CHC — Interim / Quarterly Report 2021

Nov 8, 2021

Continental Holdings Corporation

3703.TT

2021 Third Quarter Earnings Conference

November 8[th] , 2021

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

Year-over-year growth for revenue and operating profit in 1-3Q21

Selected Items from Income Statement (In NT$ millions unless otherwise noted)	1-3Q21	1-3Q20	YoY
Total Revenue	17,297	14,647	+18.1%
Gross Profit	2,355	2,268	+3.8%
Gross Margin	13.6%	15.5%	-1.9 ppt
Operating Expense	1,006	1,006	-0.0%
Operating Profit	1,349	1,262	+6.9%
Operating Profit Margin	7.8%	8.6%	-0.8 ppt
Non-Ops	(99)	(26)	+276.1%
Net Profit, attributable to owners of parent	991	1,133	-12.6%
Net Profit Margin	5.7%	7.7%	-2.0 ppt
EPS (NT$)	1.20	1.38	-12.6%

3

Double digit growth in revenue across all segments in 1-3Q21

Consolidated Revenues of CHC and each Business Segments (NT$ M)

Environmental Project Real Estate Development Construction Development

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YoY
17,297
+307
18.1%
2,502 (+14.0%)
14,647
2,195 +563
3,864
(+17.1%)
3,301
+2,127
12,286
10,159 (+20.1%)
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1-3Q20

1-3Q21

• Mainly due to increased construction revenue of Anping Reclaimed Water Plant and Tongluo Science Park Wastewater Treatment Plant Phase II EPC

• Mainly due to revenue from completed projects such as 55Timeless

• Mainly due to increased revenue from Taoyuan MRT Green Line GC01 Section and other private sector building construction projects.

4

*Consolidated revenue of three business segments do not add up to CHC’s consolidated revenue because of eliminations

Profit growth in Construction and Environmental Project Development segments in 1-3Q21

Net Profit of CHC and each Business Segments (NT$ M)

Environmental Project Development

Real Estate Development Construction

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YoY
1,133
-12.6%
-142
991 (-12.6%)
-202
264
+32
296
(+12.1%)
549
-24
525
(-4.4%)
+127
244
371 (+52.0%)
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1-3Q21

1-3Q20

• Mainly due to recognition of construction gross profit for La Bella Vita upon completion and one-time tax benefit last year, as well as less loss carryforward available for tax deduction this year

• Mainly due to revenue increase

• Mainly due to higher one-time non-op income in 2020, as well as unrealized loss in FOREX and increase in land value increment tax this year

• Mainly due to revenue increase and decrease in OPEX

• Net profit denotes net profit attributable to owners of parent; Net profit of three business segments do not add up to CHC’s net profit because of eliminations

5

Strong balance sheet

Selected Items from Balance Sheet (NT$ M)	2021.9.30 2020.12.31 2020.9.30
	Amount % Amount % Amount %
Cash and Cash Equivalents	4,131 6.0 4,512 6.7 4,034 6.0
Current Contract Assets	4,042 5.8 3,892 5.8 4,420 6.6
Account Receivable, Net	2,239 3.2 2,036 3.0 1,767 2.6
Inventories	28,899 41.8 28,363 42.2 29,150 43.7
Property, Plant and Equipment	2,491 3.6 2,346 3.5 2,256 3.4
Investment Property, Net	10,432 15.1 10,193 15.2 10,046 15.1
Long-term Accounts Receivables	7,017 10.1 5,808 8.6 5,885 8.8
Total Assets	69,174 100 67,155 100 66,722 100
Short-term Interest-bearing Loans	12,240 17.7 12,811 19.1 11,674 17.5
Current Contract Liabilities	8,460 12.2 8,121 12.1 8,004 12.0
Accounts and Notes Payable	5,230 7.6 5,784 8.6 5,394 8.1
Long-term Interest-bearing Loans	12,434 18.0 9,099 13.5 10,058 15.1
Total Liabilities	42,347 61.2 40,235 59.9 40,146 60.2
Total Equity	26,827 38.8 26,920 40.1 26,576 39.8

