CHLITINA-KY — Investor Presentation 2017

Aug 15, 2017

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August 2017

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Disclaimer

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The information contained in this document was verified by an independent third party. Chlitina is not responsible for the accuracy, fairness and completeness of any information contained in this document. The information or opinions contained in this document are provided on a specific date, and Chlitina reserves all rights to update them. Chlitina has no obligation to notify you of any updates after a specific date or any development of the information contained in this document. Chlitina will not accept any liability for any loss resulting from the use of this document or its contents or for other reasons related to this document.

This document does not constitute an offer or solicitation of an offer to purchase shares of Chlitina or any of its subsidiaries or related parties in any jurisdictions. It does not serve as a part of an offer or incentive, nor should it be interpreted as such. Any part thereof does not constitute the basis of any contract or commitment, and should not be relied upon in respect to any contract or commitment. Your acceptance of this document constitutes your agreement that the information contained in this document is kept strictly confidential. Securities researchers should have eligibility for securities research and follow any relevant securities laws and regulations and restrictions of the appropriate jurisdiction before publishing research results on Chlitina.

This document is provided for the securities researchers for use as their research reference only. This document or any part thereof cannot be photocopied, copied, forwarded, or in any manner, directly or indirectly transferred to any other person or for public announcement and for any other purpose.

Corporate Snapshot

• 1) Stock Ticker : 4137 TT

• 2) Market Cap : US$336m (on July 1, 2017 price of NT$128.5)

• 3) Paid-In Capital : NT$795m (= 79.5m shares O/S)

• 4) 2016 Sales : NT$3,361m

• 5) 2016 Net Profit : NT$731m

• 6) 2016 ROE : 19.5%

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• 7) Major Shareholder : Wealthy Garden (35%)

• 8) Industry of Operation : Beauty salon franchise (under Beauty & Personal Care)

• 9) Current Market Positioning : Industry leader in mid-to-high-end beauty salon franchise 10) Current Market Focus : China (95% of sales)

3

Corporate Snapshot (cont.)

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11) Business Model : We R&D, manufacture, market and sell our Chlitina brand cosmetic products to our franchise beauty salons, and generate the bulk of our sales via this channel.

12) 2016 Sales Breakdown by Products : Beauty salon franchise channels (87%), Licensing

& other channels (13%).

• :

• 13) Brands under Chlitina and their respective structures

A) Chlitina (our main brand targeted at beauty salon channels) B) 3DR & Peekaboo (brands licensed exclusively to Kelti which sells products via direct marketing channels)

C) Up Lider (Chlitina’s new brand targeted at beauty clinic channels)

14) # of Beauty Salon Franchises by Regions (2Q17) : around 3,400 in China, 300 in TW

4

Corporate Snapshot (cont.)

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15) Full-time employees by regions & functions : 570 employees (410 in China offices focused on sales/marketing/distribution, 100 in China production, 50 in TW focused on TW operations, 10 in TW/China R&D).

• 16) Factory location & highlights : Factory in Shanghai Songjiang Industrial Zone (SSIZ). Chlitina brand products are entirely produced in-house.

17) Training center location & highlights : Main training center also in SSIZ. This is part of the services provided to franchise owners to send themselves & beauticians to participate in mgmt. & training classes / forums. We also have regional (but smaller) training centers. 18) R&D center location & highlights : Hsin-Ju (TW). R&D strength in facial products, but with new body products targeted in 2018F, as part of strategic move to increase avg. spending per salon visit (>90% of sales are facial-related) and entry into adjacent market.

5

The Chlitina Brand in Beauty Care

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Joanna Chen,
Dr. Chen, Founder
Chairwoman
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A 20-Year Brand in China, and the industry leader in salon franchise

• 1989 : Brand inception of Chlitina by Dr. Chen, who successfully applied amino acids into beauty care products (E.P.O. series).

