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Stock Code : 1537

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Company introduction

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Industry overview Sale Profile Financials

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Performance of Vietnam plant
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Our strength and outlook

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Kung Long Batteries

Established date Jan. 25, 1990

Numbers of Capital employees NTD:821million 4,026

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Listed date Jan. 22, 2002 (Stock Code ：1537)

Plant Taiwan-Kung Long(1990)、Le Long(1995) Vietnam-Ben Luc(1996)、Duc Hoa(2007)

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Main products

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Main products

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ISS Battery

UPS Automotive

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Electric Tools

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Electric Vehicle

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Telecom

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Market outlook

Market outlook	Market outlook	Market outlook	Market outlook	Market outlook	Market outlook	Market outlook	Market outlook
0 200 400 600 800 1000 1200 2016 2017 2018 2019 2020(E) 2021(F) 2022(F) Lead acid 449 465 469 478 446 459 464 NiMH/NiCd 24 23 23 21 18 20 20 Li 218 257 324 388 389 440 526
0	2016	2017	2018	2019	2020(E)	2021(F)	2022(F)
Lead acid	449	465	469	478	446	459	464
NiMH/NiCd	24	23	23	21	18	20	20
Li	218	257	324	388	389	440	526

Lead-acid Batteries Market Scope Forecast (Unit: billion USD$)
Sources- IEKof ITRI ( Apr./2019)

In terms of current market size of lead-acid batteries, it is USD 47 billion globally in year 2019 for automobiles、motorcycles and energy storage fileds. In comparison with the market size of Nickel secondary batteries being USD 2.3 billion, and that of Lithium batteries being USD 37.2 billion, lead-acid batteries are still the electricity storage products with the biggest shares.

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The strength of lead-acid batteries

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：
： Safety
High C/P ratio
02 Compared with other
The high C/P ratio of
lead-acid batteries has batteries, lead-acid
batteries are more stable
been standing for long 01
time. 03 and of higher
performance.
04
Wide applications： Recyclable and reusable：
Lead-acid batteries can Wasted lead-acid batteries
be used for starting, can be recycled. They are
energy storage, telecom, also the only battery product
transportation purposes. whose raw materials can be
reused.
KLB Copyright 2021 6
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2020 Sales Profile by application


產品		2020		2019				6%
UPS		65%		66%			14%
Motorcycle		14%		14%		3%
Electric	Vehicle	12%		13%
						12%
Automotive		3%		3%
Other		5%		4%
UPS	Electric Vehicle	Automotive	Motorcycle		Other

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2021 1Q Sales Profile by application


產品		2021 1Q		2020 1Q			6%
UPS		63%		65%		16%
Motorcycle		16%		15%
						3%
Electric	Vehicle	12%		12%
Automotive		3%		4%		12%
Other		6%		4%
UPS	Electric Vehicle	Automotive	Motorcycle		Other

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2020 Sales Profile by geography

Europe

25%

28%

Asia

19% 21%

Ps. Letters highlighted in red stand for the numbers of 2019

Taiwan

America 21% 22% Others

3% 3%

Vietnam

23% 22%

Currency: thousand NTD

Area	America	Europe	Asia	Taiwan	Vietnam	Others
2020	1,491,535	1,977,938	1,370,678	405,776	1,664,860	204,633
%	21%	28%	19%	6%	23%	3%
2019	1,725,702	1,975,166	1,688,216	550,405	1,789,875	204,225
%	22%	25%	21%	7%	22%	3%

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2020 1Q Sales Profile by geography

Europe

24% 27%

Asia

21% 18% Ps . Letters highlighted in red stand for the numbers of 2021

Taiwan

6% 6%

America

21% 23%

Others Vietnam 4% 2%

24% 24%

Currency: thousand NTD

Area	America	Europe	Asia	Taiwan	Vietnam	Others
2021 1Q	358,344	408,496	364,875	95,321	403,127	65,810
%	21%	24%	21%	6%	24%	4%
2020 1Q	386,843	453,412	314,881	111,844	406,263	31,790
%	23%	27%	18%	6%	24%	2%

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Sales by brand-consolidated

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Worldwide

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own 2021 brand 1Q 55%

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Vietnam
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Financials -Consolidated income statement

Currency: million NTD

category	2016	2017	2018	2019	2020	2021 1Q
Operating revenue	7,024	7,773	8,490	7,933	7,119	1,695
Gross profit	1,732	1,755	1,831	1,854	1,655	394
Gross Margin	25%	22%	22%	24%	23%	23%
Operating profit	1,229	1,261	1,243	1,312	1,199	276
Pre-tax Profit	1,251	1,198	1,332	1,344	1,186	292
After-tax profit	948	906	983	1,007	879	227
Profit attributable to former owner of business combination under common control	923	901	983	1,007	879	227 AVG ~~1149~~
EPS(NTD)	11.31	11.04	12.03	12.32	10.75	2.77 ~~.~~
Average LEAD price(USD/ton)	1,871	2,318	2,244	1,998	1,824	2,020

