GKB — Investor Presentation 2021

Aug 17, 2021

Grape King Bio (1707 TT) Investor Presentation August 2021

Disclaimer

• The information contained in this confidential document ("Presentation") has been prepared by Grape King Bio (the "Company"). It has not been fully verified and is subject to material updating, revision and further amendment.

• While the information contained herein has been prepared in good faith, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers gives, has given or has authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision or supplement thereof, or of any other written or oral information made or to be made available to any interested party or its advisers (all such information being referred to as "Information") and liability therefore is expressly disclaimed. Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers takes any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of, the accuracy or completeness or injury of the Information or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this Presentation or the information.

• Neither the issue of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with any transaction and the right is reserved by the Company to terminate any discussions or negotiations with any prospective investors. In no circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent.

• This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient should satisfy itself in relation to such matters.

• This Presentation includes certain statements that may be deemed “forward-looking statements”. All statements in this discussion, other than statements of historical facts, that address future activities and events or developments that the Company expects, are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, continued availability of capital and financing, general economic, market or business conditions and other unforeseen events. Prospective Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in forward-looking statements.

Company Background

Investment Highlights

We are industry leader

• We are a leading health food manufacturer in Greater China, specializing in probiotics, mushroom and other herbal-based supplements. We command No. 1 position in probiotics and medicinal mushrooms supplements with 31% and 45% market share, respectively in 2019.

• We operate the second largest direct-selling company – Pro-Partner in Taiwan (2019 market share: 8.3%).

• We are one of the few health food companies in Taiwan that possess the capability to produce our own raw materials, manufacture products and distribute through own brands and channels.

Strong R&D capabilities

• Our expertise in raw materials allow us to develop health supplements serving different benefits. Therefore, many of our products are TFDA approved for different health benefits.

• We are also a frequent winner of major international conventions/competitions in respect to new product design/concept.

Solid growth with sustainable payout ratio

• We have delivered a solid earnings during 2008-2020 (CAGR of 19%/average ROE 25%).

• We have maintained more than 60% dividend payout in the past five years.

• On the back of a growing health and wellness market in Asia, we strive to deliver double digit topline growth through different growth catalysts from our individual business unit.

Company Milestones

2019

2014 • Grape King Bio- 1991 2009 • Dr. Andrew Tseng 2015 Tech Research succeeded his Institute was Bio Engineering Center was established. ranked No.6 among Pro-Partner’s 2013 father to become Grape King is selected as 2017 established. 2021 Taiwan direct Pro-Partner’s the CEO and Forbes “Asia's • Grape King Pro-Partner was 1982 1997 selling companies. ranked No.3 Chairman. 200 Best Under A Grape King’s first tourist formed a JV with ranked No. 41 among Taiwan • Grape King is Billion.” for two All Cosmos Bioamong all Global Listed on Taiwan Shanghai Grape direct selling selected as Forbes consecutive center Tech (4148 TT) Direct Selling Stock Exchange King was companies. “Asia's 200 Best years. opened in to expand into companies based established. Under A Billion.” July. Malaysia market. on 2020 revenue. 1969 Grape King was founded 2020 2021 2016 Uni-President 1993 Grape King 2012 Grape King Bioformed a (1216 TT) Pro-Partner was Pro-Partner’s ranked Tech Headquarter strategic alliance became a established. 2008 No.4 among Taiwan 2014 started operation with TST – a and strategic shareholder direct selling in September. leading socialPro-Partner’s ranked companies. Pro-Partner’s ranked 2018 selling company partner No.2 among Taiwan in China. through a No.8 among Taiwan direct selling companies. Taipei Grape King private direct selling companies. placement. Sales headquarter was established.

Company Overview : Three core business units

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2020 REVENUE
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1. Grape King Taiwan (Parent Co) Taiwan own brand & global OEM & ODM

Locus of all key ingredient design, formulation, and production for the whole Group.

