MAYER PIPE — Investor Presentation 2019

Nov 22, 2019

Mayer Steel Pipe Corporation?　Investor Conference

Notes:

Outline：

Business outlook
Operational overview
Financial overview

External competitive environment, regulatory environment and overall economic environment

A. Taiwan is excluded from economic integration in the international communities.
B. Steel production and sales are dominated by China.
C. Steel overcapacity around the world.

D. A tendency for labor and environmental regulations.

Production and sales volume in the last two years：

Unit :： Ton / Thousand NT Dollars
| Year Department | 2017 | | 2018 | | 2019/01/01 To 2019/09/30 | |
| --- | --- | --- | --- | --- | --- | --- |
| | Output | Output value | Output | Output value | Output | Output value |
| Steel department | 128,583 | 3,890,335 | 110,413 | 3,864,249 | 72,162 | 2,481,700 |
| Total | 128,583 | 3,890,335 | 110,413 | 3,864,249 | 72,162 | 2,481,700 |

Department	2017				2018				2019/01/01 To 2019/09/30
	Domestic Sales		Export Sales		Domestic Sales		Export Sales		Domestic Sales		Export Sales
	Sales volume	Sales value	Sales volume	Sales value	Sales volume	Sales value	Sales volume	Sales value	Sales volume	Sales value	Sales volume	Sales value
Steel department	113,407	4,013,335	28,260	846,407	106,799	4,182,092	17,511	544,663	70,861	2,778,232	9,902	310,448
Investment department	0	7,478			0	8,921			0	7,282
Real estate investment department	0	0			0	0			0	333,640
Other departments	0				0	0			323	6,607	56	274
Total	113,407	4,020,813	28,260	846,407	106,799	4,191,013	17,511	544,663	71,184	3,125,762	9,958	310,722

Sales region of major commodities：
| Region | 2017 | | 2018 | | 2019/01/01 To 2019/09/30 | |
| --- | --- | --- | --- | --- | --- | --- |
| | Net sales (Thousand NT$) | Proportion(%) | Net sales (Thousand NT$) | Proportion (%) | Net sales (Thousand NT$) | Proportion (%) |
| Taiwan | 4,015,259 | 82.5 | 4,191,013 | 88.5 | 3,122,683 | 90.87 |
| Vietnam | 590,069 | 12.12 | 317,663 | 6.71 | 152,481 | 4.44 |
| Thailand | 136,460 | 2 | 133,276 | 2.81 | - | - |
| Other | 125,433 | 3.38 | 93,724 | 1.98 | 161,320 | 4.69 |
| Total | 4,867,221 | 100 | 4,735,676 | 100 | 3,436,484 | 100 |

Percentage of sales revenue：
| Department | 2017 | 2018 | 2019/01/01 To 2019/09/30 |
| --- | --- | --- | --- |
| | Sales value(%) | Sales value(%) | Sales value(%) |
| Steel department | 99.85 | 99.81 | 89.88 |
| Investment department | 0.15 | 0.19 | 0.21 |
| Real estate investment department | 0 | 0 | 9.71 |
| Other departments | 0 | 0 | 0.20 |
| Total | 100.00 | 100.00 | 100.00 |

Notes:

Future market development：

Carbon steel
A. Raw material price fluctuations
B. Public construction and civil construction
C. Foreign demand for machine structural tubes

Stainless steel
A. Raw material price fluctuation
B. Stainless steel sheet

C. Stainless steel tube

Overseas business development：

A. Vietnam Mayer Co., LTD.
         Established：2006 /10 /19
          Location： Vietnam Binh Duong Province
          Investment Amount：NT$ 212,601 thousand
          Percentage of share： 100%

	2017		2018		2019/01/01 To 2019/09/30
	Sales volume?(Ton)	Sales value?(thousand)	Sales volume?(Ton)	Sales value?(thousand)	Sales volume?(Ton)	Sales value?(thousand)
Vietnam Mayer	23,390	699,596	12,304	379,338	6,641	203,898

B. Grand Tech Precision Manufacturing Co., LTD.? ? Established ：2006 /5 /4? Location ：Thailand Pluakdaerg District Rayong? Investment Amount ： NT$ 179,688 thousand? Percentage of share ： 45.01%
| | 2017 | | 2018 | | 2019/01/01 To 2019/09/30 | |
| --- | --- | --- | --- | --- | --- | --- |
| | Sales volume?(Ton) | Sales value?(thousand) | Sales volume?(Ton) | Sales value?(thousand) | Sales volume?(Ton) | Sales value?(thousand) |
| Grand Tech | 7,122 | 379,560 | 7,340 | 426,804 | 5,367 | 326,454 |

