Lida — Interim / Quarterly Report 2018

Aug 21, 2018

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Ticker
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4552
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- - Leading player in the high end general purpose air compressor segment in China.

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Date of

Establishment

Chairman

General Manager

Paid-in Capital

Business Scope

Consolidated Revenue

Production Sites

No. of Employees

May 11, 2012

Wu Chien-Neng (Representative of Yi Yuan Enterprises Ltd)

Chen Yi-Ping

NT$1 billion

Engage in the research, development, manufacturing and marketing of self-branded air compressors through trade names mainly with "Luowei“.

NT$8.12 billion (2017)，NT$4.04 billion (2018H1)

1. Quanzhou City, Fujian Province - Lida (China) Machine Equipment Co., Ltd.

2. 九江, Jiangxi Province - Lida (Jiangxi) Machine Equipment Co., Ltd.

1,540 (as of July 31, 2018)

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Lida (China)

Lida (Jiangxi)

Location Area Position

R&D, production Quanzhou and sales for City, Fujian 37,101m² overseas Province markets and coastal provinces Production and 九江, Jiangxi 58,529m² sales (inland Province provinces)

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	Main Products	Main Products	Main Products	Main Products	Main Products
	Category		Revenue % (2017)	Revenue % (2018H1)	Attributes & Application
	Piston- type		41.6%	36.9%	⚫Ease of use, high mobility, affordability. ⚫Wide range of users, from individuals to small- and medium- enterprises.
	Screw- type		44.1%	47.9%	⚫Medium- to large-sized manufacturers, including but not limited to: industrial production, automobile, textile, packaging and petrochemicals. ⚫Higher operating efficiency, especially under continuous operation. ⚫Energy efficiency and ease of operation.
	Scroll- type		12.2%	12.8%	⚫High quality compressed air. ⚫Particularly suitable in safety-conscious applications, such as medical, pharmaceutical, food and beverage, as well as precision industries ⚫Growing industry attention on scroll- type designs. Offers high operating efficiency and dependability, low noise levels, with reduced size and weight. 4

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Air Compressor
Positive
Dynamic
Displacement
Reciprocating Rotary Jet Turbine
Sliding Centrifu Axial
Piston Rolling Rotor Screw Scroll
Vane gal Flow
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Pressurized air, clean air
Petrochemical industry
Sandblasting
Air Tank
Pneumatic tools
Paint spray, electroplating,
injection molding
Power
Food & beverage
Air Compressor
processing
Application
Dehumidifier and
filter
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upstream midstream downstream
material industry R&D and manufacturing Terminal application
Industrial Manufacturing
Case Food
Cylinder Pharmaceutical
Compressors Head Textile
Crankcase Transport
原材料產業
Motor Chemical
Iron Plate Petrochemical
Iron Core Refrigeration
Rotor Gas Separation
Mining & Metallurgy
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Industrial Manufacturing

Pneumatic Power

Laser Cutting

CNC Machine Center

• ➢ Numerous air-driven tools, such as: pneumatic pick, riveter, tamping machine, lift, and pneumatic drill

➢ Automated equipment, such as dynamic movie theater seat, robot arm, laser, printing press, CNC machine center, machine tool and air valve

Robot Arms

Measuring Equipment Accessories

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Dynamic Movie Theater

Printing Equipment

PET Blowing

Pneumatic Tools

Paint Spraying

Equipment Application

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Food & Pharmaceutical & Textile

• ➢ Spraying, e.g. painting and rust removal

• ➢ PET bottle blowing

• ➢ Soda carbonation, automated packaging lines

Pneumatic Power

• ➢ Air-powered sewing machines

• ➢ Sandblasting of denims

Textile Equipment

Production line

Medical equipment

Food & Beverage processing

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Transport

Pneumatic Power

Chemical & Petrochemical

Pneumatic Power

Refrigeration & Gas Separation

Refrigeration & Gas 、 Separation Transmission

Mining & Metallurgy

Pneumatic Power 、 Transmission

• ➢ Automotive brakes, opening/close of bus doors, railway engineering equipment

• ➢ Synthesis and polymerization of chemical raw materials, such as synthetic nitrogen, methanol and urea

