CSRC — Interim / Quarterly Report 2019

Nov 20, 2019

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3Q 2019 International CSRC Investment Holdings Co. INVESTOR'S CONFERENCE

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Disclaimer

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.

International CSRC Investment Holdings Co. makes no representation or warranty as to the accuracy or completeness of these forward-looking statements and nor does International CSRC Investment Holdings Co. undertake any obligation to update any forward-looking statements, whether as a result of new information or future events.

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Carbon Black Segment

01

02 Biotech Segment 03 3Q 2019 Operating Results

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CSRC Group Business Overview

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E-ONE MOLI
AMERICA Brussels, Belgium Liaoning, Mainland China
EUROPE/MEA ASIA
Anhui, Mainland China
Barberton, OH Chongqing, Mainland China
Taipei, Taiwan
Phenix City, AL
Sunray, TX
Kaohsiung, Taiwan
Ponca City, OK Kemya, Saudi Arabia E-ONE MOLI
Houston, TX New Delhi, India
Gujarat, India
Manufacturing Sites
Expansion Site
Technology Centers
Licensee Manufacturing Site
Offices
E-ONE MOLI
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O1 Carbon Black Segment

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Capacity of Major Carbon Black Makers

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India 85 Taiwan USA 120 305 Mainland China 285 MT (‘000)

2,146 2,060 Mainland China 1,211 285 1,155 941 795795 515 505 400 Cabot Birla Orion Black Cat Tokai & Sid CSRC PCBL OMSK Longxing Richardson

Tokai completed acquisition of Sid Richardson in Sept. 2018

Source : Notch Consulting Inc., July 2019

Overview and Outlook

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Mainland China

• 2019 auto sales has been plunging; Jan-Sept PV sales dropped significantly by 12% YoY.

• Supply & demand imbalance will be deteriorating (oversupply widened out to 1,100k tons by 2023).

• • Negative GM% for CB makers.

Taiwan

• Co-generation of power from tail gas results in no waste heat.

• Self reliance for power consumption.

USA

• Demand growth is expected to continue into 2020.

• Peers continue to

• announce price increase.

• • Risk from IMO2020.

India

• Economy is facing a slowdown. Sharp decline of PV sales by 24% YoY in Sept 2019.

• • New fuel emission standards for automobiles effective from Apr 1[st] , 2020 result in subdued car demand.

• • Cut in corporate tax rates (30% to 22%) effective from Apr 1st, 2019.

80% 60% 40% 20% 0%

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May-19 Jun-19 Jul-19 Aug-19 Sep-19 Linyuan Power Generated % Note: power generated % = a/(a+b) a = the amount of power generated (kwh) b = the amount of power purchased (kwh)

Source: Marklines, Notch

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Mainland China Carbon Black Market

N330 Average RMB/ton

Mainland China CB Utilization Rate

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RMB $
‘000 tons
9,000
10,000 64%
61.50%
62%
60%
57% 57.40%
58%
56%
7,500
5,000 53% 53%
52% 54%
52%
50%
48%
0 46% 6,000
2014 2015 2016 2017 2018 2019 1H
Capacity Production Utilization Rate
Estimated GP/ton among
Top 4 CB Players 1-3Q19 Net Income
China CB Makers
800 Net Income YoY Change
600 400 150%
400 100%
50%
200
0 0%
0
A B C D
2017 1H 2017 2H 2018 1H 2018 2H 2019 1H -50%
-200 -36%
-76% -70% -100%
-400
-400 -150%
-129%
-600
RMB million
RMB $ Source: Notch, BAIINFO.com, Bloomberg
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India Carbon Black Market (1/2)

Weak Auto Sales Led Car Makers Cut Production 16% YoY in Q2-Q3

2019 India PV Sales

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‘000 units
PV Sales ('000 units) YoY Change
0%
310,000
-5%
290,000
-10%
270,000
-15%
250,000
-20%
230,000
-25%
210,000 -30%
190,000 -35%
Jan Feb Mar Apr May June July Aug Sept
Source: Marklines, Drivespark.com, ECOVBLUE
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What is BS-VI Norms?

