CHC — Investor Presentation 2021

Mar 17, 2021

Continental Holdings Corporation

3703.TT

4Q20 Earnings Presentation

2021/3/17

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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Agenda

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Company Overview ESG Implementation Q&A

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Company History

1945

Continental Engineering Corporation (CEC) established

1994

CEC Listed on the Taiwan Stock Exchange

2010

Continental Holdings Corporation (CHC)

listed under ticker 3703.TT after one-forone stock exchange for CEC;

Continental Development Corporation (CDC) spun off from CEC as a fully owned subsidiary of CHC

2006

HDEC Corporation (HDEC) established, 100% owned by CEC

2017

HDEC spun out from CEC as a fully owned subsidiary of CHC

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Company Overview

Paid-in Capital NT$8.2B

MktCap[(As of 3/16/2021)] NT$19.3B

Shareholder Structure

Board 33% + FINI 21% + Others 46%

FY2020 Consolidated Revenue NT$21.7B

FY2020 Net Profit/EPS (NT$/Share) NT$1.54B/$1.87 (Second highest in history)

BVPS[(As of 12/31/2020)] $28.84

3 Major Business Segments Breakdown in Sales/Net Profit

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Civil & Building Construction Real Estate Development

CEC CDC

Environmental Project Development HDEC

59%/19%

27%/58%

14%/23%

*Note: Breakdown in FY2020

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3 Major Business Segments are Industry Leading

Civil & Building Construction

Real Estate Development CEC CDC Taiwan’s Leading Well Known Brand in

Well Known Brand in High-End Housing

Construction Brand

• Mainly contract public transportation, infrastructure, housing, and office building constructions

• Focus on high-end housing, office building, hotel, and large-sized community developments

• Backlog at end of FY20: NT$ 66.5B

• Expanded market into USA &

Environmental Project Development

HDEC

Market Leading in Sewerage & Wastewater Reclamation

• Comprehensive capabilities in project-based management

• 7 water treatment project currently in operation or under construction

Malaysia

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CEC – Recent Projects

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MRT

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CQ840 Taipei MRT Wanda Line

CM01 Taoyuan Airport MRT Extension – Chunli Train Station

GC01 Taoyuan MRT Green Line

CJ930 Taichung MRT G10-G17 Station & all Station Elevator + Escalator Construction

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Railway

C211 Tainan Railway Underground

C214 Tainan Railway Underground

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Building Construction

Bountiful Journey

Nangang Depot Public Housing Guangci Community Public Housing The South Manor Keishen Shengkai Tate CMP Midtown

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CDC – Current Projects

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Completion Completion in 2021
Taipei Taichung Taichung KL, Malaysia San Francisco, CA, USA Taipei Sold out
55 Timeless Treasure Garden La Bella Vita Capri by Fraser, SERIF/ The LINE Hotel Bountiful Journey (Hotel
Serviced Apartment & Residential)
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Completion in 2022 Completion in 2023 Completion in 2024/2025
New Taipei Sold out Taipei Taipei Sold out Kaohsiung (Presale in 2021)
Drawing the Dream Life 鐫画 Timeless and Modern Expression Tianjin Street Project 和陸寓邸 Arranging New Asia Bay & The Hotel Nikko • Taipei: Sensuous Garden, Republic
Building Project
• Taichung: Dakeng Project, Huiguo
101
• Malaysia Bangsar Project
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*JV between Daiwa House Group and CDC, CDC owns 35% of the company

