CHP — Interim / Quarterly Report 2018

Nov 30, 2018

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2018 3Q Results

2018.11.30

Disclaimer

This presentation is prepared according to the reviewed financial statements by CPA and the financial numbers hereby are based on IFRS, please refer to the published financial statements for full content.

The presentation may contain forward-looking information and may differ materially from the actual results. Chung Hwa Pulp Corp (CHP) does not warranty as to the accuracy or completeness of such information and nor assume any undertaking further information becomes available or in light of changing circumstances. You shall not place undue reliance on any forwardlooking information.

The presentation and its contents may not be reproduced to a third party without the prior written consent of CHP.

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Com an Profile p y

 Major Products

 Chung Hwa Pulp Corporation

 Stock Code：1905.TW  Capital：NTD$ 11,028 Million  Date of Establishment：1968/7/5  Consolidated business with Paper and Board business unit of YFY in Oct 2012

 Pulp

 Cultural Paper & Paperboard Date of Establishment：1968/7/5  Cultural Paper Consolidated business with Paper and  Woodfree Paper Board business unit of YFY in Oct 2012  Coated Paper  Copy paper  Specialty Paper  Glassine Paper Pulp  Masking Paper  Fertilizer  Chemicals Cultural Paper Masking Paper Glassine Paper

Pulp

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Holdin Structures g

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Chung Hwa
Pulp Corp.
1905.TW
100% 100%
CHP
Hwa Fong
International
Investment
Corp.
(BVI) Corp.
60% 20.24%
100%
Guangdong Zhaoqing
Dingfung Pulp 66.27% Dingfung
Guang Hwa
& Paper Co., Forestry Co.,
Fertilizer Corp.
Ltd. Ltd.
100%
Shenzhen
Jinglun Paper
Co., Ltd.
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O eratin Locations p g

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Shanghai
Taipei
Taichung Hualien
Tainun
Taitung
Zhaoqing Shenzhen Jiutang
Taipei(Sales, Accounting and
Finance Office)
Manufacturing Sites(Hualien,
Jiutang, Taitung and Zhaoqing)
Sales Offices(Taichung, Tainun,
Shenzhen and Shanghai)
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3Q18 Financial Results

In NT Thousands 2018 3Q 2018 2Q QoQ 2017 3Q YoY	In NT Thousands 2018 3Q 2018 2Q QoQ 2017 3Q YoY	In NT Thousands 2018 3Q 2018 2Q QoQ 2017 3Q YoY	In NT Thousands 2018 3Q 2018 2Q QoQ 2017 3Q YoY
Amount % Amount % % Amount % %
Net Sales 6,080,619 100.0 6,201,622 100.0	-2.0	5,679,183 100.0 7.1
COGS 5,494,447 90.4 5,590,616 90.1	-1.7	5,155,301 90.8	6.6
Changes in Biological Assets - 2,119 - - 2,282 -	-	- 1,248 -
Gross Profit 584,053 9.6 608,724 9.8	-4.1	522,634 9.2	11.8
Operating Profit 179,224 2.9 203,659 3.3	-12.0	140,556 2.5	27.5
Other Income/Expense 18,238 0.3 - 29,480 - 0.5	-	81,902 1.4	-77.7
Profit Before Tax 197,462 3.2 174,179 2.8	13.4	222,458 3.9	-11.2
Profit After Tax 168,633 2.8 146,796 2.4	14.9	205,253 3.6	-17.8
Profit Attributable to Owners 175,144 2.9 130,980 2.1	33.7	171,979 3.0	1.8
After Tax EPS 0.16 0.12 0.16

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3Q18YTD Financial Results

In NT Thousands 2018 3QYTD 2017 2QYTD YoY	In NT Thousands 2018 3QYTD 2017 2QYTD YoY
Amount % Amount % %
Net Sales 18,034,067 100.0 16,552,402 100.0 9.0
	9.0
COGS 16,386,182 90.9 14,918,505 90.1	9.8
Changes in Biological Assets - 8,650 - - 4,418 -
Gross Profit 1,639,235 9.1 1,629,479 9.8	0.6
Operating Profit 439,247 2.4 524,082 3.2	-16.2
Other Income/Expense 38,779 0.2 78,919 0.5	-50.9
Profit Before Tax 478,026 2.7 603,001 3.6	-20.7
Profit After Tax 391,385 2.2 543,048 3.3	-27.9
Profit Attributable to Owners 351,196 1.9 468,763 2.8	-25.1
After Tax EPS 0.32 0.43

