CHC — Investor Presentation 2018

Jul 5, 2018

Investor Conference

July 5, 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.

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Company Overview

Overview

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

• Market capitalization: NT$11.2 billion as of 6/14/2018

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

Financials

Business Lines

• Capital: NT$8.2 billion

• Revenue in 2017: NT$28.4 billion

• Revenue in 2018 1Q: NT$6.6 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

• 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

• Thaiming Beitou Building (2018)

• Guanci Poai Park Public Housing (2017)

• Kaicheng Jean Residence (2016)

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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 Section 129, Xindian District, New Taipei City (2018)

• Zhishan Section 127-1, 135, 136, 136-1, 188, Shilin District, Taipei City (2018)

• Sixin Section 121, Xindian District, New Taipei City (2017)

• Huiguo Section 101, Xitun District, Taichung City (2017)

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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

• C211 Tainan Railway Underground (Taiwan)

• Guanci Poai Park Public Housing (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)

• Noida 1-3 (India)

• JMRC-UG1B (India)

• PWD-MCW (India)

• Building Construction

• Sanchih Tucheng (Taiwan)

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Completed TBM tunnel for the Xinyi Line of Taipei Metro
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• Kaicheng Jean Residence (Taiwan)

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On-going Projects: Real Estate Development

• 宝格

• • 琢青

• • 琢白

• • 丽格

• • 琢豐

• Hotel project in Malaysia

• • Residential and commercial complex project in US

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Construction: Profitable Growth

 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 gradually regained its momentum

• Only those developers with reputation and financial capabilities can sustain

• Plans

• Geographical expansion from northern to central and southern Taiwan

• Global footprints on promising international projects

• 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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Growth in both construction and real estate ~~development segments~~

NT$m

28,385

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24,537
21,777
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• The construction revenues include those from environmental projects

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Consolidated Income Statement

	NT$m	2018 1Q	2017 1Q	YoY
	Revenue	6,611	5,800	14%
	Gross Profit	922	375	146%
	OPEX	299	269	11%
	Operating Profit	623	105	492%
	Pretax Net Income	467	310	51%
	Net Income	446	296	51%
	GP%	13.9%	6.5%	+7.4pp
	OP%	9.4%	1.8%	+7.6pp
	NI%	6.7%	5.1%	+1.6pp
	EPS	0.52	0.36	44%

Gross margin increased by 7.4% YoY as revenue mix moved towards the higher-margin segment and all segments saw growth in gross margins

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Thank you