• 1997 : Joanna Chen, Dr. Chen’s daughter and the Chairwoman of

Chilitina, headed the Chlitina brand into the China market. With successful marketing tactics backed by strong products, Chlitina entered a period of high growths for years to come.

 1999 : Opening of Chlitina’s first salon flagship store in Shanghai.

• 2001-2003 : Opening of Chlitina’s training center and factory.

• 2008 : Setup of joint R&D program center in Paris with French partner.

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The Chlitina Brand in Beauty Care (cont.)

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• 2012 : Awarded “Franchise 50” for fast growing franchises in China by

U.S. media Entrepreneur Group. Awarded “Asia’s Most Valuable Brand” by M Famous Brand in Asia Brand Annual Meeting.

• 2013 : Chlitina went IPO in Taiwan (stock ticker: 4137 TT).

• 2015 : Awarded “20 Best Taiwan Global Brands” by Interbrand /

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Department of Economics).

• 2016 : Awarded “20 Best Taiwan Global Brands” by Interbrand /

Department of Economics). Sole Skincare Sponsor of 2016 Shanghai International Film & TV Festival. Chairwoman nominated as China’s Medical Beauty Industry Association (MBIA) Branch President.

• 2017 :). Sole Skincare Sponsor of 2017 Shanghai International Film & TV

7

Festival.

The Chlitina Brand in Beauty Care (cont.)

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# of Chlitina Franchise Beauty Salons

4,000 3,581[ 3,673 ] 3,551[ 3,619 3,715 ] 3,500 3,116[ 3,200 ] 3,000 2,736[ 2,769 ] 2,500 2,314[ 2,398 2,500 ] 2,000 1,500 1,000 500 - 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q17 2Q17

Source: Chlitina

8

The Chlitina Brand in Beauty Care (cont.)

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Heilongjiang Province 40 locations Jilin Province 32 locations Xinjiang Uyghur Inner Mongolia Liaoning Province Autonomous Region Autonomous Region 70 locations 7 locations 111 locations Beijing City Ningxia Hui 271 locations Autonomous Region 7 locations Shanxi Province Hebei Province 129 locations Tianjin City 134 locations 83 locations Henan Province Shandong Province Qinghai Province Gansu Province 46 locations 124 locations 1 location 8 locations Shaanxi Province Anhui 50 locations Province 127 locations Jiangsu Province 320 locations Hubei Province Shanghai City Tibet Autonomous Region Sichuan Province 114 locations Chongqing City 172 locations Zhejiang 331 locations 3 locations 54 locations Province 381 locations Shanghai Flagship store Chengdu Flagship store Guizhou 37 locations Province Hunan 182 locations Province Jiangxi Province Fujian Province 55 locations 86 locations Yunnan Province Taiwan 273 locations Guangdong 14 locations Guangxi Zhuang Province Autonomous 332 locations Region Taipei Flagship store 22 locations

Over 3,700 franchise beauty salons in Greater China, #1 in China

Northeast China

North China

East China Southeast China Northwest China Southwest China

Source: Chlitina

Hainan Province 4 locations

Taiwan

9

Industry Framework

Size of China Skincare Market (95% of Chlitina’s sales) :

According to Euromonitor,

China’s skincare market sized to around RMB 170 bn (or US$25 bn) in 2016.

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China Beauty & Personal Care Product Sales (2016)

By Application Categories	RMB m	%
Skincare	169,139	47%
Hair Care Oral Care Color Cosmetics Bath & Shower Combo Set Baby & Child Care Men's Care Sun Care Fragrances Deodorants Depilatories / Hair Removal	49,455 31,912 28,314 21,107 17,707 15,103 12,446 5,535 5,367 711 474	14% 9% 8% 6% 5% 4% 3% 2% 2% 0% 0%
Total:	357,269	100%

Note 1 : Red lined categories are seeing slower growths and contracting in % total Note 2 : Blue lined categories are seeing higher growths and increasing in % total Note 3 : Black lined categories are growing inline with industry and stable in % total Others : Euromonitor acknowledges double counting in its research Source: Euromonitor, Chlitina

10

Industry Framework (cont.)