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HDEC – Current Projects

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In Operation
New Taipei City Danshui Area Sewerage System BOT Project (2005-2040)
Taoyuan
Under Construction New
Taipei
Taoyuan Chungli Area Sewerage System BOT Project (2016-2056)
Miaoli
Taoyuan Puding Area Sewerage System BOT Project (2016-2055)
Tongluo Science Park Wastewater Treatment Plant Phase II project –
Conductivity Process Enhancement (2020-2023)
Tainan Anping Reclaimed Water Plant New Construction Turnkey
Project (2020-2037) – Reclaimed Water Plant
In Operation
Tainan Anping Reclaimed Water Plant New Construction Turnkey
Tainan
Project (2020-2037) – Wastewater Treatment
Fengshan River Wastewater Reclamation & Reuse BTO Project
(2016-2033)
Under Construction
Linhai Wastewater Treatment Plant and Reclaimed Water BTO
Project (2018-2036)
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Solid Pipeline

CEC

CDC

HDEC

Backlog NT$ 66.5B

(~3.3 yrs worth of sales)

Signed contracts to close NT$ 16.7B (+90% YoY)

Contracts on hand NT$ 42.5B (+16% YoY)

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693 167 425
665
366
88
FY19 FY20 FY19 FY20 FY19 FY20
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Competitive Advantages and Market Conditions are Favorable

Competitive Advantages

Market Conditions

	Competitive Advantages		Market Conditions
•	High brand/quality recognition	•	High construction demand
•	Fine project achievements		among public infrastructure and private project
•	Outstanding site management ability	•	2021 Total Taiwan target market size ~NT$590B
•	Known for brand image and	•	Targeted for self-use; small-to-
	quality products		mid sized products are
•	Excellence in planning and		mainstream
	construction quality	•	Low interest rate and overseas
•	Comprehensive after-sales service		homecoming cash inflow to
			support self-use demand
•	Experienced in water treatment	•	High demand for household &
	projects		industrial-use waste water
•	Comprehensive project		processing and reclamation
	management ability	•	2021 potential contract to bid
•	Remarkable construction ability		expected> NT$50B
	and operation results

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Consolidated Income Statement

(NT$M)	2016 2017 2018 2019 2020
	Amount % Amount % Amount % Amount % Amount %
Total Revenue	24,537 100 28,385 100 25,154 100 22,665 100 21,689 100
Gross Profit	1,594 6.5 2,349 8.3 3,72414.8 2,733 12.1 3,292 15.2
Operating Profit	320 1.3 1,167 4.1 2,350 9.3 1,325 5.8 1,762 8.1
Non-Ops	219 0.9 (276) (1.0) (198) (0.7) (702) (3.1) (41) (0.2)
Profit before Tax	539 2.2 892 3.1 2,162 8.6 623 2.8 1,721 7.9
Tax Expense	42 0.2 84 0.3 144 0.6 470 2.1 88 0.4
Profit,attributable to owners of parent	529 2.2 788 2.8 1,942 7.7 97 0.4 1,539 7.1
EPS, $	0.64 0.96 2.36 0.12 1.87

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GM Expansion from Favorable Revenue Mix

Revenue Mix & Consolidated Gross Margin

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土木與建築工程CEC 不動產開發CDC 環境工程HDEC 毛利率Gross Margin
3%
6% 7% 8%
14%
14%
17%
25% 22%
27%
83%
77%
70%
68% 59%
14.8% 15.2%
12.1%
8.3%
6.5%
2016 2017 2018 2019 2020
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All 3 Major Business Operating Profit Grow Year-over-year

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2019 2020
Unit: NT$ M
17,148
14,072
5,830
4,930
3,106
1,785
1,463
886
255 303 359
(1,373)
CEC CDC HDEC CEC CDC HDEC
Consolidated Revenue Net Profit
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Note: CDC recognized gain on disposal of investments on THSRC (2633.TT) stock and investment property for ~NT$940M in 2019

