CHC — Interim / Quarterly Report 2020

Jun 19, 2020

Investor Conference

June 19, 2020

Disclaimer Statement

• This presentation and release contain “forward-looking statements” which may include projections of future results of operations, financial condition or business prospects based on our own information and other sources.

• Our actual results of operations, financial condition or business prospects may differ from those expressed or implied in these forward-looking statements for a variety of reasons, including but not limited to market demand, price fluctuations, competition, international economic conditions, supply chain issues, exchange rate fluctuations and other risks and factors beyond our control.

• The forward-looking statements in this release reflect the current belief of Continental Holdings Corporation as of the date of this release. Continental Holdings Corporation undertakes no obligation to update these forward-looking statements for events or circumstances that occur subsequent to such date.

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Company Overview

Overview

• Listed on the Taiwan Stock Exchange (Ticker: 3703 TW)

• Market capitalization: NT$10.5 billion as of 6/12/2020

• Shareholder Structure: Board 33%, foreign investors 21%, other domestic investors 46%

Financials

Business Segments

• Capital: NT$8.2 billion

• Revenue for 2019: NT$22.7 billion

• Revenue for Jan-May 2020: NT$7.3 billion

• Civil/Building construction

• Real estate development

• Environmental project development

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Business Scope of Member Companies

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Civil/Building

Construction

Real Estate Development

Environmental Project Development

• •

• Construction of public Development of transportation and residential buildings infrastructure

• Development of commercial complexes

• Construction of residential and

• Construction, operation, and maintenance of wastewater reclamation and sewerage systems

commercial buildings

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Revenue Mainly Comes from Construction Business

Revenue by Segment

Note：The consolidated revenue of CEC in 2019 is NT$17,148 million.

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2020Q1 Results

Consolidated Income Statement

Revenue Gross Profit Gross Margin OPEX (Unit: NT$ million except for EPS)	2020Q1	4,968 -12.6% 682 7.2% 13.7% +3.2 pp (304) -7.0% 2019Q1 YoY
	4,339 731 16.9% (283)
Operating Income	448	378 18.6%
Operating Margin Non Operating Inc/ (Exp)	10.3% (39)	7.6% +2.7 pp 312 -112.6%
Net Income Attributable to Shareholders of the Parent Company	354	637 -44.4%
EPS (NT$)	0.43	0.77 -44.4%

Operating income increased, mainly because of higher gross profit from the real estate development and environmental project development segments and lower consolidated operating expenses in this period

Net income attributable to shareholders of the parent company decreased, mainly because of the gain on valuation and disposal of THSRC stocks approximately 360 million in the last period

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Business Outlook

Civil/Building Construction

• Indian projects and overseas investments will no longer impact overall financial performance

• Apply core competencies to the new areas of growth

Real Estate Development

• Project portfolio is more diverse in segmentation and geography

• La Bella Vita is completed and starts to generate profit in 2020

Environment Project Development

• Continue to cultivate its core business in water treatment

• Carefully assessing other environmental engineering areas

Recalibrated business focus and confirmed strategic direction

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2019
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Continental Engineering Corporation

• A leading engineering and construction contractor tracing its roots back to 1945

• Pioneer in adopting new engineering techniques

• Successfully completed a wide range of public and private-sector construction projects

Recent Projects - Civil Construction

• Hong Kong G506 – Construction of Station Square at Kai Tak Phase 1 (2019)

• GC03 Taoyuan MRT Green Line (2019)

• GC01 Taoyuan MRT Green Line (2018)

• C211 Tainan Railway Underground (2017)

• C214 Tainan Railway Underground (2017)

• Recent Projects - Building Construction

• Taipei Nangang Depot Public Housing Design and Built Project (2019)

• Grand River Xinyi A7 (2018)

• Guanci Po-Ai Park Public Housing Development (2017)

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On-going Projects: Construction

Civil Construction

• GC01 Taoyuan MRT Green Line (Taiwan)

• GC03 Taoyuan MRT Green Line (Taiwan)

• C211 Tainan Railway Underground (Taiwan)

• C214 Tainan Railway Underground (Taiwan)

• CJ910 Taichung MRT Depot (Taiwan)

• CJ930 Taichung MRT Green Line (Taiwan)

•

Building Construction

• Keishen Shengkai Tate (Taiwan)

• Guanci Po-Ai Park Public Housing Development (Taiwan)

• Sanchih Tucheng Project (Taiwan)

• Nangang Depot Public Housing Design and Built Project (Taiwan)

• CM01 Airport MRT (Taiwan)

• Reishui Tunnel (Taiwan)