C. Diamond Precision Steel Corp. ( KY-Diamond )? Established ：2017 /1 /18? Location ：Cayman? Investment Amount ：NTD 106,248 thousand? Percentage of share ： 42.5%? ※KY- Diamond 100% holding Diamond Steel Tube Enterprise Co.,Ltd ,information for Diamond Steel Tube Enterprise Co.,Ltd as follows：? Established ：2008 /5 /29? Location ：Vietnam Vinh Phuc Province? Capital Stock：USD 3,300 thousand
| | 2017 | | 2018 | | 2019/01/01 To 2019/09/30 | |
| --- | --- | --- | --- | --- | --- | --- |
| | Sales volume?(Ton) | Sales value?(thousand) | Sales volume?(Ton) | Sales value?(thousand) | Sales volume?(Ton) | Sales value?(thousand) |
| Diamond Steel Tube | 9,239 | 484,633 | 11,654 | 565,989 | 8,021 | 398,071 |

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Notes:

Condensed Balance Sheet (consolidated)

Year?Item	Financial Information for the Past Two Years (Unit: NTD thousand)		2019/09/30
	2017	2018
Current assets	3,285,920	3,351,074	3,587,329
Property,Plant and Equipment	942,928	914,795	1,040,475
Intangible Assets	2,210	2,210	2,210
Other Assets	1,767,196	1,457,784	1,860,092
Total Assets	5,998,254	5,725,863	6,491,106
Current Liabilities	2,341,641	2,415,454	2,651,298
Non-current Liabilities	311,119	296,509	740,402
Total Liabilities	2,652,760	2,711,963	3,391,700
Capital Stock	2,335,261	2,245,261	2,225,261
Additional Paid-in Capital	257,095	283,711	281,622
Retained Earnings	722,510	727,657	766,634
Other Equity	(100,690)	(242,551)	(172,080)
Treasury Stock	(5,591)	-	-
Equity Attributable to Owners of the Company	3,208,585	3,014,078	3,100, 837
Non-controlling Interests	136,909	(178)	(1,431)
Total Equity	3,345,494	3,013,900	3,099,406

Notes:

Statement of Comprehensive Income (consolidated)

Year?? Item	Financial information for the past two years (Unit: NTD thousand)		2019/01/01 To 2019/09/30
	2017	2018
Operating revenue	4,867,221	4,735,676	3,436,484
Gross profit (loss) from operations	732,086	424,303	396,506
Net operating income (loss)	383,361	186,175	229,571
Non-operating income and expenses	120,103	170,285	179,451
Profit (loss) from continuing operations before tax	503,464	356,460	409,022
Profit (loss) from continuing operations	389,842	311,786	360,908
Other comprehensive income, net	18,376	(83,167)	70,471
Total comprehensive income	408,218	228,619	431,379
Profit (loss), attributable to owners of parent	340,945	300,590	362,161
Profit (loss), attributable to non-controlling interests	48,897	11,196	(1,253)
Comprehensive income, attributable to owners of parent	371,419	215,606	432,632
Comprehensive income, attributable to non-controlling interests	36,799	13,013	(1,253)
Basic earnings per share	1.46	1.34	1.63

Financial Analysis (consolidated)

Year   Item		Financial analysis for the past two years		2019/01/01 To 2019/09/30
		2017	2018
Capital structure analysis (%)	Debt ratio	44.23	47.36	52.25
	Long-term funds to property, plant and equipment	387.79	361.87	369.04
Liquidity analysis (%)	Current ratio	140.33	138.73	135.30
	Quick ratio	72.31	70.38	77.24
	Times interest earned(times)	16.57	12.02	16.98
Operating performance analysis (%)	Accounts receivable turnover (times)	8.33	8.61	9.05
	Days to collect accounts receivable	43.81	42.39	40.33
	Inventory turnover (times)	2.98	2.84	4.56
	Accounts payable turnover (times)	9.03	8.64	6.59
	Average days to sell inventory	122.48	128.52	80.04
	Property, plant and equipment turnover (times)	5.04	5.10	4.69
	Total asset turnover (times)	0.81	0.81	0.75
Return on investment analysis (%)	Rate of return on assets	6.96	5.76	8.34
	Rate of return on stock equity	11.87	9.81	15.74
	Income before tax to capital	21.56	15.88	24.51
	Net income to sales	8.01	6.58	10.50
	Earnings per share (NTD)	1.46	1.34	1.63

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