APC — Investor Presentation 2017

Apr 20, 2017

Asia Polymer Corporation Operation Performance Highlights

Apr 20, 2017	Apr 20, 2017
Agenda	Speaker
Introduction of APC & Business Review and Outlook	Samson Tseng Sales Manager
Finance Information of APC	Nicolas Chen Accounting Manager
Q & A	K. H. Lee President

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Disclaimer

This presentation includes the Company’s current information and any development or adjustments thereof will be published according to laws, regulations or rulings. The Company is not obligated to update or revise this presentation.

The information in this presentation is not for investment advices.

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Introduction of APC Business Review and Outlook

Speaker :Samson Tseng Sales Manager

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History of APC 2020 1970 1980 1990 2000 2010 One High-Pressure Autoclave 51% of Share was transferred The production of No. 4 Established on line was added at Lin-Yuan Plant to the holding company of High-Pressure Autoclave Jan 25, ’77 with in Sept, ’85, the total yearly name line was on stream in Apr USI Corporation in Mar ’97, the capital at capacity was increased to read 2016, the total yearly name APC becomes a member of NT$600,000,000 100,000MT including LDPE & capacity was increased to EVA USI Group since then

The production of No. 4 High-Pressure Autoclave line was on stream in Apr 2016, the total yearly name capacity was increased to read 150,000MT including LDPE & EVA

Listed in Taiwan Stock Commenced the production of two High-Pressure Autoclave Market on Jun 20, ’86 The indirect investment of Gulei lines at Lin-Yuan Plant in Petrochemical Project MC was Mar, ’79 with the name capacity resolved by the Board of Directors of LDPE at 75,000MT/Year in Feb ’14 51% of Share was transferred to BTRN ASIA in Dec ’86 1970 1980 1990 2000 2010 2020 4/29

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Main Products of The Group

APC ： LDPE Resins & EVA Resins

USI ： LDPE Resins & EVA Resins HDPE Resins & LLDPE Resins

CGPC ： PVC Resins 、 Compounds 、 Pipes 、 Profiles 、 Sheets 、 、 Artificial Leather Consumed Products

TTC ： EPS Resins 、 GPPS Resins 、 HIPS Resins 、 ABS Resins 、 、 、 SAN Glass Wool Cubic Printing TVCM ： Vinyl Cholide Monomer

Swanson ： Stretch Film 、 Emboss Film 、 Diaper 、 Food-Wrap Film 、 、 、 、 Protection Film Heavy Duty Bag Lamination Film 、 Shrink Film Release Film…etc.

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Introduction of APC

Date of Establishment	Jan 25, 1977
Capital	NT$5,030,000,000
Employees	234(2016. 12. 31.)
Revenue(2016)	Individual : NT$5,750,000,000 Consolidated : NT$5,890,000,000
Production Equipment	4 High-Pressure Autoclave Production Lines with the name capacityat 150,000MT/Year
Main Products	LDPE Resins & EVA Resins

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Main Locations of APC

Head Quarter & Lin-Yuan Plant No. 3, Industrial 1[st] Road, Lin-Yuan., Kaohsiung

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Taipei Office

12F, No.37, Ji-Hu Road, Nei-Hu Dist., Taipei

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LDPE APC’s Products and The A lications pp

產 品 應 用

Lamination & Coating Grades

、 、 Liquid Packaging Flexible Packaging Food Container/Industrial Paper Coating 、 、 、 Toys Can Lids Artificial Trees Micro Fiber 、 、 General Packaging Cosmetic/Industrial Tubes Bottles

Injection Grades

Film Grades & Tube Grades

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EVA APC’s Products and The A lications 26 pp

產品應用

、 、 Mid-High End Shoe Soles Foamed Sheets 、 、 Housewares PEVA Sheets Adhesives Thermal Films Encapsulation Films for Solar Cell 、 Hot Melt Adhesive Wire & Cable

Foam & Extrusion Grades

Lamination Grades Solar Grade HMA Grades & W&C Grades

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Business Review of 2016

Sales Volume (KMT)	2015	2016	Increase (Decrease)
LDPE	70	80	10
EVA	36	45	9
Total	106	125	19

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Business Review of 2016

Crude Oil / Ethylene Monomer:

• Crude: H1 →Strong uptrend, H2 →Comparatively stable.

*** C2: * Status: * Speculation, Prices between US$1000~1200/MT. ， * Taiwan needs import partly cost increased. Strategy: High-Valued Products / Best Product Mix**

Sales of LDPE/EVA:

• Prices : To adjust Dom/Exp prices based on Cost & Market.

*** Dom Sales: Appropriate market layout , performance was in order. *** Exp Sales : * Status: New capacity competed in Asia, sales pressure increased.

• Strategy: * Strengthened the relationship between the end users & APC.

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Business Review of 2016

• Utilized the unique performance and flexibility of the process developing and producing multiple highvalued products to match the special quality requirement of modern finished products of which APC has won reputation in the market.

*** General Status of 2016:**

Sales of LDPE at 80KMT/Y, 13.9% increased vs. 2015 (high-valued market developed ); EVA at 45KMT/Y, 24.6 % increased vs. 2015 (L#4 onstream & high-valued market of export developed) ; Overall sales at 125KMT, 17.5% increased vs. 2015; Revenue increased at 13.9% vs. 2015; Total sales volume exceeds production at 3.5KMT/Y.

