HAIKWANG — Interim / Quarterly Report 2017

Nov 29, 2017

http://www.haikwang.com.tw/

Disclaimer

Contents

1、An Introduction
to Hai-Kwang

•一、Company Profile

•二、Business philosophy
and Business Objectives

2、Industrial
Overview

•一、 Industry Demand and Supply

•二、C apacity and Competition

•三、M arket share

• •四、 Market Price

3、Operational
Overview

• (1)、Production and Sale Status

• (2)、Financial Status

4、Development
Plan

•Outlook

、 1 An Introduction to Hai-Kwang

、 (1) Company Profile

• Foundation ： Feb,1969.

• ：

• Capital NT1,812,645,220.

• Major business ： Manufacture and sale of Deformed Bar

• Facilities ：

Steel mill ： 59,504 square meters ； annual capacity 65,000 tons. ： ； Rolling mill 49,587 square meters annual capacity 65,000 tons.  Subsidiaries

億昌鋼鐵廠： acquired 64% of shareholding ； 46, 281 square meters ； Plans new fab. 証統環保科技公司： acquired 51% of shareholding ； Plans new fab.  Investee ： Taiwan Steel Union─resource recollection and reutilization ； acquired 9.7% of shareholding

、 (2) Our operation and Business Objectives

﹝ ﹞ █ Quality Pragmatic

Stable ﹝ ﹞ █ Steady and steadfast

• Innovation ﹝ ﹞

• █ Pursuing excellence Service ﹝ Customer satisfaction ﹞

• █

、 2 Industrial Overview

、 (1) Industry Demand and Supply

I nternational market

• Internationally, the world's crude steel capacity of about 2.3 billion tons, but the actual demand of about 1.6 billion tons, product utilization rate of about 70%.

• China's crude steel capacity accounts for more than half of the world, with a capacity of about 1.2 billion tons and an actual output of about 800 million tons. The China steel market is the world's steel market.

• Under the stringent environmental protection policies, China's products are expected to reduce their capacity by 200 million tons from 2017 to 2018 years.The actual supply of about 120 million tons to reduce, promote the gradual rise in international steel prices.

• In the future, continuouswith the China's environmental protection policies.Effectively reduce excess supply, with the emerging economies continue to increase demand, the steel market is gradually recovering.

、 (1) Industry Demand and Supply

Taiwan market

• Taiwan Deformed Bar market status

1.There are three sources: construction project, government public works, Enterprise plant construction. 2.Annual demand from 600~700million tons slipped to 400~500 million tons.

• Taiwan Deformed Bar supply

• Due to the particularity of transportation costs, North and South have their own regional leading company. 2. Annual supply of about 5.8 million tons. 3. In recent years, due to the advantages of electric furnace steel plant has always been the single rolling mill gradually with draw from the market.

、 (1) Industry Demand and Supply

1、 Supply

Unit ： 1 thousand tons

1,100 1,050 1,000 950 900 850 800 750 700 650 600 550 500 450 400 350 300

Deformed Bar Billet

、 (1) Industry Demand and Supply

2、Demand

Unit ： 1 thousand tons

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銷售量 表面消費量

、 (2) Capacity and Competition

Unit ： 1 thousand tons Electric stove Rolling mill Total lant p Number of 21 10 31 Companies Annual 509 547 1,056 capacity 東：新寶元 北：東和、聯成、羅東 、 、 北：東周 金陵 中：豐興、慶欣欣、建順 Companies 長榮 南：海光、威致、協勝發、 、 、 南：永誠 志一 龍慶…… 漢泰、源鋼…

