MERRY — Investor Presentation 2021

May 28, 2021

Presented by : Allen Huang, CEO Date: May 4, 2021

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

Statement of Comprehensive Income

Statement of Comprehensive Income	Statement of Comprehensive Income	Statement of Comprehensive Income
(NT$ Thousand)
Item 1Q2020 4Q2020	1Q2021	QOQ YOY
Net Revenue 5,176,663 12,686,801	7,734,792	-39.03% 49.42%
Gross Profit 10.75% 11.88%	10.13%	-1.75pp -0.62pp
Operating Expenses -601,312 -994,444	-859,518	-13.57% 42.94%
Operating Margin -0.87% 4.04%	-0.99%	-5.03pp -0.12pp
Non-Operating Income 87,308 256,604	110,036	-57.12% 26.03%
Net Income 40,564 587,994	53,483	-90.90% 31.85%
Net Profit Margin 0.78% 4.63%	0.69%	-3.94pp -0.09pp
Profit Attributable to Owners of the Parent 47,381 577,986	20,920	-96.38% -55.85%
EPS(NT$) 0.23 2.79	0.10	-2.69 -0.13

※ Diluted weighted average outstanding shares were 207,683K units in Q12021.

2

Q12021 Product Mix

==> picture [43 x 39] intentionally omitted <==

==> picture [164 x 262] intentionally omitted <==

----- Start of picture text -----

Speaker
32%
Others
5%
----- End of picture text -----

3

Product Mix by Quarterly

==> picture [545 x 295] intentionally omitted <==

Speaker QoQ : -42% YoY : -12% Headset QoQ : -35% YoY : 146%

4

Headset Revenue Breakdown

(%)

==> picture [553 x 309] intentionally omitted <==

5

Speaker Revenue Breakdown (%)

==> picture [550 x 307] intentionally omitted <==

6

Balance Sheet & Key Indices(CQ)

	20200331		20201231			20210331
(NT$ Thousand)	金額	%	金額	%		金額	%
Cash and Cash Equivalents 7,137,339 29% 3,046,963 9%						5,321,982 17%
Account Receivable 3,957,331 16% 12,714,950 37%						7,663,641 24%
Inventories 2,160,257 9% 3,791,659 11%						4,408,468 14%
Other Current Assets 1,619,124 7% 2,625,977 8%						2,823,874 9%
Investments 3,953,955 16% 4,479,708 13%						4,548,565 14%
Property, plant and equipment 2,260,918 9% 3,694,738 11%						3,796,532 12%
Other Non-current Assets 3,423,102 14% 3,801,353 11%						3,624,068 11%
Total Assets 24,512,026 100% 34,155,348 100%						32,187,130 100%
Current Liabilities 10,207,870 42% 19,660,268 58%						18,604,551 58%
Non-current Liabilities 3,963,877 16% 2,224,337 7%						2,478,872 8%
Total Liabilities 14,171,747 58% 21,884,605 64%						21,083,423 66%
Total Shareholders’ Equity 10,340,279 42% 12,270,743 36%						11,103,707 34%
Key Indices A/R Turnover (CQ) 69 92 Inventory Turnover Days (CQ) 42 31 Current Ratio (x) 1.5 1.1 ROE 0.35% 4.65%						89 57 1.1 0.16%

7

Cash Flow

(NT$ Thousand)	1Q2020	4Q2020		1Q2021
Beginning Balance 6,589,863 4,191,857				3,046,963
Cash from operating activities 1,961 -1,733,742				2,102,778
Capital Expenditures -208,632 -303,022				-356,167
Short-term Loans 586,497 721,080				554,520
Long-term Loans 130,640 371,370				304,348
Investments and Others 37,010 -200,580				-330,460
Ending Balance 7,137,339 3,046,963				5,321,982
Free Cash Flow -206,671 -2,036,764				1,746,611

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

8

Recap of Recent Major Events

To issue common stocks for cash to sponsor GDR offering, or issue common stocks or CB/ECB through a private placement.

Top 5% of TWSE Corporate Governance Evaluation (905 listed companies)

==> picture [654 x 51] intentionally omitted <==

9

2Q2021 Outlook

10

Overview of the Market Trend

11

(Total Available Market) Continuously Growing on TAM

==> picture [250 x 192] intentionally omitted <==

----- Start of picture text -----

CAGR
20%
----- End of picture text -----

TAM includes the market of Headset, Speaker, SiP, Video Conference System, Healthcare Device, MEMS Mic/ AI Mic Module and Battery related device.

Key Growth Drivers

Growing on the existing market demand:

Headset Healthcare Growing on the new product lines:

==> picture [51 x 51] intentionally omitted <==

==> picture [51 x 51] intentionally omitted <==

Video Conference System

SiP

12

(Service Addressable Market) Growing on Headset SAM

NT$254B

Key Growth Drivers

2025 SAM

NT$76B

2020 SAM

==> picture [196 x 194] intentionally omitted <==

==> picture [54 x 178] intentionally omitted <==

Growing on TWS market demand

New customers

Growing on existing customers

Headset includes : Gaming Headset, TWS, Enterprise Headset, Consumer Headset.

13

(Service Addressable Market) Growing on Healthcare SAM

NT$76B

2025 SAM

Key Growth Drivers

NT$43B

2020 SAM

==> picture [196 x 194] intentionally omitted <==

==> picture [54 x 55] intentionally omitted <==

==> picture [54 x 55] intentionally omitted <==

An increase of hearing loss people because of aging of population and lacking of general knowledge of ear health.

An increase of wearing rate for hearing-aids device while the passage of OTC in USA.

(wearing rate now is around 10%)

14

New Product - SiP (Service Addressable Market)

NT$135B

2025 SAM

Key Growth Drivers

NT$0

2020 SAM

==> picture [194 x 194] intentionally omitted <==

==> picture [55 x 55] intentionally omitted <==

==> picture [56 x 53] intentionally omitted <==

New Product Line Growing on the market demand: SiP technology would be used on around 70% of mid/high-end TWS for miniaturization in the future.

15

(SAM) New Product - Video Conference System

NT$4.7B 2025 SAM

Key Growth Drivers

NT$0 2020 SAM

==> picture [194 x 193] intentionally omitted <==

==> picture [56 x 55] intentionally omitted <==

==> picture [56 x 56] intentionally omitted <==

New Product Line More demand and requirement on video conference at post COVID-19 era.

16

==> picture [103 x 102] intentionally omitted <==

E nvironment

S ocial

• Aimed to join the RE100 and would commit 100% renewable electricity in 2050.

• Sustainable Design.

• Energy Efficiency and Carbon Reduction

• Raising the public awareness on minimal hearing loss

• Equal Employment Opportunities and Safe Working Conditions

G overnance

• Formed 4 task forces under BOD to achieve ESG missions: Sustainability, Ethical Mgmt., Risk Mgmt., and Information Security teams.

• Top 5% of TWSE Corporate Governance Evaluation among 905 listed companies.

17

==> picture [107 x 63] intentionally omitted <==

----- Start of picture text -----

Vision
----- End of picture text -----

“Delivering Fidelity Sound to Enrich Human’s Life”

• Mr. Leo Liao, the Founder and Chairman

18

CONFIDENTIAL @ MERRY All Right Reserved

Q & A

19

==> picture [45 x 46] intentionally omitted <==

20