Hiroca — Investor Presentation 2013

Mar 28, 2013

Hiroca Holdings Ltd. (1338) 廣華控股有限公司

Presented by Yu, Che-Ming

==> picture [79 x 49] intentionally omitted <==

I. General Introduction

==> picture [79 x 49] intentionally omitted <==

General Introduction

• Established date: Dec. 8, 2009

(Dongguan Hirosawa Automotive Trim Co., Ltd. Established in Dec. 20, 2002)

• Chairman of the Board : Mr. Yu, Che-Ming

• ：

• Paid-in Capital NTD710,000,000

• ：

• Headquarter Dongguan City, Guangdong Province, China

• ：

• Main Operation Sites

• Dongguan-Hirosawa Automotive Trim Co., Ltd. (2002 年 )

• Wuhan-Wuhan Hiroyoshi Automotive Trim Co., Ltd. (2010 年 )

• ： Business Scope OEM manufacturer of automotive plastic trim parts, mold design and manufacturing, trading, etc.

• Main Customers ： Tier 1 suppliers of three top Japanese car

==> picture [79 x 49] intentionally omitted <==

- General Introduction Milestones

• 2002—Dongguan Hirosawa Automotive Trim Co., Ltd. established Cubic Printing Technology licensed by Taica Corporation

• Awarded Excellent Supplier of MAZAD Hianan and GSK Guangzhou

• 2003—Development for Safety Parts-DAB & PAB

• 2004— Awarded ISO/TS16949 and Lofty Success Group Ltd. established

• 2007—Awarded FORD’s MMOG and Q1 Certification

• 2009—Hiroca Holdings Ltd. established (for the purpose of listing)

• Joint venture with Taica Corporation to setup Dongguan Taica Hirosawa Technologies Co., Ltd. For e-Cubic Printing Technology

==> picture [79 x 49] intentionally omitted <==

General Introduction-Milestones

 2010—License of Cubic Printing Technology extended by Taica Corporation to 2020

Wuhan Hiroyoshi Automotive Trim Co., Ltd. established Stocks registered on the Emerging Stock Market of Taiwan on Oct. 13, 2012

• 2011—Joint venture with Tsukada Riken Industry Co., Ltd. to setup Jiangmen Tsukada Riken Automotive Trim Co., Ltd. for plastic plating parts

Planned a join venture with Mono Group to setup Changshu Mono Hirosawa Automotive Trim Co., Ltd., for real wood parts  2012—Dongguan Guangneng Automotive Trim Co., Ltd. and Hunan Hiroyoshi Automotive Trim co., Ltd. Established

==> picture [79 x 49] intentionally omitted <==

General Introduction- Organization Chart

	General Introd	General Introd	**uction- **	**uction- **	Organization Chart
			Hiroca Holdings (Cayman)
				100%
			Lofty Success
			(Samoa)
				100%
			Hiroca Investment (Samoa)
				35%
			Taica Hirosawa (Dongguan e-Cubic)

==> picture [79 x 49] intentionally omitted <==

II. Operations-Products and Production

==> picture [79 x 49] intentionally omitted <==

Operations-Our Products I

==> picture [721 x 368] intentionally omitted <==

----- Start of picture text -----

Nissan Teana
----- End of picture text -----

==> picture [79 x 49] intentionally omitted <==

Operations-Our Products(II)

==> picture [721 x 368] intentionally omitted <==

----- Start of picture text -----

Toyota Camry
----- End of picture text -----

==> picture [78 x 49] intentionally omitted <==

III Operations-Our Products

==> picture [721 x 368] intentionally omitted <==

----- Start of picture text -----

Honda Accord
----- End of picture text -----

==> picture [79 x 49] intentionally omitted <==

Operations-Production I

 Plastic Injection

==> picture [300 x 195] intentionally omitted <==

126 sets of injection machines from biggest injection of 2200T press and smallest with 60T press.