2. Pro-Partner (60%-own) Taiwan direct selling distribution A differentiated distribution channel with products sold through direct-selling by members under the Pro-Partner brand.

3. Grape King Shanghai (100%-own) China OEM & ODM Our manufacturing in China that focuses on OEM and ODM for domestic and global health food companies.

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9% 7%
NT$
9.2 bn
84%
2020 NET PROFIT
7%
19%
NT$
1.3 bn
74%
Grape King Taiwan Pro-Partner Grape King Shanghai
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Complete Product Range

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Energy Health Children
drink maintenance healthcare
Feminine Chinese
beauty herbal
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Competitive Strengths - Strong Products Capabilities

We acquired more than 186 patents and published over 84 research papers. Also, we acquired more than 10 TFDA Health Food certifications on our products.

Brain

Lion’s Mane Mushroom Powder

Feminine beauty Snow Brightening Essential Drink

Blood sugar Tang Li Jia

Liver protection ANTRODIA KING

Eye protection

Yo-Shi Premium Lutein

Respiratory system Bai Ke Sz

Immune system

Ganoderma King 、 LING ZHI ANTIALLERGY 、 995 Bio-tech Nourishment 、 Antrodia Bio Aid 、 Pro-Partner Meal Supplement

With TFDA Health Food certifications

Gastrointestinal health

Stomach Wei-Jie

LGG PROBIOTICS 、 PROBIOTICS KING 、 OLIGO PROBIOTICS 、 Super 13 Probiotics & Prebiotics 、 Super 13 Probiotics & Prebiotics (N)

Energy

ComeBest Series 、 Golden ComeBest 、 PowerBOMB

Menopause symptoms

Xīn Yue Kang

Grape King Biotech Research Institute Product Innovation backed by Science

2017~2020 ： 8 countries, 125 awards

State-of-the-Art Production Facilities Competitive Strengths -

1. Grape King Taiwan

Taiwan - Grape King Brand Sales Channels

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Business Line Own Brand Products Raw materials & global ODM
Health / Functional Mushroom mycelium/ ODM
Products Bio Products
Beverages Probiotics/Enzymes Products
Physical Virtual Customers
Channels/
Customers
、 、 、
Traditional Pharmacy TV Shopping Channel Direct selling companies
Modern Retail、Cosmed、 Online Shopping(e.g. momo)、 Multi-level marketing companies、
Watsons、Post Office. etc Grape King e-Shop Health Food companies、
Pharmaceutical companies
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Our best seller Slim Turmeric Complex

22% of 1H20 revenue

Metabolism promotion and digestion/defecation improvement

Our 2[nd] seller ComeBest Series 17% of 1H revenue

Energy drinks that restore energy and provides necessary vitamins

Improves digestion and defecation

Liver protection and hangover prevention and alleviationLiver protection and hangover prevention and alleviation

2. Pro-Partner

Pro-Partner Overview

4 key numbers of Pro-Partner

• Largest local direct selling company in Taiwan based on revenue.

• 1 •

• One of the fastest growing direct selling companies in Taiwan (15% sales CAGR from 2008 to 2020)

• Second largest overall direct selling company in

• 2 Taiwan. (2019 market share: 8.3%)

• Smallest product range – 35 Health and Beauty

• 35 products among the top 5

• No. 41 in the worldwide direct selling company

• 41 rankings for 2021 (Source: 2021 DSN Global 100- based on 2020 revenues)

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Growing sales and members#
220,000
Members# (+2% YoY)
210,900
157,262
95,802
46,689
7,719 m
7,429 m
6,708 m
Sales (NT$)
3,690 m
1,960 m
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Our best seller – Probiotics & Prebiotics 18% of 1H21 revenue

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Promote healthy digestive system and suppress allergy
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Our second best seller– Bio Aid 995 16% of 1H21 revenue

Post operative convalescence

Bai Yi Jie (toothpaste)

• Grape King’s Lactobacillus pentosus GK4

• → Inhibit 13 kinds of oral bacteria & Prevent cavities

• Xylitol

Hi Spray (oral spray)

• Sorbitol

• Grape King’s Lactobacillus pentosus GK4

→ Anti-plaque

• Thyme

→ Inhibit 13 kinds of oral bacteria & Prevent cavities

→ Freshen breath

• Mint

→ Sooth teeth

→ Anti-plaque

• Sodium fluoride

• → Prevent enamel erosion

• Mint

→ Sooth teeth

19

How is Pro-Partner different from other direct selling companies?