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Industry demand growth
20%
outlook in China : Corp salary Comparative Growths in China
2011-2016
18.7%
grows 6-10% per year, similar to
17.0% % YoY Growths - China Cosmetics Retail
15%
GDP growths. According to
13.3%
Euromonitor, consumer spending
% YoY Growths - China GDP 10.0%
growths on cosmetics (beauty & 10%
8.8%
8.3%
personal care) generally outpace 9.5%
7.9% 7.8%
7.3%
6.9%
that of GDP growths. Segment- 6.7%
5%
wise, higher-end / price brands 2011 2012 2013 2014 2015 2016
generally grow even faster than Source: The Statistics Portal, Chlitina
lower-end / price brands.
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3) What are our main

competitive advantages? High quality products, brand value, strong marketing & channel networks.

• High Strong R&D Quality and know-how Products

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Brand Value

• Ability to secure 1[st] tier sponsorships & raise brand perception.

These are the qualitative values that drive Chlitina’s Chlitina’s financial performances. Core Competence Strong - Training center Marketing & values attract Channels new franchise biz

Corporate Focus & Strategies

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: Business Expansion Strategies

1) Broaden product portfolio to address a larger market and attract new franchises : New Body Therapy Session Series in 2018F : At the Existing Products

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moment, customers who wants to do Body mostly seek a Body shop. Our goal is to capture a pool of these customers as they come to do Face with Chlitina, which can raise our sales per customer visit & SSS.

Body Categories

	Body Soothing	Whitening	Moisturizing	Firming	Breast Care	Slimming	Private Part
2017	Yes		Yes		Yes
2018F	Target	Target	Target	Target	Target	Target	Target

Source: Chlitina

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Corporate Focus & Strategies (cont.)

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Source: Chlitina

2) Geographic Expansions into Developing Areas in China

Developed Well-off Areas Areas

Developing Areas

 Faster disposable income & consumer spending growths in Developing Areas.

Our Coverage: Shanghai, Beijing, Guangdong, Ningbo, Jiangsu... Main Objective: Raise SSS via new product categories Our Coverage: Fujian, Jiangxi, Henan, Shandong, Liaoning, Guangxi… Main Objective: Raise market share Our Coverage: Heilongjiang, Guizhou, Jilin… Main Objective: Brand awareness & attract new franchises nding growths in eloping Areas. ng emphasis on uty as disposable me rises.	Our Coverage: Shanghai, Beijing, Guangdong, Ningbo, Jiangsu... Main Objective: Raise SSS via new product categories Our Coverage: Fujian, Jiangxi, Henan, Shandong, Liaoning, Guangxi… Main Objective: Raise market share Our Coverage: Heilongjiang, Guizhou, Jilin… Main Objective: Brand awareness & attract new franchises nding growths in eloping Areas. ng emphasis on uty as disposable me rises.	Our Coverage: Shanghai, Beijing, Guangdong, Ningbo, Jiangsu... Main Objective: Raise SSS via new product categories Our Coverage: Fujian, Jiangxi, Henan, Shandong, Liaoning, Guangxi… Main Objective: Raise market share Our Coverage: Heilongjiang, Guizhou, Jilin… Main Objective: Brand awareness & attract new franchises nding growths in eloping Areas. ng emphasis on uty as disposable me rises.	Our Coverage: Shanghai, Beijing, Guangdong, Ningbo, Jiangsu... Main Objective: Raise SSS via new product categories Our Coverage: Fujian, Jiangxi, Henan, Shandong, Liaoning, Guangxi… Main Objective: Raise market share Our Coverage: Heilongjiang, Guizhou, Jilin… Main Objective: Brand awareness & attract new franchises nding growths in eloping Areas. ng emphasis on uty as disposable me rises.	Our Coverage: Shanghai, Beijing, Guangdong, Ningbo, Jiangsu... Main Objective: Raise SSS via new product categories Our Coverage: Fujian, Jiangxi, Henan, Shandong, Liaoning, Guangxi… Main Objective: Raise market share Our Coverage: Heilongjiang, Guizhou, Jilin… Main Objective: Brand awareness & attract new franchises nding growths in eloping Areas. ng emphasis on uty as disposable me rises.
2016 Year-End	Developed Areas	Well-off Areas	Developing Areas	Total
# of Stores in China	1,732	1,414	132	3,278
% of Total	53%	43%	4%	100%

