Primax — Interim / Quarterly Report 2021

May 14, 2021

Primax 4915 TT

26 February 2021

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1Q21 Earning conference

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Safe Harbor

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Disclaimer

• Primax’s presentation contains forward-looking statements subject to significant risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In this context, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions.

• Actual results may differ materially from those contained in the forward-looking statements due to risk and uncertainties resulting from a number of important factors. Such factors include, but are not limited to: our highly competitive environment; the cyclical nature of our business; our ability to develop new products; and our successful execution in new business developments, and etc.

• All forward-looking statements in this presentation are based on information available to us as of the date hereof, we undertake no obligation to update these forward-looking statements for new information, future events, otherwise, or update the reasons why actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future.

• 。

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Primax 1Q2021 Earning Summary

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• •

• Revenue up 27% YoY Historical 1Q record high(Better than expected YoY growth)

• •

• Revenue down 12% QoQ Better than normal seasonality

• Gross Profit up 41% YoY

• •

• Gross margin reached 12.5% Increased by 1.2ppt(YoY)

• Operating profit up 188% YoY

• • • Operating margin reach 3.5% Increased by 1.9ppt( YoY)

• • PBT up 139% YoY

• • • PBT margin reached 3.7% Increased by 1.7ppt (YoY)

• • • EPS of NT$1.13 Historical 1Q record high

• • EPS grew 82% YoY

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Revenue up 27% YoY, down 12% QoQ

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Amount: NT$ million

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30,000
25,291
25,014
25,000
19,559
20,000 18,907
16,251 17,159
16,704
13,524
15,000
13,641
10,000
5,000
0
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21
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1Q201 Revenue breakdown by segment

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Interface VT Business Equipment Audio
29%
37% 35%
39% 39%
45%
52%
54%
57%
6%
6%
10% 4% 12%
10%
9%
17% 14%
13%
11% 5%
8%
14% 5%
12%
12%
15%
53%
39% 40% 41% 43%
33%
31%
26%
23%
1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021
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Note: Audio represents revenue contribution from Tymphany Note: VT- Visual Technology

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5

Gross Profit up 41% YoY, Gross Margin up 1.2ppt( YoY)

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Gross Profit Gross Margin
16.0%
3,500
3,010 14.0%
2,936
3,000 13.0%
12.5%
11.8% 11.9% 11.7% 11.7%
2,500 2,454 12.0% 11.2% 11.3% 11.3%
2,290
2,148
2,000 1,871 1,842 10.0%
1,614
1,525
1,500
8.0%
1,000
6.0%
500
4.0%
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21
0
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21
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Operating Profit up 188%, Operating Margin up 1.9ppt(YoY)

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Operating profit

Operating margin

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Amount: NT$ million
7.0%
1,300
1,212
1,200
6.0%
1,100
4.8%
1,000 934 5.0% 4.7%
896
900
4.1%
801
800 3.7%
4.0%
3.5%
700
592
600 3.0%
2.4% 2.4%
500
396 398
400 2.0% 1.6%
1.5%
300
221
205
200 1.0%
100
0.0%
0
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21
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Record high 1Q EPS

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Amount ： NTD

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1.80 1.73
1.72
1.60
1.35
1.40
1.20 1.13 1.13
1.00 0.93
0.82
0.80
0.80
0.62
0.60
0.40
0.20
0.00
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21
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1Q2021 Income Statement

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Amount： NTD M	Q1 21		Q4 20	Q1 20	QoQ	YoY
Net Sales	17,159		19,559	13,524	-12.3%	26.9%
COGS Gross Profit	15,011		17,269 2,290	11,999 1,525	-6.2%
	2,148					40.8%
Gross Margin	12.5%		11.7%	11.3%	0.8%	1.2%
Operating Expense Operating Expense % Operating Income Operating Margin Non-operating Items Income before Tax Income Tax	1,556		1,490 7.6% 801 4.1% (254) 547 109	1,320 9.8% 205 1.5% 60 266 58	1.5% -26.0% -0.6% 15.9%
	9.1% 592					-0.7% 188.4%
	3.5% 42					1.9%
	634 133					138.7%
Net Income	501		438	207	14.4%	141.9%
Net Margin Net income attributed to Primax EPS (NT$)	2.9% 505 1.13		2.2% 367 0.82	1.5% 276 0.62	0.7% 37.6%	1.4% 83.2%

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1Q2021 Balance Sheet

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Selected items from Balance Sheet (Amount： NTD M) Cash Notes and Accounts receivable Inventory Total Current Assets Fixed Assets*	2021/3/31	2021/3/31		2020/3/31	2020/3/31
	Amt 6,167 12,145 10,242 39,547 6,497	%		Amt 15,639 11,016 8,840 38,139 6,447	%
		12% 23% 19% 75% 12%			31% 22% 17% 75% 13%
Total Assets	52,646	100%		51,012	100%
Notes and Accounts Payable S-T Borrowings CPLTD Total Current Liabilities L-T Borrowings	15,205 8,662 121 31,316 1,334	29% 16% 0% 59% 3%		15,974 9,152 0 31,877 151	31% 18% 0% 62% 0%
Total Liabilities	36,707	70%		36,445	71%
Total Equity	15,939	30%		14,566	29%

• Note: The proportion of Cash Positon (as 2020) was transferred to time deposit. As 2021/3/31, for over 3-month time deposit of ~NT$8bn was categorized from Cash into current financial assets at amortized cost.

