middle East, North Africa and Southeast Asia

• The China market is an important new market for acetate flakes. We target new orders this year.

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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.

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Key Target Markets

• Egypt • Syria

• • Iran • Tunisia • Turkey • Thailand • Algeria

32

Staying Ahead of Industry Trends and Developing New Revenue Sources

Biodegradable cigarette filters

Biodegradable cigarette filters Acetate film for agriculture Biodegradable cellulose acetate film

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

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Other plastic
products
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• Sun houses for agriculture

• Agricultural and consumer packaging to meet EU requirements

Heated tobacco products

• Diaphragm membranes for lithium batteries.

Heated tobacco products

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

Biodegradable flakes for other products

• Recyclable straws

• Recyclable Facial Masks

• Other Non-Woven Products

• Hair Dye and Hair Color Products

33

Investing in Sustainable Materials for Long-term Growth

Materials based on Acetate flakes are compostable and biodegradable. Under the right conditions, they will break down into glucose and vinegar, eventually becoming carbon dioxide and water as they enter back into the earth’s ‘bio cycle.’ Such acetate-based materials are an excellent production input for making sustainable materials, and we have been developing them for years.

Forest Cotton linter or wood pulp + Acetic acid

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Breaking down into
+
glucose and vinegar
Acetate tows Acetate flakes
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34

Acetek has Received EU Certification for Biodegradable Acetate-Based Materials

• ü EU certification was Received in Early April : It will will help Acetek better promote and develop these new materials in various applications in Europe.

• ü The global drive for improved sustainability is driving stricter regulations for the use of plastics and other materials:

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

• In China, more than 30 states and cities started to ban singleuse plastic bags, tableware, straws, etc. this year.

• ü Wide range of applications: Our products can replace nonbiodegradable, environmentally harmful microplastics in applications such as cosmetics and personal care products. They can also be used as biodegradable film in agriculture or in food packaging.

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35

Biodegradable Cellulose Acetate Products Markets Are Growing Rapidly

ü We estimate the annual market for biodegradable cellulose acetate products is US$300m – US$500m

• ü The applications of biodegradable cellulose acetate products are:

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Cellulose Acetate Film Cellulose Acetate Fiber Cellulose Acetate Sheet Spherical Cellulose Acetate Particles
Food Packaging Apparel Premium Eyewear Personal Care Products
Although TAM is relatively low, green and biodegradable products have become a global trend.
Actual Market Size of Target Segments
Microplastics in
Personal Care Products:
Global Polyester Filament
Yarn Market Toothpaste, Shower Gel,
Global Food Plastic Shampoo, Cleanser, Facial
Global Polyester Staple
Packaging Market Masks, Sunscreen, Lipsticks,
Fiber Market US$89bn
Mascara, Hair Dye, Blush,
Conditioner, Nail Polish
US$27bn
US$125bn
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ü Although TAM is relatively low, green and biodegradable products have become a global trend.

• TechSci Research, Fior Markets, Mordor Intelligence, Peer company IR presentations

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Examples of Some of the Industry’s Most Innovative Biodegradable Cellulose Acetate Products

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Eastman - Naia

The Naia portfolio of cellulosic acetate fibers includes cellulosic staple fiber and cellulosic filament yarn. These sustainable fibers transform into luxurious, comfortable, and easy-to-carefor fabrics with supreme softness, improved dry rates, and reduced pilling.

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Celanese - Clarifoil

Daicel - BELLOCEA

BELLOCEA, spherical cellulose acetate, elicits a feeling of softness and smoothness from fine particles, and gives a moist and smooth feeling to makeup products such as foundation and skin care products.

Clarifoil is a sustainable and highly aesthetic cellulose acetate film. Applications include carton windows, anti-fog film, print lamination, labels, tape.

37

Our 5-Year Targets

Expand capacity of acetate tows and flakes by at least 10% 01 annually over the next five years Be an industry leader in the development of biodegradable 02 acetate flakes We aim to maintain a cash dividend payout ratio between 03 60-80%* 04 Sustain ROE in excess of 20% *Based on net income before mark-to-market paper gain/loss from the 2Q17 and 3Q20 CBs.