、 (3) Market share- Deformed Bar

		Taiwan	HAI- Kwang	HAI- Kwang	TUNG HO	TUNG HO	FENG HSIN	FENG HSIN	WHI CHIH	WHI CHIH
	Unit： Tons	Shipments	Shipments	market share	Shipments	market share	Shipments	market share	Shipments	market share
	2006	7,190,519	779,523	10.8%	807,154	11.2%	670,929	9.3%	393,032	5.5%
	2007	6,195,902	787,251	12.7%	774,221	12.5%	734,045	11.8%	388,234	6.3%
	2008	5,224,004	718,936	13.8%	754,249	14.4%	657,660	12.6%	479,261	9.2%
	2009	4,311,682	667,099	15.5%	618,073	14.3%	621,660	14.4%	277,669	6.4%
	2010	4,987,902	632,102	12.7%	775,849	15.6%	698,127	14.0%	216,322	4.3%
	2011	5,135,200	683,000	13.3%	825,450	16.1%	736,769	14.3%	267,734	5.2%
	2012	5,719,500	645,600	11.3%	868,330	15.2%	689,959	12.1%	248,818	4.4%
	2013	5,793,800	644,000	11.1%	830,085	14.3%	687,967	11.9%	262,610	4.5%
	2014	6,059,600	604,700	10.0%	929,340	15.3%	724,948	12.0%	196,614	3.2%
	2015	5,654,100	584,700	10.3%	895,014	15.8%	663,703	11.7%	141,892	2.5%
	2016	4,724,600	383,300	8.1%	675,903	14.3%	595,055	12.6%	325,032	6.9%

、 (4) Market Price

Unit ： NT/TONS

、 3 Operational Overview

、 (1) Production and Sale Status

1. Production Status

Monthly For the Nine Months Ended October Output average September 30 2017 2016 2017 2016 2017 2016 Billet 37,963 23,537 29,255 23,581 254,584 209,835 ( tons ) Deformed Bar 35,273 31,795 28,443 29,449 249,153 274,333 (tons)

、 (1) Production and Sale Status

2. Utilization rate 2017 2017 2017 1rd 2rd 3rd Billet 59% 65% 76% Deformed 66% 65% 74% Bar

、 (1) Production and Sale Status

3. Sale Status- Deformed Bar

For the Nine Monthly Months Ended October avera e Se tember 30 g p 2017 2016 2017 2016 2017 2016

Shipments 32,561 30,228 240,340 284,748 26,704 31,639 (tons) Net Revenue ( In Thousands of 508,870 381,133 3,445,322 3,509,728 382,814 389,970 New Taiwan Dollars )

、 (2) Financial Status

、 1 Consolidated Income Statement

(In Thousands of New Taiwan Dollars, Except Par Value)

For the Nine Months Ended September 30,2017 2016 2015 2014 2013
NET REVENUE 3,445,322 4,760,166 8,023,635 10,940,111 11,842,149
GROSS PROFIT 18,708 78,716 (120,936) 20,407 167,906
INCOME FROM OPERATIONS (109,526) (69,599) (273,895) (156,720) (23,685)
NON-OPERATING INCOME AND EXPENSES 11,794 309,862 39,075 (19,935) (45,264)
NET INCOME (117,336) 203,804 (196,586) (147,662) (59,823)
EARNINGS PER SHARE (0.52) 0.65 (1.16) (0.89) (0.38)

、 (2) Financial Status (In Thousands of New Taiwan Dollars)

September 30, 2017 2016 2015 2014 2013
Total current assets 2,669,628 2,304,540 2,238,0083,746,585 3,347,976
Property, plant and equipment 3,333,758 3,420,998 3,527,3213,898,890 3,634,952
Other noncurrent assets 710,483 196,512 297,522 285,876 360,174
Total assets 6,713,869 5,922,050 6,062,8517,931,351 7,343,102
Total current liabilities 2,131,174 1,387,779 2,026,9033,534,114 2,563,943
Total noncurrent liabilities 742,491 762,640 1,095,0961,245,399 1,478,041
Total liabilities 2,873,665 2,150,419 3,121,9994,779,513 4,041,984
Capital stock 1,812,645 1,726,329 1,726,3291,726,329 1,726,329
Capital surplus 268,471 268,297 268,292 268,292 268,292
Retained earnings 490,278 671,508 555,909 768,274 922,782
Others Equity 792,565 620,056 0 0 0
Equity attributable to shareholders of theparent 3,363,959 3,286,190 2,550,5302,762,895 2,917,403
NoncontrollingInterests 476,245 485,441 390,322 388,943 383,715

、 4 Development Plan

Outlook

 Waste Recycling Develop waste as a deformed bar raw materials material to reduce costs and increase processing revenue. 1. Textile Sludge Recycling : Completed finishthe project test will enter the case re-use stage.

1. Incinerator fly Recycling :In early 2018 to enter the demonstration verification program,The feasibility assessment of the Competent Authority will be completed in mid-2018.

 Subsidiaries produces fastener Has completed the design and planning, is entering the stage of construction,It is expected to begin production in 2018 Q4.

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Q&A
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Thanks For Your Attention!