 Rising emphasis on beauty as disposable income rises.

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Corporate Focus & Strategies (cont.)

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Franchise Management on a Closer Look

• 25 Branch Offices for:

• Timely advice & supervision for existing franchise stores

• Strategies for business development and expansion

• Storefront management courses for new franchises

• Local training in skincare practices & product knowledge

• Main Training Center in Shanghai (SSIZ):

 Can accommodate 2,000 trainees

• Staffed by highly-qualified teaching personnel

• 10 categories of professional training classes

for beauticians and franchise owners / managers

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Inner Beijing Tianjin Dalian
Mongolia
Hebei
Shandon
g
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Nanjing
Shaanxi
Anhui Suzhou
Chengdu Hubei Shanghai
Hangzhou Ningbo
Chongqing
Hunan Wenzhou
Jiangxi
Taipei
Fujian
Taichung
Guangzhou
Kaohsiung
Shenzhen
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Source: Chlitina

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Corporate Focus & Strategies (cont.)

Training Center in Shanghai (SSIZ)

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Market
landscape
class
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Store
mgmt.
class
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CRM class
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Healthy
drinks
class
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Profit
maximizati
on class
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Chlitina’s
Professional
Training
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Beautician
training
class
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----- Start of picture text -----

F88 skin
testing
class
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Salon
treatment
class
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Advanced
level
training
class
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Body
treatment
class
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Corporate Focus & Strategies (cont.)

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Franchise Longevity

	<1 Year	1-3 Years	3-5 Years	5-10 Years	>10 Years	All
% Total	17%	24%	22%	21%	16%	100%

Source: Chlitina

 Health of Chlitina’s Franchise Network : We think franchise longevity is a good indicator on the overall health of Chlitina’s franchise network. Unprofitable franchises largely exit within 1 year, and we have been seeing a trend of % of franchises operating longer & longer. Note that 16% of our current franchises are over 10 years in operation.

3) Develop new distribution channels : Chlitina is working on developing its internet retailing channel. we will continue to seek to improve the operation here.

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Corporate Focus & Strategies (cont.)

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• :

• 4) Future Development Schemes on a 5-Year Roadmap

 Medical Beauty Clinics : Chlitina is investing into China beauty clinics industry. This represents a new distribution channel but also is an opportunity for Chlitina to offer more medical-based / biotech products in the future. Given medical clinic operating license quotas in China, Chlitina will proceed via M&A strategy. (In 2017, bought a beauty clinic in Beijing for RMB 6.5m.)

• Medical-based / biotech product offerings and R&D : Concurrently, Chlitina will

look for opportunities to invest into product technologies. Our strategic alliance with China’s Tongji University on regenerative medicine also serves as a key foundation for our future developments in this area.

18

Financial Summary & Outlook

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Our profits are highly sensitive to volume & TWD/RMB FX: Sales are determined by SSS, # of stores, and TWD/RMB FX (RMB depreciation significantly hurts our biz). Our GM is relatively stable (volatility depends on product mix). Our OPEX is linked to sales on compensation structure.

Chlitina - Financial Performance

What happened in 2015 & 2016? The trademark "3DR

Peekaboo", licenseing+ODM biz for Kelti., 2015 for China policy thereby affecting our license income.

