Lida — Interim / Quarterly Report 2019

Nov 15, 2019

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Lida Holdings Limited Ticker:4552

Financial Review of 3Q 2019 15 Nov. 2019

• • Leading player in the high end general purpose air compressor segment in China.

Safe Harbor

• The information contained in this document wasn’t verified by an independent third party. Lida holdings company does not responsible for the accuracy, fairness, and completeness of any information contained in this document. You should not assume any information in this document to be accurate, fair, nor complete. The information or opinions contained in this document is provided on a specified date, which Lida holdings company reserves all right to update.

• Lida holdings company has no obligation to notify you of any updates after a specific date or any development of information in the documents.Lida holdings company will not accept any liability for any loss resulting from the use of this document or its contents or for other reasons related to this document. This document does not constitute an offer or solicitation of an offer of purchase or acquisition to sell or issue shares of Lida holdings company or any of its subsidiaries or related parties in any jurisdictions, does not serve as a part an offer or incentive, nor should be interpreted as such.

• Any part thereof or distribute the facts does not constitute the basis of any contract or commitment, and should not be relied upon in respect of any contract or commitment.

Corporate Overview

Date of Establishment May 11, 2012 and listing Chairman Wu Chien-Neng (Representative of Yi Yuan Enterprises Ltd) General Manager Chen Yi-Ping ， Paid-in Capital NT$1.16 billion As of September 2019 Engage in the research, development, manufacturing and marketing of Business Scope self-branded air compressors through trade names mainly with "Luowei“.

Consolidated Revenue NT$4.12 billion /EPS 2.28(2019Q1~3)

Production Sites

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

2.Jiangxi Province - Lida (Jiangxi) Machine Equipment Co., Ltd. 3. Lida Industrial Park-under construction

No. of Employees 1,525

Main Products

Category	Revenue % (2Q19)	Revenue % (3Q19)	Attributes & Application
Piston- type	31.5%	28.6%	⚫Ease of use, high mobility, affordability. ⚫Wide range of users, from individuals to small- and medium- enterprises.
			⚫Medium- to large-sized manufacturers,
			including but not limited to: industrial
Screw- type	52.8%	54.9%	production, automobile, textile, packaging and petrochemicals. ⚫Higher operating efficiency, especially
			under continuous operation.
			⚫Energy efficiency and ease of operation.
			⚫High quality compressed air.
			⚫Particularly suitable in safety-conscious
			applications, such as medical,
Scroll- type	13.1%	13.5%	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.

Air Compressor Classifications

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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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Air Compressor Process 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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Use of Air Compressors Use of Air Compressors

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Laser Cutting
Production line
Dynamic Movie Theater Robot Arms CNC Machine Center Paint Spraying
Textile Equipment
Food & Beverage processing
PET Blowing
Printing Equipment
Pneumatic Tools
Medical equipment
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Lida end users, by Industry

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2016年首三季
2018 2015年度 2019YT9
Others, 9.0%
Others,
9.7%
Food
Food
Industrial Processing, Industrial
Processing,
Manufacturing, 9.7% Manufacturing
9.9%
34.4% , 33.9%
CAGR Pharmaceutical,
9.5%
Pharmaceutic
al, 9.6% Electronics, 7.6%
Electronics,
7.3%
Auto Package
Package Mining & Auto
printing, 4.0% Manufacturing, printing, 3.9% Mining &
Metallurgy, Manufacturing,
4.8% Metallurgy, 9.9%
8.6% 4.9%
Textile&Appar
Textile&Appar
Chemical & el, 6.2% Chemical &
el, 6.4%
Petrochemical, 5.2% Petrochemical, 5.4%
Source: Lida
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The future trend of screw compressors in china

• ➢ According to the Report of Prospect and Investment Strategy Planning, the western developed countries accounted for 80% of the market share in screw compressor sector. Currently, the market share in China is still in low level and therefore there is huge space for replacement from piston compressors to screw compressors.

• ➢ The large market in China is 120P or above models. 60P or above models are in replacement stage while most of 75P or above models have completed the replacement process. Taking into the factors of upgrade in production capacity and energy conversation, the conversion from the normal screw compressors to high-end energy-saving screw compressors will continue.

