LOTES — Annual Report 2019

Apr 1, 2020

嘉澤端⼦⼯業股份有限公司

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Executive Summary

• ✓ LOTES specializes in the design and manufacture of inter-connect solutions for Server, PC, Automotive, Industrial and Medical. According to Bishop & associate, LOTES rank no.6 in computer and peripherals and no.30 worldwide.

• ✓ As world wide top 3 CPU sockets supplier, LOTES is being selected by many customers as their strategic partner. Thus LOTES has more chance to codevelop the front-end products with them.

• ✓ Being a connector and socket leading supplier in Server and PC industry, we see more and more opportunities in the upcoming generation.

• ✓ With world-renowned tier 1 customers in automotive industry, LOTES keep receiving inquires from various automotive customers. We expect it will contribute more in few years.

經營綜合報告

• ✓ LOTES為⼀專業設計及製造連接器／連接線給伺服 器、個⼈電腦、汽⾞、⼯控及醫療的廠商。依Bishop 統計，在電腦暨週邊連接器廠商中LOTES全球排名 。

• 第六，不分⾏業別排名全球排名第三⼗

• ✓ 做為全球前三⼤中央處理器插座供應商，客⼾多會將 LOTES選為策略供應商。LOTES也因此得到許多與 客⼾共同開發新⼀代產品的機會。

• ✓ 做為伺服器及個⼈電腦連接器與插槽的領導廠商， LOTES在新⼀代的機型上取得佷多的機會。

• ✓ 因打入全球知名汽⾞⼀階⼤廠供應鏈，LOTES持續 取得各式⾞⽤連接器/連接線的詢單，⾞⽤市場將在 未來數年內有更顯著的貢獻。

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Agenda

✓Company Profile ✓Business Outlook

✓Financials at Glance ✓Q & A

議程

✓公司簡介 ✓營運概況 ✓財務概況 ✓問答交流

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公司簡介

COMPANY PROFILE

股票代號：3533.TW

Stock Symbol : 3533.TW

2019.12.6列為台灣中型100指數成份股 2019.12.6列為台灣發達指數成份股

Inclusion in FTSE TWSE Taiwan Mid-Cap 100 Index in Dec 6[th] , 2019 Inclusion in FTSE TWSE Eight Industries Index in Dec 6[th] , 2019

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About LOTES

• ✓ In 1986, Mr. Ju and Mr. Ho co-founded LOTES. They firmly believes continuous research and development, and non-stop improvement are the foundation of LOTES. With this belief, LOTES has became a world class inter-connect solution provider.

• ✓ LOTES owns over 3200 patents applied worldwide, top 2 among Taiwan connector makers.

• ✓ LOTES fully integrated processes in house including design, tooling, molding, stamping, electro-plating and automation assembly. It render us more flexibility to support our customers.

• ✓ With ISO17025 certification, LOTES reliability test lab is capable of providing industry standard test reports and also meeting customers’ test requirements. Which can shorten the time and lower the expense on product validation.

• ✓ Certified with ISO 9001, IATF 16949, ISO 13485, AS 9100, ISO 14001, OHSAS 18001, QC 080000, and ISO 14064.

關於 LOTES

• ✓ 董事長與總經理於1986年成立LOTES，他們深信不斷研 究、持續改善是LOTES發展的基⽯。依著這樣的信念， LOTES已成為世界級連接器/連接線的供應商。

• ✓ LOTES在全球擁有超過3,200件連接器／連接線專利

• ✓ LOTES⾼度製程整合，包括產品設計、模治具及⾃動化設 備開發、射出成型、⾦屬沖壓、電鍍、組裝等， 以使我們 能更有彈性的服務客⼾。

• ✓ LOTES有著已取得 ISO 17025認證的信賴性實驗室，可出 具⾏業標準報告，亦可依客⼾規範進⾏測試，並可縮短產品 驗證時間，並降低驗證的費⽤。

• ✓ 已取得 ISO 9001, IATF 16949, ISO 13485, AS 9100, ISO 14001, OHSAS 18001, QC 080000 及 ISO 14064等品質系 統認證。