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Ratio Between Dom/Exp of LDPE Sales

2015 2016 Exp 31% Exp 38% Dom 62% Dom 69%

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Ratio Between Dom/Exp of EVA Sales

2015

Dom 17% Exp 83%

2016 Dom 11% Exp 89%

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The Exp Area of LDPE Sales

2015

2016

SA Others 6% 0% SEA 9% MC/HK 85%

SA Others SEA 2% 0% 5% MC/HK 93%

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The Export Area of EVA Sales

2015

2016

Africa AfricaOthers Japan 1%[Others] 1% Japan 0% 1% 2% 1% SA 2% SEA SEA 19% 30% MC/HK MC/HK 64% 79%

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The Volume of LDPE between Production & Sales

KMT/Year

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80
70
60
50
40
30
20
10
0
2012 2013 2014 2015 2016
Production 54 65 67 69 75
Sales 51 69 63 70 80
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The Volume of EVA between Production & Sales

KMT/Year

- 5 10 15 20 25 30 35 40 45 50 2012年 2013年 2014年 2015年 2016年 產量 42 41 38 35 46 銷量 43 45 35 36 45	- 5 10 15 20 25 30 35 40 45 50 2012年 2013年 2014年 2015年 2016年 產量 42 41 38 35 46 銷量 43 45 35 36 45	- 5 10 15 20 25 30 35 40 45 50 2012年 2013年 2014年 2015年 2016年 產量 42 41 38 35 46 銷量 43 45 35 36 45	- 5 10 15 20 25 30 35 40 45 50 2012年 2013年 2014年 2015年 2016年 產量 42 41 38 35 46 銷量 43 45 35 36 45	- 5 10 15 20 25 30 35 40 45 50 2012年 2013年 2014年 2015年 2016年 產量 42 41 38 35 46 銷量 43 45 35 36 45	- 5 10 15 20 25 30 35 40 45 50 2012年 2013年 2014年 2015年 2016年 產量 42 41 38 35 46 銷量 43 45 35 36 45
-	2012年	2013年	2014年	2015年	2016年
產量	42	41	38	35	46
銷量	43	45	35	36	45

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Business Outlook of 2017

Crude Oil / Ethylene Monomer:

*** Crude: Prices fluctuated , Shale Oil tends to come back , less chance of sharp increase** of price.

• C2: * Status: * Long shutdown of New N/C #3, pressure of material shortage & cost increased .

• Less impact by N/C #4 overhaul in Nov ‘17, C2 supply in

rest of 2017 might not be tight.

C2 sources in advance Strategy: * To prepare and try to make up the inventory of C2 through every possible channels .

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Business Outlook of 2017

Sales of LDPE/EVA:

• Dom Sales: Flexible pricing policy →To enlarge the high-valued

market of LDPE Lamination and EVA Shoe Sole Foaming.

• Exp sales: * Status: Cheaper LDPE/EVA products ( Tubular

process mainly) converted from Shale Gas plus new capacity of China would invade Asian market , the Sales might become . tougher

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Business Outlook of 2017

• Strategy: * To raise the service quality and keep better relationship with customers so to maintain the market share at normal. * To continuously utilize the unique performance of Autoclave process producing products which are difficult to replace to maintain and even enlarge high-valued market .

* Others

• By conducting the organism of appropriate product mix , APC might be capable to balance the cost & market requirement to approach the target of best market layout & max. profit margin .

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Industrial Safety & Environmental Protection

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• To strengthen the safety control of the operators/neighbors at the plant site and to raise the operating liability of the production facilities, Lin-Yuan Plant has been conducting:

Certificates of Quality Management System

● ISO-9002 ● ISO-9001

Certificates of SHE Management System

● ISO-14001 ● OHSAS-18001

“General Safety Management System”

“Special Safety Management System”

Attained Environmental Sustainability Award in 2013 from SGS Certification.

Reached 2. 65 million safe working hours from Oct., ‘10 ~ Mar., ‘17

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Gulei Petrochemical Project

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Fujian Gulei Petrochemical Co. Ltd.
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Ethylene、Propylene、Butadiene、 Taiwan and China each holds Ethylene Vinyl Acetate copolymers 50 % of the joint venture EVA）、Ethylene Oxide（EO）、 company's shares . Ethylene Glycol（EG）, etc.

• Total investment (Taiwan and China) : approximately 27.38 billion RMB • According to APC Board’s FID (March 2016), APC will indirectly invest the Gulei Project in Fujian Province, China, via a third place. The amount of investment will not exceed NT $ 6 billion. Capital will be in place consecutively after government’s approval.

• Shareholders of Taiwan and China co-signed the JV agreement and corporate charter in May 2016. • Registration of Fujian Gulei Petrochemical Co. Ltd. was complete in Xiamen on November 7, 2016.

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Finance information

Speaker : Nicolás Chen Manager

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Consolidated Statements of Income

(In millions of NTD, except per share data)

		2016		2015	YoY%
Sales Cost of goods sold		5,893 5,113		5,187 4,578	13.6% 11.7%
Gross profit gross profit ratio		780 13%		609 12%	28.1%
Operating expenses		212		197	7.6%
Operating income operating income ratio		568 10%		412 8%	37.9%
Non-operating income(loss)		225		226	-0.2%
Income before income taxes		793		637	24.4%
Income taxes		122		98	24.3%
Net income net income ratio		671 11%		539 10%	24.4%
Net income attributable to - APC -former owner		666 5		532 8	25.3%
Earningsper share		1.32		1.06

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Financial ratio anal sis y

		2016		2015
Operatingincome margin(%)		9.6		7.9
Net income margin(%)		11.4		10.4
Debt ratio(%)		35		14
Current ratio(%)		256		226
Quick ratio(%)		222		144
Accounts receivable turnover days		43		28
Inventoryturnover days		52		66

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EPS vs DPS

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Thank you

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Q & A

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