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Special
CAGR
compressors
Horse-power
Screw compressors
Scroll
Piston
compressors
Level of industrial automation
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Product Diversification

Screw Type F Type Two-Stage Type E Type Scroll Type 10

Focus on R&D and high-end level market

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Vertical
Integration
Self-production of screw head
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-
Focus on high end market and increase gross profits market of products
Oil-Free
Scroll Type VariableF VariableF+ RTwo Stage E Type Screw Type(under
development)
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Sales Model

Sales - of air compr essors

Original large distribution channels

Matured distribution channels - Sales through 70 first-tier local distributors, extending to second-tier and third-tier local distributors throughout China.

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—
北京奧運主體育場 鳥巢建
築
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Export sales through importers Through importers and large exhibitions - The sales orders mainly come from Asia and Europe.

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Enhance brand awareness

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HANNOVER MESSE 2019 China Import and Export Fair
2019
CAGR
Taiyuan Coal (Energy) Industrial Technology
and Equipment Exhibition 2019
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Lida Industrial Park

• ➢ Purpose

• Internal factor: Develop high-end screw compressor market for long-term demand and scale.

• External factor: Cooperate with the government in increasing the efficiency and proper planning for the land use policy.

• ➢ Area

• Located in Taiwanese Zone, Quanzhou. Total industrial use area is 185,514 square meter.

• ➢ Amount

• The budget for construction of the new factory is RMB489 million. The construction is subcontracted according to the planned timetable.

➢ Progress

• Commenced on August 2018. 40% completed as at today. Expected completion date: end of 2020.

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Lida Industrial Park

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2019.04
2019.07
◼ YoY-29.9% ◼ YoY-54.4%
◼ QoQ-6.0% ◼ QoQ+1.9%
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2019.06
2019.10
◼ YoY-61.5%
◼ QoQ-5.4%
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Revenue and Profit

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，
Unit: NT’000 Paid-in capital NT$1.16 billion
1,964,794
2,000,000 2.50
2.17
1,537,312 2.00
1,466,334
1,500,000
1,378,085
1,279,793
1.50
1,000,000
1.07
1.00
0.88
0.84
500,000
324,523 0.55 0.50
249,842
145,145 147,929
104,625
252,027
123,883 64,342 102,591 97,008
0 0.00
2018Q3 2018Q4 2019Q1 2019Q2 2019Q3
Revenue Operating Profits Net Profits EPS
◼ YoY-29.9% ◼ YoY-54.4% ◼ YoY-61.5%
◼ QoQ-6.0% ◼ QoQ+1.9% ◼ QoQ-5.4%
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Revenue and Profit

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25.0% 23.6%
23.2%
20.5%
20.2%
19.0%
20.0%
16.5% 16.3%
15.0%
10.7%
12.8% 9.9%
10.0%
8.2%
8.1%
7.0% 7.0%
5.0%
5.0%
0.0%
2018Q3 2018Q4 2019Q1 2019Q2 2019Q3
Gross Margin Operating Profits Margin Net Profits Margin
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Revenues by Region

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100%
12.3%
90% 18.4% 24.3% 20.9% 5.4%
Asia 10.6%
80%
70%
60%
50%
87.7% 85.9%
40% 81.6% 79.1% 79.9%
75.7%
30%
20%
10%
0%
2018Q2 2018Q3 2019Q2 2019Q3 2018YT9 2019YT9
China Others
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Revenues by Products

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100%
2.8% 3.1% 2.7% 2.5% 3.0%
90% 13.1% 13.0% 13.1% 13.1% 13.5%
80%
70%
60% 48.6%
50.5% 51.0% 52.8%
54.9%
50%
40%
30%
20%
35.5%
33.4% 33.2% 31.5%
28.6%
10%
0%
2018Q3 2018Q4 2019Q1 2019Q2 2019Q3
Piston Screw Scroll Others 19
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Product Mix by Screw Type