The most advanced Bharat-Stage VI (BS-VI) emission standard for norms will take effect autos = Euro-VI norms in India from Apr. 2020

The new norms make Fuel injection system on-board diagnostics will be introduced for 2 (OBD) mandatory for wheelers. A first in all vehicles India

Only 13 BS-VI Compliant Models on the Market

• Maruti Suzuki: 8 • KIA: 1

• • • Hyundai: 1 Jeep: 1

• • • Toyota: 1 Mercedes: 1

India Carbon Black Market (2/2)

India’s Ranked 4[th] in Worldwide Auto Production in 2018

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Auto Sales will Rebound in 2021

‘000 units

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2000 2004 2008 2018
1. USA 1. USA 1. Japan 1. China
2. Japan 2. Japan 2. China 2. USA
3. Germany 3. Germany 3. USA 3. Japan
4. France 4. China …… 4. India
5. S. Korea …… 9. India
…… 12. India
15. India
2018 figures
Others China
26% 27%
Distribution
of Top 30
S. Korea Tire Makers
10% Japan
14%
US
India
10%
Source: ETAuto.com, The World Bank, 13%
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Source: ETAuto.com, The World Bank, research reports, CSRC

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India Auto Sales Forecast 36,076
34,084
32,375
30,897 30,854
FY2019 FY2020f FY2021f FY2022f FY2023f
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Great Potential in India’s Car Ownership

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2018 figures
5 times
Vehicles Owned Per Individual 20500
9771
10500
0.98 2016
0.85 500
0.774
0.74 China India
0.591
7 times GDP per capita
(Current US$)
0.164
0.022
USA UK New Australia Japan China India
Zealand
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What is MARPOL 2020?

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From January 2020, the marine sector will have to reduce sulfur emissions by over 80% by switching to lower sulfur fuels. The maximum sulfur content of fuel oil will fall to 0.5%.

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Marine Fuel Sulfur Limits (% by weight)
5
4.5
January 2012,
4
from 4.5% to 3.5%
3.5
3
Outside ECAs Cap
2.5
2
1.5
January 2020,
1
from 3.5% to 0.5%
0.5 Within ECAs Cap
0
2005 2010 2015 2020 2025
Source: EIA
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MARPOL 2020’s Impact to Carbon Black Manufacturers

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• Nearly 50% of residual fuel oils in the US goes to marine sector, carbon black feedstock is a small subset. Bunker fuels dominate the pool.

• Biggest impact to CB makers is the transition of current oil suppliers’ & CB customers’ pricing index.

• Uncertainty of CBO and CB price index, USGC HSFO or VLSFO.

North America Asia FCC Bottoms Feedstock Coal Tar/ Ethylene Tar	40			Price difference between HSFO and VLSFO is widening
USGC HSFO Carbon Black Contract Driver Negotiated Quarterly Prices	20 30
Bunker Fuel Feedstock Market Driver Industrial Use	10
Massive Impact IMO 2020 Regional Impact Moderate Impact Source: Bloomberg, CSRC Group	0 2019/1/1 2019/4/1 2019/7/1 2019/10/1 Price difference (USGC 0.5% sulfur to 3.5% sulfur, FOB, US$/barrel) Data as of Oct 25, 2019

Strong Focus on Research and Development

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Growth Strategies

• R&D Centers built in Taiwan & India to strengthen capabilities.

• Moving up the value chain in rubber and non-rubber grades to develop a stronger product portfolio.

• Continue to grow market share and expand operations to new geographies.

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Innovation towards Tire Black

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CONTINEX LH SERIES

Heat Build-Up

Rolling Resistance

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Wear Resistance

• Made for Green Tire, Enhancing Fuel Economy - Greater Dispersibility & Processability

• • Reducing Rolling Resistance of Tires
• • Increasing Wear Resistance of Tires
• • Improving Heat Build-Up of Tires

Environmental Friendly Carbon Black for Truck & Passenger Car Tires

金鉅獎 年度創新獎

Innovation towards Non-Tire Black

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SATIN BLACK SERIES

Rubber

• Handle Grips - Rubber Tubes - Shoe Soles - Car Door Seals - Conveyor Belts

Providing better appearance, higher reinforcement, and greater pigmentation

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Plastics

• Color Masterbatch

• • Cables and Wires
• • Automotive Interiors
• • PE & PVC Pipes
• • Plastic Moulded Goods