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3 18YTD Non-O eratin Incomes and Ex enses Q p g p

Unit : NT Thousands	2018 3QYTD	2017 3QYTD
Finance costs	- 39,118	- 43,834
Foreign exchange gain(losses) and Gain (loss) on financial instruments at FVTPL	- 51,183	24,456
Share of profit of associates	39,983	28,476
Dividend income	55,783	32,609
Other incomes	33,314	37,212
Total	38,779	78,919

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Quarterly Performance

-10.0% -5.0% 0.0% 5.0% 10.0% 15.0%	$0.13 $0.13 $0.23 $0.17 $0.07 $0.10 $0.04 $0.14 $0.12 $0.15$0.16 $0.13 $0.04 $0.12 $0.16 11.0% 10.5% 10.9% 10.9% 9.0% 7.9% 7.7% 9.5% 10.4% 10.0% 9.2% 11.1% 7.8% 9.8%9.6% 3.8% 3.4% 4.0% 3.6% 2.2% 1.4%~~0.9%~~ 2.5% 1.0%3.3% 2.5% 4.4% 1.0% 3.3% 2.9% -0.20 -0.10 0.00 0.10 0.20 0.30 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 EPS Gross Profit Operating Profit NTD$

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Summar y

3Q 18

The 3Q18 consolidated revenue was NTD $6.08 billion. Due to routine annual maintenance performed in Taiwan and mainland factories, the Pulp output is reduced and the 3Q18 consolidated revenue decline 2% Q/Q. Attributable to the global pulp and paper prices rising year on year, the 3Q18 consolidated revenue increased 7.1% Y/Y. The Gross Profit and Operating Profit were 9.6% and 2.9% , declined 0.2 and 0.4 ppt. Q/Q ,and with annual growths of both 0.4 ppt.

Non-operating incomes were affected by the fluctuation of foreign exchange markets and the NT$ 55.7 million dividend income. The Net profit after tax was NT$ 197 million, and attributable to owner was NT$175 million in 3Q18, with annual growths of 1.8%. The 3Q18 EPS was NTD$0.16.

2018 3QYTD

• The 3Q18YTD consolidated revenue was NTD $18.03 billion, with 9% Y/Y growth. The 3Q18YTD Gross Profit and Operating Profit were 9.1% and 2.4% respectively. The 3Q18YTD net profit after tax was NT$391 million, and attributable to owner was NT$351 million. The 3Q18YTD EPS was NT$0.32.

4Q18 Outlook

• Due to trade war between China and the US, the customer orders tend to be more conservative. The company is cautious about its 4Q18 operations.

•  In order to comply with the 2019 Plastic Restriction Act, the company has developed “ Easy Straw Paper” which is truly plastic-free, recyclable and can be decomposed by the environment.

Starting from Nov 1[st] , the cultural paper manufactured by CHP will not contain fluorescent agent and the manufacturing process will be more eco-friendly and reduced water resources consumption. The company will continue to improve and develop various products, and improve the production process to be greener and more eco-friendly.

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CHP-Corporate Sustainability Honor

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Won

Corporate Sustainability Report Awards-Gold Top50 Corporate Sustainability Awards Growth through Innovation Awards Website： https://tcsaward.org.tw/tw/news/index/178 Media Report： https://tcsaward.org.tw/tw/about/harvest/Mediareport (

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Growth throu h Innovation Awards- g

CHP Specialty Recycling System

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Corrugated
medium paper
Recycling Paper containers
paper manufacturers
manufactu
rers
Product
( Release liner )
Recycled paper containers Paper containers
and release liner
Label
manufacturers Clients
Label products
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Thank you