CATHAY RED — Investor Presentation 2018

Oct 26, 2018

Cathay Real Estate Development Co., Ltd. ★ Quality Lifetime Homes ★

Disclaimer Statement

• This presentation contains forward looking statements which are estimated based on the current status of Cathay Real Estate Development Co., Ltd. and general economic conditions. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, rising costs of raw materials, competitive products and pricing pressures and regulatory developments.

• Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved.

• Cathay Real Estate Development Co., Ltd. expressly disclaims any obligation to review, update or correct these materials after the date thereof. Cathay Real Estate Development Co., Ltd. may update, amend, supplement or otherwise alter the information contained in any such materials by subsequent presentations, reports, filings, or other means without notice. This presentation may not be stored, copied, distributed, transmitted.

Content

• Company Brief

• � Financial Data

• Consolidated Income Statement

• Consolidated Balance Sheet

• Business Strategy & Operating Results

• � Ordinary Business: Current progress of the project execution

• Re-investment：Current status and future plan

• Real-estate Market Prospects

• Presale Market Overview

• The Factors Affect Housing Market

Company Brief

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Reputable Publicly-traded Developer
Domestic
Domestic Re-investment
Ordinary Business � Set up Cathay Real Estate
Management in 2005.
� Leading brand in � Set up Cathay Healthcare
Established in 1964 Management in 2011.
housing development. with 115.96 � Set up Cathay Hospitality
� Number of households
Management in 2012.
built: approx. 53,000. billion in capital. � Set up Cathay Hospitality
� Building area built: Listed on TWSE Consulting in 2018.
.
approx. 8,000,000m [2] in 1967, stock code
Commercial Development
2501.
� Courtyard hotel cooperated
with Marriot in 2018.
� Liberty Stationery Corp. office
building rebuilt in 2022.
� Hotel built cooperated
with Mitsui Fudosan in 2025.
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Real estate developer with diverse asset allocation and various operation

1

Consolidated Income Statement

	EPS、Cash Dividend：NTD/Per Share	EPS、Cash Dividend：NTD/Per Share	EPS、Cash Dividend：NTD/Per Share	EPS、Cash Dividend：NTD/Per Share	EPS、Cash Dividend：NTD/Per Share	EPS、Cash Dividend：NTD/Per Share	EPS、Cash Dividend：NTD/Per Share	EPS、Cash Dividend：NTD/Per Share
Item	2015		2016		2017		2018Q2
	NT$bn	% of Rev.	NT$bn	% of Rev.	NT$bn	% of Rev.	NT$bn	% of Rev.
Revenue	9.85	100%	18.70	100%	12.27	100%	5.08	100%
Gross Profit	3.48	36%	4.51	24%	2.59	21%	1.48	29%
Operating Profit	2.40	25%	3.40	18%	1.34	11%	0.83	16%
Non-operating revenue and expenses	0.04	-	(0.07)	-	(0.15)	(1%)	(0.02)	-
Net Profit	2.19	22%	2.84	15%	1.24	10%	0.89	18%
Parent Net Profit	2.33	23%	3.01	16%	1.44	12%	0.97	19%
EPS	1.40		2.06		1.25		0.83
Cash Dividend*	1.0		1.5		1.2		-

*Based on the payout year.

2

Consolidated Balance Sheet(1/2)

Item	2015	2015	2016	2016	2017	2017	2018Q2	2018Q2
	NT$bn	%	NT$bn	%	NT$bn	%	NT$bn	%
Land for Construction	11.70	19%	8.43	15%	8.90	16%	6.64	12%
Construction in Progress	22.25	36%	13.53	24%	16.03	30%	19.31	34%
Buildings and Land Held for Sale	0.66	1%	7.59	14%	3.57	7%	1.62	3%
Others	0.20	-	0.28	1%	0.35	1%	2.64	5%
Total Inventories	34.81	56%	29.82	54%	28.85	54%	30.21	54%
Cash and Cash Equivalents	3.50	6%	1.67	3%	1.23	2%	1.43	3%
Investment Property	13.15	21%	13.67	25%	12.98	24%	12.97	23%
Long-term investment – Equity	0.03	-	0.02	-	0.01	-	-	-
Total Assets	61.93	100%	55.43	100%	53.76	100%	560.0	100%

3

Consolidated Balance Sheet(2/2)

