LOTES — Interim / Quarterly Report 2020

Jun 9, 2020

嘉澤端子工業股份有限公司

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Executive Summary

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• LOTES specializes in the design and manufacture of interconnect 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 co-develop 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

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• 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

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 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

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• 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

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• 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, Germany 蘇州
Beaverton, OR Suzhou, China
休士頓
聖荷西
San Jose, CA Houston, TX 廣州 LINTES Taipei
Guangzhou, China
Keelung, Taiwan (HQ)
嘉澤 ＆ 嘉基
Singapore
新加坡
Manufacturing Sites 工廠
Sales / Eng support 服務據點
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Geographic profile in China

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• Established: 2010 Hengnan 湖南

• • Employees : 1000 • Function: Tooling Center, Cable Assembly •• Established: 1993Employees : 6000 Guangzhou 廣州 • Function: R&D, Tooling, Molding, Stamping, Electro-Plating and Assembly

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Suzhou 蘇州

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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
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LINTES 中和

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• Established: 1986 LOTES 基隆
• Employees : 100
• Function: R&D, Sales, Finance
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Geographic profile in Guangzhou

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 4 of our Guangzhou facilities are leased

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Facility LD
Facility WZ Slot
20min drive
25min drive
Main CPU Socket
Facility
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

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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 Capability Electrical/Optical Cable HVM 高精密固晶打線製程 電子／光纖線量 產 能力 LINTES Technology listed in TWSE with stock symbol 6715 in November 15[th] , 2018.

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
625
-New product launch
(DDR4)
500
-Strategic customers start
to contribute
New product launches
375
-Server SKT R
-Desktop SKT H
-Laptop SKT G
New product launches
250
Gain market share -Mechanical parts for
from competitors Purley
-LINTES TBT3 cable
series
125
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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Strategy
Customers LINTES
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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	↗	→	→	↗	↗	↗	↗
Future product plan	-Storage -Power -Optical	-Type C -Type C cable	-Socket H5 -Socket V -DDR5	-Customized	-Customized	-Customized	-Customized

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LOTES’ Plan

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2013 2019 Within next 5yrs Main 80% 44% 30% Business Future 2013 2019 Within next 5yrs Focus LINTES

56% 70%

20%

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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

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Unit: million NTD

	2014	2015	2016	2017	2018	2019	2020Q1
Revenue	8,304	8,197	8,863	10,482	13,311	15,089	31,367
Gross profit	2,834	2,765	2,817	3,390	4,348	5,467	1,122
Operating Expense	1,730	1,985	2,090	2,170	2,366	2,717	654
Operating profit	1,104	780	728	1,220	1,982	2,750	467
Net Profit	1,078	796	690	956	1,608	2,076	413
EPS(NT$)	11.53	8.52	7.38	10.23	17.21	20.11	3.99
DPS (NT$)	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%	35.78%
Operating Margin(%)	13.30%	9.52%	8.21%	11.63%	14.89%	18.00%	14.91%
Net Margin(%)	12.98%	9.71%	7.79%	9.12%	12.08%	18.23%	13.16%
RD/sales(%)	8.14%	9.94%	10.00%	7.28%	6.79%	7.32%	9.23%
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

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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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