FSC — Investor Presentation 2019

Apr 29, 2019

First Steamship Co., Ltd. Investor Conference

2019/4/29

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Disclaimer

• The contents in this presentation and relevant messages issued at the same time were obtained from the company’s internal and external information such as operation results, financial status, business development, etc.

• The company does not release any financial forecast. However, the description involving the company’s opinions on its future operation and industrial development in respect of the company’s finance, business and Q&A made in this presentation could be different from the future actual results. The reasons for such differences may include changes in market demand, price fluctuations, competition behavior, international economic situation, exchange rate fluctuations, upstream and downstream supply chain, and other risk factors which are out of the company’s control.

• The future outlook in this presentation reflects the company’s views on the future to this day. The company will not be responsible to send reminders or make updates for any future change or adjustment in those views.

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Agenda

Company Profile Group Overview Business Development Financial Summary

Business Vision

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Company Profile

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 Inception Date: 1963/10/8
 Listed Date: 1965/11/4
Basic Info
 Capital: NT$6,308,831,500
 Stock Symbol: 2601
 Operation includes shipping, retail, rental,
financial leases, property development, and
financial services
Business
Retail 80.3%
Shipping
13.7% Financial
Leasing
4%
Financial
All data are based on financial report as of 2018 Q4 Others Service
1% 1%
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Group Overview

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1963 2006 2013
Grand Ocean Mariner Finance Ltd.
Financial
Shipping Retail
Leasing
2015 2016 2015 TESC
Morton Securities
RSW 2017 Sandmartin,
Summit Ascent
Property Financial Group
Development Service Holding
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Business Development : Shipping (1)

Self‐own fleet dedicated in the dry bulk ship market

• Currently own 9 vessels: 2 Handysize‐type, 3 Kamsarmax‐type, and 4 Supramax‐type.

• A new ship is under construction : Kamsarmax type, estimated to be delivered in Nov. 2020.

• Maintain high operation flexibility by switching between charter time model and joint‐operation model as well as effective vessel asset management.

• Strengthen E‐management and maintenance effectiveness , lowering operation costs and boosting operation efficiency.

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Business Development : Shipping (2)

Baltic Dry Index 2017/01‐2019/4

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• The trend of Baltic Dry Index illustrates that the index has been on an increasing path since 2017 Jan. Although the index was undergoing a downward correction during 2019 Q1, our outlook on 2019’s dry bulk cargo is still bullish and we believe the index will bounce up to the level of 2018. We can see in the figure the index is ramping up since April 2019, and we anticipate this momentum will continue.

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Business Development : Shipping (3)

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Long‐Term
Rental
Pool
Operation
One‐Year
Rental
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• Among the 9 ships in the fleet, 2 of them are undergoing long‐term rental contracts with duration above 5 years, 3 of them under the pool operation business, and the rest 4 ships are in one‐year contracts.

• This portfolio of ship operation provide stable income and less exposure in the market risk.

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Business Development : Shipping (4)

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Gross Profit of Shipping Department
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
(500,000)
2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4
毛利 (248,364) 891,180 1,718,164 2,184,355 2,936,036 2,632,095 3,192,700 3,407,137 3,143,020 2,985,742
USD
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Business Development ： Mariner Finance Ltd. (1)

 Provides financial leasing service for businesses and for individuals, including but not limited to new car leasing.

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 As of 2018/12/31
 Operates in 31 major cities
 Loan Receivable amounts to around 450 million RMB
 Approximately 3,293 auto leases
 Owns 589 Shanghai auto license plates
 During 2018 :
 New loan amounts up to 340M RMB
 2,037 New Auto leases
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Business Development ： Mariner Finance Ltd. (2)  Financial Result over the last 3 years

Unit:RMB ‘000	Unit:RMB ‘000	Unit:RMB ‘000	Unit:RMB ‘000	Unit:RMB ‘000
Fiscal Period	2018	2017	2016	Notes
Recorded Profit After Tax	(5,418)	86	(52,859)	PAT Record in the financial report
FX Gain / (Loss)	(5,121)	3,418	(14,492)	Unrealized valuation loss on USD based foreign borrowings
Estimated Credit Loss (Due to applying IFRS 9)	(6,237)			Additional provision due to IFRS 9, compared to local accounting principle
Adjusted Profit After Tax	5,940	(3,332)	(38,367)	Excluding FX and Estimated Credit Loss

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： Business Development Mariner Finance Ltd. (3)

In 2019 , Mariner Finance anticipate to growth 20% in revenue , grounding on the achievement in 2018, 2,037 new auto leases and RMB 340M new loan. By expanding new geographic region and exploring new business model, Mariner Finance is confident that it should reach the goal of 2019, 3,900 new auto leases and RMB 460M new loan.

Expanding New Exploring Business Scope Establishing High Geographic Region (Partner with C‐Trip) Quality Client Portfolio Wuhan City  GDP ： RMB 1080 Billion in 2018 Q3, 1.Rental Business ：  Ride‐hailing business ranked no.9 in China.  Among 30 cities filing application,  Partnership with C‐Trip in car  Population ： Up to 8.15 million in 2018 8 cities are granted for the renting of Business Travel and  Fortune 500 ： 256 of Fortune 500 chartered license in the first batch, of Casual Travel businesses have branches in WuHa 2018. And the demand in first  Business‐used card of Xi‐an phase should be 900~1500 Government business and  GPD ： RMB 588.4 Billion in 2018 Q3, ranked vehicles. agencies, and of global luxury no.20 in China. 2.Raid‐Hailing Business ： business.  Population : Up to 9.81 million in 2018  C‐Trip raid‐hailing : Through C‐trip C‐Trip Rental Car  Fortune 500 : 203 of Fortune 500 have platform and C‐Trip ride‐hailing app, C‐Trip currently owns branches in Xi‐an, and two Xi‐an are on the chartered license in 128 cities. F‐500 list.