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100%
6.1% 6.9% 8.5%
11.7%
14.2%
90%
80% 24.1% 24.4% 23.7%
23.4%
24.2%
70%
60%
50%
40%
69.8% 68.7% 67.8%
64.9%
30% 61.7%
20%
10%
0%
2018Q3 2018Q4 2019Q1 2019Q2 2019Q3
Original-Type F-Type Two-Stage Type
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Gross Profits Margin by Products

12.0% 14.0% 16.0% 18.0% 20.0% 22.0% 24.0% 26.0% 28.0%	26.1%	26.1%	255%	13.4% 14.2% 14.3% 22.8% 23.9% 24.2% 19.6% 20.5% 20.5% 2019Q1 2019Q2 2019Q3 Screw Scroll
	20. 25.5	0% %	19.1% . 25.0%	13.4% 14.2% 14.3% 22.8% 23.9% 24.2% 19.6% 20.5% 20.5%
	2018Q3		2018Q4 Pi
			ston	crew

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Steel Prices Trend

5years Steel Prices in China

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Income Statement

Unit: NTD’000

Items		2019Q3	2019Q2 2018Q3 QoQ(%) YoY(%)
		Amount ％	Amount ％ Amount ％ TWD RMB TWD RMB
Revenue		1,378,085 100.0%	1,466,334 100.0% 1,964,794 100.0% -6.0% -3.7%-29.9% -28.9%
Gross profits		282,998 20.5%	295,738 20.2% 456,766 23.2% -4.3% -2.0%-38.0% -37.3%
Operating profits		147,929 10.7%	145,145 9.9% 324,523 16.5% 1.9% 4.2%-54.4% -53.9%
Non operating income and expenses		2,678 0.2%	13,727 0.9% 39,270 2.0% -80.5% -79.5%-93.2% -92.7%
Income before tax		150,607 10.9%	158,872 10.8% 363,793 18.5% -5.2% -3.0%-58.6% -58.0%
Income tax		(53,599) -3.9%	(56,281) -3.8% (111,766) -5.7% -4.8% -2.5%-52.0% -51.5%
Net profits		97,008 7.0%	102,591 7.0% 252,027 12.8% -5.4% -3.3%-61.5% -60.9%
EPS		0.84	0.88 2.17

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Paid-in capital NT$1.16 billion

Income Statement

	Income Statement	Income Statement	Income Statement
	Unit: NTD’000
Items		2019Q1~Q3	2018Q1~Q3 YoY(%)
		Amount ％	Amount ％ TWD RMB
Revenue		4,124,212 100.0%	6,005,669 100.0% -31.33% -30.21%
Gross profits		821,459 19.9%	1,418,565 23.6% -42.09% -41.15%
Operating profits		397,699 9.6%	991,515 16.5% -59.89% -59.24%
Non operating income and expenses		15,057 0.4%	(6,998) -0.1% -315.16% -318.72%
Income before tax		412,756 10.0%	984,517 16.4% -58.08% -57.39%
Income tax		(148,815) -3.6%	(338,795) -5.6% -56.08% -55.36%
Net profits		263,941 6.4%	645,722 10.8% -59.12% -58.46%
EPS		2.28	5.57

Paid-in capital NT$1.16 billion

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Balance Sheet

Unit: NTD’000

Items	2019Q3	2019Q2 2018Q3
Cash	3,327,009	2,463,748 3,070,023
Trade receivables	1,183,453	1,130,183 761,660
Inventories	228,145	257,476 278,876
Other current assets	800,503	1,851,213 1,788,449
Fixed assets	1,107,809	948,753 756,073
Other assets	304,118	254,818 178,352
Total assets	6,951,037	6,906,191 6,833,433
Short-term borrowings	91,350	49,731 93,156
Trade payables	860,692	785,560 484,841
Other current liabilities	994,995	968,083 1,315,297
Total liabilities	1,947,037	1,803,374 1,893,294
Share capital	1,160,000	1,160,000 1,000,000
Capital reserves	1,548,200	1,548,200 1,548,200
Retained earnings	2,850,070	2,753,062 2,852,246
Other reserves	(554,270)	(358,445) (460,307)
Total equity	5,004,000	5,102,817 4,940,139

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