	2013	2014	2015	2016
Net Sales (NT$m)	$2,701	$3,071	$4,394	$3,361
Net Profit(NT$m)	$693	$756	$1,167	$731
GM(%)	78%	81%	76%	80%
OPM(%)	30%	29%	31%	30%
Net Margin(%)	26%	25%	27%	22%
ROE(%)	35%	24%	32%	19%
EPS(NT$)	$9.4	$9.5	$14.7	$9.2
Avg. FX - TWD/RMB	4.8	4.9	5.0	4.8

Source: Chlitina

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Financial Summary & Outlook (cont.)

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Sales Breakdown; Segmental GM (channel GM >80%; royalty GM 100%; ODM GM 20%)

Sales Breakdown	1Q15	2Q15	3Q15	4Q15	2015	1Q16	2Q16	3Q16	4Q16	2016	1Q17	2Q17
Sales Breakdown (NT$m) $824 $992 $1,137 $1,441 $4,394 $1,103 $730 $713 $815 $3,361 $718 $765
Channel - Beauty Salon Franchise Channel - Internet Retailing Channel - Beauty Clinic Licensing & ODM - Trademark Royalty - ODM Production	$727 $819 $655 $826 $2 $5 $40 $56 $0 $0 $0 $0 $95 $167 $442 $559 $47 $67 $221 $320 $49 $100 $221 $239				$3,027 $103 $0 $1,264 $655 $610	$709 $635 $679 $775 $43 $29 $22 $29 $0 $0 $0 $2 $351 $65 $12 $8 $160 $55 $15 $3 $191 $11 ($3) $5				$2,799 $123 $3 $437 $233 $204	$681 $754 $26 $9 $0 $0 $12 $1 $0 $0 $12 $1
Sales Breakdown (%) 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Channel - Beauty Salon Franchise Channel - Internet Retailing Channel - Beauty Clinic Licensing & ODM - Trademark Royalty -ODM Production	88.2% 82.6% 57.6% 57.3% 0.3% 0.5% 3.5% 3.9% 0.0% 0.0% 0.0% 0.0% 11.6% 16.9% 38.9% 38.8% 5.6% 6.8% 19.4% 22.2% 5.9% 10.1% 19.4% 16.6%				68.9% 2.4% 0.0% 28.8% 14.9% 13.9%	64.3% 87.0% 95.2% 95.1% 3.9% 4.0% 3.0% 3.6% 0.0% 0.0% 0.0% 0.3% 31.8% 9.0% 1.7% 1.0% 14.5% 7.5% 2.1% 0.4% 17.3% 1.5% -0.4% 0.6%				83.3% 3.7% 0.1% 13.0% 6.9% 6.1%	94.8% 98.7% 3.6% 1.1% 0.0% 0.1% 1.6% 0.2% 0.0% 0.0% 1.6% 0.2%

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Financial Summary & Outlook (cont.)

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Chlitina has a very strong

Balance Sheet

As of end of 2016:

• Chlitina has a cash position of NT$3.5 bn and a net-cash

position of NT$2.7 bn.

• Net cash sized to 75% of

shareholder equity.

• Net cash equaled to 22% of

market cap.