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Consolidated Sales

Consolidated Sales	Consolidated Sales	Consolidated Sales	Consolidated Sales	Consolidated Sales	Consolidated Sales	Consolidated Sales	Consolidated Sales	Consolidated Sales	Consolidated Sales
6,766 6,944 7,024 7,773 8,490 7,933 7,115 19% 21% 25% 22% 22% 24% 23% 0% 10% 20% 30% 0 2,000 4,000 6,000 8,000 10,000 2014 2015 2016 2017 2018 2019 2020 Turnover Currency: million NTD
	Consolidated Turnover	6,766	6,944	7,024	7,773	8,490	7,933	7,115	VG 2.3%
	LME average price(USD/MT)	2,096	1,786	1,871	2,318	2,244	1,998	1,824
	Gross Profit Margin	19%	21%	25%	22%	22%	24%	23% A 2
	After-tax EPS	8.09	9.42	11.31	11.04	12.03	12.32	10.75
		KLB Copyright 2021 13

Dividend policy

0 10	0 10	0 10	0 10	0 10	0 10	0 10
	~~8605%~~ 83.13% 93.02%
	79.58% ~~.~~ 81.17%

		2016	2017	2018	2019	2020
EPS		11.31	11.04	12.03	12.32	10.75
Dividend distribution	Cash dvidends	9.00	9.50	10.00	10.00	10.00
	Stock dividends	-	-	-	-	-
Dividend yield		79.58%	86.05%	83.13%	81.17%	93.02%

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Operating cash flow

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2017
2018
2019
2020
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783

Currency: million NTD

1,163

1,667

1,275

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Comparison chart of LME, SMM, and EPS

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4,000

4.00 3.50

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3.50
3.00
2.50
2.00
1.50
1.00
0.50
0 0.00
16' 17' 17' 17' 17' 18' 18' 18' 18' 19' 19' 19' 19' 20' 20' 20' 20' 21'
4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
LME 2,150 2,279 2,165 2,334 2,493 2,523 2,441 2,102 1,964 2,037 1,886 1,984 2,038 1,847 1,670 1,876 1,903 2,020
SMM 2,605 2,680 2,409 2,868 2,929 3,012 3,175 2,797 2,695 2,586 2,398 2,455 2,278 2,077 2,002 2,238 2,217 2,333
EPS 3.30 2.20 3.27 2.67 2.90 2.44 3.67 3.51 2.41 3.14 3.15 3.09 2.94 2.57 2.40 2.95 2.83 2.77
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3,000

2,000

1,000

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Sales Quantity by KL group

Sales Quantity by KL group	Sales Quantity by KL group	Sales Quantity by KL group	Sales Quantity by KL group	Sales Quantity by KL group	Sales Quantity by KL group	Sales Quantity by KL group
Monthly turnover(million NT dollars) 2,026 2,119 2,288 2,024 2,020 1,956 1700 1800 1900 2000 2100 2200 2300 2400 2021 1Q 2020 2019 2018 2016 2017 585 648 707 661 592 565 0 200 400 600 800 Monthly shipping q’ty(thousand pcs)
	2016	2017	2018	2019	2020	2021 1Q
Monthly shipping q’ty	2,026	2,119	2,288	2,024	2,020	1,956
Growth rate of shipping q’ty	-2%	5%	8%	-11%	-	-3%
Monthly turnover	585	648	707	661	592	565
Growth rate of turnover	1%	11%	9%	-7%	-10%	-5%

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Location

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N
Hanoi Sale
Office
Danang
Sale Office
Ho Chi Minh
Sale Office
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Location

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T ỉ nh Long An
Ben Luc
Factory(1996)
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Ho Chi Minh
Duc Hoa
Factory(2007)
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Turnover of Le Long Vietnam

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6,000
58,238 56,369 55,759
60,000
46,438
50,000
4,000
40,000 4,853 4,697 4,642
4,647
30,000 3,870
20,000 13,925 2,000
10,000
0 0
2017 2018 2019 2020 2021 1Q
內銷內銷月平均
單位：USD仟元
Category 2017 2018 2019 2020 2021 1Q
Domestic sales 46,438 58,238 56,369 55,759 13,925
Domestic sales 3,870 4,853 4,697 4,647 4,642
monthly AVG
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Overview of Vietnam plant

Ben Luc plant

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36,500 square meters

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Overview of Vietnam plant

Ben Luc plant

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36,500 square meters

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Overview of Vietnam plant

DucHoaplant

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350,000 square meters(200,000square meters are developed)

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Core value
Quality
Cost
Innovation
Service Delivery
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KLB ESG presence

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Environment Social Responsibility Corporate Governance

Green Procurement  To Promote Local  To Advance Shareholders
Energy Management Culture Equity  Environmental  To Popularize Art and  To Enhance Information Protection Facilities Culture Activities Transparency 
To Improve  To Care Social To Strengthen Governor’s Function
Manufacturing Process Vulnerable Groups 
To Operate Business To Sponsor The Academics Honestly

To Expand Social Responsibility as the Core of Business

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Strength

The production of lead-acid batteries comprises the know-how of Excellen electrochemistry and complex system of manufacturing & management. It is t quality not easy to produce quality batteries stably for the long term.