85% of Pro-Partner’s sales are contributed by old members

Executive distributor growth inline with membership growth

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Pro-Partner sales contribution(2020) The growth rate of our executive distributors are similar to the growth rate
Sales from of our members in the past years. This implies that our members
new proportionally promoted each year based on their contribution to the group.
members However, due to Covid-19, our membership growth paused in 2020 as most
(less than 1 of the training activities were restricted, nonetheless, our executive
year), 15.0% distributors continue to grow along with their contribution.
Sales from
existing
Pro-Partner membership growth rate
members
(more than 1 30%
Members Executive Distributors
year), 85.0%
25%
Our member retention rate is remarkably high number among peers
20%
Members retention rate 15%
10%
5%
More than
0%
75%
-5% 2012 2013 2014 2015 2016 2017 2018 2019 2020
2015 2016 2017 2018 2019 2020
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The growth rate of our executive distributors are similar to the growth rate of our members in the past years. This implies that our members are proportionally promoted each year based on their contribution to the group. However, due to Covid-19, our membership growth paused in 2020 as most of the training activities were restricted, nonetheless, our executive distributors continue to grow along with their contribution.

How is Pro-Partner different from other direct selling companies?

Products purchase Products’ uniqueness Support Training

Compensation

• No minimum purchase requirement.

• No inventory pressure. (Members buy products directly from the company)

• Higher entry barrier  Managed by Grape  All the trainings and  Transparent for Products (bioKing, a well-respected venues are held by compensation researched and health food company the company, so we structure. engineered). in Taiwan, so we can can have consistent  All purchases can be

• Symbol of national offer dedicated training quality. accumulated. certifications. customer service and  All the trainings are  All compensation are

• Products are mostly support. paid to sales free to members.

• manufactured incontribution and house rather than directly to the outsourced. members by the

• All compensation are paid to sales contribution and directly to the members by the company.

3. Grape King Shanghai

Grape King Shanghai Overview

• Established in 1993, Grape King Shanghai was initially targeted as the production base for Grape King’s own brand products in China.

• A change in strategy steered by the new management to an OEM/ODM model has reversed several years of losses and turned the operation profitable.

• We see tremendous growth potential for Grape King Shanghai as it continues to acquire more ODM clients locally in China.

Grape King Shanghai operating profit (Rmb m)

Product series

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0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
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80

60

40

20

-20

General foods PKL Health Beauty Energy supplements drinks supplements drinks drink

• -40

*In 2019, the overalldemandwas impactedby Chinagovernment’s tightening on direct-selling and healthcare industry & in 2020 the China consumption recovery has been softer-than-expected under the pandemic.

Our Goals and Strategies

To become a global leading health and wellness company that promotes a healthier living and a more sustainable future

Our business tied to 5 megatrends; amplified by Covid

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Urbanization and Increased Growing Digitalization Sustainability
Globalization Awareness of Ageing Society
Self-care
Hygiene is a basic need Rising conscious of a Low birth rate and Digital is reshaping Sustainability is a
and also the foundation
healthier lifestyle and a growing ageing consumer behavior growing business
of health of all mankind
personal well-being population and shopping habits priority, and even
and societies
more so after Covid
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We have identified our R&D focus fitting in the megatrends

Probiotics

Medicinal Mushrooms

Personal Hygiene

Respiratory Health/Anti-Bacterial

Lower risks factor (Antrodia) Memory Improvement (Lionsmane)

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Mood Improvement
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Weight Management

Eye Health (Cordyceps Sobolifera) Sleeping Quality (Armillaria mellea)

