CHC — Investor Presentation 2017

Dec 1, 2017

Investor Conference

December 1, 2017

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$12.1 billion as of 11/20/2017

• Shareholders: Board 38%, foreign investors 22%, other domestic investors 40%

Financials

Business Lines

• Capital: NT$8.2 billion

• Revenue in 2016: NT$24.5 billion

• Revenue in 2017 1-3Q: NT$18.7 billion

• Civil/Building construction

• Real estate development

• Environmental project development

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Business Scope

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Civil / Building Construction

Real Estate Development

Environmental Project Development

• Construction of public transportation and infrastructure

  • Development of residential buildings

• Development of

• • Construction of commercial complexes residential and commercial buildings

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

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Member Company: 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

  • C211 Tainan Railway Underground (2017)

  • C214 Tainan Railway Underground (2017)

  • CQ840 Taipei MRT Wanda Line (2016)

  • CQ850A Taipei MRT Wanda Line (2016)

• Recent Projects – Building Construction

  • Guanci Poai Park Public Housing (2017)

  • Kaicheng Jean Residence (2016)

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Member Company: Continental Development Corporation

• Well recognized in the high-end residential housing

• One of the pioneers in new community development

• Has expanded into commercial real estate and will continue building partnership

• Recent Projects

  • 琢豐 (2017)

  • 琢白 (2016)

  • 丽格 (2016)

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Member Company: Hsin Dar Environment Corporation

• Traces its roots back to CEC’s environmental engineering capabilities

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

• Continue exploring new environmental projects

• Recent Projects

  • Puding Area Sewerage System BOT Project (2016)

  • Chungli Area Sewerage System BOT Project (2016)

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

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

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On-going Projects: Construction

• Civil Construction

• CJ910 Taichung MRT Depot (Taiwan)

• CJ930 Taichung MRT Green Line (Taiwan)

• CM01 Airport MRT (Taiwan)

• Reishui Tunnel (Taiwan)

• CQ842 Taipei MRT Wanda Line (Taiwan)

• CQ850A Taipei MRT Wanda Line (Taiwan)

• CQ840 Taipei MRT Wanda Line (Taiwan)

• HATS (HK)

• Mui Wo (HK)

• LT-6 (HK)

• Kai Tak (HK)

• Noida 1-3 (India)

• JMRC-UG1B (India)

• PWD-MCW (India)

• Building Construction

  • Sanchih Tucheng (Taiwan)

  • Kaicheng Jean Residence (Taiwan)

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----- Start of picture text ----- Completed TBM tunnel for the Xinyi Line of Taipei Metro----- End of picture text -----

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On-going Projects: Real Estate Development

• 謙量

• • 琢賦

• • 宝格

• • 琢青

• 琢白

• 丽格

• • 琢豐

Treasure Garden (宝格)

• Architect : Antonio Citterio

• Location : Xitun District, Taichung

• • Scope of work :

  • Structure : SS

• 39-story building with a 6-level basement Total Area : 44,846 m[2 ] (13,566 ping)

• • Completion : 2017

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Construction: Profitable Growth

 Market

• Taiwan government’s “Forward Looking Plan” has released construction projects with a total value of NT$366 billion during 2017-30 in railway/metro sectors

• Taiwan’s building segments that we target include:

  • High-end residential buildings and large-scale commercial complexes

  • Super high-rise commercial complexes

  • Public sector turnkey work

  • Hotels, hospitals and large scale government rezoning projects

• Hong Kong government’s civil infrastructure expenditures average at HK$56 billion per annum

 Plans

• Pursue higher-margin civil projects

• Optimize resources for high-end residential and commercial real estate projects

• Build up domain knowledge and new capabilities in emerging civil segments

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Real Estate: Focus on Creating Value

 Market

• Taiwan’s real estate market remains sluggish, and the high-end retail segment has been particularly hit by Taiwan government’s price-curbing measures

• Only those developers with reputation and financial capabilities can sustain

• Plans

  • Geographical expansion from northern to central Taiwan

  • Continue developing commercial real estate projects with partners

  • Continue observing and exploring new segments in response to demographic

    • changes

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Environmental Projects: Water Treatment Specialist

 Market

• Taiwan government’s expenditures in sewerage system projects amount to NT$58 billion during 2018-22

• Taiwan government’s expenditures in wastewater reclamation and reuse projects amount to NT$20 billion during 2018-22

 Plans

• Develop new business opportunities in sewerage system projects and

wastewater reclamation and reuse projects

• Continue enhancing Engineering Procurement Construction (“EPC”) project management capabilities

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Consolidated Income Statement

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----- Start of picture text ----- NT$Mn 2017 1-3Q 2016 1-3Q YoY•Sales 18,648 16,413 13.6%Gross Profit 1,068 515 107.4% GP% 5.7% 3.1% +2.6pp•OPEX 820 889 -7.8%Operating Profit 248 (374) NMF OP% 1.3% (2.3%) +3.6ppPretax Net Income 1,382 (38) NMF •Net Income 1,339 (183) NMF NI% 7.2% (1.1%) +8.3ppEPS 1.61 (0.18) NMF----- End of picture text -----

Gross Profit: Increased by 107.4% YoY due to better project/business mix

OPEX: Decreased by 7.8% YoY mainly due to lower selling expenses and optimized geographical footprints

Net Income: Mainly due to disposal of THSRC shares

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Consolidated Balance Sheet

NT$Mn	NT$Mn	2017 3Q	2016 4Q
AssetsCash & Cash EquivalentsCurrent Financial AssetAccounts ReceivableConstruction Contract ReceivableInventoryPrepaymentOther Current AssetsTotal Current AssetsNon-Current Financial AssetLong-Term Investment by Equity Method
	sash & Cash Equivalentsurrent Financial Assetccounts Receivableonstruction Contract ReceivablenventoryrepaymentOther Current AssetsTotal Current AssetsNon-Current Financial Assetong-Term Investment by Equity Method	2,6882,0045,4723,12024,0401,166670	2,549	•
			3,0115,5263,09721,0331,155641	•
		39,160	37,012
		1,7042,521	1,704
			3,124	•
P	roperty, Plant & Equipment	13,241	12,923
I Liabi	ntangible AssetOther Non-current AssetTotal Non-current AssetsTotal Assetslities	9324,237	7403,840
		22,635	22,331
		61,794	59,343
SACA	hort-term Borrowings/Current Portion LT Debtccounts Payableonstruction Contract Payabledvance ReceiptOther Current Liabilties	11,1007,4661,4635,026	9,0486427
			,1,104
			5,244
		470	582
L Shar	Total Current Liabilitiesong-Term BorrowingsOther Non-current LiabilitiesTotal Non-current LiabilitiesTotal Liabilitieseholder's Equities	25,524	22,405
		12,772452	13,691426
		13,224	14,117
		38,748	36,522
CA	apitaldditional Paid-in Capital	8,2326,804	8,2326,804
R	etained EarningsOther EquitiesNon-controlling InterestTotal Shareholder's Equities	6,1091,149751	5,2011,821762
		23,046	22,821

Current Financial Asset: Decreased by NT$1,007Mn mainly due to selling THSRC shares Inventory: Increased by NT$3,007Mn mainly because CDC’s inventory increased

Borrowings: Increased by NT$1,133Mn mainly due to CDC’s increased leverage partially offset by CEC’s loan repayment

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