LU HAI — Interim / Quarterly Report 2019

Aug 26, 2019

六暉控股股份有限公司 LU HAI HOLDING CORP. 六暉 -KY(2115) 2019 H1 Business Review

Safe Harbor Notice

This presentation and discussion contain certain forward-looking statements with respect to the result of operation, financial condition and current The statement are expectation. forward-looking subject to know and unknown uncertainties and risks that could cause actual results to differ materially from those expressed or implied by such statements. Therefore, please refer to the information on MOPS website as the main basis if has been made. LUHAI any adjustment undertakes no obligation to update these forward-looking statements for events or circumstances that occur subsequent to such date. ( http://mops.twse.com.tw)

1

Company Profile

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Foundation ： 2009.10.19 Stock Listing ： 2013.12.25

Capital NTD 819.65 million

Production Valves, about 80 % Accessories and others, about 20%

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Chairman/General Manager Simon Hsu

Number of employees 1,363 (As of July 2019)

Production Capacity 66 million pcs / Month

2

Global Locations

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XH
XH
LH
(XINLING)
(GUANKOU)
1983
1990 2000
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LU HAI INDUSTRIAL CORP.

XIAMEN XIAHUI RUBBER METAL

XIAMEN XIAHUI RUBBER METAL

1. Location ： Taiwan

2. Land area ： 4,899 ㎡

INDUSTRIAL CO., LTD (PLANT XINLING)

1. Location ： Jimei District, Xiamen China

INDUSTRIAL CO., LTD (PLANT GUANKOU)

1. Location ： Jimei District, Xiamen China

2. Product Category ： Taiwan market’s valve

3. Sales Market ： 100% sale to Taiwan

4. Land area : 12,820 m²

5. Majority Product Category : Bicycle.

6. Motorcycle. Electric motorcycle.

7. Sales Market : 40% for domestic (South China). 60% For sale abroad.

8. Land area : 16,438 m²

9. Majority Product Category : TPMS Valves. Precision machining accessories.

3

Global Locations

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KH
1997
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LUHAI RUBBER METAL INDUSTRIAL

(KUNSHAN) CO., LTD.

1. Location ： Kun Shan, Jiangsu China

2. Land area : 36,138 m²

3. Majority Product Category : Passenger Car.

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IH
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2011

PT. LUHAI INDUSTRIAL

  1. Location ： Serang, Indonesia

  2. Land area : 57,777 m²

  3. Majority Product Category : Motorcycle

  4. Sales Market : Indonesia (ASEAN and Moslem market)

• Light Truck. Truck. Agricultural & OTR

• Sales Market : 70% for domestic (East China

• and North China) 30% For sale abroad.

4

XIAHUI New Plant

LAND CONSTRUCTION PRODUCTION 2018 2018 2020 Acquire land Factory construction Started the production Start on Nov. 2018 on mid-year 2020 on Jan. 2018

Land area ： 54,784 m[2] Gross floor area ： 90,240 m[2] Floor Area Ratio ： 1.64 Building density ： 57% 5

Main Products

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Bicycle Valves Series
Motorcycle Valves Series
Passenger Car
Valves Series
Truck, Bus, Agricultural
& OTR Valves Series
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6

TPMS Valve

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TPMS Legislation
RUSSIAN
2016.01
EUROPE
JAPAN unknown
AMERICA 2012.11
2005.10 CHINA KOREA 2013.01
2020 TAIWAN
2016.07
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7

Material Trend

Copper Aluminum

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Rubber

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Copper (SHFE)

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Rubber (SHFE)

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8

Niche Business Model and Production Process

• Achieve economies of scale, renowned brand and leader manufacturer in the field.

• Possess well-appointed production line and be able to provide one-stop shopping service.

• Focus on own field. Only develop market with customer, never compete with customer.

• Reclaim own copper scrap. That is to decrease cost and ensure copper quality.

• The electroplating and rubber mixing is all done by our own factory, thus, ensuring product quality.

• High automation level, attaching great importance to EH&S.

• Possess three production bases which are relatively located in China and Indonesia. Group production could be allocated flexibly.