• CQ840 Taipei MRT Wanda Line (Taiwan)

• CQ850A Taipei MRT Wanda Line (Taiwan)

• CQ842 Taipei MRT Wanda Line (Taiwan)

• Mui Wo (HK)

• LT-6 (HK)

• Kai Tak Development – Stage 2 Infrastructure Works for Development at the Southern Part of the Former Runway (HK)

• G506 Construction of Station Square at Kai Tak Phase 1 (HK)

• JMRC UG1B (India)

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Construction: Explore New Opportunities

Market Overview	• Remain confident that Taiwan government will continue to invest in further infrastructure upgrade and improvement including rail and metro in line with its “Forward Looking Plan” • Further growth opportunities in energy as Taiwan moves forward with its plans to replace its aging energy generation in favor of conventional and renewable energy generation • Continue to monitor confidence in the residential and hospitality sector driving demand for new building		Strategy	• Strengthencash paybackbottom line growth • Pursue new opportunities within the energy sector in Taiwanwhile identifying selectivecivil infrastructure opportunities within adjacent markets • In order to mitigate the effects of the worldwide construction skills shortage, CEC is investing in a number of exciting opportunities to benefit from the use of technology, modularization and prefabrication

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Continental Development Corporation

• Highly recognized in high-end residential market

• A Pioneer in large-sized community development

• Continue developing commercial real estate with market leaders

• Recent Projects

• Drawing the Dream Life (2020)

• Timeless and Modern Expression (2020)

• Kaohsiung Asia New Bay Area Residential & Commercial Complex (2020；CDC owned 35%)

• The LINE SF (2020；CDC owned 54%)

• Taipei Tianjin Street Residence (2020)

• Fullerton Hotel Joint-Development Project (2020)

• Bountiful Journey (2017)

• 55Timeless (2016)

• La Bella Vita (2016)

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Projects Under Construction

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Taipei
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Bountiful Journey

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Taipei
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Timeless and Modern Expression

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San Francisco
USA
Residential & Commercial
Complex
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New Taipei
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Drawing the Dream Life

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Kuala Lumpur
Malaysia
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Service Apartment

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Kaohsiung
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Residential & Commercial Complex

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Real Estate Development: Focus on Creating Values

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• Taiwan’s real estate market • Geographical expansion from
remains stable northern to central and
southern Taiwan
•
Only developers with
reputation and financial • Continue developing
capabilities can grow commercial real estate
sustainably projects with strategic
partners
•
Continue exploring new types
of products
Strategy
Market Overview
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HDEC Corporation

• Inherit environmental engineering competencies from CEC

• Participate in local government tenders for sewerage system BOT and wastewater reclamation and reuse BTO projects

• Exhibit project management capabilities in planning, designing, building and operation & maintenance

• Continue exploring new environmental projects

• Recent Projects

• Tongluo Science Park Wastewater Treatment Plant Phase II project (2020-2023)

• Linhai Wastewater Reclamation & Reuse BTO project (2018-2036)

• Puding Area Sewerage System BOT Project (2016-2055)

• Chungli Area Sewerage System BOT Project (2016-2056)

• Fengshan River Wastewater Reclamation & Reuse BTO Project (2016-2033)

• New Taipei City Danshui Area Sewerage System BOT Project (2005-2040)

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New Project Awarded in 2020

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Tongluo Science Park Wastewater Treatment Plant Phase II project

• Scope of construction works

• Design and construction of water collection pipeline and affiliated facilities (3,880m)

• Design and construction of conductivity treatment facilities and affiliated facilities

• Renew and improve the design and construction of existing wastewater plant and affiliated facilities

• 3 years of operation and maintenance (delivered by the partner of this project)

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Project in Operation: Sewerage System BOT

Danshui Area Sewerage System BOT Project (2005 2040)

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Project in Operation: Wastewater Reclamation & Reuse BTO

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Fengshan River Wastewater Reclamation & Reuse BTO - Project (2016 2033)

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Environmental Projects: Growing Water Business and Exploring Other Sectors in the Industry

Market Overview	• The 2020-22 market size of environmental engineering industryin Taiwan amounts to NT$112.2 billion • The 2020-22 market size of water and wastewater treatment sectorin Taiwan amounts to NT$97.4 billion • The 2020-22 market size of renewable energy engineering sectorin Taiwan amounts to 14.8 billion		Strategy	• Continue developing new business opportunities in sewerage system projectsand wastewater reclamation and reuse projects • Explorebiomass power generationandsolid waste disposalmarkets • Continue enhancing Engineering Procurement Construction (“EPC”)project execution capabilities and operationalefficiency

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Q & A

Thank you