CSRC — Interim / Quarterly Report 2018

Nov 19, 2018

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2018 Q3 China Synthetic Rubber Corporation I n v e s t o r s ’ C o n f e r e n c e

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Carbon,

source of life, foundation of civilization 碳乃生命之源，文明之本

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Carbon Black moves civilization 碳黑是文明進步的滾輪

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Vision Eco-friendly civilization Mission Renewable energy and resources

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– CSRC Group A circular economy and green life sustainable company

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CSRC Group Business Overview

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E-ONE MOLI
AMERICA Brussels, Belgium Liaoning, China
EUROPE/MEA ASIA
Anhui, China
Barberton, OH Chongqing, China
Taipei, Taiwan
Phenix City, AL
Sunray, TX
Kaoshiung, Taiwan
Ponca City, OK Kemya, Saudi Arabia E-ONE MOLI
Houston, TX New Delhi, India
Gujarat, India
Manufacturing Sites
Technology Centers
Licensee Manufacturing Site
Offices
E-ONE MOLI
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MT (‘000)
India
85
Taiwan America
120 305
China
285
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Capacity of Major Carbon Black Makers

2,133

2,050

1,211 1,155 941 795 515 505 400 Orion Black Cat Tokai & Sid CSRC PCBL OMSK Longxing Richardson Tokai completed acquisition Sid Richardson in Sept.

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Cabot Birla
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Source : Notch Consulting Group, 2018

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CONTENTS

01 02 03	Business Overview Business Outlook Q3/2018 Operating Results

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Business Overview[01]

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Carbon Black Industry Overview

MT (‘000)

Expansion and Globalization will be the inevitable trend

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25,000 3.2% 3.2%
3.2% 3.2%
20,000 3.2% 3.2%
3.2%
15,000 3.1% 3.1%
3.1%
3.1% 3.1%
10,000 3.1%
3.1%
5,000 3.0%
3.0%
0 3.0%
2018 2019 2020 2021 2022
Demand Growth %
North America ASIA W. Europe
3,000 5.0%5,000 5.0%
3.5%
3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.1% 3.1% 3.1% 3000 5.0%
3.0% 3.0%
2,500 3.0%4,000 3.0% 2500 2.5% 2.5% 2.7%
2,000
1.0%3,000 1.0% 2000
1,500
1500 0.0%
-1.0%2,000 -1.0%
1,000
1000
500 -3.0%1,000 -3.0%
500
0 -5.0% 0 -5.0% 0 -5.0%
2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022
Demand Growth % Demand Growth %
Demand Growth %
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Source: Future Markets “The Global Market for Carbon Black 2018”

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Specialty Carbon Black Overview

Developing high value Specialty CB Products

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SCB Worldwide
3500 8% 8% 8% 7% 7% 10%
2292 2459
2500 2133 5%
1975
1832
1500 1094 1148 1208 1265 1325 0%
500 -5%
-500 2018 2019 2020 2021 2022 -10%
Value (USD M) Volume (kt) Value Growth Rate
Value (USD Value (USD
SCB by Application 1500 SCB by Region
M) M)
2000
1000
1500
1000
500
500
0
0
2018 2019 2020 2021 2022
2018 2019 2020 2021 2022
Plastics Inks Coatings Other
N. America Europe APAC ROW
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Source: Lucintel-Global Specialty Carbon Black Market Trends Forecast and Opportunity Analysis 2018

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Valuable Carbon Black

• Cable Wire

High Performance Tire

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Low Rolling Resistance Tire

• Low Grit

• • High color plastics

Plastics

• Fiber

• Conductive CB Long Run Tire Coating

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Business Outlook[02]

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Beyond Circular Economy

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Globalization

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The Future isWorth It

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Carbon Black is Circular Economy

Emission Control System

Transfer industrial waste as raw material

• Dramatic reducing Sox, NOx, PM

• Petrochemical industry

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• Coking industry / Steel industry

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• Recycle Energy

• • Recycling Energy from Production • Steam

• • Power

• 17 days of power consumption

• in Taipei city

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Source: Taipei City Government

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Commitment to Eco-friendly

High Pollution Control Standard Taiwan Nox, PM China Sox, Nox, PM Sox, Nox, PM USA (consent decree) India NCR zone PM issue

Advanced Pollution Control System SNCR  SCR De-Sox, SNCRSCR De-Sox, SCR Investing in advanced system at new plant (De-Sox, SCR)

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Taiwan: 1 Under Construction China: 2 Established, 2 Commissioning USA: 1 Commissioning India: Designed

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Reduction Rate of SOx, NOx

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Anhui, China Liaoning, China
Phenix City, AL
Commissioning Commissioning
SOx 90 %↓ SOx 90 %↓
NOx 90 %↓ NOx 90 %↓
AMERICA Liaoning, China
EUROPE/MEA ASIA
Anhui, China
Chongqing, China
Sunray, TX
New Delhi, India
New Delhi, India
Gujarat, India Chongqing, China Kaohsiung, Taiwan
Ponca City, OK
Designed Established Under Construction
Commissioning
SOx 96 %↓ SOx 95 %↓ SOx 90 %↓ SOx 90 %↓
NOx 95 %↓ NOx 95 %↓ NOx 90 %↓ NOx 90 %↓
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Social Participation From the society, for the society

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The Impact of IMO 2020 Sulphur Cap

In Oct-2016, IMO decided to bring in a sharp cut in marine fuel Sulphur limit ( from 3.5% to 0.5%) by 2020 for further emission reduction at global marine shipment industry

Higher demand for low sulfur feedstock

Lower demand for high sulfur feedstock

Continue to look into price change impact

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Beyond Circular Economy

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Globalization

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The Future isWorth It

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Globalizing

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Global Talent
Global R & D
Integration
Global Management
System
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Global Brand
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Global Account
Service
Global Feedstock
Sources
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Beyond Circular Economy

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Globalization

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The Future isWorth It

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Industry Holding Company

Linyuan Advanced Materials Technology Co., Ltd.