Consumers’ Experience is the Core of Everything We Do

Our Mission

“Cultivate and manufacture the best health-food supplements that are affordable to everyone. Think Healthy, Think Grape King”

How? Offer scientifically-proven specialty products with competitive pricing

Create lifestyle branding and storytelling based on personal experiences

Leverage websites, e-commerce and digital marketing to drive customer excitement and loyalty

Deliver customized experiences to encourage trial and repeat purchases

83% of Pro-Partner orders were placed online in 2Q21 vs. 9% in 2018

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44% of Grape King’s marketing 30
spend are in Digital in 2020
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Grape King Antrodia King (liver protection) Stress causes high blood pressure but also harms liver

As well as the “go-to” brand for Probiotics

Grape King Probiotics Probiotics like a golden warrior who protects your digestion

Leading to strong growth from our virtual channels

Grape King Taiwan’s revenue from virtual channels grew by 33% in 1Q21 and accounted 45% of total revenue.

Our Growth Strategies for Three Key Businesses

Key Objectives Levers

Grape King Taiwan

• Market share gain

• Expanding through new adjacencies

• Accelerate overseas ODM & raw materials businesses

• Market share gain through products upgrade and deeper channels penetration

• Business expansion through penetrating new product categories

• Continue to promote Grape King’s raw material and R&D capabilities in probiotics and medicinal mushrooms.

Pro-Partner

• Unlock growth ceiling

• Improving demand forecast, sales visibility, and products time to market

• Accelerate new product launches from only 1-2 new products to 3-5 products per year.

• Focus on growing younger members.

• Duplicate Taiwan success in new geographies

Sustainable

topline and bottomline growth

Grape King Shanghai

• Clients diversification

• Prepping for the probiotics boom

• Cultivate 10 new customers with the potential of each contributing Rmb 10mn sales per annum

• Develop non-direct/WeChat customers

• Capture more business opportunities through local strategic partnerships and alliances

Growing on Giant’s Shoulder

Channels & Distribution Collaboration

• Physical Channels：Taiwan~6,000 stores/ China~ 400 stores / Southeast Asia ~ 3,000 stores

• (including convenience stores, pharmacies, department stores)

• Virtual Channels

R&D Collaboration

Production Resource Collaboration

• Taiwan/overseas mutual OEM production

• New adjacencies (such as F&B) expansion

• R&D collaboration, joint product development

• Products agency

• Food safety enhancement

Our Joint Products with UPEC have recently been launched

Our Sustainability Progress

PURPOSE-LED BRAND 72%

CLEANER PLANET

318 kg

of our revenues are aligned with United Nation’s (UN) Sustainable Development Goals (SDGs)

of CO2e of carbon emission reduced in 2020

100%

Of renewable energy usage by 2035 (15% by 2030)

Adopted SASB indicators for ESG communications with investors

Top 5% among all TWSE companies in 2020 Corporate Governance Assessment

Third-Party ESG Credentials

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2020
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FAIRER SOCIETY

STRONGER STEWARDSHIP

815 hrs

33%

Of Board independence is expected in the coming Board election

service hours were invested in community investment projects in 2020 NT$1.6 mn

42%

of female board members expected in the coming Board election, higher than TWSE average of 13.4%