• ➢ Long distance transmission of natural gas

• ➢ Refrigerated air, Freon compressor

• ➢ Transmission of refrigerated air and/or separated air

• ➢ Drilling equipment, such as rock drill, pneumatic drill & hammer

➢ Transmission of combustion gases, cement, and provision of air in mines

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2016 年首三季2017

2015年度 2018H1

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Others, 9.0%
Others,
8.8%
Food Processing, Industrial Food Processing, Industrial
9.9%
Manufacturing, 10.0% Manufacturing,
34.8% 34.3%
Pharmaceutical, CAGR Pharmaceutical,
9.9%
9.7%
Electronics, 7.1% Electronics, 7.1%
Auto
Package Package
Auto
Manufacturing,
printing, 4.0% Mining & printing, 4.1% Mining & Metallurgy,
4.9% Manufacturing,
Metallurgy, 9.3% 9.1%
5.1%
Textile&Apparel
Chemical & Petrochemical, Textile&Apparel,
, 6.4% Chemical & Petrochemical,
6.3%
5.1%
5.2%
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Source: Lida

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SALES CHANNEL
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• ➢ Through professional competency in R&D, production and marketing, our selfbranded general-purpose air compressors are sold through acomprehensive network of distributors.

• ➢ China: a network of 70 key distributors ，Overseas: importers & trading houses

Main building of Beijing 2008 Olympic Games

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DEVELOPMENT OF COMPRESSORS’
INDUSTRY
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➢ In tandem with China‘s economic growth and increased adoption of industrial automation, the market size of the Chinese air compressor industry is expected to reach RMB 50.7 billion by 2021,for the annual 7% CAGR.

➢ Enhancement of environment policies and control in China.

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Small
differentiation in
Reshuff Differe
CAGR
products le ntiation
Price competition in
low to medium end
Integration
products
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• ➢ Small

➢ Price competition in low to medium end products

➢ More differentiation in product quality and after sales services to maintain the stability of selling prices and market shares.

• ➢ The market integration will lead to four keys of brand,quality,service and channel。

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Competitive	Competitive	Competitive	Competitive	Advantages	Advantages	Advantages
	Brand			R&D		Channels		Focus
➢	China Famous		➢	Independently	➢	Mature and	➢	Focus on
	Trademark			developed scroll		stable		general-
➢	Over 20 years of			air compressor		distribution		purpose air
	continuous		➢	F-Variable		network		compressors.
	production			Frequency	➢	Network of 70	➢	Not easily
➢	High C/P Value。			compressor has		distributors in 25		affected by
				industry leading		provinces		single industrial
				efficiency				trend.
			➢	Self-production					15
				of screw head

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Focus on high-end market and increase gross profits market of products

⚫ Made in China → To increase the intelligence of products; and follow the trend of the market to differentiate the quality of our products

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Small to medium-size generic High-end generic compressors
compressors Ex: F+frequency scew 、 oil/oil-free scroll 、
、 、
Ex: Piston screw scroll
Two-stage screw
Screw Type F Type
CAGR
F F+ F
Variable Variable two-stage
-
Scroll Type Oil Free Type
Oil-Free Oil-Free
Scroll Type Screw Type
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UPGRADE AND INTEGRATION
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➢ Aims to high-end product marketing scale in building long-term

strategic foundation.

