FUCC — Investor Presentation 2019

Dec 20, 2019

FUCC

Formosan Union Chemical Corp.

2019 Investor Conference
12.20.2019
(Stock Symbol: 1709)

Disclaimer

Information from this presentation may include forward-looking statements; however, it is not limited to statements on all of our possible business activities, events or developments. Such statements are based on our assumptions on future operation and political, economic and market factors not in our control. Actual operational outcomes may be significantly different from such statements.

Company Historical Highlights

June 1973 Established in Taipei City on June 21, 1973. The registered capital is NT$50,000,000.
April 1977 Completed Linyuan Factory in Kaohsiung. Started producing detergent-use alkyl benzenes.
July 1986 Company stock officially offered to the market for trading.
Oct. 2004 Nonylphenol plant expansion, annual production capacity is 25KT.
Dec. 2010 Upgrade alkylation equipments. Increased the total capacity of alkyl benzenes
to 125KT.
Jan. 2014 Received the permission to release the first domestic unsecured convertible debenture. The total amount is NT$ 0.7 billion. The debenture has been listed since February 20th in the year.
May 2016 Completed plant debottleneck of Hydrogenated Hydrocarbon Resin, annual
production capacity increased to 24KT.
April 2018 Started-up 40KTA Nonylphenol Plant in Jiangsu, China. The plant is 50-50 JV with
Chang Chun Group.

Business Scope

Main business:
We're committed to the manufacturing, processing and sale of alkyl benzene, alkyl phenol, and hydrocarbon resin and their derivatives and the operation and investment of other related businesses.

Business Proportion for Main Products (Departments)?Our main business focuses on the manufacturing and sale of the products and derivatives below: Alkyl benzene, alkyl phenol, alkyl benzene sulfonic acid and hydrocarbon resin.

Year	2018		2017
Item	Amount	Ratio (%)	Amount	Ratio (%)
Alkylation Department	6,629,123	67.75	5,753,804	65.48
Resin Department	2,806,920	28.68	2,693,769	30.65
Agriculture & Others	349,342	3.57	340,207	3.87
Total	9,785,385	100.00	8,787,780	100.00
Unit: NT$ thousand

Our Products

Alkyl benzene: An upstream material for household laundry powder and detergent.

Alkyl benzene sulfonic acid: Alkyl benzene becomes the main component of the decontaminant after processing. It is extensively used in the household cleaning and care field, including laundry powder, detergent and home cleaners.

Alkyl phenol: An upstream material for surfactant and raw material for lubricant additive. It's mainly used in the industrial detergent, antioxidant, high-class printing ink resin, hardener and lubricants.

C9 hydrocarbon resin/hydrogenated hydrocarbon resin: It's the upstream material for adhesive and hot melt adhesive. It increases tack and moisturization.

Other: We focus on the sale of agricultural product and sugar trade.

Market Analysis

Primary sales region of product
Unit: NT$ thousand
| Year | | 2018 | | 2017 | |
| --- | --- | --- | --- | --- | --- |
| Sales Region | | Amount | Ratio (%) | Amount | Ratio (%) |
| Domestic sales | | 2,279,311 | 23.29 | 2,215,774 | 25.21 |
| Export sales | China | 2,381,933 | 24.34 | 1,737,024 | 19.77 |
| | Vietnam | 668,367 | 6.83 | 638,220 | 7.26 |
| | Philippines | 567,365 | 5.80 | 428,419 | 4.88 |
| | Guatemala | 731,908 | 7.48 | 636,205 | 7.24 |
| | Subtotal for others | 3,156,501 | 32.26 | 3,132,138 | 35.64 |
| Net sales | | 9,785,385 | 100 | 8,787,780 | 100 |

Short and Long Term Business Development Plans

Alkyl benzene
Short term: We aim to strengthen customer service and consolidate our market.
Long term: We strive to offer customers with personal and specialized services and develop new uses of products.
Alkylphenol
Short term: We continue to develop the European and U.S. markets to increase the global market share.
Long term: We will maintain stable high operating rate. Develop other alkylphenol products such as the lubricant additives to increase the operating profit.
Hydrogenated hydrocarbon resin
Short term: We provide a complete product line for hydrogenated and non-hydrogenated C9 hydrocarbon resin. We develop a highly hydrogenated hydrocarbon resin with high softening point to meet customers’ needs.
Long term: We will continue to expand the capacity and increase the production efficiency.

Financial Overview
Financial information for the last 5 years

CONSOLIDATED STATEMENTS OF INCOME IN THE LAST 5 YEARS

Unit: NT$ million	2015	%	2016	%	2017	%	2018	%	2019Q3	%
Operating revenue	9,462	100	8,574	100	8,787	100	9,785	100	6,528	100
Operating costs	7,939	84	6,747	79	7,137	81	8,528	87	5,759	88
Gross profit	1,523	16	1,827	21	1,650	19	1,252	13	777	12
Operating expenses	735	8	783	9	796	9	759	8	518	8
Profit from operations	788	8	1,044	12	854	10	493	5	259	4
Non-operating income and expenses	58	1	66	1	(34)	0	30	0	(7)	0
Profit before income tax	846	9	1,110	13	820	10	523	5	252	4
Income tax expense	144	2	209	2	158	2	133	1	78	1
Net profit	702	7	901	11	662	8	390	4	174	3
Earnings per share (NT$)	1.42		1.96		1.32		0.77		0.36
Cash dividends (NT$)	1.18		1.51		1.50		0.55		-

CONSOLIDATED REVENUE IN THE LAST 5 YEARS

Chart: Unit: NT$ million

Category
2015	9462.0
2016	8574.0
2017	8787.0
2018	9785.0
2019Q3	6528.0

NET PROFIT IN THE LAST 5 YEARS

Chart: Unit: NT$ million

Category
2015	702.0
2016	901.0
2017	662.0
2018	390.0
2019Q3	174.0

SIMPLIFIED CONSOLIDATED STATEMENTS OF INCOME

Unit: NT$ million	2019Q3	%	2018Q3	%	Amount of increase (or decrease)	Rate of increase (or decrease) (%
Operating revenue	6,528	100	7,670	100	(1,142)	(15)
Operating costs	5,759	88	6,539	85	(780)	(12)
Gross profit	777	12	1,131	15	(354)	(31)
Operating expenses	518	8	585	8	(67)	(11)
Profit from operations	259	4	546	7	(287)	(53)
Non-operating income and expenses	(7)	0	38	1	(45)	(118)
Profit before income tax	252	4	584	8	(332)	(57)
Income tax expense	78	1	135	2	(57)	(42)
Net profit for the period	174	3	449	6	(275)	(61)

Financial ratio analysis in the last 5 years

Chart

Category
2015	7.09	10.43
2016	8.93	12.49
2017	6.42	8.66
2018	3.7	5.1
2019Q3	1.7	2.37

Q&A