CHICONY — Call Transcript 2020

Mar 10, 2020

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CHICONY ELECTRONICS

4Q19 Results Conference Call March 10, 2020

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Safe Harbor Notice

Chicony’s statement of its current expectations are forwardlooking statements which are subject to significant risks and uncertainties. Actual results may differ materially from those . contained in any forward-looking statements

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Positioned as Number 1 Global Market Leader

Chicony Continued to Achieve Leading Market Share

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37%
NB Keyboard
32%
DT Keyboard
Number #1
Market
42%
Share in NB Camera Module
2019
47%
NB Adaptor
30%
IP Cam
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4Q19 Revenue of NT$24.6B in line with Expectation

 5.1% YoY/-5.9% QoQ Revenue Growth in 4Q19

NT$M 2016~2019 Quarterly Revenue

2016 2017 2018 2019 26,186 22,551

30,000 25,000

24,638

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19,177

20,000 15,000 10,000

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5,000

0

1Q

2Q

3Q

4Q

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Record High NT$92.6B Revenue in 2019, with 6.1% YoY Growth

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NT$M 2005~2019 Revenue
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
200520062007200820092010201120122013201420152016201720182019
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92,552
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Evolving Revenue Structure Starting from 2016

Non-PC Revenue %

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Sports DV
60%
58%
56%
54% 53% 53%
Game Console
51%
52%
51%
50%
50%
Gaming NB
48%
2015 2016 2017 2018 2019
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Record High EPS of NT$8.45 in 2019

Chicony EPS 2005 – 2019

NT$

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10.0
8.45
8.0
6.0 5.76 5.52 [5.85] [6.06] [6.62] 5.97 5.81 [6.19] 5.63 5.21 5.89 5.22
3.82
4.0
1.6
2.0
0.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
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Consistent Dividend Pay-Out Policy to Reward Investors

Chicony	2014	2015	2016	2017	2018	2019
EPS	6.22	5.79	5.24	5.9	5.22	8.45
Cash Dividend	4.65	4.3	4.25	4.45	3.80	5.90
Stock Dividend	0.05	0.05	0.05	0.05	0	0
Dividend Payout %	76%	75%	82%	76%	73%	70%
Cash Yield Rate %	5.43	5.79	5.25	6.1%	4.8%	7.3*

Source: Cmoney Note*: Based on stock price closed on March 9[th] , 2020

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2019 Financial Results

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2019 Operating Margin Rose to 6.8%; Record High EPS of NT$8.45

Million NT$	2019 2018 YoY %
Net Sales	92,552 100.0 87,260 100.0 6.1
COGS	(76,271) (82.4) (74,644) (85.5)
Gross Profit	16,281 17.6 12,617 14.5 29.0
Operating Expense	(10,012) (10.8) (7,967) (9.1)
Operating Profit	6,269 6.8 4,650 5.3 34.8
Other Income/Expense	1,919 2.1 386 0.4
Profit Before Tax	8,189 8.8 5,035 5.8 62.6
Tax	(1,386) (1.5) (1,057) (1.2)
Net Income	5,839 6.3 3,591 4.1 62.6
After Tax EPS	8.45 5.22 61.9

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2019 Operating Results

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High ASP Keyboards Outperformed in 4Q19

4Q19 Revenue by Products

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Others
High ASP
, 4 KB, 21% KB 35%
Power,
32%
PC KB,
14%
Image,
28%
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Revenue %	4Q19	YoY
High ASP KB	21%	19%
PC KB	14%	5%
Image	28%	-2%
Power	32%	6%

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Power, Image and High ASP Keyboard Products Outperformed in 2019

2019 Revenue by Products

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Others
, 4%
High ASP KB 33%
KB, 19%
Power,
34% PC KB,
14%
Image,
28%
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Revenue %	2019	YoY
High ASP KB	19%	9%
PC KB	14%	0%
Image	28%	7%
Power	34%	10%