invested in employee health management and health promotion

Top 35% of all global companies, and the top scoring supplier of our ODM client

ESG Risk Rating of 20.8, ranked no. 5 in Global Personal Product companies

Our Capacity and Expansion Plan

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Grape King Specialist Fermentation Grape King Shanghai Grape King Bio-Tech Grape King Bio-Tech
& Manufacturing Site Headquarters Headquarter Research Institute
Production Monthly Capacity Production Monthly Capacity Production Monthly Capacity Start Production Capacity
Line 2019 2020 Line 2019 2020 Line 2019 2020 Line 2019 2020
Capsules 7 M capsules 7 M capsules Liquids(Glass) 18 M bottles 18 M bottles Capsules 13M 13M capsules -
Fine Granule 2 M pack 2 M pack Liquids 3 M packs 3 M packs capsules Lactobacilli 40 tons 40 tons
Liquids-Big CC 4.2 M bottles 4.2 M bottles Powder(Retort Pouch) 15 M pack 15 M pack Fine Granule 15M pack 15M pack -
Liquids-Small CC 1 M bottles 1 M bottles
PKL 1.4 M bottles 1.4 M bottles Capsules 7 M capsules 7 M capsules Powder 1.8M packs 1.8M packs - Mushroom 60 tons 60 tons
PIC/S 0.8 M packs 0.8 M packs Troches 63 M capsules 63 M capsules Jelly foil - 7.2M packs 3Q20
Production Capacity Monthly capacity =30,000 packs/hr x 12 hrs/day x 20 working days/month
Line 2019 2020
Lactobacilli 25 tons 25 tons
Mushroom 161.5 tons 161.5 tons
PKL Liquids 80 tons 80 tons
Our Specialist Fermentation & Manufacturing Site (Zhongli plant) will relocated to Pinzhen Industrial Zone due to city development plan, expansion for PKL and different forms production line. The new plant
construction is schedule to begin in the second half of 2020 with production expected to start in 2023. The relocation won’t impact our operating and we expect that once the new facility is fully completed and 100%
utilized, it is able to contribute additional NT$10bn in revenue for Grape King.
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Financial Performance

Financial Highlights

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Historical revenue vs. operating profit
10,000 2,500
8,000 2,000
6,000 1,500
4,000 1,000
2,000 500
0 -
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Revenue (NT$m) LHS Operating Profit (NT$m)
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Historical EPS vs. ROCE
12 35%
8
20%
4
0 5%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EPS (NT$) LHS ROCE
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Historical gross margin vs. operating margin

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90% 30%
80% 25%
70% 20%
60% 15%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross margin (LHS) Operating margin
Note: The drop in gross margin is due to higher contribution from Shanghai Grape King
with lower gross margin from ODM, but operating margin is around the same.
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Historical cash dividend payout
8 90%
6
80%
4
70%
2
0 60%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Cash dividend per share (NT$) LHS Dividend payout
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Revenue Breakdown (2Q21 v.s. 2Q20)

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2Q20 REVENUE
12% 7%
NT$
2.2 bn
81%
2Q20 NET PROFIT
15% 18%
NT$
285 mn
67%
Grape King Taiwan Pro-Partner Grape King Shanghai
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2Q21 REVENUE
+11.4% YoY 1.Grape King Taiwan
NT$ 223mn (+47% YoY)
12% 9%
Thanks to strong sales of our own brand products
as well as higher ODM revenues.
NT$
2.5 bn
2.Pro-Partner
79% NT$ 1,966mn (+8% YoY)
Despite worsening pandemic in Taiwan, Pro-
Partner was able to transition its members
2Q21 NET PROFIT
+14.4% YoY trainings and sales activities from offline to
10% online.
23%
3.Grape King Shanghai
NT$
326 mn NT$ 302mn (+15% YoY)
Thanks to improved orders from our major
customers as China consumption continues to
67%
recover.
Grape King Taiwan Pro-Partner Grape King Shanghai
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Thanks to strong sales of our own brand products as well as higher ODM revenues.

Despite worsening pandemic in Taiwan, ProPartner was able to transition its members trainings and sales activities from offline to online.

3.Grape King Shanghai NT$ 302mn (+15% YoY)

Thanks to improved orders from our major customers as China consumption continues to recover.