	Unit: NT$m Total Current Assets	2013 $3,160	2013 $3,160	2014 $2,994	2014 $2,994	2015 $4,736	2015 $4,736	2016 $4,259	2016 $4,259
	Total Non-Current Assets Total Assets	$1,178 $4,338		$1,405 $4,399		$1,239 $5,975		$1,351 $5,610
	Total Current Liab.	$977		$1,062		$1,168		$2,030
	Total Non-Current Liabilities	$395		$8		$860		$20
	Total Liabilities	$1,372		$1,070		$2,028		$2,050
	Total Shareholder Equity Total Liabilities & Shareholder Equity	$2,966 $4,338		$3,330 $4,399		$3,947 $5,975		$3,560 $5,610
	Selective Items (NT$m)
	Inventories	$235		$239		$437		$461
	Net Debt (Net Cash)	($2,291)		($2,410)		($2,548)		($2,682)
	B/S Ratios Analysis Liquidity & Turnover Ratios:
	Current Ratio Quick Ratio	324% 292%		282% 255%		405% 361%		210% 182%
	Cash Ratio Solvency Ratios:	271%		227%		291%		175%
	Total Debt / Total Shareholder Equity Net Debt / Total Shareholder Equity	14.3% (77.3)%		0.0% (72.4)%		21.5% (64.6)%		24.3% (75.3)%		21

Financial Summary & Outlook (cont.)

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and a very strong FCF profile which allows us to pay cash dividends

Unit: NT$m	2013	2014	2015	2016
Operation Cash Flow	$795	$824	$550	$1,474
Investment Cash Flow	($520)	($216)	$121	($293)
Financing Cash Flow	$1,463	($946)	$333	($838)
FX Adjustment	$60	$102	($18)	($192)
Change in CF	$1,797	($236)	$986	$151
FCF	$62	$731	$532	$1,330
FCF per share (NT$)	$0.8	$9.2	$6.7	$16.7
Other Selective Items
EPS (NT$)	$9.4	$9.5	$14.7	$9.2
Cash Dividend per Share (Cash DPS, NT$)	$6.0	$7.0	$10.0	$6.5
Cash DPR on Prior Year's EPS (%)	64%	74%	68%	71%

Source: Chlitina

22

Financial Summary & Outlook (cont.)

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2Q17 P&L Summary – Starting to see an operational turnaround trend  YoY EPS growth back to (+) growth territory after 4 quarters of YoY declines.

 2Q17 EPS of NT$2.0 is at a 1-year high.

Chlitina (4137 TT)- 2Q17 Result	Chlitina (4137 TT)- 2Q17 Result	Chlitina (4137 TT)- 2Q17 Result	Chlitina (4137 TT)- 2Q17 Result	Chlitina (4137 TT)- 2Q17 Result	Chlitina (4137 TT)- 2Q17 Result	Chlitina (4137 TT)- 2Q17 Result
P&L Summary (NT$m)	2Q17	1Q17	% QoQ	2Q16	% YoY	Notes:
Sales Gross Profit Operating Profit Pretax Profit Net Profit EPS (NT$)	765	718 593 179 142 93 1.18	7%	730 621 183 210 154 1.93	5%	Excluding FX translation, RMB sales is up 15% YoY 2Q17 non-op includes China gov‘t subsidy (NT$25m)
	621		5%		0%
	195		9%		7%
	227		60%		8%
	159		71%		3%
	2.02		71%		5%
Margins & ROE (%)
Gross Margin Operating Margin Pretax Margin Net Margin ROE (Annualized)	81.2%	82.6% 24.9% 19.8% 13.0% 10.4%	N.A. N.A. N.A. N.A. N.A.	85.1% 25.1% 28.8% 21.1% 17.3%	N.A. N.A. N.A. N.A. N.A.	OPEX cost reductions
	25.5%
	29.7%
	20.8%
	17.6%
Other Key Operating Metrics
Exchange Rate (TWD/RMB) Franchise Store Count Quarterly Sales per Store to Chlitina (NT$k)	4.42	4.52 3,619 188	(2)%	4.93 3,702 172	(10)%	Heavy YoY impact from RMB depreciation YoY increase due from earlier store restructuring
	3,715		3%		0%
	203		8%		18%

23

Financial Summary & Outlook (cont.)

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2Q17 Segmental Breakdown

 Strong core channel (beauty salon franchise) sales performance in 2Q17.

 In TWD (financial reporting currency), +19% YoY.

 In RMB (operating currency), up almost 30% YoY.