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In 2019, Smart Home Application Increased 21% YoY and Gaming PC Products Increased 19% YoY

	2019 Revenue % YoY	2019 Revenue % YoY	2019 Revenue % YoY
PC	47% 7%
Non-PC	Gaming 12% 11%
	IOT 35% 10%
	Networking & Others 6% -26%
Total		100% 6%
Product Category PC Non-PC
			Related Applications
			DT, NB Peripherals and tablet application
		Gaming	Gaming Console and Gaming PC
		IOT	Smart Home, Smart Building, Automotive Electronics, Cloud Computing, Sports DV, Smartphone, and Drone
		Networking & Others	Networking, Chanel Management, and others

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2019 Highlights

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LED Back-Lit NB Keyboard Revenue Grew 15% YoY in 2019

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LED Back-Lit NB Keyboard
Penetration Rate
40%
35%
33%
35%
30%
26%
25%
20%
15%
15%
10%
5%
0%
2016 2017 2018 2019
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Gaming NB Power and Gaming Keyboard Revenue Grew 19% YoY in 2019

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Gaming PC Applications Revenue
NT$M Gaming PC
Gaming PC Gaming PC % Revenue %
8.6%
9,000 9%
8%
8,000 8%
7,000 7%
6%
6,000 6%
5,000 5%
4%
4,000 4%
3,000 3%
2,000 2%
1%
1,000 1%
0 0%
2015 2016 2017 2018 2019
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Gaming PC Revenue %

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Smart Home Applications Revenue Grew 21% in 2019

Smart Home Applications Revenue

Smart Home Revenue %

NT$M

Smart Home Smart Home %

25%

25,000

21%

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19%

20%

20,000

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15% 10%

15,000

13%

10,000

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7% 4%

5%

5,000

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0%

0

2015

2016

2017

2018

2019

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in 4Q19, Ranked 4th in Chicony in 2019

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2019
2018
Category Clients Revenue %
2017
2016
Category Revenue Clients Revenue %
Category Clients
Category Clients Revenue % 1 PC % A 12~15 %
~
1 PC A 12 15%
1 PC HP 15.77
1 PC HP 15.88
2 PC B 12~15%
2 PC 2 PC Lenovo 2 PC 13.50 Lenovo 13.85 B 12~15%
Microsof
3 PC + CE Microsoft 10.52
3 PC + CE 3 PC 3 PC 10.44 C C 10~12% 12~15%
t
4 PC Dell 9.49
4 PC 4 PC + CE Dell 10.19 D 9~10%
~
4 [Smart ] D 10 12%
5 PC +CE Asus 4.61 Home
5 PC +CE Logitech 4.94
5 [Smart ] E 9~10%
Home
5 PC + CE E 10~12 %
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Note: PC= Personal Computing; CE=Consumer Electronics

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Outlook

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Global Smart Home Camera Market to Reach $7.9 Billion in 2019 Thanks to the Growing Popularity of Video Doorbells

• Strategy Analytics predicts that by 2023 camera sales to consumers globally will surge to more than 111 million units, growing at a 19.8% CAGR

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Interactive Security Drives Smart Home Adoption in the US

Within Smart Homes

– Top 10 Smart Home Devices Owned

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Source: Strategy Analytics, November 2019

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2020 Outlook

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Smart Home
/Smart Office
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 High ASP Keyboards Lead Keyboard Revenue Growth

• LED backlit NB keyboard penetration rate continues to rise

• Gaming keyboard revenue boosted by growing gaming PC market

• Tablet/2-in-1 device keyboard revenue driven by solid demand

 Smart Home/Smart Office Applications

• A series of doorbell cam and IP cams to be launched in 2020

• Developed a more geographically diversified client base for smart home image sector

• New business opportunities derived from strong demand for Video Conference

 Increasing Thailand Capacity

• Smooth ramp-up of smart home image device capacity from leased manufacturing facility in Thailand

• New self-built manufacturing facility to be ready in 4Q20

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