Qisda — Interim / Quarterly Report 2021

Aug 12, 2021

Qisda Corporation Investor Conference: 2021 Q2 Results

August 12, 2021

Participants

Chairman	Peter Chen
CFO	Jasmin Hung
GM, Information Technology Business Group Commercial and Industrial Business	Joe Huang
GM, Medical Devices Business Group	Harry Yang
GM, Business Solutions Group	Michael Lee
GM, Networking and Communication Business Group	April Huang
CIO	Michael Wang

Agenda

• 1. 2021 Q2 Financial Results
• 2. Business Update and Outlook
• 3. Summary of Business Groups
• 4. Q&A

Safe Harbor Notice

We have made forward-looking statements in the presentation. Our forward-looking statements contain information regarding, among other things, our financial conditions, future expansion plans and business strategies. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that these expectations and projections are reasonable, such forward-looking statements are inherently subject to risks, uncertainties, and assumptions about us.

We undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events might not occur and our actual results could differ materially from those anticipated in these forward-looking statements.

1. 2021 Q2 Financial Results

Qisda Group

Qisda is a global technology group with businesses spanning information and communication, medical, smart business solutions, and 5G networking communication.

Established Year IPO Year (Ticker 2352) Capital (NTD)	1984 1996 19.7B	Global Presence Manufacture Sites:Taiwan, China, Vietnam Sales Offices:197 Locations Worldwide	2021 First Half Revenue NTD\$106.9B (USD\$ 3.8B) 2020 Revenue (USD\$ 6.5B) NTD\$191.7B
Consolidated Companies	183	R&D:Taiwan, China	Awards Winning 「Best Companies to 2020
Listed Companies (Taiwan)	14	Revenue Breakdown by Geography (2020): Asia 46%	Work For in Asia」 2020Winning 「Taiwan Corporate
No. of Employees	33,000	Americas 29% Europe 22% Others 3%	Sustainability Awards (TCSA)」 2018 THOMSON REUTERS: 「TOP 100 GLOBAL TECH LEADER 」

7

Q2 High value-added business account for 32% of total revenue

2021 Q2 Highlights

• ◆ Q2 revenue, operating income and net income attributable to Qisda were all the highest second-quarter results in 10 years.
• ◆ Highest Q2 EPS \$1.93 in 10 years; 1H EPS \$3.01 already higher than full-year EPS in 10 years.
• ◆ Q2 revenue and profitability significantly increased on YoY basis
• Revenue increased by 28%, operating income increased by 33% and net income attributable to Qisda increased by 301%.
• Revenue growth rate maintains double digits: This is due to Qisda's strategic investment in high value-added business and increasing demand in commercial and industrial applications for ICT products.
• High value-added business: Revenue significantly increased by 94% on YoY basis and continuously accounted for more than 30% in 4 consecutive quarters. Revenue for medical business increased by 42%.
• Non-operating income continued to make positive contribution: Mainly due to investment in AUO is changed to FVOCI from equity method, amount is approximately NTD 2.4 billion.
• ◆ First half revenue, operating income and net income attributable to Qisda were all the highest half-year results in 10 years.
• Gross margin, operating income margin and net income margin increased on YoY basis: Gross margin 14.7% (+1.2ppt), operating income margin 3.4% (+0.4ppt), net income margin 6.5% (+4.6ppt).

Consolidated Statement of Comprehensive Income (Quarterly)

Unit : NT\$ Million

			YoY		QoQ
	2021 Q2	2020 Q2	g% amt	2021 Q1	g% amt
Net Sales	55 984 100% ,	43 673 100% ,	12 311 28% ,	50 904 100% ,	5 080 10% ,
Cost of Goods Sold	(47 725) ,	(37 744) ,	(9 981) ,	(43 403) ,	(4 322) ,
Gross Margin	8 259 14 8% ,	5 929 13 6% ,	2 330 39% ,	7 501 14 7% ,	758 10%
Operating Expenses	(6 352) 11 3% - ,	(4 494) 10 3% - ,	(1 858) ,	(5 783) 11 4% - ,	(569)
Operating Income	1 907 3 4% ,	1 435 3 3% ,	472 33%	1 718 3 4% ,	189 11%
Net Income non-operating	3 388 ,	392	2 995 ,	1 415 ,	1 973 ,
Profit(Loss) before Tax	5 295 9 5% ,	1 827 4 2% ,	3 468 190% ,	3 133 6 2% ,	2 162 69% ,
Net Income	4 388 7 8% ,	1 213 2 8% ,	3 175 262% ,	2 609 5 1% ,	1 779 68% ,
Net income attributable Qisda to	3 805 6 8% ,	949 2 2%	2 857 301% ,	2 112 4 1% ,	1 694 80% ,
EPS (NT\$) (a)	\$1 93	\$0 48	\$1 45	\$1 07	\$0 86

(a) EPS was calculated based on total weighted-averaged outstanding shares (1,967 m shares)

Consolidated Statement of Comprehensive Income (First Half)