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1Q2021 Balance sheet Major indicators

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	Key Indices 2021/3/31 2020/3/31	Key Indices 2021/3/31 2020/3/31
	AR Turnover(days) 78 82
	AP Turnover(days) 120 119
	Inventory Turnover(days) 56 64
	Cash Conversion Cycle(days) 14 27
	Current Ratio(%) 126.3 119.6
	Total Liabilities-to-Assets Ratio(%) 69.7 71.4
	Return on Equity (%) 3.2% 1.4%
	Return on Equity-annualized(%) 13.0%

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1Q2021 Cashflow Statement

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Amount：NTD M 2021Q1 **2020Q1 **
From Operation (8,572) 2,088
- Income Before Tax 634 266
- Depreciation and Amortization 515 590
- Notes and Accounts Receivable 1,434 8,601
- Notes and Accounts Payable (3,796) (7,771)
- Inventory 14 1,549
- Other Operating Sources/ (Uses) (7,373) (1,146)*
From Investment (517) (1,047)
- Fixed Assets (533) (993)
- Other Investing Sources/ (Uses) 17 (53)
From Financing 8,390 7,976
- S-T Borrowings 7,757 8,060
- L-T Borrowings 700 (28)
- Other Financing Sources/ (Uses) (66) (56)
Net Cash Position Change (699) 9,018
Effect of Foreign Currency Exchange Translation (70) (79)
Cash at Beginning of Year 6,935 6,701
Ending Cash Balance 6,167 15,639

• Note: The proportion of Cash Positon (as 2020) was transferred to time deposit. As 2021/3/31, for over 3-month time deposit of ~NT$8bn was categorized from Cash into current financial assets at amortized cost.

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2021 Outlook

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• Deepen 3 Senses in 1 strategy: Continue to expand new smart devices to inject growth momentum, Increase

high value-added new products mix gradually each year, such as AIOT and Smart Access

• Profit growth > Revenue Growth: Due to optimizing product and customer mix, gross margin and operating

• margin improvement

• Intelligence Interface segment :PC and gaming peripheral demand remain robust thanks to WFH(work from

• home), High growth from new business such as SmartHome, Docking, and Wireless charging

• Visual Technology segment : ADAS (apply to EV and advanced driving assistance system) likely show multiple

• growth thanks to US based EV customer. Increase higher margin non-smartphone camera module mix

• Audio Segment: Chiefly due to consumer audio and video conference demands, coupled with new projects

• kick-off, audio profitability will improve significantly on YoY basis.

 Increase high value-added product mix : Our strategy to gradually increase commercial and industrial contribution from AIOT(eg. Fleet management, law enforcement policy body camera) and SmartHome ( Smartlock and Smartdoorbell), inject the next new wave of growth drivers

• Upgrade manufacturing capabilities : Move towards Smart Manufacturing and Industrial 4.0 concept to lead

our manufacturing

• Diversify capacity: Thailand manufacturing site will be ready and move in by end of 4Q21

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2Q21 Outlook

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• Sales outlook: Anticipate positive YoY growth but growth rate could be affected by component shortage

• Due to Cov-19, WFH demand lead to overall strength in PC/Gaming/consumer segments, expect double digit YoY growth

• Car electronics demand continue to grow robustly( ADAS camera module applied to EV and advanced driving assistance; but smartphone camera module revenue and mix will decrease

• Home audio and conference products demand carry over growth, new professional audio projects kick off; revenue grow QoQ slightly. Overall higher margin revenue mix will increase substantially versus 1Q20

• Profit Outlook: Improve gross margin and operating margin( expect higher than 1Q)

• Anticipate overall gross margin and operating margin significant improvement compared to 2Q20

• Intelligence interface: Profitability will remain stable thanks to intact PC/gaming demand

• Visual Technology: Chiefly due to rising car ADAS contribution, profit will show substantial YoY

• growth

• Audio: Improve customer structure and increase high-end premium audio mix, audio profit will

grow significantly over 1Q21 level

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Dividend Payout History

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Cash dividend(NT$) Payout ratio Dividend yield
3.5 7.00%
3.2
6.20%
3.0
5.60%
3 6.00%
5.10%
2.5
2.4 2.4
2.5 5.00%
4.72%
2.1
5.00%
2 4.00%
4.00%
1.5 3.00%
1 2.00%
70%
61%
52% 57% 50%
70%
0.5 1.00%
0 0.00%
2015 2016 2017 2018 2019 2020
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Notes: Yields are based on Primax’s closing share price the last day in Q1.

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15

Q&A

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Thank You!

Contact: IR@primax.com.tw

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