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Balance Sheet

Selected Items from Balance Sheet (Unit: NT$ M)	2020 Amount %	2019
		Amount %
Cash and Cash Equivalents	4,512 6.7	4,423 7.0
Current Contract Assets	3,892 5.8	4,963 7.8
Account Receivable, Net	2,036 3.0	2,140 3.4
Inventories	28,363 42.2	26,369 41.5
Property, Plant and Equipment	2,346 3.5	2,287 3.6
Investment Property, Net	10,193 15.2	9,835 15.5
Long-term Accounts Receivables	5,808 8.6	4,548 7.2
Total Assets	67,155 100	63,548 100
Short-term Interest-bearing Loans	12,811 19.1	9,972 15.7
Current Contract Liabilities	8,121 12.1	6,555 10.3
Accounts and Notes Payable	5,784 8.6	5,908 9.3
Long-term Interest-bearing Loans	9,099 13.5	10,353 16.3
Total Liabilities	40,235 59.9	37,851 59.6
Total Equity	26,920 40.1	25,697 40.4

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FY2020 Cash Dividend Distribution a Record High

CHC Dividend Distribution History

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Cash Dividend (NT$/Share) and Dividend Yield [1] (%) 1.40
6.0%
0.90
0.60 0.60
0.50 0.50 0.50 0.50 0.50 0.50
5.2%
4.7% 4.6% 4.6%
4.5% 4.5%
4.3%
4.2%
0 3.7%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
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	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019		2020
Net Profit (NT$ M)	931	984	1,147	920	(980)	573	529	788	1,942	97		1,539
Payout Ratio2	54%	43%	37%	91%	-	72%	78%	63%	38%	424%		75%

1. Yield rate for FY2010-2019 was calculated based on the closing price of ex-div day, FY2020 calculated based on the closing price of NT$23.40 on March 16[th] , 2021.

2. FY2010 cash dividend distribution is drawn from additional paid-in capital (capital dividend); FY2013 dividend distribution includes stock dividend

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Business Outlook

• Group revenue expected to grow with current projects on hand

under all 3 business segments

• Favorable outlook amid Taiwan construction, real estate

• development and water treatment high demand

• COVID-19 to delay overseas projects

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CEC – Taoyuan MRT Green Line (GC01)
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CDC – Bountiful Journey
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HDEC – KH Linhai Wastewater BTO
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Agenda

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Company Overview
ESG Implementation
Q&A
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Core Business Complying with SDGs

CHC Revenue Mix under SDGs

SDGs

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Water
Treatments
24%
Railway Civil
SDGs
Others Engineering
related
42% Urban Renewal/ Construction
58% Public Housing 47%
Building and
Mechanical
Construction
29%
Note: Calculated based on FY20 consolidated revenue
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ESG Implementation Structure

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CSR
Committee
Executive
Secretary
Occupational Customer &
Sustainable Employee Corporate
Health & Community
Environment Wellbeing Governance
Safety Service
Execution
Companies/Departments
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• CSR Committee serves as the highest level decision-making center for corporate social responsibilities.

• CSR Committee is chaired by the CEO of CHC and consists of the CEO/GM of 3 major business segments and CHC’s functional department heads

• To plan and execute sustainable growth amid 5 aspects: sustainable environment, employee wellbeing, occupational health and safety, customer and community service, and corporate governance

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Main ESG Initiatives

Sustainable Environment

• Reducing waste on raw materials and consumed energy

• Promoting circular Corporate Governance

• economy

• • • Reducing operational Improving operating waste performance and risk management

• • Ethical corporate management

• Customer & • Enhancing stakeholder

• Community Service communications and

• • Promoting education on interactions environment

• • Enriching community service

• • Maintaining customer interests and improving customer satisfaction

Employee Wellbeing • Building an open, diversified and inclusive workplace • Enhancing physical and spiritual balance for employees • Reinforcing talent training & development Occupational Health & Safety • Applying technology, improving workplace safety guidelines, and adopting employee body and mind enhancements to lower occupational injuries and promote employee wellbeing

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Agenda

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Company Overview
ESG Implementation
Q&A
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Q & A

3703.TW 欣陸投控 Continental Holdings Corporation IR Contact Spokesman: Mr. Kris LIN ir@continental-holdings.com +886-2-2700-4509

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Continental Holdings https://continental-holdings.com/en/about/media-center/