Lida — Interim / Quarterly Report 2018

May 22, 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.

	Mainproducts	Mainproducts	Mainproducts	Mainproducts	Mainproducts
	Category		Revenue % (2017)	Revenue % (2018Q1)	Attributes & Application
	Piston- type		41.6%	37.0%	⚫Ease of use, high mobility, affordability. ⚫Wide range of users, from individuals to small- and medium- enterprises.
	Screw- type		44.1%	47.8%	⚫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%	12.9%	⚫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. 2

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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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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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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
1,986,947 2.67 2.50 ◼ YoY+5.5%
2,000,000 1,887,308 ◼ QoQ-11.5%
1,789,039 2.33
1.93 2.31
2.00
1.84
1,500,000
◼ YoY+1.0%
1.50
◼ QoQ-8.7%
1,000,000
1.00
500,000 303,926 355,104 390,640 336,252 306,907 0.50 ◼ YoY-4.7%
232,610 266,735 231,327 ◼ QoQ-20.4%
193,211 184,087
0 0.00
2017Q1 2017Q2 2017Q3 2017Q4 2018Q1
Revenue Operating Profits Net Profits EPS
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30.0%
Sales price of products have been raised on Q1’18 to release cost pressure.
25.0% 24.5% 24.2% 23.7% 23.9%
21.8%
20.0%
17.9% 17.6%
17.0%
16.3%
15.8%
15.0%
12.1%
10.0% 11.7%
10.8% 10.8%
9.8%
5.0%
0.0%
2017Q1 2017Q2 2017Q3 2017Q4 2018Q1
Gross Margin Operating Profits Margin Net Profits Margin
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100%
10.5% 12.3% 9.6% 11.8% 13.8%
90%
80%
70%
60%
50%
89.5% 87.7% 90.4% 89.2% 86.2%
40%
30%
20%
10%
0%
2017Q1 2017Q2 2017Q3 2017Q4 2018Q1
China Other Regions
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100%
2.2% 1.8% 2.0% 2.3% 2.4%
90% 12.1% 12.0% 12.0% 12.7% 12.9%
80%
70%
42.0% 43.2% 43.9%
60% 46.8% 47.3%
50%
40%
30%
20% 43.7% 43.0% 42.1%
38.2% 37.4%
10%
0%
2017Q1 2017Q2 2017Q3 2017Q4 2018Q1
Piston Screw Scroll Others
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➢ Ability to set air pressure at any desired level and output at constant pressure, providing greater energy savings

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%	0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%	30	30	30	30	30	30	30	30	30	30
				1.9% 25.	8%	25.	9%		26.	4%	26.
									24.6%		24.9%
						14.2%
			F-variable Screw Type

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◼ The of is sensitive and gross margin piston-type compressors high relative to peers competition and steel price

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29.0%
27.5%
27.0% 27.0%
26.7%
27.0% 26.2%
26.8% 26.5%
26.4%
26.7%
25.0% 26.0%
23.0%
21.0% 20.8%
20.7%
20.4%
21.0%
19.3%
19.0%
17.0%
15.0%
2017Q1 2017Q2 2017Q3 2017Q4 2018Q1
Piston Screw Scroll
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5years Steel Prices in China

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Unit: NTD’000

Items	Q1 2017	Q1 2018	YoY(%)
	Amount ％	Amount ％	TWD RMB
Revenue	1,789,039 100.0%	1,887,308 100.0%	5.5% 3.6%
Gross profits 437,824 24.5%		451,110 23.9%	3.0% 1.2%
Operating profits 303,926 17.0%		306,907 16.3%	1.0% -0.8%
Income before tax 291,900 16.3%		286,385 15.2%	-1.9% -3.6%
Income tax (98,690) -5.5%		(102,298) -5.4%	3.7% 1.8%
Net profits 193,211 10.8%		184,087 9.8%	-4.7% -6.4%
EPS 1.93		1.84

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Unit: NTD’000

Items 2017	Q1 2018
Cash 2,331,573	2,489,424
Trade receivables 950,824	847,725
Inventories 284,466	290,213
Other current assets 1,996,505	2,048,968
Fixed assets 669,336	672,963
Other assets 64,507	174,158
Total assets 6,297,211	6,523,451
Short-term borrowings 50,215	51,117
Tradepayables 626,238	519,977
Other current liabilities 691,711	742,046
Total liabilities 1,368,164	1,313,140
Share capital 1,000,000	1,000,000
Capital reserves 1,548,200	1,548,200
Retained earnings 2,706,524	2,890,611
Other reserves -325,677	-228,500
Total equity 4,929,047	5,210,311

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Thank You.

Q&A

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