Primax — Interim / Quarterly Report 2020

Mar 5, 2021

Primax 4915 TT

26 February 2021

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4Q20 Financial

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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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4Q2020 Income Statement

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Amount：NTD M	Q4 20		Q3 20		Q4 19		QoQ		YoY
Net Sales	19,559		18,907		25,014		3.5%		-21.8%
COGS	17,269		16,452		22,078
Gross Profit	2,290		2,454		2,936		-6.7%		-22.0%
Gross Margin	11.7%		13.0%		11.7%		-1.3%		0.0%
OperatingExpense	1,490		1,558		2,002
OperatingExpense%	7.6%		8.2%		8.0%		-0.6%		-0.4%
OperatingIncome	801		896		934		-10.6%		-14.3%
OperatingMargin	4.1%		4.7%		3.7%		-0.6%		0.4%
Non-operatingItems	(254)		168		(52)
Income before Tax	547		1,063		882		-48.6%		-38.0%
Income Tax	109		235		193
Net Income	438		828		689		-47.1%		-36.4%
Net Margin	2.2%		4.4%		2.8%		-2.1%		-0.5%
Net income attributed to Primax	367		773		602		-52.5%		-39.0%
EPS(NT$)	0.82		1.73		1.35

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Quarterly Sales

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Amount ： NTD M

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30,000
25,014
25,291
25,000
19,559
20,000 18,907
18,522
16,704
16,251
13,524
15,000
13,641
10,000
5,000
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0
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4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20
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Gross Profit & Gross Margin

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Gross Profit Gross Margin
Amount ： NTD M
3,500
16.0%
3,010
3,000 2,936
14.0%
13.0%
2,454 12.3%
2,500
2,271 2,290 11.9% 11.8% 11.9% 11.7% 11.7%
12.0% 11.2% 11.3% [11.3% ]
2,000 1,871
1,842
1,614 10.0%
1,525
1,500
8.0%
1,000
6.0%
500
0 4.0%
3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20
4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20
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Amount ： NTD M

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Operating Income & Operating Margin

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Operating Income

Operating Margin

Amount ： NTD M

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7.0%
1,300
1,212
1,200
6.0%
1,100
1,000 934 4.8%
4.7%
896 5.0%
900
4.1%
800
3.7%
4.0%
700
3.1%
570
600
2.4%
3.0% 2.4%
500
398
396
400
2.0% 1.6%
1.5%
300
221
205
200
1.0%
100
0
0.0%
4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20
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2020 Income Statement

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Amount：NTD M	2020		2019		YoY
Net Sales	68,241		80,650		-15.4%
COGS	60,130		71,219
Gross Profit	8,111		9,431		-14.0%
Gross Margin	11.9%		11.7%		0.2%
OperatingExpense	5,811		6,668
OperatingExpense %	8.5%		8.3%		0.2%
Operating Income	2,300		2,763		-16.8%
Operating Margin	3.4%		3.4%		0.0%
Non-operating Items	179		151
Income before Tax	2,478		2,914		-14.9%
Income Tax	534		651
Net Income	1,944		2,263		-14.1%
Net Margin	2.8%		2.8%		0.0%
Net income attributed to Primax	1,919		2,135		-10.1%
EPS (NT$)	4.30		4.80

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Sales by segment and Margin trend

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16% 15%
21%
34%
10%
42% 42%
13%
9% 51%
27% 9%
25%
30% 9% 6%
23% 7% 14%
16%
13%
46% 48%
40% 39%
34% 34%
29%
2014 2015 2016 2017 2018 2019 2020
Interface VT Business Equipment Audio
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Note: Audio represents revenue contribution from Tymphany Note: VT= Visual Technology

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11.9%
12.3% 12.0% 11.7% 11.9%
11.3%
11.1%
10.6%
10.4%
8.8% 8.9%
4.0%
3.3% 3.5% 3.3% [3.7% 3.6% ] 3.4% 3.4%
3.0%
2.4%
1.6%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross margin Operating margin
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8

EPS

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Amount ： NTD

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1.80 1.72 1.73
1.60
1.35
1.40
1.20 1.13
1.06
1.00 0.93
0.82
0.80
0.80
0.62
0.60
0.40
0.20
0.00
4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20
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2020 Balance Sheet

Selected items from Balance Sheet		2020/12/31	2020/12/31	2020/12/31		2019/12/31	2019/12/31	2019/12/31
(Amount：NTD M)		Amt		%		Amt		%
Cash		6,935		15%		6,701		13%
Notes and Accounts receivable		13,579		29%		19,197		36%
Inventory		10,247		22%		10,493		20%
Total Current Assets		35,110		74%		39,323		74%
Fixed Assets		6,542		14%		7,364		14%
Total Assets		47,307		100%		53,146		100%
Notes and Accounts Payable		19,001		40%		23,745		45%
S-T Borrowings		905		2%		1,092		2%
CPLTD		75		0%		28		0%
Total Current Liabilities		27,941		59%		33,563		63%
L-T Borrowings		681		1%		151		0%
Total Liabilities		31,806		67%		38,642		73%
Total Equity		15,501		33%		14,504		27%

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2020 Balance sheet Major indicators

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	KeyIndices 2020/12/31 2019/12/31
	AR Turnover(days) 81 78
	AP Turnover(days) 118 118
	InventoryTurnover(days) 53 48
	Cash Conversion Cycle(days) 16 8
	Current Ratio(%) 125.7 117.2
	Total Liabilities-to-Assets Ratio(%) 67.2 72.7
	Return on Equity-annualized(%) 13.0% 15.4%

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2020 Cashflow Statement

shflow Statement
Amount：NTD M	2020		2019
FromOperation	3,961		6,628
- IncomeBeforeTax	2,478		2,914
- DepreciationandAmortization	2,230		2,190
- Notes andAccountsReceivable	5,630		(3,111)
- Notes andAccountsPayable	(4,744)		5,450
- Inventory	(39)		(3,327)
-OtherOperating Sources / (Uses)	(1,594)		2,511
From Investment	(2,796)		(3,579)
- FixedAssets	(2,689)		(3,485)
-Other Investing Sources / (Uses)	(107)		(94)
From Financing	(975)		(1,098)
-S-T Borrowings	(187)		125
- L-T Borrowings	577		88
-CashDividend	(1,077)		(1,114)
-Other Financing Sources / (Uses)	(288)		(197)
Net Cash Position Change	190		1,951
Effect of Foreign CurrencyExchange Translation	44		(241)
Cash atBeginning of Year	6,701		4,990
Ending CashBalance	6,935		6,701

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2021 Outlook

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 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

• Diversify capacity: Thailand manufacturing site will be ready by end of 4Q01

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1Q21 Outlook

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• Sales outlook: Optimistically positive, Anticipate positive YoY growth

• Due to Cov-19, WFH demand lead to overall strength in PC/Gaming/consumer segments, customers order aggressively

• Car electronics demand continue to grow robustly( ADAS camera module applied to EV and advanced driving assistance), smartphone camera module demand also pull-in in 1Q21

• Home audio and conference products demand carry over growth, new projects kick off

• Profit Outlook: Improve and optimize gross margin and operating margin

• Anticipate overall gross margin and operating margin significant improvement compared to 1Q20

• Intelligence interface: Profitability will remain solid thanks to strong PC/gaming demand

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

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

• Increase key components inventory by 6-8weeks( IC/EE parts) to prevent shortage

• Outstanding financial management, reduce currency impact

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