JENTECH — Investor Presentation 2019

Dec 12, 2019

Stock Code:3653

Jentech Precision Industrial Co.,Ltd. Investor Conference

December 12, 2019

Content

 Corporation Overview

• Core Products & The Markets

• Financial Information

Corporation Overview

 Founded ：

1987/June

 Certificate of Registration :

ISO 9001, ISO 14000, IATF16949  Number of Employees

Taiwan: 1325 / China Wuxi: 650

 Worldwide Operational Location:

• Taiwan:

• Huaya plant & Dayuan plant

• China: Wuxi plant

• USA: Arizona office

• Germany: Munich office

• Japan: Kumamoto office

• Malaysia: Penang office

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Taiwan Huaya Plant (Headquarters)

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China, Wuxi Plant

Taiwan, Dayuan 1[st] Plant

Taiwan, Dayuan 2[nd] Plant

 Estimated completion date: February, 2020

• Land Area： 6,828 m² (2,069 坪)

• Factory Building ： 19,500 m² (5,909 坪)

• The goal is to set up a intelligent factory (Smart Factory)

• Current Status： start manufacturing in 2020 Q2

• Manufacturing Product Line： Heat spreader for Server, Water cooling module for automobile and EMC Leadframe for automobile

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China, Wuxi 2nd Plant

• Established: December, 2018

• Land Area: 35,000m² (10,605坪)

• Factory Building: 34,500m²(10,454坪)

• Current Status: Setting up the manufacturing equipment

• Manufacturing Product Line ： Server ILM loading Mechanism, Water Cooling Module for Automobile and Pre-Mold Leadframe

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Core Product & The Markets

Product Application

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PPA LED Leadframe

Contravariant Power Module Cooling Baseplate & Frame

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EMC Heat Fixing Epoxy Resin Injection Molding Lithium Battery Cooling Plate

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ECU Unmanned Computer Cooling Plate

Ceramic Substrate Component

Electric Vehicle and Fuel Car Outlook

Global car market declined slightly in 2019. The total sales is around 90 million vehicles. The electric vehicle (EV) demand is increasing, the sales will reach to 5 million vehicle and the market share to 6%. The International up Energy Agency (IEA) expecting the sales share for electric vehicle will increase to 30% by 2030.

Electric Vehicle

Fuel Car

Source: Electric Vehicle Outlook 2019 Bloomberg NEF

IGBT Module Market Analysis

• Electric vehicles (EV) is the major growth momentum in future vehicles industry. IGBT module will be the key components.

• From 2016 to 2018, the EV annual growth were 28%, 29% and 27%. Before 2015, the growth rate was only single digits. The booming EV industry has been increase the IGBT module demand dramatically.

• Expecting the sales of EV will reach to 8 million vehicles in 2021, which is two times more than 2018. The IGBT market sales will also reach to 5.2 billion USD in 2021.

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Thousand
Vehicles
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Million
USD
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Jentech Competitive Advantage

Thermal Structure Thermal Flow Design & Simulation Design & Simulation Precision Forging Folded Fin Grooved Sheet Technology Stamping Technology Stamping Technology

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Insert Molding Leadframe Stamping & Molding Technology

Brazing Technology

Plating Technology For Semiconductor

Liquid Cooling Module for Automobile Outlook

• Application ： Electric vehicle and Hybrid electric vehicle

• Jentech 2019 /2018 YOY ： 166%

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• Jentech predict growth in 2020 ：

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EMC Lead Frame
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Sever Application

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Heat

ILM Loading VC Heat Mechanism Spreader

Thermal module

Spreader

CPU Heat Spreader Market

• Recently the consumer electronics industry is booming. The high end GPU demand is growing due to the leading trend of smart phone, gaming products, gaming machine and crypto currency mining.

• Along with the popularization of Internet of Things (loT), autonomous cars, big data and Artificial Intelligence (AI), the thermal solutions demand for cloud data center and high speed smart mobile device is growing. We expect there will be a huge growth of thermal market in the future.

CPU Heat Spread Outlook

 Application ： Laptop, Desktop, Server, MCU for vehicle and Gaming machine

 Jentech 2019 /2018 YOY ： 48%

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• Jentech predict growth in 2020 ：：

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Thermal Solutions
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Sever ILM Loading Mechanism

 Products: Loading Mechanism for CPU Connectors

 Function: Provide sufficient clamping force for CPU, Socket and Heat sink to guarantee well electrical connectivity and thermal conduction.

• Applications: Cloud Severs and Data Centers

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ILM Loading Mechanism

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Heat Spreader

Sever Outlook

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Worldwide server shipments (in million units)

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Server Shipments
Forecast
12.99
12.49
11.45 11.79
11.09 11.1
9.52 9.67 9.89 10.09
8.1
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
YEAR
QUANTITY (M)
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Source: Statista Market research company

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Market Jentech 2019/2018 YOY 5.9% 43% ↑ 2020 Predict YOY 5% 20% ↑

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EMC Application and Market Analysis

• Medium and high power Leadframe

• 5G signal amplifier components

• Image sensor

• Tire-pressure monitor

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Medium and high power Leadframe

• Insulation board

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Chip
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EMC
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Wire
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Image sensor

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Chip
EMC
Wire
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Tire pressure monitor

5G signal amplifier components

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Insulation board

Pre-Molded LED Leadframe (PPA/EMC) Outlook

 ： automobile 、 sensor 、 Application lighting

• Jentech 2019 /2018 YOY ： (16%)

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• Jentech predict growth in 2020 ：

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EMC Lead Frame
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PPA Lead Frame
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Financial Information