Unit : NT\$ Million

	1H				YoY
	2021		2020 H1		amt	g%
Sales Net	106 888 ,	100%	82 873 ,	100%	24 015 ,	29%
Cost of Goods Sold	(91 128) ,		(71 680) ,		(19 448) ,
Gross Margin	15 760 ,	14 7%	11 193 ,	13 5%	4 567 ,	41%
Operating Expenses	(12 135) ,	11 4% -	(8 721) ,	10 5% -	(3 413) ,
Operating Income	3 625 ,	3 4%	2 472 ,	3 0%	153 1 ,	47%
Net Income non-operating	4 802 ,		(6)		4 808 ,
Profit(Loss) before Tax	8 427 ,	7 9%	2 466 ,	3 0%	961 5 ,	242%
Net Income	6 997 ,	6 5%	1 604 ,	1 9%	5 392 ,	336%
Net income attributable Qisda to	5 917 ,	5 5%	1 181 ,	1 4%	4 736 ,	401%
EPS (NT\$) (a)	\$3 01		\$0 60		\$2 41

¹⁰ (a) EPS was calculated based on total weighted-averaged outstanding shares (1,967 m shares)

Consolidated Balance Sheet Highlights

Unit : NT\$ Million

	2021 06 30		2021 03 31		QoQ		2020 06 30			YoY
					g% amt				amt	g%
Cash & Equivalent	21 234 ,	12%	23 629 ,	14%	-2 395 ,	-10%	15 423 ,	11%	5 812 ,	38%
Receivable Accounts	33 041 ,	18%	30 792 ,	18%	2 249 ,	7%	27 876 ,	20%	165 5 ,	19%
Inventory	42 008 ,	23%	35 897 ,	21%	6 110 ,	17%	26 991 ,	20%	15 017 ,	56%
L-T Investments	3 276 ,	2%	16 677 ,	10%	-13 401 ,	-80%	17 389 ,	13%	-14 113 ,	-81%
Financial fair value assets at
through other comprehensive	17 466 ,	10%	2 599 ,	2%	14 867 ,	572%	1 285 ,	1%	16 181 ,	1259%
income–non-current
Total Assets	182 913 ,	100%	171 215 ,	100%	11 698 ,	7%	138 200 ,	100%	44 713 ,	32%
Fin * Debt	50 557 ,	28%	47 733 ,	28%	2 824 ,	6%	39 331 ,	28%	226 11 ,	29%
Accounts Payable	40 175 ,	22%	36 914 ,	22%	3 262 ,	9%	29 802 ,	22%	10 373 ,	35%
Toal Liabilities	121 507 ,	66%	109 897 ,	64%	11 609 ,	11%	91 039 ,	66%	30 468 ,	33%
Equity	61 406 ,	34%	61 318 ,	36%	8 8	0%	47 162 ,	34%	14 245 ,	30%

YoY Added company : Alpha

* Fin. Debt included long term and short term financial debts and lease obligations payable

Key Financial Ratios

	2021 06 30	2021 03 31	QoQ	2020 06 30	YoY
AR Turnover (Days)	7 7	7 8	1 -	8 2	5 -
Inventory Turnover (Days)	7 7	7 5	+2	7 0	+7
(Days) AP Turnover	8 1	8 1	+0	7 7	+4
Cash Conversion Cycle (Days)	7 3	7 2	+1	7 5	2 -
ROE (annualized) (a)	23 3%	4% 17	9 +5 ppt	6 7%	+16 6 ppt
Current ratio	121%	127%	6 ppt -	120%	+1 ppt
Fin Debt / Total Assets (b)	28%	28%	0 ppt	28%	0 ppt

(a) Annualized net income / Average total equity

(b) Fin.debt included long term and short term financial debts and lease obligations payable.

Revenue and Operating Income

⚫ Revenue and operating income reached Q2 and 1H record high in 10 years

Revenue Breakdown by Business (Quarterly)

* ICT:includes monitor, projector, signage , TV and electronics products * Others:includes BenQ Materials Corp. and other products

* NCG:Networking and Communication * BSG:Business Solutions Group * Medical:includes medical service, medical equipment, medical consumable

Revenue of High value-added Business (Yearly)

• High value-added business is moving toward the goal of accounting for more than half of total revenue by 2022

2. Business Update and Outlook

Chairman Peter

Qisda's Vision

High value-added business will account for

more than half of the revenue by 2022

Qisda's Winning Strategy

Current Business Optimization

ICT Products ( No. 2 in Monitor, No.1 in DLP Projector, Others )

5G Network Business Strategic Placement

Comprehensive broadband solutions

Major

Pillars

Fast Expansion for Medical Businesses

Medical Service, Equipment & Consumables

Acceleration on

Solution Development

Smart Solutions ( Hospital, Factory, Retail, Energy, Enterprise, Campus )

2021 Q3 Outlook

✓ Business Drivers

• Revenue and profitability of high value-added business continue to grow.
• Medical business likely to maintain high growth: Hospital business growing steadily, with increasing supplies of infection prevention products.
• In-depth expansion of Business Solution Group: Enhance cloud and information security services. DFI (ticker: 2397) completes public acquisition of Ace Pillar (ticker: 8374).

✓ Cautious Measure to Global Economic

• Pandemic-related impact: While the vaccine penetration rate increases and many countries lift the lockdown one after another, variants of the virus still significantly affect many countries' economies.
• Supply and demand: The supply chain still face challenges such as shortage in materials and cargo capacity. Rising inflation and its impact on consumer spending may affect demand.

3. Summary of Business Groups

GM, Information Technology Business Group Commercial and Industrial Business Group GM, Medical Devices Business Group HarryYang GM, Business Solutions Group Michael Lee GM, Networking and Communication Business Group April Huang

Joe Huang