Revenue Breakdown (1H21 v.s. 1H20)

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1H20 REVENUE
9% 7%
NT$
4.3 bn
84%
1H20 NET PROFIT
9%
19%
NT$
548 mn
72%
Grape King Taiwan Pro-Partner Grape King Shanghai
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1H21 REVENUE
+5.1% YoY
1.Grape King Taiwan
10% 10% NT$ 449mn (+46% YoY)
Thanks to strong sales of our own brand products
NT$ as well as higher ODM revenues.
4.5 bn
2.Pro-Partner
80%
NT$ 3,563mn (flat YoY)
Pro-Partner’s 2Q21 growth was offset by a
1H21 NET PROFIT
lower 1Q21 due to extraordinary high base in
+2.0% YoY 1Q20.
9%
20%
3.Grape King Shanghai
NT$
NT$ 464mn (+21% YoY)
558 mn
China demand was severely impacted in
1H20 while the recovery was softer-than-
71% expected in 2H20
Grape King Taiwan Pro-Partner Grape King Shanghai
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Company Overview : Three core business units

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Revenue breakdown
(NT$ mn)
100% 2% 7% 10% 15% 10% 9% 10%
80%

60%
93% 89% 86% 84% 84% 80%
81%
40%
20%
0% 5% 5% 4% 4% 6% 7% 10%
2015 2016 2017 2018 2019 2020 1H21
Grape King Taiwan Pro-Partner Grape King Shanghai
(NT$ mn) (NT$ mn)


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*Accounting principle changed to IFRS 15 from 2018, if excluding the impact from IFRS 15, Grape King Taiwan, Pro-Partner and Grape King Shanghai’s revenue growth YoY were 11%, 3% and 51% in 2018.

Five-Year Income Statement

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YoY (%)
(NT$ m) 2016 2017 2018 2019 2020 1H21
2016 2017 2018 2019 2020 1H21
Revenue 9,185 9,388 9,183 9,239 9,168 4,476 26.7 2.2 (2.2) 0.6 (0.8) 5.1
Gross Profit 7,919 7,865 7,329 7,566 7,537 3,550 24.0 (0.7) (6.8) 3.2 (0.4) 1.6
Operating Expenses (5,685) (5,610) (4,979) (5,231) (5,232) (2,584) 24.3 (1.3) (11.2) 5.0 0.0 2.7
Operating Profit 2,234 2,254 2,350 2,335 2,305 966 23.3 0.9 4.2 (0.6) (1.3) (1.2)
Non Operating Income/(Loss) 78 151 77 105 73 41 11.8 92.6 (49.2) 36.8 (30.2) 12.9
Pretax Income 2,312 2,405 2,427 2,440 2,378 1,007 22.8 4.0 0.9 0.6 (2.5) (0.7)
Tax Expenses (426) (471) (537) (502) (483) (186) 26.8 10.6 14.0 (6.5) (3.7) (9.6)
Minority interest (590) (583) (595) (630) (623) (263) 19.2 (1.3) 2.1 5.9 (1.1) 0.5
Net Income to Parent 1,297 1,352 1,295 1,309 1,272 558 23.3 4.3 (4.2) 1.1 (2.8) 2.0
Basic EPS (NT$) 9.82 10.03 9.57 9.63 9.34 3.80 21.7 2.1 (4.6) 0.6 (3.0) (5.5)
Key Financial Ratios (%)
Gross Margin 86.2 83.8 79.8 81.9 82.2 79.3
Operating Expense Ratio 61.9 59.8 54.2 56.6 57.1 57.7
Operating Margin 24.3 24.0 25.6 25.3 25.1 21.6
Effect Tax Rate 18.4 19.6 22.1 20.6 20.3 18.5
Net Margin 14.1 14.4 14.1 14.2 13.9 12.5
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Five-Year Balance Sheet