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Geographic profile of LOTES 全球佈局

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斯圖加特
奧瑞岡 Stuttgart, 蘇州
Beaverton, OR Germany Suzhou, China
休⼠頓
聖荷⻄
Houston, TX
San Jose, CA 廣州 LINTES Taipei
Guangzhou,
Keelung, Taiwan (HQ)
China
嘉澤 ＆ 嘉基
Singapore
新加坡
Manufacturing Sites⼯廠
Sales / Eng support服務據點
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Geo ra hic rofile in China g p p

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• Established: 2010 Hengnan湖南
• Employees : 1000
• Function: Tooling Center, Cable Assembly
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•• Established: 1993Employees : 6000 Guangzhou廣州
• Function: R&D, Tooling, Molding, Stamping, Electro-
Plating and Assembly
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• Established: 2004 Suzhou蘇州
• Employees: 1200
• Function: Product Design, Tooling, Molding,
Stamping, Eletro-Plating and Assembly
• Established in 2011 LINTES中和
• Employees : 400
• Products: Thunderbolt, Type C, High
Speed Cable, Active Optical Cable
• Established: 1986 LOTES基隆
• Employees : 100
• Function: R&D, Sales, Finance
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Geographic profile in Guangzhou

➢ 4 of our Guangzhou facilities are leased

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Facility LD
Facility WZ Slot
20min drive
25min drive
Main Facility CPU Socket
15min drive
40min drive Facility DJ IO
Facility Electro-
ZhongShan Plating
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Integration plan in Zhongshan 中⼭廠整合計劃

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New plant in Zhongshan: 140,000 sqm

Phase 1 Phase 2 Phase 3 Sep-19 2H '20 2H '21 Block B Factory Dorm H & E Block A Factoy Warehouse Block C Factory Dorm G & F

No CPU socket and LM parts move until at least Phase 3 is complete

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LOTES’ Core Competence 核⼼競爭⼒

Stamping Die Injection Mold 沖壓模具 塑膠模具 100% of design and fabrication in house 100% ⾃⾏設計及製造

Assembly Jigs Automation Machines 組裝治具 ⾃動機

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LINTES’ Competiveness 嘉基核⼼競爭⼒

High Speed Socket Design Precision Micro Lens design Capability capability ⾼速連接器設計 ⾼精度光學鏡片設計 High Speed Cable⾼速線纜 (Optical / Electrical / Active / Passive) Precision Die/Wire Bond Electrical/Optical Cable Capability HVM ⾼精密固晶打線製程 電⼦／光纖線量產能⼒

AOC 主動式光纖

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ACC 主動式銅線
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經營概況

BUSINESS OVERVIEW

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Sales Revenue 營收走勢

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Million USD
500
-New product launch
(DDR4)
-Strategic customers
375
start to contribute
New product launches
-Server SKT R
-Desktop SKT H
250 -Laptop SKT G
New product
Gain market launches
share from -Mechanical parts for
competitors Purley
125
-LINTES TBT3 cable
series
Laptop CPU on board New Generation
New Generation Change
No socket needed Change
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
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Business Covera e g

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Desktop Strategy
Customers LINTES
Laptop
Server Automotive Industrial
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Revenue share	24%~27%	11%~12%	30%~33%	11%~13%	1%~2%	2%~3%	14%~16%
Current main product	-CPU Socket -DDR -PCIE	-SODDR -M.2 -I/O	-All types of connectors	-Connectors -Cable -Mechanical parts	-Connectors -Wire harness	-Connectors -Wire harness	-Docking cable -Thunderbolt 3 cable -AOC
Market trend	Yearly 1~3% ↗	Yearly→ →	Yearly 1~3% ↘	↗	↗	↗	↗
Sales outlook	↗	→	→	↗	↗	↗	↗
~~Confidential~~ Future product plan	-Storage -Power -Optical	-Type C -Type C cable	-Socket H5 -Socket V -DDR5	~~14~~ -Customize d	-Customize d	~~Al~~ -Customize d	~~Cti~~ -Customize d