Strategic Alliances Planting a Flag and Staking Our Claim

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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% 63.6%
ELEUNG Limited Acetek Momentum
36.4%
(Hong Kong) Co., Ltd.
Parent Company of Taly Acetic Anhydride
Plastic Extrusion Manufacturer
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Acetate Tow Strategic Alliances

Marketing & Distribution Strategic Alliances

ü South America Market:

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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
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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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.

ü 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

ü Upstream:

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

ü Downstream:

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

ü 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.

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Plastic Grade Flake Strategic Alliances

ü Strike Alliances with Downstream Acetate Granule and Plate Manufacturers

Jinan Acetate Ken Chen Plate Manufacturers Chemical Thy Glory, JINLIANG, and TALY are cellulose acetate plate and Owner of Thy Listed Entity granules manufacturers. All are downstream customers of Acetek’s Glory Limited plastic grade acetate flake. 20% 80% Access to Tier 1 Suppliers to Luxury Optical Frame Brands JINLIANG Acetek Chemical LA/ES Acetate (Hong Kong) LA/ES is a strategic partner of Acetek. It supplies cellulose acetate Investment plates to Luxottica and Safilo, who between them hold a dominant Acetate Plates Holding Company Acetate Plates Manufacturer Manufacturer market share for all luxury optical frame brands. Luxottica’s share for ELEUNG amongst luxury optical frame and sunglass brands is 80%. Safilo is 25% the No. 2 player. ELEUNG Limited 20% (Hong Kong) 55% Order Commitments Parent Company of Acetate Plates 70% of granules Taly buys are made from Acetek flake. Factory 100% TALY Plastic Plastic Grade Plastic Colored Optical Extrusion Diacetate Acetate Plastic Frames Flake Granules Acetate Sheet Acetate Plates Manufacturer 42

• ü Access to Tier 1 Suppliers to Luxury Optical Frame Brands

ü Order Commitments

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ESG
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Raw Material Reuse & Recycling, Developing Greener Products

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1 Developing Eco-Friendly Products
Developing Eco- •
Biodegradable products
Friendly Products
•
Recyclable products
2 Improving Waste Management
Improving
Waste • Enhancing our sewage treatment
recycling processes.
Management
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• 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.

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Financial Performance

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Key Financial Performance Metrics

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NT$m
2,400 2,353 600 40.0%
2,175
33.5%
31.0%
1,748 1,739 27.6%
1,800 450 30.0%
1,586
24.4% 24.2%
449
1,200 300 20.0%
330 21.2%
18.0%
287 16.5%
600 150 10.0%
188 170 11.9%
9.3%
0 0 0.0%
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
Revenue (LHS) Net Income (RHS) GPM OPM
NT$ NT$
10.00 40.0% 8.00 160%
33%
124%
7.50 27% 30.0% 6.00 108% 120%
21%
5.00 20.0% 4.00 81% 72% 80%
15% 14% 61%
2.50 10.0% 2.00 40%
6.17 4.04 3.66 6.52 8.95 5.00 5.00 4.00 4.75 5.50
0.00 0.0% 0.00 0%
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
EPS (LHS) ROE (RHS)
Dividend per share (LHS) Payout Ratio (RHS)
20 46
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• Excludes the mark-to-market impact from the convertible bonds issued in 2Q17 and 3Q20.