： Business Development Royal Sun Way

• Royal Sun Way(RSW) is the expert in residential and business building development.

• RSW’s business covers rental and sale of real estates, and investments in infrastructure, in new town development, and in new community development, etc.

• The followings are some facts of the First Phase of “River and Tree” joint Venture Project :

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• locates in the Taipei metropolitan area, and is aside to Keelung River. It has a upside and foursquare base of about 20,000 square meters.

• Building Occupation Permit : Acquired in Feb. 2018

• Revenue Recognition : Revenue is recognized on the delivery of condos since the third quarter of 2018

• RSW turned profit and recorded a profit of NTD 4.5M by recognizing the aforementioned revenue on delivery.

Phase 1 Base Size	Number of Condos	Parking Lot	Size of Condo	Number of Floors
Around 5,000 square meters	265 Condos	169 Parking Spaces	96~139 Squire meters	15F/B3

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Business Development: Group’s Holding

• TESC

• (8476.TT)

• • Share Holding 9.67%

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• Summit Accent
(0102.HK)
•
Share Holding
19.22%
• Sandmartin
(0482.HK)
•
Share Holding
29.0%
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• Participate thoroughly in business operation.

• Aggressively leveraging group resources, assist in business expansion.

• Lead strategic planning to build mid‐ or long‐term operation niches.

• Increase ROE by creating group cooperation synergy

(Information: Announcements as of December 31, 2018)

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Business Development: Grand Ocean

Operation Status : Store Locations

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Wuhan Zhongshan
Chongqing
Wuhan Guangu
Wuhan Longyang
Hubei Yichang
Hubei Shiyan
Nangqing Xinjiekou
Grand Ocean Foot Prints Nangqing Jianbei
Anhui Hefei
16 Stores Countrywide
Shanghai HQ
(Incl. Franchise)
Multi‐Regional Deployment Hunan Henyang
Fuzhou Donjiekou
6 Province and 1 municipality Fuzhou Grand Classic
Fuzhou Grand Vivo
Central China Fuzhou Jiaruixing
3 Regions East China （ Underground Street ）
Fujian Quanzhou
South China
Tian‐An Grand Ocean Life Store
10 Cities (Incl. Franchise ） (Franchise)
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Financial Summary

• Consolidated Statement of Comprehensive Income

• Key Elements in Non‐Operating Income/(Expense)

• Business Status After the new management team took over

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Consolidated Statement of

Comprehensive Income

Unit: NT million dollars

項目 2018 2017 2016 Operating revenues 8,044 7,297 7,616 Operating costs 2,311 2,030 2,152 Gross profit from Operation 5,733 5,267 5,464 Operating expenses 4,425 4,283 4,889 Net Operating income 1,308 984 575 Non‐operating income and expenses ‐868 23 ‐1,128 Profit from Operating before tax 440 1,007 ‐553 Tax expense 221 312 407 Profit (Owners of parent) 6 565 ‐1,086 Basic earnings per share (NTdollars) 0.01 1.06 ‐2.93

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Key Elements in Non‐Operating Income/(Expense) in 2018

1. Recorded Non‐Operating loss of NTD 279M from interests in Grand Ocean ：

• A. Impairment associated with the closure of Xiantan store

• B. Impairment associated with the closure of Suzhou store

• C. Impairment due to the underperforming of Fuzhou‐3 store

• D. Impairment associated with the closure of Tongling store (such as not collectable margin)

2.Recorded Non‐Operating loss of NTD 692.1M in First Steamship Group level :

• A. Loss in fair value due to position in SIHL (After reclassifying into Available for Sale security)

• B. Pro‐Rata loss in SIHL due equity method investment position in SIHL(2018/01~2018/11) C. Additional provision as estimated credit loss in Mariner Finance due to the implementation of IFRS9

• D. Pro‐Rata loss in equity method investment position in TESC

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Business Status

After the new management team took over

• Financial Liability Level Change

• Net Debt Ratio Level Change

• Operating revenues Level Change

• Operating profit ratio and change in net operating income

• Ship Operating gross profit and gross profit margin change

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Financial Liability Level Change

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Unit: NT million dollars
Amount of financial liability
17,000
16,000
15,000
14,000
13,000
12,000
11,000
10,000
105Q3 105Q4 106Q1 106Q2 106Q3 106Q4 107Q1 107Q2 107Q3 107Q4
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Net Debt Ratio Level Change

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Net Debt Ratio Unit : %
260%
240%
220%
200%
180%
160%
140%
105Q3 105Q4 106Q1 106Q2 106Q3 106Q4 107Q1 107Q2 107Q3 107Q4
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Operating Revenues Level Change

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Operating Revenues Unit: NT million dollar s
3,000
2,800
2,600
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
105Q3 105Q4 106Q1 106Q2 106Q3 106Q4 107Q1 107Q2 107Q3 107Q4
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Operating profit ratio and change in net operating income

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Unit ： NT million dollars
Operating profit ratio Net operating income
25% 500
Operating profit ratio
20% 400
Net operating income
15% 300
10% 200
5% 100
0% 0
‐5% (100)
105Q3 105Q4 106Q1 106Q2 106Q3 106Q4 107Q1 107Q2 107Q3 107Q4
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Ship Operating gross profit and gross profit margin change

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Unit ： NT thousand dollars
Gross profit margin Gross Profit
40% 460,000
Gorss profit margin
Gorss profit
30% 360,000
20% 260,000
10% 160,000
0% 60,000
‐10% (40,000)
‐20% (140,000)
105Q4 106Q4 107Q4
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Thank you

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The End

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