With more and more people realizing the importance of environmental protection, China has imposed lots of restrictions on the manufacturing of lead-acid batteries High Entry including the production scale, facilities, and environmental protection…etc. This Barrier standard is also considered by many other countries, and therefore there’s no new comer for many years. And besides China, there’re few manufacturers in other Asian.

It takes long time to test individual battery performance and service life. Qualified The most important is that the incoming inspection can not determine the service life of batteries. Thus, quality customers will set up high Standard qualification procedure and field audit for new comers. We are able to develop the products meeting customer needs.

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Strength

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Localization

All our supervisors are Vietnamese, and Taiwanese management people can communicate with them in Vietnamese language without problem. By the way, we enter Vietnam market early and take high shares in M/C AM market. Our batteries have been recognized as high quality. Our brand images is also well established. All of these are very helpful for our profits. Also, the investment environment in Vietnam is good and government seldom interferes.

We’re devoted to the upgrade and diversity of lead-acid batteries. Through the R&D enhancement of battery performance, we not only make more profits but also develop lower-end products to help customers take more market shares. Our ability program has been extended from current small sized SLA to medium/large sized ones. We also develop star stop batteries to expend client bases.

Our customers include leading companies in each industries, thus the importers in each areas are willing to distribute our products. Moreover, Quality as the sales territories and customers are properly diversified, we can client avoid the huge impacts resulted by single industry and economic factors.

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Strength

Most of our competitors has factory in China. But the issuance of “manufacturing permission of SLA batteries “ in 2011 has limited the development of SLA industry and eliminated lagging production. We’re the professional UPS battery manufacturer with biggest capacity in Southeast Asia, and it can help us to take more orders than our competitors.

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Main production bases of small/ medium sized SLA batteries are located in China and Vietnam. When Chinese labor costs keep rising, RMB is under pressure for appreciation, and SLA industry is limited, Chinese battery manufacturers are forced to move to outside. However it’s difficult to find a suitable location. While we’re producing in Vietnam and we can expand our capacities to maintain our advantages

China publishes the notice for imposing consuming tax on batteries and pasting – starting from 1//1/2016, 4% consuming tax will be imposed on lead-acid battery manufacturing, OEM, and import. This bring significant burden to Chinese lead-acid battery factories.

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Future outlook

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Continuous Introducing automatic equipment to introduction of increase production efficiency, decrease automatic equipment material waste and maintenance cost, to lower the dependence on manpower

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Develop large sized SLA batteries for The promotion of industrial and telecom applications to new products and segment current mass products and market obtain niche market.

Continuous Continuously develop light weight development models which meet market needs to on lightweight models increase gross margin.

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Future outlook

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Sustainable development on Risk environment protection policy perspective * Right response to the fluctuation of lead price and cost* • Actively satisfy customer needs and develop new market to increase market shares**

Manufacturing perspective

Sales perspective

Adjust sales price according to lead cost, and set a fair way for transactions.
Continuously develop batteries suitable for renewable energy.
Establishing product position and doing the market segmentation.
Continuously develop large sized SLA batteries for telecom applications.
Continuously proceed the design and
modification for automatic production.
Develop long life time and advanced start stop batteries.

* Continuous research and development

Technical * Possess critical technology perspective * Implement more processing control systems

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Vincent Liu

Financial Senior Manager
Email: [email protected]

TEL:+886-49-2254777

AI assistant

KUNG LONG — Annual Report 2021

51859_rns_2021-11-09_fdaf43d9-ab83-47d1-8b3c-3f8886fea5f0.pdf

Stock Code : 1537

Company introduction

Kung Long Batteries

Main products

Main products

ISS Battery

UPS Automotive

Electric Vehicle

Market outlook

The strength of lead-acid batteries

2020 Sales Profile by application

2021 1Q Sales Profile by application

2020 Sales Profile by geography

Ps. Letters highlighted in red stand for the numbers of 2019

Currency: thousand NTD

2020 1Q Sales Profile by geography

Europe

America

Sales by brand-consolidated

Financials -Consolidated income statement

Currency: million NTD

Consolidated Sales

Dividend policy

Operating cash flow

Currency: million NTD

Comparison chart of LME, SMM, and EPS

3,000

Sales Quantity by KL group

Location

Location

Turnover of Le Long Vietnam

Overview of Vietnam plant

Ben Luc plant

36,500 square meters

Overview of Vietnam plant

Ben Luc plant

Overview of Vietnam plant

DucHoaplant

350,000 square meters(200,000square meters are developed)

KLB ESG presence

To Expand Social Responsibility as the Core of Business

Strength

Strength

Localization

Strength

Future outlook

Future outlook

More from KUNG LONG

KUNG LONG Annual Report 2021