CHP — Interim / Quarterly Report 2019

Nov 14, 2019

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3Q19 Earnings Results

2019.11.14

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%
100%
Guangdong Zhaoqing
Syntax
Dingfung Pulp 66.27% Dingfung
Communication Genovella
& Paper Co., Forestry Co.,
(H.K.) Ltd. Renewables Inc.
Ltd. Ltd.
100% 100%
Zhaoqing
Shenzhen
Xinchung Green
Jinglun Paper
Technology Co.,
Co., Ltd.
Ltd.
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O eratin Locations p g

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Shanghai
Taipei
Taichung Hualien
Tainun
Taitung
Zhaoqing Shenzhen Jiutang
Hongkong
Taipei(Sales, Accounting and
Finance Office)
Manufacturing Sites(Hualien,
Jiutang, Taitung and Zhaoqing)
Sales Offices(Taichung, Tainun,
Shenzhen, Shanghai and
Hongkong)
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2019 3Q Financial Results

In NT Thousands 2019 3Q 2018 3Q YoY Amount % Amount % %	In NT Thousands 2019 3Q 2018 3Q YoY Amount % Amount % %
Net Sales 4,921,895 100.0 6,058,063 100.0 - 18.8
COGS 4,725,248 96.0 5,462,386 90.2	- 13.5
Changes in Biological Assets - 1,464 - - 2,119 -	-
Gross Profit 195,183 4.0 593,558 9.8	- 67.1
Operating Profit - 216,656 - 4.4 182,969 3.0	-
Other Income/Expense 45,148 0.9 18,310 0.3	146.6
Profit Before Tax - 171,508 - 3.5 201,279 3.3	-
Profit After Tax - 157,269 - 3.2 171,405 2.8	-
Profit Attributable to Owners - 110,982 - 2.3 175,144 2.9	-
After Tax EPS(NTD) - 0.1 0.16

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2019 3QYTD Financial Results

In NT Thousands 2019 3QYTD 2018 3QYTD YoY Amount % Amount % % Net Sales 15,664,361 100.0 18,087,579 100.0 - 13.4 COGS 14,560,519 93.0 16,387,081 90.6 - 11.1 Changes in Biological Assets - 4,617 - - 8,650 - - Gross Profit 1,099,225 7.0 1,691,848 9.4 - 35.0 Operating Profit - 115,236 - 0.7 468,622 2.6 - Other Income/Expense 38,185 0.2 39,145 0.2 - 2.5 Profit Before Tax - 77,051 - 0.5 507,767 2.8 - Profit After Tax - 53,845 - 0.3 414,365 2.3 - Profit Attributable to Owners - 29,646 - 0.2 351,196 1.9 - After Tax EPS(NTD) - 0.03 0.32	In NT Thousands 2019 3QYTD 2018 3QYTD YoY Amount % Amount % % Net Sales 15,664,361 100.0 18,087,579 100.0 - 13.4 COGS 14,560,519 93.0 16,387,081 90.6 - 11.1 Changes in Biological Assets - 4,617 - - 8,650 - - Gross Profit 1,099,225 7.0 1,691,848 9.4 - 35.0 Operating Profit - 115,236 - 0.7 468,622 2.6 - Other Income/Expense 38,185 0.2 39,145 0.2 - 2.5 Profit Before Tax - 77,051 - 0.5 507,767 2.8 - Profit After Tax - 53,845 - 0.3 414,365 2.3 - Profit Attributable to Owners - 29,646 - 0.2 351,196 1.9 - After Tax EPS(NTD) - 0.03 0.32
	- 13.4
COGS 14,560,519 93.0 16,387,081 90.6	- 11.1
Changes in Biological Assets - 4,617 - - 8,650 -	-
Gross Profit 1,099,225 7.0 1,691,848 9.4	- 35.0
Operating Profit - 115,236 - 0.7 468,622 2.6	-
Other Income/Expense 38,185 0.2 39,145 0.2	- 2.5
Profit Before Tax - 77,051 - 0.5 507,767 2.8	-
Profit After Tax - 53,845 - 0.3 414,365 2.3	-
Profit Attributable to Owners - 29,646 - 0.2 351,196 1.9	-
After Tax EPS(NTD) - 0.03 0.32

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2019 3 YTD Non-O eratin Incomes and Ex enses Q p g p

Unit : NT Thousands	2019 3QYTD	2018 3QYTD
Finance costs	- 45,989	- 38,627
Foreign exchange gain(losses) and Gain (loss) on financial instruments at FVTPL	- 34,226	- 51,148
Share of profit of associates	- 16,513	39,983
Dividend incomes	76,543	55,783
Other incomes	58,370	33,154
Total	38,185	39,145

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Summar y

3Q19 YTD

Due to the weakness in the market, the global pulp and paper prices declined year on year. Hence, the 3QYTD19 consolidated revenue of CHP was NTD $15.64 billion, with 13.4% Y/Y declined. The 3QYTD19 Gross Profit Margin and Operating Profit Margin were 7.0% and -0.7% respectively, with a decline of 2.4 and 3.3 ppt. Y/Y. The 3QYTD19 net loss after tax to the shareholders was NT$30 million and recorded EPS with NTD $-0.03.

Outlook

Resulted from the uncertainties remain in the international trade situation, the trend of pulp and paper prices are unclear. In order to prepare for the economy environment changes, CHP will actively reduce inventory, adjust product structure, and upgrade equipment to prudently respond to the trend of the environment.

In response to the global plastics reduction trend, CHP develops paper-based and environmentally friendly materials that can be directly recycled to replace plastic products. In addition to the development of various products for beverages, Easy Straw Paper products has actively to acquire certifications by domestic and international food manufacturers and aim to expand into food industry. CHP also extends its research and development to beverage sealing paper and beverage container paper to provide a global solution for plastic reduction.

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Thank you