MERRY — Interim / Quarterly Report 2019

Jul 29, 2019

Stock Code 2439

Merry Electronics 2019 Second Quarter Earnings Conference

Presented by :Allen Huang Date: Jul. 29, 2019

0

Safe Harbor Notice

Except for historical information contained herein, the matters set forth in this presentation are forward looking statements subject to significant risks and uncertainties that could cause actual results to differ materially, including the impact of competitive products and pricing strategies, whether the design is accepted by our customers timely, the prompt introduction of new technologies, the capability for mass production of new products, the risk of excess capacity, the availability of production capacity, the financial stability in terminal markets or other risks, and so on.

1

Consolidated Statements of Comprehensive Income

		(audited)	(audited)		(NT$Thousand)
會計項目	2Q2018	1Q2019	2Q2019	QoQ	YoY
Net Revenue	6,708,658	7,631,451	10,064,072	31.88%	50.02%
Gross Profit	9.67%	13.29%	16.12%	2.83pp	6.45pp
operating expenses	(469,414)	(652,011)	(748,632)	14.82%	59.48%
Operating Margin	2.67%	4.74%	8.68%	3.94pp	6.01pp
non-operating earnings	(36,875)	166,624	151,618	-9.01%	511.17%
Net Income	73,910	415,911	776,277	86.64%	950.30%
Net Profit Margin	1.10%	5.45%	7.71%	2.26pp	6.61pp
EPS(NT$)	0.38	2.07	3.80	1.73元	3.42元

*. Diluted weighted average outstanding shares were 204,132K units in 2Q2019.

2

Balance Sheets & Key Indices(CQ)

	20180630		20190331		20190630
(NT$ Thousand)	Amount	%	Amount	%	Amount	%
Cash & Marketable Securities 4,172,704 18% 4,805,254 20% 4,178,222 16%
Account Receivable 4,909,913 22% 5,691,987 23% 9,210,118 35%
Inventories 2,705,941 12% 2,845,860 12% 2,141,320 8%
Other Current Assets 1,797,610 8% 1,416,244 6% 977,493 4%
Investments Accounted for Using Equity Method 3,176,108 14% 3,609,377 15% 3,684,061 14%
Net PP&E 1,937,736 9% 2,040,616 8% 2,051,228 8%
Other Non-current Assets 3,954,600 17% 4,073,104 17% 4,141,802 16%
Total Assets 22,654,612 100% 24,482,442 100% 26,384,244 100%
Current Liabilities 11,931,439 53% 8,487,734 35% 11,185,170 42%
Non-current Liabilities 631,004 3% 3,985,629 16% 3,883,766 15%
Total Liabilities 12,562,443 55% 12,473,363 51% 15,068,936 57%
Total Shareholders’ Equity 10,092,169 45% 12,009,079 49% 11,315,308 43%
Key Indices A/R Turnover (CQ) 49.8 84.9 67.1 Inventory Turnover Days (CQ) 39.4 40.7 26.9 Current Ratio (x) 1.1 1.7 1.5

3

Cash Flow

(NT$ Thousand)	2Q2018	1Q2019	2Q2019
Beginning Balance 5,401,818 8,512,129 4,805,254
Cash from operating activities (807,593) 108,119 (662,418)
Long-term Investments 0 0 0
Capital Expenditures (101,281) (100,619) (76,832)
Short-term Loans (328,178) (4,247,406) 233,110
Issuance of Common Stock for Cash 0 448,000 0
Investments and Others 7,938 85,031 (120,892)
Ending Balance 4,172,704 4,805,254 4,178,222
Free Cash Flow (706,312) 208,738 (585,586)

*. Free cash flow = Cash from operating activities - Capital expenditures

4

2Q2019 Proportion of the Product Revenue

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Speaker 27% Microphone 0.7% Healthcare 2% Battery 1.4% Others 1%

5

Proportion of the Product Revenue (2018/2019)

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100%
80% SPK SPK SPK SPK SPK SPK
27% 23% 26% 34% 27% 27%
60%
HDT HDT HDT HDT HDT HDT
40% 65% 71% 66% 58% 66% 68%
20%
0%
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19
Headset Speaker Microphone Healthcare Battery Others
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6

(%) Q2 Proportion of the Products Revenue

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Headseet
80%
71%
68%
70%
66%
QoQ: 36%
YoY: 43%
60%
■ Audio
■ TWS
50%
■ Gaming
2Q2018 1Q2019 2Q2019
Gaming
Gaming
Gaming
Audio
Audio Audio
TWS
TWS TWS
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7

Q2 Proportion of the Products Revenue (%)

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Speaker
30%
27% 27%
25%
23%
QoQ: 31%
20%
YoY: 77%
15%
10%
2Q2018 1Q2019 2Q2019
SPK System
SPK System
SPK System
PC/NB Non PC/NB PC/NB Non PC/NB
Non PC/NB PC/NB
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■ Non-PC/NB
■ PC/NB
■ SPK System
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8

Q2 Proportion of the Products Revenue (%)

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Microphone
2.00% QoQ: -3%|YoY: 2%
0.98%
0.91%
1.00%
0.67%
0.00%
2Q2018 1Q2019 2Q2019
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Healthcare Battery
QoQ: -25%|YoY: 39% 4.00% QoQ: -12%|YoY: 105%
4.00%
2.17%
2.49%
2.16% 1.99% 2.00% 1.44%
2.00% 1.05%
0.00%
0.00%
2Q2018 1Q2019 2Q2019
2Q2018 1Q2019 2Q2019
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9

Key Information

• Merry sets August 22 as Ex-Dividend Date.

• Cash Dividend is NT$8.6 per share.

10

2019 Q3 Outlook

11

Q & A

12

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13