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YoY (%)
(NT$ m) 2016 2017 2018 2019 2020 1H21
2016 2017 2018 2019 2020 1H21
Total Assets 9,550 9,892 10,648 11,359 13,104 13,556 10.9 3.6 7.6 6.7 15.4 15.5
Cash 1,899 1,920 2,050 2,146 2,927 2,131 32.6 1.1 6.8 4.7 36.4 50.1
AR & NR 204 160 171 202 202 295 111.6 (21.5) 6.8 18.0 (0.2) 17.2
Inventories 435 492 563 546 689 751 21.0 13.1 14.4 (2.9) 26.2 13.3
Fixed Assets 6,084 6,355 5,927 6,454 7,308 7,190 8.7 4.5 (6.7) 8.9 13.2 (2.5)
Total Liabilities 3,767 3,564 3,715 3,888 5,126 3,315 (14.3) (5.4) 4.2 4.7 31.8 (32.7)
AP & NP 198 323 262 223 255 353 29.6 63.2 (18.9) (15.1) 14.7 31.5
Total Borrowing 1,206 1,022 1,119 1,177 1,921 213 (50.6) (15.2) 9.5 5.2 63.3 (82.2)
Total Equity 5,783 6,328 6,933 7,471 7,978 10,241 37.1 9.4 9.6 7.8 6.8 50.5
Key Financial Ratios (%)
A/R Turnover Days 5.9 7.0 6.5 7.3 7.9 11.0
Inventory Turnover Days 113.0 109.5 102.4 119.3 136.4 137.4
A/P Turnover Days 49.9 61.6 56.8 52.2 52.7 60.4
Cash Conversion Days 69.0 54.9 52.1 74.4 91.6 88.0
ROE (%) 31.3 27.0 23.7 22.0 19.9 17.1
ROA (%) 14.3 13.9 12.6 11.9 10.4 10.1
Net debt (cash)/Equity % (12.0) (14.2) (13.4) (13.0) (12.6) (18.7)
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Dividend Payout and Capex

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(NT$ m) 2015 2016 2017 2018 2019 2020
Net profit 1,052 1,297 1,352 1,295 1,309 1,272
Cash dividend 730 862 903 883 884 948
DPS (NT$) 5.6 6.4 6.7 6.5 6.5 6.4
Payout ratio 69.4% 65.2% 66.6% 67.9% 67.4% 68.5%
Cash yield 2.6% 3.2% 2.9% 3.0% 3.3% 3.8%
Capex 2,635 736 772 1,116 630 1,214
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Notes:

1. The big spike in capex in 2015-2017 is largely due to the investment of 1) Pro-Partner’s new headquarter building, 2) the new factory and tourist factory in Pingzhen (Grape King Headquarter), 3) the new factory in Longtan (Grape King Bio-Tech Research Institute), and 4) additional production lines for Grape King Shanghai.

2. The capex for 2020 is mainly used for land acquisition for our Zhongli plant relocation and for new production facilities.

3. 2020 cash yield is calculated based on Grape King’s 2021/6/2 closing share.

Appendix: Industry Trends

Taiwan health food industry

Taiwan’s health food industry is growing

We keep gaining market share in Taiwan

Taiwan health food industry continues to be driven by consumers’ increasing interest in healthier lifestyles as a cost-effective way to combat ageing and prevent modern illness.

We have been gaining market share in Taiwan’s health food industry and we are also the industry leader in both mushroom-based supplements and probiotics.

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(NT$ bn) Taiwan health food industry (NT$ bn)
180
160 CAGR 7.6%
140 (2003-2019)
120
100
80
60
40
20
0
Source: AC Nielsen
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
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Grape King's market share in Taiwan health food industry

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2013 2019
Taiwan health food 4.90% 5.60%
Mushroom 32.06% 44.93%
Probiotics 13.89% 30.64%
Energy drink 12.23% 11.22%
Source: AC Nielsen, Company data
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Taiwan direct selling industry

Health food takes up ~60% of direct selling industry in Taiwan

Taiwan direct selling industry is strictly regulated with entry barrier

According to Taiwan FTC, health food takes up 60% of the direct selling market share, which shows that direct selling is an important Source: Taiwan FTC channel for health food products.