LOTES’ Plan

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2013 2019 Within next 5yrs
Main
Laptop 80% 44% 30%
Busines
Desktop
s
Future 2013 2019 Within next 5yrs
Server
Focus Automotive
LINTES 20% 56% 70%
Strategy
Customers
Industrial
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New Product Plan

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DDR5
Desktop PCIe Gen 4
Socket H5 Socket V
PCIe Gen 4 PCIe Gen 5
SMT DDR4 DDR5
Server
Socket P0 Socket P4 Socket E
2018 2019 2020 2021 2022
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LOTES

FINANCIAL DATA

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Income Statement 損益表

Unit: million NTD

	2014	2015	2016	2017	2018	2019
Revenue	8,304	8,197	8,863	10,482	13,311	15,089
Gross profit	2,834	2,765	2,817	3,390	4,348	5,467
Operating Expense	1,730	1,985	2,090	2,170	2,366	2,717
Operating profit	1,104	780	728	1,220	1,982	2,750
Net Profit	1,078	796	690	956	1,608	2,076
EPS(NT$)	11.53	8.52	7.38	10.23	17.21	20.11
DPS (NT$)	5.5	4.5	4	5.5	8.7	10.5
Payout R(%)	47.70%	52.82%	54.20%	53.76%	50.55%	52.21
Gross Margin(%)	34.13%	33.73%	31.79%	32.34%	32.67%	36.24%
Operating Margin(%)	13.30%	9.52%	8.21%	11.63%	14.89%	18.00%
Net Margin(%)	12.98%	9.71%	7.79%	9.12%	12.08%	18.23%
RD/sales(%)	8.14%	9.94%	10.00%	7.28%	6.79%	7.32%
EBITDA(NT$/Share)	17.84	14.99	13.55	19.94	31.02	37.59
ROE(%)	14.87%	10.06%	8.66%	11.81%	18.08%	19.47%

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Balance Sheet 資產負債表

Unit: million NTD

	2014	2015	2016	2017	2018	2019.12.31
Total Assets	10,500	10,857	10,478	11,753	13,790	16,280
Cash	1,396	2,041	1,465	1,319	1,448	2,845
Accounts receivable	3,015	3,263	3,736	4,293	5,291	5,949
Inventories	1,192	1,277	1,557	1,790	2,228	1,976
Property, plant and equipment	2,272	2,193	2,528	2,875	3,350	3,514
Total liabilities	2,664	2,769	2,503	3,321	3,918	3,734
Short-term borrowings	591	416	108	600	919	30
Accounts payable	1,213	1,352	1,447	1,701	1,743	1,885
Total equity	7,776	8,039	7,897	8,285	9,506	11,815
Share capital	935	935	935	935	935	1,035
Capital surplus	2,362	2,366	2,383	2,410	2,466	3,959
Retained earnings	4,060	4,346	4,616	5,196	6,296	7,172
Current Ratio(%)	297.40%	281.06%	287.80%	239.92%	246.79%	314.00%
Debt Asset ratio(%)	25.36%	25.50%	23.38%	27.91%	28.41%	22.94%
Book Value Per Share	83	86	84	89	102	114
Average AR turnover days	138	140	144	140	132	137
Average Inventory turnover days	84	91	97	99	93	90
Average AP turnover days	87	87	85	81	71	70

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Consolidated Cash Flows Statement 現⾦流量表

Unit: million NTD

(NT$ M)	2016		2017	2018	2019.12.31
Cash Flows from Operating Activities		879	1,026	1,508	3,360
Cash Flows from Investing Activities		(390)	(1,137)	(1,419)	1,492
Cash Flows from Financing Activities		(637)	186	96	(149)
Impact from Changes in FX Rate		(428)	(221)	(55)	(321)
Net Increase in Cash		(576)	(146)	129	1,398
Cash, beginning of the period		2,041	1,465	1,319	1,448
Cash, end of the period		1,465	1,319	1,448	2,845
Note:	2016		2017	2018	2019.12.31
Capital expenditures		527	1,045	1,308	1,127
Capex/sales(%)		5.95%	9.97%	9.82%	7.46%

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Q&A

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Socket P PHLMs Separate Parts

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