Including :

 5 sets of double color

• 3 sets of IMD

 1 set of gas-injection

==> picture [79 x 49] intentionally omitted <==

Operations-Production II

 Cubic Printing-1

==> picture [224 x 103] intentionally omitted <==

==> picture [225 x 111] intentionally omitted <==

==> picture [225 x 105] intentionally omitted <==

Film Printing

• The pattern or design is gravureprinted on a water soluble film.

Activation

• The film is specially treated to activated or “re-wet” the inks.

Transfer

• The film is floated out onto the water and the product (material) to be decorated is pressed down into the film

==> picture [100 x 71] intentionally omitted <==

==> picture [101 x 72] intentionally omitted <==

==> picture [100 x 59] intentionally omitted <==

==> picture [79 x 49] intentionally omitted <==

Operations-Production III

 Cubic Printing-2

==> picture [225 x 115] intentionally omitted <==

==> picture [225 x 117] intentionally omitted <==

==> picture [225 x 78] intentionally omitted <==

Film Removal & Washing

Having fulfilled its role as the medium for the print transfer, the film is washed away.

Drying

Water which has adhered to the product (material) during transfer is dried off.

Top Coating

• A transparent top coat is applied

==> picture [100 x 76] intentionally omitted <==

==> picture [100 x 76] intentionally omitted <==

==> picture [100 x 45] intentionally omitted <==

==> picture [79 x 49] intentionally omitted <==

Consolidated Financial Statements

Item	2009		2010		2011		2012(Jan-Sept)
	Amount	%	Amount	%	Amount	%	Amount	%
Sales	2,905,456	100%	3,547,157	100%	4,666,981	100%	4,095,851	100%
Cost of Goods Sold	1,980,580	68%	2,414,309	68%	3,405,589	73%	3,088,045	75%
Gross Profit	924,876	32%	1,132,848	32%	1,261,392	27%	1,007,806	25%
Operating Expenses	351,765	12%	415,180	12%	531,901	12%	631,948	15%
Operating Income	573,111	20%	717,668	20%	729,491	15%	375,858	9%
Non-Operating Income	48,841	2%	39,360	1%	69,952	1%	49,475	1%
Non-Operating Expenses	33,904	1%	62,982	2%	28,928	-	18,674	0%
Pre-Tax Income	588,048	20%	694,046	19%	770,515	16%	406,659	10%
Income Tax Expenses	100,214	3%	158,073	4%	189,218	4%	99,301	2%

==> picture [79 x 49] intentionally omitted <==

Key Financial Ratios

			2009	2010	2011	2012(Jan-Sept)
		Gross margin ratio	32%	32%	27%	25%
	Return on invenstment	Operating income ratio	20%	20%	15.0%	10%
	analysis	Pre-tax income ratio	20%	19%	16.0%	10%
		Net income ratio	17%	15%	12.0%	8%
		Current ratio	179%	245%	194%	157%
	Liquisity	Quick ratio	149%	207%	167%	126%
	analysis	Debt ratio	33%	29%	34%	40%
		Interest coverage ratio	93	72	144.73	43.17
	Operating	Average collection turnover (times)	3.44	3.79	3.79	3.6
	performance	Average inventory turnover (times)	10.39	7.76	8.19	7.43
	analysis	Average paybles turnover (times)	4 5	5 1	4 71	3 97

==> picture [79 x 49] intentionally omitted <==

Sales Breakdown

Product Item		2009		2010		2011		2012(Jan-Sept)
		Amount	%	Amount	%	Amount	%	Amount	%
Auto interior parts	Plastic parts	733,420	25.24	1,021,925	28.81	1,576,331	33.78	1,391,770	33.98
	Painted parts	858,841	29.56	1,249,448	35.22	1,359,303	29.13	1,176,169	28.71
	Cubic printing	711,484	24.49	917,991	25.88	1,076,408	23.06	1,039,043	25.37
Mold		228,053	7.85	212,281	5.99	342,204	7.33	278,126	6.79
Others		373,658	12.86	145,512	4.10	312,735	6.70	210,743	5.15