Chlitina (4137 TT)- 2Q17 Result	Chlitina (4137 TT)- 2Q17 Result	Chlitina (4137 TT)- 2Q17 Result	Chlitina (4137 TT)- 2Q17 Result	Chlitina (4137 TT)- 2Q17 Result	Chlitina (4137 TT)- 2Q17 Result	Chlitina (4137 TT)- 2Q17 Result
Sales Breakdown (NT$m)	2Q17	1Q17	% QoQ	2Q16	% YoY	Notes:
Channel – Beauty Salon Franchise Channel – Internet Retailing Channel – Beauty Clinic Licensing & ODM	755	681 26 - 12	11%	635 29 - 65	19%	Strong YoY growth despite RMB weakness Outlook could improve in 2H17F Sales could start to rise in 2H17F (1 clinic in Beijing)
	9		(67)%		(70)%
	0.4		N.A.		N.A.
	1		(89)%		(98)%
Sales Breakdown (%)
Channel – Beauty Salon Franchise Channel – Internet Retailing Channel – Beauty Clinic Licensing & ODM	98.7%	94.8% 3.6% 0.0% 1.6%	N.A. N.A. N.A. N.A.	87.1% 4.0% 0.0% 9.0%	N.A. N.A. N.A. N.A.	Further negative impact from here will be limited
	1.1%
	0.1%
	0.2%
Other Key Operating Metrics
Exchange Rate (TWD/RMB)	4.42	4.52	(2)%	4.93	(10)%	Heavy YoY impact from RMB depreciation

24

Financial Summary & Outlook (cont.)

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2Q17 Cash Flow Summary

 2Q17 FCF status favorable.

 Chlitina’s annual FCF remains in the positive over 2012-2016. We do not expect the status to change in the

near future.

Chlitina (4137 TT)- 2Q17 Result	Chlitina (4137 TT)- 2Q17 Result	Chlitina (4137 TT)- 2Q17 Result	Chlitina (4137 TT)- 2Q17 Result
Cash Flow Summary (NT$m)	2016	1Q17	2Q17
Operation Cash Flow	$1,474	($100)	$121
Investment Cash Flow	($293)	($32)	$122
Financing Cash Flow	($838)	($73)	$0
FX Adjustment	($192)	($121)	$35
Change in CF	$151	($326)	$278
FCF	$1,330	($80)	$529
FCF per share (NT$)	$16.7	($1.0)	$6.7

 FCF = Net income + Depreciation & Amortization + change in NWC - CAPEX

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Financial Summary & Outlook (cont.)

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2017F Investment Summary- beauty salon franchise sales up in 2017 Growth in 2018F 2017F – The GOOD! (Disclaimer: we do NOT provide official financial guidance)

• of franchise stores could grow >5% YoY to around 3,800 stores

• RMB-based SSS growth could be in the range of 5-6% YoY

 Realigning company resources to achieve our Business Expansion Strategies – 1) broaden product portfolio; 2) expand geographically; 3) expand distribution channels; 4) form the foundation for entry into beauty clinic industry

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Financial Summary & Outlook (cont.)

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2017F – The Challenges (Disclaimer: we do NOT provide official financial guidance)  RMB has depreciated against TWD by about 10% YoY, which directly impacts our sales & profits (FX sensitivity is close to 1, as most of our sales & costs are in RMB)  Initial investments in broadening our product portfolio + higher OPEX for beauty clinic business could slightly raise our OPEX YoY (thus OPM could be down YoY)

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Financial Summary & Outlook (cont.)

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2018F – Chlitina’s Opportunity

• Assuming RMB stabilizes, Chlitina’s sales & profits growths should be back to double-

• digit YoY as YoY comps become favorable

• New body series debut in 2018F should start to help our biz overall (ie. attract new

franchises, increase SSS, strengthen the competitiveness of franchises)

• New biz opportunities under Chlitina’s future roadmap

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Thanks for your attention!

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