ETERNAL — Call Transcript 2021

Nov 12, 2021

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Eternal Materials

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2021 Third Quarter Earnings Conference

Speaker : B.C. Liu, Spokesman / CFO

2021/11/12

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Outline

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 Profile Overview、Development Milestones、Business Group 、 Global Production Sites/Service Network/R&D Sites 、 Annual Sales Distribution

• 3Q21 Financial results

 Key messages

 Q&A

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Profile - Overview

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• Core Business： Manufacturing, processing and sales

• ：

• Founding in 1964, Headquarter in Kaohsiung, Taiwan

• Year of Listed on Taiwan Stock Exchange：1994

• Chairman： Allen K. L. Kao

• Number of Employees： 4,960[1]

• Number of Production Sites：23 (4 in Taiwan, 13 in Mainland China, 1 in United States,

1 in Thailand, 2 in Japan, 1 in Malaysia and 1 in Italy) Overall Sales Revenue in 2019： USD 1,299 million[2]

• Headcounts of Researchers：591 (R&D expenditures accounted for 4% of sales revenue)

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Eternal is:

• One of the leading suppliers of Dry film photoresist in the world.

• One of three largest UV curable Monomers & Oligomers material suppliers.

• One of the leading suppliers of synthetic resin in Asian.

• 1.Number of Employees on September 30,2021

• 2.refer to year 2020 Consolidated statement

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Profile-Development Milestones

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1964 1985 1989 2000 2004 2008 2013 2016 2020+
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Profile-Business Group

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Resin Materials 48.2% Dry Film Photoresist 、 Dry Film Solder Mask 、 UV INK 、 Dry Film Photosensitive Polyimide 、 Alkyd Resin 、 Solvent-Based Acrylic Coating Resin 、 Liquid Polyimide Material 、 Vacuum Laminator 、 Water-Based Acrylic Coating Resin 、 Toll Coating Service 、 Acrylic Resin For Adhesives and Overprinting 、 Paper Phenolic Copper Clad Laminate 、 Polyester Polyol Resin 、 Fluorocarbon Resin 、 Composite Epoxy Copper Clad Laminate Polyurethane Resin 、 Saturated Polyester Resin 、 Amino Resin 、 Optoelectronic Materials 、 Other Coatings Resin 、 Unsaturated Polyester Resin 、 2020 Vinyl Ester Resin 、 Fire Retardant Resin 、 Electronic Materials Epoxy System 、 Structural Adhesive 、 Consolidated Revenue 33.5% Polyester for Polyurethane Foam USD 1,299 Million UV Monomers 、 UV Oligomers 、 Enzyme, antibody for IVD, conductive polymer Special Coatings 、 silicone powder 、 Liquid molding compound, Additives 、 3D UV printing Material 、 Binder, electrolyte, Si/C for LIB materials EMC 、 Optical Silicone & Epoxy material - Hydrophilic film for strip for LED Packaging

High Performance Materials 17.6%

Others 0.7%

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Profile-Global Sites : Production / Sales / R&D

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Production 23 Buyers’ 65 Service 34 R&D 11
Sites countries Network Sites
Resin Materials：8
Electronic Materials：13
High Performance Materials： 3
China
Japan
Korea
Production：13
Sale：17 Production：2
Sale：1
R&D Center：1 Sale：3
Lab：1
Italy Applied Lab：7
USA Taiwan
Production：1
Sale：1
Production：1 India Production：4
Sale：1 Vietnam Sale：5
Sale：1 R&D Center：1
Sale：1 Applied Lab：1
Indonesia
Thailand
Production：1 Sale：1
Sale：2
Malaysia
Production：1
Sale：1
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Profile-Annual Sales Distribution

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(In the recent 5 years)
Unit : USD million
1,600
1,436
1,365 Group
1,400 1,303 1,299
189 China
1,200
Other
1,000 890
845
793 Taiwan
738
800 799
600
400 394
370 364 339
315
200
146 150 152 146 160
-
2016 2017 2018 2019 2020
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Financial Information-Balance Sheets & Key Indices