==> picture [79 x 49] intentionally omitted <==

III. Brief Introduction of China Automobile Industry

==> picture [79 x 49] intentionally omitted <==

China Automobile Market Introduction

==> picture [721 x 368] intentionally omitted <==

----- Start of picture text -----

China automobile sales from 2004 to 2012 Unit:10,000units
2000
50%
1800
40%
1600
30%
1400
20%
1200
10%
1000
0%
800
600 -10%
400 -20%
200 -30%
0 -40%
2004 2005 2006 2007 2008 2009 2010 2011 2012
Car Sales 507.2 575.8 721.6 879.2 938.1 1364.5 1806.0 1851.0 1931.0
Commercial vehicle 180.1 178.7 204.0 249.4 262.5 331.3 430.0 403.0 381.0
Passenger car 327.1 397.1 517.6 629.8 675.6 1033.1 1376.0 1447.0 1550.0
Growth rate for car sales 15.5% 13.5% 25.3% 21.8% 6.7% 46.2% 32.4% 2.5% 4.3%
Growth rate for Commercial 21.0% -1.0% 14.0% 22.3% 5.3% 28.4% 33.2% -6.3% -5.5%
----- End of picture text -----

==> picture [79 x 49] intentionally omitted <==

China Automobile Market Introduction

==> picture [721 x 371] intentionally omitted <==

----- Start of picture text -----

2005-2012 Passenger Car sales breakdown Unit:10,000units
1400 90%
80%
1200
70%
60%
1000
50%
800
40%
30%
600
20%
400
10%
0%
200
-10%
0 -20%
2005 2006 2007 2008 2009 2010 2011 2012
Sedan+SUV+MPV 318 426 532 569 844 1133 1232 1326
Small cars 101 117 123 133 234 294 256 252
Growth rate for Sedan+SUV+MPV 26% 34% 25% 7% 48% 34% 9% 8%
----- End of picture text -----

==> picture [79 x 49] intentionally omitted <==

China Automobile Market Introduction

==> picture [721 x 368] intentionally omitted <==

----- Start of picture text -----

Market share for Foreign-origin brands in China (Sedan+MPV+SUV)
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
VW KIA GM Toyota Nissan Honda Ford PSA Domestic
2005 17.1% 11.0% 11.0% 4.6% 5.2% 8.4% 2.0% 4.4% 27.8%
2006 16.3% 9.7% 10.6% 6.6% 5.0% 8.2% 3.2% 4.8% 28.2%
2007 17.3% 6.6% 10.0% 8.6% 5.5% 8.7% 3.4% 3.9% 29.2%
2008 17.5% 7.8% 8.8% 9.6% 6.5% 9.2% 2.9% 3.2% 27.9%
2009 16.6% 10.2% 9.6% 7.6% 6.3% 7.2% 2.9% 3.2% 30.7%
2010 16.5% 9.9% 9.9% 6.8% 6.0% 6.0% 2.8% 3.3% 32.7%
----- End of picture text -----

==> picture [79 x 49] intentionally omitted <==

China Automobile Market Introduction

==> picture [721 x 372] intentionally omitted <==

----- Start of picture text -----

Market share of Sedan +MPV+SUV in China by engine size Unit:10,000units
40.0%
30.0%
20.0%
10.0%
0.0%
2.5L and
0.8-0.9L 1.0-1.1L 1.3-1.4L 1.4L-1.6T 1.5L 1.6L 1.8L-2T 1.8L 2.0L 2.3-2.5L
above
2009 1.4% 5.3% 11.8% 0.2% 12.7% 31.1% 3.2% 9.4% 12.8% 10.1% 1.9%
2010 1 4% 4 5% 11 8% 1 8% 15 3% 28 1% 4 0% 8 5% 14 0% 8 4% 2 2%
----- End of picture text -----

==> picture [79 x 49] intentionally omitted <==

IV. Core Competence and Strategy

==> picture [78 x 49] intentionally omitted <==

Core Competence-Position Strategy

Be the No. 1 Tier 2 supplier in China Tier 1 are our major customers, OEM are our Friends.