Income Statement Highlights

NT$ million	2016	2017	2018	2019	2020	YoY (%) 2016 2017 2018 2019 2020 10 10 (1) 25 8 10 (3) (1) 60 17 8 (21) (22) 141 28 - - - - -	YoY (%) 2016 2017 2018 2019 2020 10 10 (1) 25 8 10 (3) (1) 60 17 8 (21) (22) 141 28 - - - - -	YoY (%) 2016 2017 2018 2019 2020 10 10 (1) 25 8 10 (3) (1) 60 17 8 (21) (22) 141 28 - - - - -	YoY (%) 2016 2017 2018 2019 2020 10 10 (1) 25 8 10 (3) (1) 60 17 8 (21) (22) 141 28 - - - - -	YoY (%) 2016 2017 2018 2019 2020 10 10 (1) 25 8 10 (3) (1) 60 17 8 (21) (22) 141 28 - - - - -	YoY (%) 2016 2017 2018 2019 2020 10 10 (1) 25 8 10 (3) (1) 60 17 8 (21) (22) 141 28 - - - - -
							2016	2017	2018	2019	2020
Sales Revenue	1,586	1,748	1,739	2,175	2,353		10	10	(1)	25	8
Gross Profit	437	426	421	673	789		10	(3)	(1)	60	17
Operating Profit	261	207	162	391	499		8	(21)	(22)	141	28
MTM Gain (Loss) on CB	0	(16)	55	0	56		-	-	-	-	-
Other Non-Operating Income(Loss),Net	58	(23)	(7)	(13)	(2)		(5)	(140)	-	-	-
Pretax Income	319	169	210	378	553		5	(47)	25	80	46
Net Income to Parent	287	172	225	330	505		8	(40)	31	46	53
EPS (NT$)	6.17	3.70	4.85	6.52	10.07		(3)	(40)	31	34	54

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Balance Sheet Highlights

							Percent of Total Assets (%)	Percent of Total Assets (%)	Percent of Total Assets (%)
NT$ million	2016	2017	2018	2019	2020
						2016	2017	2018	2019	2020
TOTAL ASSETS	1,604	2,437	2,317	2,586	3,109	100	100	100	100	100
Cash	364	206	369	589	831	23	8	16	23	27
NR & AR	128	378	312	438	661	8	16	13	17	21
Inventory	375	416	321	243	220	23	17	14	9	7
Fixed Assets	320	832	864	827	898	20	34	37	32	29
TOTAL LIABILITIES	235	1,062	1,025	1,214	1,501	15	44	44	47	48
CB Payable	0	424	440	457	988	0	17	19	18	32
NP&AP	85	289	245	222	157	5	12	11	9	5
TOTAL EQUITY	1,368	1,375	1,291	1,373	1,608	85	56	56	53	52
A/R turnover days	48	53	72	63	85
Inventory turnover days	95	109	102	68	54
A/P turnover days	69	52	74	57	44
Cash conversion cycle	74	110	100	75	95

48

Dividend Payout & Capex

(NT$m)	2016	2017	2018	2019	2020
Net Income to Parent*	287	188	170	330	449
Dividend Paid	232	232	184	238	275
Cash DPS (NT$)	5.00	5.00	4.00	4.75	5.50
Cash Payout ratio*	81%	124%	108%	72%	61%
Dividend yield	2.8%	3.9%	2.7%	3.6%	4.1%
Capex	356	261	190	105	221
Capex/Sales	22.4%	14.9%	10.9%	4.8%	9.4%

• Excludes the mark-to-market impact from the convertible bonds issued in 2Q17 and 3Q20.

Note: Yield calculated using market cap on the day prior to ex-dividend date for 2016-2019. 2020 yield is calculated using market cap on 2021/3/31.

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Appendix

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CB-1 Terms and Trading Information

nd Trading Information	nd Trading Information	nd Trading Information
Issue Date			2017/06/09
	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$ 137.0
	Conversion Premium		103.59%
	Trading Price (2021/03/31)		NT$ 105.00
	CB Holder Redemption Option
	Date	Put Price (NT$)		Yield to Put
	2020/06/09	101.5075		0.5%
2021/06/09	2021/06/09	102.0151		1.0%

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CB-2 Terms and Trading Information

nd Trading Information	nd Trading Information	nd Trading Information
Issue Date			2020/09/25
	Issue Date		2020/09/25
	Maturity Date		2025/09/25
	Maturity Term		5 years
	Coupon Rate		0.00%
	Issue Amount		NT$ 600,000,000
	Issue Price		NT$ 101.0
	Latest Conversion Price		NT$ 130.7
	Conversion Premium		102%
	Trading Price (2021/03/31)		NT$ 108.10
	CB Holder Redemption Option
	Date	Put Price (NT$)		Yield to Put
	2023/09/25	100.75		0.25%
2024/09/25	2024/09/25	101.00		0.50%

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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.

53

Thank You

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