Developing Profitable Markets	Developing Profitable Markets
	Upgrading Technical Skills
1.Still improving high- end product mix. 2. Increasing high end	CAGR 1. Self-production of screw head.		Improving Production Capacities 1. Strengthen
products variety and developing more differentiation especially on screw type。 2. Starts in Industry- university cooperative research to develop more high-end products			relationship with distributions and develop more creative sales models .
	and R&D level.		2.Progress in building
			new factory to expand
			and integrate capacity.
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2,500,000 3.00 Unit: NT’000
2,214,705
2,133,141 2,153,567
1,986,947 2.67 2.50 ◼ YoY+8.4%
2,000,000 1,887,308 ◼ QoQ+14.1%
2.33
2.31
2.10
2.00
1.84
1,500,000
◼ YoY+1.4%
1.50
◼ QoQ+17.3%
1,000,000
1.00
500,000 355,104 390,640 336,252 306,907 360,085 0.50 ◼ YoY-9.9%
232,610 266,735 231,327 184,087 209,608 ◼ QoQ+13.9%
0 0.00
2017Q2 2017Q3 2017Q4 2018Q1 2018Q2
Revenue Operating Profits Net Profits EPS
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0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
		24.2%	23.7% 21.8% 23.9% 23.7% 17.6% 15.8% 16.3% 16.7% 12.1% 10.8% 9.8% 9.7% 2017Q3 2017Q4 2018Q1 2018Q2 Operating Profits Margin Net Profits Margin
		17.9%
		117%
		.
		2017Q2 G Mi
		ross argn	perang ros argn

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100%
9.6%
12.3% 11.8% 13.8% 12.3%
90%
80%
70%
60%
50%
87.7% 90.4% 89.2% 86.2% 87.7%
40%
30%
20%
10%
0%
2017Q2 2017Q3 2017Q4 2018Q1 2018Q2
China Other Regions
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100%
1.8% 2.0% 2.3% 2.4% 2.4%
90% 12.0% 12.0% 12.7% 12.9% 12.8%
80%
70%
43.2% 43.9%
60% 46.8% 47.3% 48.4%
50%
40%
30%
20% 43.0% 42.1%
38.2% 37.4% 36.4%
10%
0%
2017Q2 2017Q3 2017Q4 2018Q1 2018Q2
Piston Screw Scroll Others
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29.0%
27.0% 27.0% 26.9%
26.7%
27.0% 26.2%
25.8%
26.8% 26.5%
26.4%
25.0% 26.0%
23.0%
20.8%
20.7%
20.4%
21.0% 20.2%
19.3%
19.0%
17.0%
15.0%
2017Q2 2017Q3 2017Q4 2018Q1 2018Q2
Piston Screw Scroll
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5years Steel Prices in China

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Unit: NTD’000

Items		Q2 2018	Q1 2018 Q2 2017 YoY(%) QoQ(%)
		Amount ％	Amount ％ Amount ％ TWD RMB TWD RMB
Revenue		2,153,567 100.0%	1,887,308 100.0% 1,986,947 100.0% 8.4% 2.6% 14.1% 12.8%
Gross profits		510,689 23.7%	451,110 23.9% 481,049 24.2% 6.2% 0.5% 13.2% 11.9%
Operating profits		360,085 16.7%	306,907 16.3% 355,104 17.9% 1.4% -3.9% 17.3% 16.0%
Income before tax		334,339 15.5%	286,385 15.2% 353,288 17.8% -5.4% -10.3% 16.7% 15.4%
Income tax		(124,731) -5.8%	(102,298) -5.4% (120,678) -6.1% 3.4% -2.0% 21.9% 20.5%
Net profits		209,608 9.7%	184,087 9.8% 232,610 11.7% -9.9% -14.6% 13.9% 12.5%
EPS		2.10	1.84 2.33

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Unit: NTD’000

Items	Q2 2018	Q1 2018 Q2 2017
Cash	2,653,544	2,489,424 3,123,727
Trade receivables	988,534	847,725 943,132
Inventories	286,242	290,213 265,783
Other current assets	2,044,406	2,048,968 1,591,371
Fixed assets	773,855	672,963 485,927
Other assets	183,331	174,158 50,252
Total assets	6,929,912	6,523,451 6,460,192
Short-term borrowings	96,453	51,117 49,346
Tradepayables	602,536	519,977 577,212
Other current liabilities	1,371,844	742,046 1,482,200
Total liabilities	2,070,833	1,313,140 2,108,758
Share capital	1,000,000	1,000,000 1,000,000
Capital reserves	1,548,200	1,548,200 1,548,200
Retained earnings	2,600,219	2,890,611 2,208,462
Other reserves	-289,340	-228,500 -405,228
Total equity	4,859,079	5,210,311 4,351,434

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Thank You.

Q&A

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