FUCC — Investor Presentation 2020

Dec 17, 2020

FUCC

Formosan Union Chemical Corp.

2020
Investor Conference
12.17.2020
(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, 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 and sale of alkyl benzene, alkyl phenol, and hydrocarbon resin and their derivatives. We also manage the operation and investment of 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	2019		2018
Item	Amount	Ratio (%)	Amount	Ratio (%)
Alkylation Department	5,909,388	67.17	6,629,123	67.75
Resin Department	2,452,138	27.88	2,806,920	28.68
Agriculture & Others	435,636	4.95	349,342	3.57
Total	8,797,162	100.00	9,785,385	100.00
Unit: NT$ thousand

Our Products

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

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

Alkyl phenol: An upstream material for surfactant and raw material for lubricant additives. It's mainly used in the industrial detergent, antioxidant, coatings, 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 the tack of adhesives.

Other: We also focus on the sale of agro-product and refined sugar.

Market Analysis

Primary sales region of product
Unit: NT$ thousand
| Year | | 2019 | | 2018 | |
| --- | --- | --- | --- | --- | --- |
| Sales Region | | Amount | Ratio (%) | Amount | Ratio (%) |
| Domestic sales | | 2,181,007 | 24.79 | 2,279,311 | 23.29 |
| Export sales | China | 1,560,851 | 17.74 | 2,381,933 | 24.34 |
| | Vietnam | 629,212 | 7.15 | 668,367 | 6.83 |
| | Philippines | 446,176 | 5.07 | 567,365 | 5.80 |
| | Guatemala | 743,304 | 8.45 | 731,908 | 7.48 |
| | Subtotal for others | 3,236,612 | 36.80 | 3,156,501 | 32.26 |
| Net sales | | 8,797,162 | 100.00 | 9,785,385 | 100.00 |

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	2016	%	2017	%	2018	%	2019	%	2020Q3	%
Operating revenue	8,574	100	8,787	100	9,785	100	8,797	100	6,514	100
Operating costs	6,747	79	7,137	81	8,528	87	7,802	89	5,431	83
Gross profit	1,827	21	1,650	19	1,252	13	997	11	1,087	17
Operating expenses	783	9	796	9	759	8	693	8	574	9
Profit from operations	1,044	12	854	10	493	5	304	3	513	8
Non-operating income and expenses	66	1	(34)	-	30	-	(6)	-	21	-
Profit before income tax	1,110	13	820	10	523	5	298	3	534	8
Income tax expense	209	2	158	2	133	1	90	1	140	2
Net profit	901	11	662	8	390	4	208	2	394	6
Earnings per share (NT$)	1.88		1.32		0.77		0.44		0.85
Cash dividends (NT$)	1.60		1.50		0.50		0.50		-

CONSOLIDATED REVENUE IN THE LAST 5 YEARS

Chart

Category	Operating Revenue
105	8574.0
106	8787.0
107	9785.0
108	8797.0
109Q3	6514.0

NET PROFIT IN THE LAST 5 YEARS

Unit: NT$ million

Chart

Category	Net Profit
105	901.0
106	662.0
107	390.0
108	208.0
109Q3	394.0

SIMPLIFIED CONSOLIDATED STATEMENTS OF INCOME

Unit: NT$ million	2020Q3	%	2019Q3	%	Amount of increase (or decrease)	Rate of increase (or decrease) (%
Operating revenue	6,514	100	6,528	100	(14)	-
Operating costs	5,431	83	5,759	88	(328)	(6)
Gross profit	1,087	17	777	12	310	40
Operating expenses	574	9	518	8	56	11
Profit from operations	513	8	259	4	254	98
Non-operating income and expenses	21	-	(7)	-	28	400
Profit before income tax	534	8	252	4	282	112
Income tax expense	140	2	78	1	62	79
Net profit for the period	394	6	174	3	220	126

Financial ratio analysis in the last 5 years

Chart

Category	ROA	ROE
105	8.93	12.49
106	6.42	8.66
107	3.7	5.1
108	2.04	2.82
109Q3	3.68	5.4

Q&A