CHC — Investor Presentation 2019

Dec 4, 2019

Investor Conference

December 4, 2019

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$10.7billion as of 11/29/2019

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

Financials

Business Lines

• Capital: NT$8.2 billion

• Revenue for 2018: NT$25.2 billion

• Revenue for Jan-Oct 2019:

• Civil/Building construction

• Real estate development

• Environmental project development

NT$18.6billion

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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

• Construction of residential and

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

commercial buildings

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Construction Revenues Remained Relatively Stable

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1Q-3Q19 Consolidated Income Statement

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Consolidated Income Statement
(Unit: NT$ million except for EPS)
2019 1Q-3Q 2018 1Q-3Q YoY
Revenue 17,072 18,704 -8.7%
Gross Profit 2,057 2,473 -16.8%
Gross Margin 12.1% 13.2% -1.2pp
OPEX (1,013) (918) 10.4% •
Operating Income 1,044 1,555 -32.9%
Operating Margin 6.1% 8.3% -2.2pp
Non Operating Inc/ (Exp) -451 323 NMF
Net Income Attributable to Shareholders of
249 1,754 -85.8% •
the Parent Company
EPS (NT$) 0.30 2.13 -85.8%
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Operating income fell, mainly because of lower revenue contribution and product mix margin from real estate development business in this period

Net income attributable to shareholders of the parent company

decreased, mainly from the lower operating income, and the higher investment loss and impairment loss booked in this period

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Continental Engineering Corporation

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

• A pioneer in adopting new engineering techniques

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

• Recent Projects - Civil Construction

• GC03 Taoyuan MRT Green Line (2019)

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

• GC01 Taoyuan MRT Green Line (2018)

• C211 Tainan Railway Underground (2017)

• C214 Tainan Railway Underground (2017)

• Recent Projects - Building Construction

• Nangang Depot Public Housing Development (2019)

• Grand River Xinyi A7 (2018)

• Guanci Poai Park Public Housing Development (2017)

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On-going Projects: Construction

Civil Construction

• GC03 Taoyuan MRT Green Line (Taiwan)

• 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)

Building Construction

• Keishen Shengkai Tate (Taiwan)

• Guanci Poai Park Public Housing Development (Taiwan)

• Sanchih Tucheng (Taiwan)

• Nangang Depot Public Housing Development (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: Leveraging Core Competencies to Drive Growth

• The addressable market size of targeted civil and building construction segments amounts to NT$400 billion per year in Taiwan • In Taiwan, construction costs are increasing, and the competition is lifted further in the building segment • Taiwan’s national energy policy will focus on natural gas and renewable energy development

• Targeted civil and building segments in Taiwan include: - Civil segment: Railway, stations, and conventional/renewable energy projects - Building segment: High-end residential buildings, mixed-use transit hubs, super high-rise commercial complexes, selective hotels, and turnkey public housing projects • Explore new segments in the civil construction • Utilize technology to elevate efficiency

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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

• 琢豐 (2018)

• 丽格 (2016)

• Recent Land Acquisitions and Development Projects

• Taipei Fullerton – Nanjing Reconstruction, Taipei City (2019)

• Bangsar District, Kuala Lumpur, Malaysia (2019)

• Intersection of Zhongshan and Linsan Roads, Kaohsiung City (2019)

• Ankang Section, Xindian District, New Taipei City (2018)

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

• Zhishan Section, Shilin District, Taipei City (2018)

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On-going Projects: Real Estate Development

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Taipei Taichung
琢豐 丽格
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San Francisco
USA
Residential & Commercial
Complex
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Kuala Lumpur
Malaysia
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Service Apartment

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Real Estate Development: Diversifying the Portfolio and Creating Values

• Taiwan’s real estate market • Geographical expansion from has gradually gained its northern to central and momentum and restored southern Taiwan • • Only developers with Continue developing reputation and financial commercial real estate capabilities can sustain well projects with partners • Continue exploring new types of products

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HDEC Corporation

• Inherits environmental engineering competencies from CEC

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

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

• 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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Water Resources Plants in Operation

Tamsui, New Taipei City Fengshan, Kaohsiung City

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Environmental Projects: Growing Water Business and Exploring Other Environmental Areas

• The market size of environmental projects amounts to NT$92 billion during 2020-22 in Taiwan • Taiwan’s water and wastewater treatment projects amount to NT$69 billion during 2020-22

• Continue developing new business opportunities in sewerage system projects and wastewater reclamation and reuse projects • Carefully consider tapping into other new segments

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

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Thank you