Condensed Balance Sheet

	Unit : NT$ thousand Amount Ratio% 96,638 6.25 174,000 13.46 (173,580) (12.92) (192,807) (75.18) (95,749) (2.16) 183,367 8.55 84,023 35.25 267,390 11.22 171,641 2.52 (26,875) (4.17) 42,262 9.02 15,387 1.38 (694,478) (100.00) 44,986 42.17 (649,492) (81.07) (634,105) (33.13) 805,746 16.42 171,641 2.52 Difference
Item 2018.12.31 2019.09.30
Current Assets Cash and Cash Equivalents 1,545,104 1,641,742 Account Receivable 1,292,971 1,466,971 Inventory 1,343,489 1,169,909 Other Current Assets 256,446 63,639 Total Current Assets 4,438,010 4,342,261 Noncurrent Assets Property, Plant and Equipment 2,145,557 2,328,924 Other Noncurrent Assets 238,347 322,370 TotalNoncurrent Assets 2,383,904 2,651,294
Total Assets 6,821,914 6,993,555
Current Liabilities Account Payable 644,480 617,605 Other Current Liabilities 468,338 510,600 Total Current Liabilities 1,112,818 1,128,205 Noncurrent Liabilities Bonds Payable 694,478 0 Other Noncurrent Liabilities 106,678 151,664 Total Noncurrent Liabilities 801,156 151,664
Total Liabilities 1,913,974 1,279,869 Total Equity 4,907,940 5,713,686
Total Liabilities & Equity 6,821,914 6,993,555

Aging analysis of accounts receivable and loss allowance on 09/30/2019

Unit : NT$ thousand

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Item Not past due (Note) 1-60 Days 61-90 Days 91-180 Days Over 180 Days Amount
Account receivable 1,374,589 92,014 160 1,180 1,255 1,469,198
Loss allowance (84) (282) (16) (590) (1,255) (2,227)
At amortized cost 1,374,505 91,732 144 590 0 1,466,971
The ratio of loss allowance of account receivable 0.15%
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Note: The weighted average duration of non-overdue accounts is 85 days

Allowance for Inventory Valuation and Obsolescence Status on 09/30/2019

Unit : NT$ thousand

Category Amount (A) %	Category Amount (A) %	Category Amount (A) %	Allowance for Inventory Obsolescence (B)	Allowance for Inventory Obsolescence (B)	Allowance for Inventory Valuation (C) Net Amount (A+B+C)	Allowance for Inventory Valuation (C) Net Amount (A+B+C)	Allowance for Inventory Valuation (C) Net Amount (A+B+C)	Allowance for Inventory Valuation (C) Net Amount (A+B+C)	Allowance for Inventory Obsolescence% (B)/(A) Allowance for Inventory Valuation% (C)/(A)	Allowance for Inventory Obsolescence% (B)/(A) Allowance for Inventory Valuation% (C)/(A)
Finished Goods 527,286 41% Work in Process 439,562 35% Raw Materials & Supplies 292,275 23% Merchandise 14,659 1%			(28,937) (19,836) (20,712) (1,270)		(10,426) 487,923 (13,777) 405,949 (8,704) 262,859 (211) 13,178				5.49% 1.98% 4.51% 3.13% 7.09% 2.98% 8.66% 1.44%
Total 1,273,782 100%			(70,755)		(33,118) 1,169,909				5.55% 2.60%
	Inventory Aging	1~3months(Note)		4~6months		7~12months	Over 1 year	Total
	Allowance for Inventory Obsolescence ratio	0%		0%		50%	100%
	Amount	8,193		0		25,705	36,857	70,755

Note ： Defective product

Property, Plant and Equipment

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Unit : NT$ thousand
Item 2018.12.31 2019.09.30 2019 Addition %
Equipment 2,426,075 2,591,189 165,114 47%
Plant 812,695 967,747 155,052 45%
Other Equipment 275,323 292,081 16,758 5%
Plant under construction 190,317 201,297 10,980 3%
Land 689,246 689,570 324 0%
Tatal 4,393,656 4,741,884 348,228 100%
Accumulated depreciation (2,248,099) (2,412,960) (164,861)
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Note:

• ￭ Plant increased NT$155 million mainly for Wuxi new plant established.

• ￭ 。 Forecast increasing fix asset is about NT$ 950 million in 2020.

2018Q3-2019Q3 Condensed Income Statement

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Unit : NT$ thousand
Item 2018 Q3 2018Q4 2019Q1 2019Q2 2019Q3
Net sales 1,224,289 1,221,604 1,271,939 1,304,559 1,385,060
COGS 891,819 893,910 924,912 925,038 963,491
Gross Profit 332,470 327,694 347,027 379,521 421,569
Operating Expense 152,155 170,847 164,607 180,864 173,325
Operating Income 180,315 156,847 182,420 198,657 248,244
Non-Operating Income/(Loss) 33,107 8,806 20,972 38,816 5,352
Income before Tax 213,422 165,653 203,392 237,473 253,596
Tax Expense 49,558 32,417 38,708 35,952 55,893
Net Income 163,864 133,236 164,684 201,521 197,703
Basic EPS (NT$) 1.54 1.22 1.44 1.67 1.63
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Revenue, Gross Margin and Operating Margin

Unit: NT$ 100 Million

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Quarter	2018 Q3	2018 Q4	2019 Q1	2019 Q2	2019 Q3
Revenue (100 Million)	12.24	12.22	12.72	13.05	13.85

Revenue by Product

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Quarter	2018 Q3	2018 Q4	2019 Q1	2019 Q2	2019 Q3
Revenue (100 Million)	12.24	12.22	12.72	13.05	13.85

Gross Margin Ratio and Product Portfolio Optimizing

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Product Category Adjustment

2019 2020 Heat Spreader Thermal module Lead frame Lead frame Electronic Electronic components components

Electronic components Communication connectors Others

Communication Others

Stock code:3653

Thank you Q&A