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					2019 Amount % 6,076 11 Unit：TWD Millions	2019 Amount % 6,076 11 Unit：TWD Millions
		3Q’2021		2020	2019
		Amount %		Amount %	Amount %
	Cash and cash equivalents and current financial assets	5,685 9		6,170 11	6,076 11
	Accounts receivable
		19,494 32		17,523 31	15,361 29
	Inventories	10,052 17		7,493 13	7,182 13
	Financial assets	3,485 6		3,344 6	3,043 6
	Property, plant and equipment	16,167 27		16,623 30	17,436 32
	Total Assets	60,213 100		56,189 100	53,797 100
	**Short-term borrowings **	7,239 12		4,404 8	4,415 8
	Current portion of long-term borrowings	3,224 5		2,211 4	4,547 9
	**Long-term borrowings **	12,192 20		13,185 23	11,924 22
	Total Liabilities	36,573 61		32,950 59	31,877 59
	Total Equity	23,640 39		23,238 41	21,920 41
	Key Financial Ratios
	**Average cash collection days **	137		159	139
	A d id f l	84		93	86
	verage ays requre or sae
	Eternal Materials Current ratio(%)	9 181		210	191

Financial Information-Statements of Comprehensive Income

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Unit：TWD Millions

	3Q’2021		2020	2019
	Amount %		Amount %	Amount %
Operating Revenue	37424 100		38370 100	40363 100
	,		,	,
Gross profit	8,144 22		8,886 23	7,857 19
Operating expenses	(4,804) (13)		(5,747) (15)	(5,522) (14)
Operating Income	3,340 9		3,139 8	2,335 6
Non-operating income and expenses	325 1		6 0	579 1
Net profit attributable to owners of the company	3,665		2,543	2,466
Key Financial Ratios
Net profit margin	8		6	6
EPS	2.32		2.05	1.99
ROE	16		11	11

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Financial Information-Cash Flow Statements

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				Unit：TWD Millions
	3Q’2021		2020	2019
	Amount		Amount	Amount
Cash and cash equivalents at the beginning of the year	6,108		6,010	6,085
Cash flows from operating activities	168		4,148	4,946
Acquisition of property, plant and equipment	(1,348)		(1,458)	(2,111)
Increase (decrease) in borrowings	2,964		(997)	(2,228)
Dividends paid	(1,860)		(1,736)	(1,116)
Other items	(236)		134	914
Effects of exchange rate changes on cash and cash equivalents	(251)		7	(480)
Cash and cash equivalents at the end of the period	5,545		6,108	6,010
Free cash flow	(1,180)		2690	2,835
Note: Free cash flow= Cash flows from oeratin activities-Acuisition		of roert lant and euiment
		y,

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Sales Revenues & Gross Profits

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Unit：TWD Millions

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Sales
3Q’21 y/y q/q
3Q20 4Q20 1Q21 2Q21 3Q21
Sales 9,889 11,896 11,202 13,211 13,010
Sales +32% -2%
Gross
Profits
3Q20 4Q20 1Q21 2Q21 3Q21 Gross
+12% -7%
Profits
GP 2,390 2,745 2,563 2,896 2,686
GPM 24.2% 23.1% 22.9% 21.9% 20.6%
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Performance by Segment

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TWD Millions Sales Operating Profits Sales %
Others
High Performance Materials
Electronic Materials
y/y q/q y/y q/q
Resin Materials
1% 1% 1%
Resin
6,290 +30% -3% 3 -99% -98% 17% 19% 21%
Materials
39% 35% 34%
Electronic
3,568 +7% -11% 503 +1% -26%
Materials
44% 45% 45%
High
Performance 3,069 +86% +17% 663 +271% +26%
Materials 3Q20 2Q21 3Q21
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Recap of Recent Major Events

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• The project of construction a R&D Building located in Eternal Materials Suzhou which planned to spend CNY 381 million was approved by the Board of Eternal Taiwan on 2021/11/5.

• The project of expansion on Coating Production Lines in Eternal Electronic (Suzhou) which planned to spend CNY544 million was approved by the Board of Eternal Taiwan on 2021/11/5.

• Establishment of Corporate Governance and Social Responsibility Committee and appointment of the first members were approved by the Board of Eternal Taiwan on 2021/11/5

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Q & A

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Thank you

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