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Carbon
Black
BU
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International CSRC Investment Holding Co., Ltd.

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India Plants
CCIL, CCET
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Energy
BU
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Bio Tech
BU
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Circular Commitment Company

• Effective Internal Management

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Synpac
(North Carolina),Inc.
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• Industry Transparency

• Enhancing expanding strategies of each business unit to higher level

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Expanding in India

Capacity Phase I - 150,000 Mt (450,000 Total)

• Production Carbon Black Sector (Rubber Carbon Black and Specialty Carbon Black) • Steam • Power Expected Phase I - USD 83 Million Capex Three Phases Expected Phase I will complete by Timeline 2021

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Dahej,
Gujarat
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• Advantageous Geographical Location

• • Customers and Feedstock Cluster

• • Well Developed Infrastructure

• • Higher Economic Growth

• • Friendly Investment Environment

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Battery Power

Expansion Plan

New Capacity in Taiwan 18 Million Cells/Month Double Capacity – by 2020 9 Million Cells/Month 850 million Decrease in by Jan. 2019 through Capital Achieved Talent Management, 3,500 million 4.5 Million Cells Process Optimization, Increase in Capital /Month R&D and Technology Investment Capital: 3,013 M -> 5,663 M Complete By Q1 2019

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New Product in 2019:

Battery Power

21700:

• P42A: 4.2Ah/45A

Product Strategy:

• M50A: 5Ah/20A

• Niche Market

18650:

1. High Capacity with Extremely High Power

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• P28A: 2.8Ah/35A

• M30A: 3Ah/10A

• M35A: 3.5Ah/10A

• Application:

• Home Appliances

• • Medical & Military

• • ESS

• Power and Outdoor Solution

• • Personal Device

• E-Bike

• Aerospace & Seismic

• • BBU for Data Center

• • E-Call

• • 5G

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Investing in Future

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Investing in Future
Resource
Consolidation
•
•
Investing in R&D
High-Performance CB
Center •
Specialty CB
•
•
Investing in Talent New Generation CB
and Technology for EV tire
•
Development
Next Stage Battery
• •
Investing in Integrating Global Design
Pharmaceutical Resources and
Technologies
Niche Product
R & D Investment Development
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03 Q3/2018 Operating Results

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Q3/2018 Results

Gross Margin & %

Sales Revenue

NTD million

NTD million

Gross Margin Gross Margin %

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20,114
18,149
15,889
14,843
FY FY 1-3Q/ 1-3Q/
2016 2017 2017 2018
EBITDA
NTD million EBITDA EBITDA / Sales
24% 23% 26% 26%
4,701 4,692
3,876 3,854
FY FY 1-3Q/ 1-3Q/
2016 2017 2017 2018
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29% 28% 28% 28%
5,570 5,051
4,570 4,186
FY FY 1-3Q/ 1-3Q/
2016 2017 2017 2018
Net Income& EPS
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NTD million Net Income Basic EPS (NT$)
3.88
3.69
2.84
2.39
2,820
2,300
1,960
1,414
FY FY 1-3Q/ 1-3Q/
2016 2017 2017 2018
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Operating Income by Business Units

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NTD Million
75%
2788
3134
3233
206 6%
721 19%
510
-108
Y2016 Y2017 -21 1-3Q 2018
-209
Carbon Black Battery Biotech
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Carbon Black Sales & GM%

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NTD million GM %

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Current Ratio
3
2.3
2.2
2.0 2.0 2.0
2
1
Y2014 Y2015 Y2016 Y2017 Y2018Q3
% Debt Ratio ( L/A)
50
44
45 42
38
37 37
40
35
30
Y2014 Y2015 Y2016 Y2017 Y2018Q3
Book Value / share
50
36.2
40 34.3
31.4 31.8
29.0
30
20
Y2014 Y2015 Y2016 Y2017 Y20183Q
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Financial Structure

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Interest Bearing Debt/ Asset
40% (consolidated)
32.1%
30.1%
30% 28.4%
27.6%
26.9%
20%
Y2014 Y2015 Y2016 Y2017 20183Q
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THANK YOU csrcir@csrcgroup.com

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The forward-looking statements contained in this presentation are subject to risks and uncertainties and actual results may differ materially from those expressed or implied in these forward-looking statements.

China Synthetic Rubber Corporation makes no representation or warranty as to the accuracy or completeness of these forward-looking statements and nor does China Synthetic Rubber Corporation undertake any obligation to update any forwardlooking statements, whether as a result of new information or future events.

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