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Commitment to Sustainability (1/2)

Donation of Environmental Comic Books , Taiwan 2019

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Summer Camp at Shanwei Elementary School, Taiwan 2019

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Cement Academy, Mainland China 2019

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International Day of Yoga, India 2019

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Commitment to Sustainability (2/2)

CSR Awards

TCSA TCSA 企業永續報告 台灣永續企業 金獎 績優獎 EcoVadis 企業社會責任 銀牌獎

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TCIA Award TCIA 循環經濟 成果獎

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O2 Biotech Segment

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Myozyme Timeline

2019.01 EU EP1301201B1 revoked 2016.06 2006.10 2013.08 2019.05 2[nd] US Divisional CSRC and Biomarin Genzyme raised doubts about Patent Synpac started challenged IP EU royalty 2016.09 to recognize 7056712 in 2019.06 2[nd] EU Divisional royalty income USA US AAA notification of arbitration Patent 2019.07 Uncollected EU royalty payment of 1Q19 2006 2007 2013 2014 2016 2018 2019 2018.01 2019.08 2007.11 2014.09 Claim 19 of US 712 valid Expected credit loss recognized. IP E1301201B1 1[st] EU Divisional 2018.03 EU royalty payment of 1Q19 received. was Patent US Appeal for invalidated 2019.09 challenged in 2014.12 claim 9 of US 712. Notification of 1[[st]] hearing for process Europe 1[st] US Divisional 3[rd ] US Divisional Patent from US AAA Patent 2018.09 2019.10

2019.08 Expected credit loss recognized. EU royalty payment of 1Q19 received. 2019.09 Notification of 1[[st]] hearing for process from US AAA 2019.10 Claim 9 of US 712 affirmed by C.A.F.C.

3[rd] EU Divisional Patent

Arbitration Timeline

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Arbitration May Take About 1 Year

Now

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Filing Preliminary The Award
Hearings
2019.05.30 Hearing
1 2 3 4 5 6 7
Information
Arbitrator
Exchange & Post-Hearing
Selection
Preparation Submissions
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O3 3Q 2019 Operating Results

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3Q 2019 Operating Results

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Revenue
NTD million
18,149 18,694
1-3Q/2018 1-3Q/2019
EBITDA & %
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NTD million

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EBITDA EBITDA %
26%
19%
4,692 3,529
1-3Q/2018 1-3Q/2019
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Gross Profit & %

NTD million

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Gross Profit Gross Margin %
28% 26%
5,051 4,818
1-3Q/2018 1-3Q/2019
Net Income & EPS
NTD million
Net Income Diluted EPS (NT$)
3.43
1.58
2,634 1,537
1-3Q/2018 1-3Q/2019
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3Q 2019 Operating Results by Segments

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NTD Million NTD Million
Revenue Operating Income
2,935 3,139
2,500 2,539
2,788
2,179
12,676 12,520
206
721
72
1-3Q/2018 1-3Q/2019 1-3Q/2018 1-3Q/2019
-125
Carbon Black Battery Biotech Carbon Black Battery Biotech
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Carbon Black Sales & Gross Profit Margin

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6,000 15.6%
12.2%
11.5%
10.2%
9.2%
5,500 6.9% 10.0%
6.2% 6.1%
5,000
0.0%
4,524
4,500
4,303 4,268 4,262
4,219
4,039
-10.0%
4,000 3,849
3,719
3,500
-20.0%
3,000
-30.0%
2,500
2,000 -40.0%
4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Sales GM % NTD million
GM %
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Financial Structure
Operating Cash Flow/Current Debt
Debt Ratio (L/A)
45%
44%
29% 29% 30% 38%
37%
24% 35%
34%
2015 2016 2017 2018 3Q/2019 2015 2016 2017 2018 3Q/2019
Debt/EBITDA Book Value/Share
3.89
34.5
3.44 3.38
31.4 31.8 31.5
2.98 3.02
29.0
2015 2016 2017 2018 3Q/2019 2015 2016 2017 2018 3Q/2019
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Financial Structure

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