CHC — Investor Presentation 2018

Nov 30, 2018

Investor Conference

November 30 , 2018

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.

2

Company Overview

Overview

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

• Market capitalization: NT$11.7 billion as of 11/19/2018

• Shareholders: Board 27%, foreign investors 22%, other domestic investors 51%

Financials

Business Lines

• Capital: NT$8.2 billion

• Revenues for 2017: NT$28.4 billion

• Revenues for Jan.-Oct. 2018: NT$20.5 billion

• Civil/Building construction

• Real estate development

• Environmental project development

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Business Scope

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Civil / Building Real Estate Development

Construction

Environmental Project Development

• Construction of public • Development of transportation and residential buildings infrastructure • Development of

• • Construction of commercial complexes

• residential and

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

commercial buildings

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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

• GC01 Taoyuan MRT Green Line (2018)

• 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

• Grand River Xinyi A7 (2018)

• Taimin Shipai Project (2018)

• Guangci Social Housing Turn-Key (2017)

• Keishen Shengkai Tate (2016)

5

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)

• Recent Land Acquisitions

• Sixin, Xindian District, New Taipei City (2018)

• Zhishan, Shilin District, Taipei City (2018)

6

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

• Linhai Wastewater Reclamation & Reuse BTO project (2018)

• 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

• GC01 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)

• 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)

• JMRC-UG1B (India)

• Building Construction

• Sanchih Tucheng Project (Taiwan)

• Guangci Social Housing Turn-Key (Taiwan)

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Completed TBM tunnel for the Xinyi Line of Taipei Metro
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• Keishen Shengkai Tate (Taiwan)

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On-going Projects: Real Estate Development

• 琢白

• 丽格

• 琢豐

• Hotel project in Malaysia

• Residential and

• commercial complex project in US

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Construction: Explore New Opportunities

• Market

• Taiwan government’s “Forward Looking Plan” has released civil 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
  
   - Hotels, hospitals and large scale government rezoning projects
  

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

  • annum

 Plans

• Pursue the most advantageous tenders in civil projects

• Explore new segments in civil construction

• Utilize technology to enhance efficiency

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Real Estate: Focus on Creating Value

 Market

• Taiwan’s real estate market has continued its lackluster performance in growth and profitability profiles

• Only those developers with reputation and financial capabilities can sustain

• Plans

• Geographical expansion from northern to central and southern 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 while exploring other new segments

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

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Construction Revenues Remain Stable

NT$m

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6,388
6,611
84 5,705 91
470
87 562
372
1,910
1,591
1,145
4,146 4,101 4,143
1Q18 2Q18 3Q18
Construction Real estate development Environmental projects Others
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Consolidated Income Statement

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NT$m 2018 1-3Q 2017 1-3Q YoY
Sales 18,704 18,648 0.3%
Gross Profit 2,473 1,068 131.5%
GP% 13.2% 5.7% +7.5 pp
OPEX 918 820 11.9%
Operating Profit 1,555 248 528.0%
OP% 8.3% 1.3% +7.0 pp
Pretax Net Income 1,877 1,382 35.9%
Net Income 1,808 1,339 35.1%
NI% 9.7% 7.2% +2.5 pp
EPS 2.13 1.61 32.3%
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• Gross margin increased by 7.5pp YoY as revenue mix moved towards the highermargin segment and all segments saw growth in gross margins

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Consolidated Balance Sheet

NT$m	2018/1/1	2018/9/30
Assets
Cash & Cash Equivalents	3,429 2,021 4,097 2,855 2,670	3,297 2,495 3,657 3,411 2,571 23,677 657 1,053
Current Financial Asset
Accounts Receivable Contract Asset - Construction Contracts Contract Asset - Accounts Receivable Retention
Inventory	22,865
Prepaid Other Current Assets Total Current Assets	739 835
	39,510	40,816
Non-current Financial Asset Long-term Investment by Equity Method Fixed Asset Intangible Asset Other Non-current Assets	2,267	2,810 1,351 14,888 1,184 4,497
	1,525
	15,591
	1,011
	4,797
Total Non-current Assets	25,192	24,730
Total Assets	64,702	65,546
Liabilities		13,670 7,930 2,592 1,949 67 713
Short-term Borrowing/Current Portion LT Debt	11,322 8,885 3,059 2,178 124
Accounts Payable Contract Liability - Construction Contracts Contract Liability - Other Contracts Advance Receipt
Other Current Liabilties Total Current Liabilities	993
	26,568	26,920
Long-term Borrowing	13,657	12,547 806
Other Non-current Liabilities Total Non-current Liabilities Total Liabilities Shareholder's Equities	807
	14,463	13,353
	41,032	40,273
	23,671	25,273
Book value per share(NT$/share) Net debt/Equity(%) L/A(%) Current Ratio(%)	27.0 91% 63% 149%	28.4 91% 61% 152%

• Inventory increased by $812m mainly because of land acquisition, construction in progress and investment property

reclassification, partially offset by settlements

• Borrowings increased by $1,238m mainly because of continued investment in real estate

development projects, partially offset by loan repayment

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Thank you