6

Solid backlog of three business segments

Construction

Environmental Real Estate Project Development Development

Backlog Signed contracts to close NT$ 63.5B NT$ 18.0B 4.5x of 2020 Revenues 3.1x of 2020 Revenues

• -NT$3.5B QoQ, mainly due to delay of new public sector contract bids resulted from insufficient budget

• +NT$1.3B QoQ, mainly due to new signed contracts from domestic/overseas pre-sell projects

• Contracts on hand NT$ 39.1B

• 12.6x of 2020 Revenues

• • -NT$0.7B QoQ, mainly due to delay of new contract bids from government this quarter

Note:

1. Backlog and contract numbers are as of end of third quarter, 2021; Revenues numbers are 2020 consolidated revenues

2. Contracts on hand for Environmental Project Development business are calculated based on contract terms and project status. Actual recognized revenue amount may vary based on final execution for each project.

7

Pipeline of Real Estate Development Business – Residential

Project Name	Location	Type	Residence Value1 (NT$)	Estimated Timeline2	Estimated Timeline2	Estimated Timeline2	Estimated Timeline2	Estimated Timeline2
				2021	2022	2023	2024	2025
Bountiful Journey	Taipei	Residence/ Hotel (by_My Humble House Group)_	8.20B (Retail included)	v
Drawing the Dream Life	New Taipei	Residence	2.84B		v
Timeless and Modern Expression	Taipei	Residence	2.39B			v
Tianjin Street Project	Taipei	Residence	2.23B			v
Arranging New Asia Bay3	Kaohsiung	Residence/ Hotel (Hotel Nikko)	3.51B			v
Sensuous Garden	Taipei	Residence/ Hotel (Hyatt Centric)	4.50B					v
Prologue Eternal	Taipei	Residence	4.50B					v
Belle Époque	Taichung	Residence/ Office	4.10B					v
Dakeng Project	Taichung	Township Community	3.54B					v
SERIF4	San Francisco, CA, USA	Residence/ Hotel (The LINE Hotel)	US$240M	v
Bangsar Project4	Kuala Lumpur, Malaysia	Residence	MY$170M					v

1. (1) Total residence value amounts for JV and subsidiary-owned projects; otherwise residence value amounts attributable to CDC. (2) Actual amounts for sold-out projects; otherwise estimated residence value amounts.

2. Denotes the year in which the project would start handover and recognize revenues.

3. Owned by JV between Daiwa House Group (65%) and CDC (35%)

4. Owned by CDC subsidiaries; 54.08% and 60% stake in the project companies for SERIF and Bangsar Project, respectively.

8

Pipeline of Real Estate Development Business – Hotel

Hotel Products

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Hotel by My Humble House Group [1] Taipei, Taiwan Completion in 2021

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The LINE Hotel[2] Capri by Fraser[2] San Francisco, CA, USA Kuala Lumpur, Malaysia Scheduled opening in 2022 Scheduled opening in 2022

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Hotel Nikko[3] Kaohsiung, Taiwan Scheduled opening in 2023

Estimated total value NT$22B

1. Leased to My Humble House Group for rental income

2. Owned by CDC subsidiaries and managed by THE LINE Hotel and Capri by Fraser respectively. CDC owns 54.08% and 55% stake in each project company respectively.

3. Owned by JV between Daiwa House Group (65%) and CDC (35%) and managed by Hotel Nikko

9

Strategically and financially synergistic portfolio poised for growth

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•
Profitability over revenue
•
Participate in the civil portion of the
Construction emerging energy related projects
•
Use technology to enhance safety and to
improve productivity
•
Diversify into other cities beyond
Real Estate Taipei/Taichung
•
Cultivate more project in the
Development
commercial sector (office, etc.)
•
Well poised to gain more reclaimed water
Environmental projects
•
Ally with partners to enter incinerator business
Project
•
Leverage existing anaerobic digestion
Development
capabilities to enter bio-mass energy business
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3703.TW 欣陸投控 Continental Holdings Corporation https://www.continental-holdings.com ir@continental-holdings.com +886-2-2700-4509