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Material Threading Multiple Post-
Forging Washing
cutting rolling processing processing
Material Rubber
Electroplating
cutting mixing
Rivet and
Rivet Third-
Coarsening Curing valve Washing
removing processing
inserting
Goods
Bending Inspection Packing
outgoing
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9

Financial Results

ncial Results	ncial Results
NTD thousand
2016 2017 2018	2019H1 2018H1 YoY(%)
Revenue 2,606,582 2,647,010 2,628,778	1,336,021 1,272,362 5.00
Gross Profit 682,178 681,005 561,055	291,179 250,105 16.42
Gross Profit% 26.17 25.73 21.34	21.79 19.66
Operation Expense 276,135 285,804 291,713	141,395 145,412 -2.76
Operation Expense% 10.59 10.80 11.10	10.58 11.43
Operating Profit 406,043 395,201 269,342	149,784 104,693 43.07
Operations Profit% 15.58 14.93 10.25	11.21 8.23
Net Income 318,406 274,152 208,463	104,443 76,922 35.78
Net Income% 12.22 10.36 7.93	7.82 6.05
Capital 744,947 819,650 819,650	819,650 819,650
EPS 4.27 3.35 2.54	1.27 0.94 35.11
Dividend 1+1 1.5 1+0.5

10

Financial Results

NTD thousand

	NTD thousand
2016 2017 2018	2019H1 2018H1
Cash and cash equivalents 880,938 927,331 824,221	811,721 817,582
Accounts/Note receivables 706,473 627,733 666,059	695,419 666,862
Inventories 430,083 627,128 565,263	603,773 525,626
Property, plant and equipment 621,704 634,053 723,273	912,086 686,116
Total assets 3,028,501 3,282,097 3,383,863	3,570,902 3,257,702
Debt ratio(%) 32.51 33.05 34.17	35.97 33.71
The Net Asset Value of Each Share 27.44 26.81 27.18	27.90 26.35
CASH FLOWS FROM OPERATING ACTIVITIES 383,512 244,282 322,913	42,961 129,947
CASH FLOWS FROM INVESTING ACTIVITIES (273,937) (214,547) (340,155)	(123,683) (190,418)
CASH FLOWS FROM FINANCING ACTIVITIES (155,990) 22,865 (74,483)	60,496 (59,437)

11

Financial Results

NTD thousand	Revenue 2015 2016 2017 2018 2019	Revenue 2015 2016 2017 2018 2019
	Q1 650,772 617,421 679,120 627,683 673,385
	Q2 647,847 664,226 663,527 644,679 662,636
	Q3 580,666 639,234 638,372 670,075
	Q4 595,342 685,701 665,991 686,341
	500,000 550,000 600,000 650,000 700,000	Q1 Q2 Q3 Q4 2015 2016 2017 2018 2019

12

Financial Results

Gross Profit (NTD thousand) Gross Profit (%) 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Q1 134,301 155,248 192,125 123,139 144,351 20.64 25.14 28.29 19.62 21.44 Q2 145,910 170,507 172,497 126,966 146,828 22.52 25.67 26.00 19.69 22.16 Q3 123,992 167,761 149,156 147,469 21.35 26.24 23.37 22.01 Q4 141,437 188,662 167,227 163,481 23.76 27.51 25.11 23.82

Gross Profit YoY 16.42% 21.79% Gross Profit rate up 2.13%

： Comparison

• Copper Cost declined

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19.66%
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• Sales Portfolio

• Foreign Exchange effect little

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2018H1 2019H1
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13

Financial Results

Operating Profit (NTD thousand) Operating Profit (%) 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Q1 67,511 86,912 120,369 52,558 75,673 10.37 14.08 17.72 8.37 11.24 Q2 84,035 107,297 102,190 52,135 74,111 12.97 16.15 15.40 8.09 11.18 Q3 59,947 100,617 79,070 70,074 10.32 15.74 12.39 10.46 Q4 70,806 111,217 93,572 94,574 11.89 16.22 14.05 13.78

Net Income(NTD thousand)	Net Income(%)
2015 2016 2017 2018 2019	2015 2016 2017 2018 2019
Q1 58,296 65,530 86,399 29,316 54,694	8.96 10.61 12.72 4.67 8.12
Q2 65,198 84,386 74,226 47,606 49,749	10.06 12.70 11.19 7.38 7.51
Q3 66,317 79,801 55,861 55,094	11.42 12.48 8.75 8.22
Q4 56,694 88,689 57,666 76,447	9.52 12.93 8.66 11.14

14

Financial Results

		2016	2017	2018	2019Q1	2019Q2
Capital	Debts ratio	32.51	33.05	34.17	31.81	35.97
structure analysis (%)	Long term funds to fixed assets	398.09	373.34	389.66	379.76	303.80
Liquidity	Current ratio	408.74	268.74	423.90	470.90	298.42
analysis (%)	Quick ratio	324.89	196.85	316.68	356.55	218.37
	Average collection turnover (days)	95	94	92	90	95
Operating performance analysis	Average inventory turnover (days)	86	102	109	102	106
	Average payables turnovers(days)	9.09	7.88	7.63	7.72	7.61
Return on	Return on assets(%)	10.93	8.94	6.51	6.68	6.27
investment	Return on equity(%)	15.52	12.93	9.42	9.56	9.25
analysis (%)	Net income(%)	12.22	10.36	7.93	8.12	7.82