	Equity Per Share：NTD/Per Share	Equity Per Share：NTD/Per Share	Equity Per Share：NTD/Per Share	Equity Per Share：NTD/Per Share	Equity Per Share：NTD/Per Share	Equity Per Share：NTD/Per Share	Equity Per Share：NTD/Per Share	Equity Per Share：NTD/Per Share
Item	2015		2016		2017		2018Q2
	NT$bn	%	NT$bn	%	NT$bn	%	NT$bn	%
Total Borrowing	24.30	39%	23.57	43%	24.19	45%	24.46	44%
Advances from Customers	8.48	14%	5.78	10%	4.50	8%	4.05	7%
Total Liabilities	35.87	58%	31.85	57%	30.54	57%	32.92	59%
Capital (per share NT$10)	16.57	27%	11.60	21%	11.60	22%	11.60	21%
Parent Equity	25.26	41%	22.98	41%	22.77	42%	22.69	41%
Total Equity	26.06	42%	23.58	43%	23.22	43%	23.08	41%
Equity Per Share	15.25		19.82		19.63		19.56

• Based on Parent Equity.

4

Business Strategy

• Business Model

• Utilize premium brand image to create products’ added value.

• Market driven sales strategy.

• Delivery perpetual services

• Land Bank

• Mainly the lands in downtown area, adjoining lands in suburbs with complete residential functions.

• Diversified land development model (including urban renewal, joint construction… etc.)

5

Operating Results

• Positive Profitability Expected

• 5 new projects completed this year are continually handed over to buyers

• Outstanding sales of listed projects which will be completed during 2019 to 2020

• Sufficient Planned Development in Reserve

• Approximately 350 billion dollars reserved for planned residential development

• Approximately 77% of the planned development located in the northern area (north of Hsinchu)

6

Home-Sales Performance(1/2)

Project	Area	Total Amount (NT$bn)	Sales rate(%)	Year of completion	Year of completion	Year of completion	Year of completion	Year of completion
				2018	2019	2020	2021	2022
國泰金城	Taipei	17	Sold out
國泰沐善	Taipei	17	95%
御博苑	Taichung	22	Approximately sold out
文林硯	Tainan	32	Approximately sold out
DoubleA 馥建築	Kaohsiung	19	75%
國泰昕春	Taipei	13	90%
國泰賦都	Taoyuan	33	80%
國泰層峰	Taichung	45	60%
二聖(二)	Kaohsiung	16	Under construction

*not released project

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Home-Sales Performance(2/2)

Project	Area	Total Amount (NT$bn)	Sales rate(%)	Year of completion	Year of completion	Year of completion	Year of completion	Year of completion
				2018	2019	2020	2021	2022
國泰水秀	Taoyuan	12	90%
國泰禾	Hsinchu	38	90%
國泰PLUS	Taichung	27	Approximately sold out
O2馥建築	Kaohsiung	40	55%
國泰豐格	Taipei	18	60%
國泰悅	Taipei	19	60%
學士路	Taipei	20	**- ***
永華路	Tainan	35	Under construction
國泰朋	Taipei	25	85%

*not released project

8

Re-investment-Current status and future plan

9

Presale Market Overview

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Trading Volume Index Cathay Real Estate Index 成交量指數 可能成交價指數
Housing Price Index
成交量指數 可能成交價指數
全國(TAIWAN)
700 150
560 120
420 90
280 60
140 30
0 0
Under the circumstance of stable global economic recovery and constructors not
Price striving to make higher housing price, consumer confidence has leveled off and
& trading volume increased greatly in the past year. As for housing price, it
Volume corrected at peak in 2013 and has corrected gradually by quarter since 2016. With
rising housing price and demand support , the risk of price correction has been low.
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The Factors Affect Housing Market

1. There are no harmful policies to housing market currently so the housing demand has increased gradually and consumer confidence has continued to level off. Government 2. Relevant housing market policies, such as Statute for Expediting Policy Reconstruction of Urban Unsafe and Old Building, social housing and transparency of transaction data affect the supply-demand condition of the entire future market.

Due to the benefit from rising price of international raw material and prosperous demand of mechanic equipments, the export of traditional goods Domestic has a strong performance. The export performance of the first half year of 2018 Economy is better than expected. However, the rising price of international raw material will be an important uncertainty to the future economy .

The global trading growth Expansion of the recent years has slowed down in this year. Europe, Japan and China ease the growing strength. EU will end EQ Global policy in the end of the year which shows that EU is confident with the economy Economy recovery. With continuing economic expansion in the U.S. , the uncertainties of trade war between China and the U.S. still affects the investment and confidence of major trading partners to the U.S..

11