Sales incentive system

1) Reasonable product price (mark-up on pricing); 2) Reasonable compensation structure (distribution of profit)

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(NT$ bn) Taiwan Direct Selling Market Value Breakdown
90
80
70
60
50
40
30
20
10
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Health food Diet food Beauty
Detergent Health apparatus Water purifer
Apparel Funeral contract Others
2010-2018 Taiwan market Pro-Partner
V.S.
CAGR 4 % 14 %
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Member‘s system

According to Taiwan’s regulation, it is illegal to produce earnings by simply introducing new participants instead of engaging in promotion & selling goods or services. Companies in violation may be subject to imprisonment and/or fines.

Pro-Partner is the only domestic direct selling company in Top 10

Pro-Partner has highest sales per product among top 3 players

Top 10 players have high market concentration

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Sales contribution
Rank & Market Member
shares (%) s ('000) Per member Per product
(NT$) (NT$m)
TOP10
Pro-Partner 2 (9.8%) 200 43,300 288.7
55% Nu Skin 3 (5.5%) 120 40,000 21.9
Amway 1 (13.4%) 350 33,857 41.0
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China health food industry

China’s health food industry grew 21% CAGR between 2011-2018

China direct selling has significant growth from 2011-2018

China’s health food industry mainly driven by economic growth, disposable income, and rising health awareness. The industry has been growing for the past 7 years.

Direct selling has become an important distribution channel as sales from direct selling has grown from 26% in 2011 to 47% in 2018.

Health Food Industry in China

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Direct Selling as % of Total China Consumer Health
Market size (Rmb bn) YoY Market
400 50% 50%
40% 45%
300
30% 40%
200
20% 35%
100
10% 30%
0 0% 25%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2011 2012 2013 2014 2015 2016 2017 2018
(E)
Source: Forward Business and Intelligence Source: Euromonitor
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Despite the latest Administrative Measure of Health Food Registration and Filing having streamlined the certification process for vitamins and minerals, other products still need to go through the “Blue Hat” certification process by the CFDA.

China health food industry

Global probiotics market is still growing

According to Statista, global probiotics market has reached US$40 bn with Asia Pacific region being the largest of all. The market is still increasing and is estimated to grow 7.0% CAGR between 2016-2022.

Grape King is the 7[th] largest distributor globally

We are ranked as the 7[th] largest probiotics supplement company globally, this also makes us the largest player in Greater China. Grape King is known for its capability in developing different strains of probiotics that target different health benefits.

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Global Probiotics Market Size
Rank Company Brand
CAGR 7.0%
Others22% 1 Align
Asia $US
Western Pacific44% $US 64 bn 2 Enterogermina
Europe16% North $US 56 bn 3 Shin Biofermin S
America
18% $US 49 bn
40 bn
7 Probiotics & Prebiotics 、
Super 13 Probiotics & Prebiotics
Source: Statista 2016 2018 (E) 2020 (E) 2022 (E)
Notes: Global probiotics market includes probiotics supplement, probiotic
yoghurt, and sour milk products. Source: Euromonitor
…..
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China probiotics market

China probiotics market is expected to reach Rmb 85 bn in 2020

China’s probiotic consumption remains at a relatively early stage and the supply is mostly dependent on import. According to ASKCI, China probiotics market is forecasted to reach RMB 85 bn dollars by 2020.

Taiwan and China probiotic supplement market are expected

to deliver robust growth

According to Euromonitor, both Taiwan and China’s probiotic supplement market are expected to deliver 27% and 23% of growth in 2016-2021, respectively.

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China Probiotics Market (2014-2020) Probiotics Supplements Retail Value (2016-2021)
(Rmb bn) (USD m) Retail value 2016 % expected growth 2016/2021
100 2500 57% 60%
85
46%
50%
80 2000
40%
60 1500
27%
42 25% 24% 30%
40 1000 16% [19%23%]
13% 14% 20%
8%
20 500 6% 5% 10%
0 0 0%
2014 2015 2016 2017 2018(E) 2019(E) 2020(E)
Source:ASKCI Notes: China probiotics market includes probiotics supplement, probiotic
yoghurt, and sour milk products.
Source: Euromonitor
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Thank You

For more information, please visit our company website at www.grapeking.com.tw

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