MERRY — Interim / Quarterly Report 2018

Nov 1, 2018

Merry Electronics

2018 Second Quarter Earnings Conference

Presented by : Allen Huang

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 Market Cap. : US$ 1,060 Million(as of July 2018)

 Founders : Mr. Leo Liao / Mr. Jack Wei

• Service and Offering :

Acoustic Component, Wired & Wireless Headphone, Headset ,and Battery Related Product

• Year 2017 Revenue : US$ 896 Million

 No. of Employee : 14,700 (as of June 2018)

• Global Footprint : 11 presences

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Global Presence

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Taichung Hsinchu Taipei Taiwan Taiwan

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Shenzhen Huizhou Suzhou Dongguan
China
(In progress)
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Thailand

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Singapore

Functions

HQ RD Sales Mfg.

Local Sales Office

East Coast, USA West Coast, USA Hong Kong, China

*Strategic Corporation with Luxshare Group

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Key Milestones

1975-2000

2006-2010

2017—

• 1975 MERRY Founded • Awarded by Forbes

• • 1989 Commenced Overseas Investment (2005 & 2007)

• 2000 Publicly listed (TWSE)

• Huizhou factory

• Production ramp-up of MEMS Mic

• Dongguan factory (2018)

• • Awarded by Forbes (2018)

2011-2016

2000-2005

• Suzhou factory

• Battery Product Line

• Applied RF technology

• Won the iF/G-Mark Design Award

• • Thailand factory • Strategic Corporation with Luxshare Group

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Leading Technology

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4

Product Introduction

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Speaker
Entertainment
Battery
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5

Proportion of the products revenue

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Battery Others
1% 1%
Handsfree
<1%
Speaker
23%
Entertainment
Handsfree
Entertainment Speaker
74% Battery
Others
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2018 Second Quarter Financial settlement (audited)

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Consolidated Statements of Comprehensive Income

(audited)

(NT$ Thousand)

Item	2Q2017	1Q2018	2Q2018	QoQ	YoY
Net Revenue	5,368,400	4,359,280	6,708,658	53.89%	24.97%
Gross Profit	19.00%	9.30%	9.67%	0.37ppt	-9.33ppt
operating expenses	(425,829)	(452,619)	(469,414)	3.71%	10.24%
Operating Margin	11.07%	-1.08%	2.67%	3.75ppt	-8.40ppt
non-operating earnings	73,145	(47,238)	(36,875)	-21.95%	-50.41%
Net Income	540,317	(71,119)	73,910	103.92%	-86.32%
Net Profit Margin	10.06%	-1.63%	1.10%	2.73ppt	-8.96ppt
EPS	2.89	(0.36)	0.38	105.56%	-86.85%

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(%)

Proportion of the products revenue

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Entertainment Speaker
80% QoQ: 73%|YoY: 27% 30% QoQ: 28%|YoY: 60%
75% 25% 28%
76%
74% 20% 23%
70% 15% 19%
10%
65% 67%
5%
60% 0%
2Q2017 1Q2018 2Q2018 2Q2017 1Q2018 2Q2018
Handsfree Battery
2% QoQ: -2%|YoY: -64% 4% QoQ: -42%|YoY: -42%
3%
2%
3%
1% 2% 2%
1% 1%
1%
<1%
0% 0%
2Q2017 1Q2018 2Q2018 2Q2017 1Q2018 2Q2018 9
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(%)

Proportion of the products revenue

Entertainment

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80%
75%
76%
74%
70% QoQ: 73%
YoY: 27%
■ Wired/Entertainment 65% 67%
■ Wireless/Entertainment
60%
2Q2017 1Q2018 2Q2018
2Q2017 1Q2018 2Q2018
25% 23%
29%
71%
75% 77%
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Proportion of the products revenue (%)

Speaker

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30%
25% 28%
20% 23%
15% 19% QoQ: 28%
■ Other YoY: 60%
10%
■ NB&PC/Speaker Box
5%
■ Mobile/Speaker Box
0%
2Q2017 1Q2018 2Q2018
2Q2017 1Q2018 2Q2018
16% 12% 11%
34%
39%
14%
70% 49%
55%
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Consolidated Gross Margin

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25.00%
20.00%
22.89%
15.00%
10.00%
9.30% 9.67%
5.00%
0.00%
2Q2017 1Q2018 2Q2018
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12

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Consolidated Operating Expenses
( NT$ million)
YoY:10.24% | QoQ:3.71%
530
469
426 453
430
235
221
330 195
230
163 167 170
130
69 65 64
30
2Q2017 1Q2018 2Q2018
Selling expenses Administration expenses R&D expenses Total
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Consolidated Operating Income & Margin

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( NT$ million)
YoY:-69.87% | QoQ:380.82%
11.07%
750 12.00%
600
450 6.00%
2.67%
300 594
-1.08%
150 179 0.00%
-47
0
2Q2017 1Q2018 2Q2018
-150 -6.00%
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Consolidated Operating Income Consolidated Operating Margin

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Consolidated Net Income & Margin
( NT$ million)
YoY:-86.32% | QoQ:103.92%
10.06%
500 10.00%
400 1.10% 5.00%
300
540 -1.63% 0.00%
200
-5.00%
100 74
-71
-10.00%
0
2Q2017 1Q2018 2Q2018
-100 -15.00%
Consolidated Net Income Consolidated Net Profit Margin
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Consolidated Earnings Per Share

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( NT$ dollar)
4
2.89
2
0.38
0
(0.36)
-2
2Q2018 1Q2018 2Q2018
EPS 2.89 (0.36) 0.38
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http://www.merry.com.tw/page/investor

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