==> picture [66 x 66] intentionally omitted <==

==> picture [123 x 61] intentionally omitted <==

==> picture [154 x 51] intentionally omitted <==

==> picture [177 x 49] intentionally omitted <==

==> picture [173 x 56] intentionally omitted <==

==> picture [68 x 33] intentionally omitted <==

==> picture [148 x 46] intentionally omitted <==

==> picture [87 x 12] intentionally omitted <==

==> picture [87 x 18] intentionally omitted <==

==> picture [139 x 8] intentionally omitted <==

==> picture [180 x 48] intentionally omitted <==

==> picture [131 x 52] intentionally omitted <==

==> picture [73 x 48] intentionally omitted <==

==> picture [79 x 49] intentionally omitted <==

Core Competence-Stable Customer Mix

 Top three Japanese car makers accounting for about 75% of sales

==> picture [666 x 345] intentionally omitted <==

----- Start of picture text -----

CK（XY）, 2.2%
TGP (HS), 2.2%
TPO (SH), 2.4%
CK（GZ）
Yangfeng Key(SH),
Hirosawa USA
2.8%
CK（GZ）, 24.8%
Trinity（SH）
Kasai (GZ), 3.7% Sanko Gosei(GZ)
Moriroku (GZ)
Kasai (GZ)
Moriroku (GZ), 4.5%
Yangfeng Key(SH)
TPO (SH)
Hirosawa USA, 11.6%
CK（XY）
Sanko Gosei(GZ), 4.6%
TGP (HS)
Trinity（SH）, 11 5% 2012 sales
----- End of picture text -----*

Core Competence-Horizontal and Vertical Integration

Integrated Production Provides Best Services Design / Engineering (設計/工程) Tooling & Gauge (模具開發) Injection (注塑) Decoration (裝飾) Plasma & Laser CUBIC/e-CUBIC IMD/INS Real Wood Painting Plating Fluorination Etching (水轉印) (模內轉印 ) (真木) (塗裝) (電鍍) ( 等離子與氟化處理 ) (雷射雕刻) Assembly (組裝)

==> picture [79 x 49] intentionally omitted <==

V. Future Strategies and Goals

==> picture [79 x 49] intentionally omitted <==

Future Strategies and goals

 Keep strengthening relationships with three top Japanese car makers in China

 Keep exploring new customers

 Integrate and develop new decoration technology for auto plastic interior trim parts

• Developing markets for real wood and plastic plating parts for luxury cars

==> picture [79 x 49] intentionally omitted <==

Future Strategies

Keep strengthening relationship with three top Japanese car makers in China

DF-Nissan (Wuhan and Guangzhou) Current Cap. ： 1million units Planned Cap. ： 1.5million units

 DF-Honda (Wuhan)  GZ-Honda (Guangzhou) Current Cap. ： 0.7million units Planned Cap. ： 1.2million units

GZ-Toyota (Guangzhou) Current Cap. ： 0.3million units Planned Cap.: 0.6-0.8milion units

==> picture [79 x 49] intentionally omitted <==

Explore New Customers

Chongqing  CA-Ford Current Cap. ： 0.5 million units Planned Cap.: 1.2 million Units  CA-Domestic Cap. ： 2 million units  CA-Suzuki Cap. ： 0.7million units Chengdu  FAW-VW  FAW-Toyota

Future Strategies

==> picture [387 x 386] intentionally omitted <==

----- Start of picture text -----

Changsha
 GZ-Mitsubishi
Cap. ： 0.25million units
 GZ-Fiat

Chrysler
Cap. ： 0.3million units
 SH-VW
Wuhan
 SKODA
Cap. ： 0.2million units  SH-GM
Cap. ：
0.6million units
Shenzhen
 CAPSA
Cap. ： 0.3 million
units
Foshan
 FAW-VW
Cap. ： 0.3 million
----- End of picture text -----

==> picture [171 x 98] intentionally omitted <==

Thank you!