15

Revenue Breakdown by product category

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2017
17.24%
21.24%
2019 H1
5.73%
6.67
配件及其他
Accessories and others
13.99% 35.13% 17.41% 腳踏車 BC
21.60%
TPMS 類
7.05%
汽車 PC 4.21%
2018
機車、電動摩托車
、
MC Electric MC
14.62%
17.56% 19.87% 卡車及非道路用車 35.11%
、 、 、
T/B L/T AG Otr
7.47%
5.30%
14.55% 35.26%
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16

YoY Quantities by Products

Unit ： thousand pcs

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機車、電動摩托車 卡車及非道路用車
腳踏車 (BC) 汽車 (PC) TPMS
(MC, E-MC) (T/B, L/T, AG, OTR)
+4.91% +9.08%
134,445
92,998 97,563 123,253
-16.35%
+2.30% +0.26%
17,869 14,948
10,192 10,426
5,334 5,348
2018H1 2019H1 2018H1 2019H1 2018H1 2019H1 2018H1 2019H1 2018H1 2019H1
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17

Revenue Breakdown by Locations

2018H1 營業收入占比 2019H1 營業收入占比 70.94% 67.12% Revenue 28.69% 22.56% 23.15% 18.86% 1.43% -14.68% -18.07% 六暉控股公司 (LHH) 廈暉公司 (XH) 昆山六暉 (KH) PT.LUHAI 調整及沖銷 與其他 (Other) YoY ▲ 10.97% ▼ 17.45% ▲ 28.88% ▼ 29.28% 2018H1 稅前淨利占比 2019H1 稅前淨利占比 78.05% 78.36% Income before tax 16.37% 19.06% 18.79% 13.20% 2.70% 4.69% -15.90% -15.31% 六暉控股公司 (LHH) 廈暉公司 (XH) 昆山六暉 (KH) PT.LUHAI 調整及沖銷 與其他 (Other) YoY ▼ 27.78% ▲ 33.26% ▲ 130.61% ▲ 54.61% ▼ 6.78%

18

Revenue Breakdown by Area

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中國 China 印尼 Indonesia 其他 others
2019H1 43.68% 27.56% 28.76%
2018H1 47.81% 23.48% 28.71%
47.81%
43.68%
28.71% 28.76%
2018H1 2019H1
27.56%
中國 China
23.48%
2018H1 2019H1
其他 others
2018H1 2019H1
印尼 Indonesia
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19

Financial Results

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27.66 27.90
96,239 27.44
27.18
85,669 26.81
82,801
76,188
56,065
Net Value
Depreciation per share(NTD)
2015 2016 2017 2018 2019H1
2015 2016 2017 2018 2019H1
162 162
19.77%
18.08% 152
15.80% 148 147
EBITDA 15.00% 15.17%
Average Monthly
Revenue by person
margin
(NTD thousand)
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162 162
152
148 147
Average Monthly
Revenue by person
(NTD thousand)
2015 2016 2017 2018 2019H1 20
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2015 2016 2017 2018 2019H1

Financial Results

NTD thousand

	NTD thousand
Foreign Exchange 2015 2016 2017 2018	2018H1 2019H1
Gain/(Loss) 17,435 14,325 (17,681) 4,907	(3,707) (1,292)
Sales % 0.70 0.55 (0.67) 0.19	(0.29) (0.097)

USD/RMB

USD/INR

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7.20 16,000
7.00
15,000
6.80
14,000
6.60
13,000
6.40
12,000
6.20
11,000
6.00
5.80 10,000
1 月 2 月 3 月 4 月 5 月 6 月 7 月 8 月 9 月 10 月 11 月 12 月 1 月 2 月 3 月 4 月 5 月 6 月 7 月 8 月 9 月 10 月 11 月 12 月
2019 年 2018 年 2017 年 2016 年 2015 年 2019 年 2018 年 2017 年 2016 年 2015 年
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21

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THANK YOU!! 全球產量第一 台灣氣門嘴領導品牌 We Deliver the Best Quality & High-end Technology from Taiwan.

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六暉控股股份有限公司 LU HAI HOLDING CORP.

http://www.luhai.com.tw E-mail://spokesman@luhai.com.tw