RH — Interim / Quarterly Report 2018

Nov 15, 2018

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TW.4807

Company Profile

www.regaljewelrygroup.com

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Thailand Production Site ◊Area: 65,896 square meter ◊3,700 employees ◊ Three gold jewelry factory buildings ◊One jewelry plating factory building

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Company Overview

Company Incorporation

2014.10.16

林志謙 PHACHARAPON President PHAIBOONSUNTORN

Number of 38,160,000 股 Shares Issued Capital 新台幣 381,600 仟元

Main Operational Country

泰國

Employee Number 約 3,700 人

Stock Code:4807

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09

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Industry Value Chain

Upstream

• Metal mining

and production

• Raw stone mining and production

Midstream －１

• Gem Cutting and Polishing

• Gemstone Wholesale

• Jewelry Design and Brand Marketer

• Processing equipment and materials supply

Midstream －２

• Gold Jewelry Manufacture

• Jewelry Plating

• Jewelry accessory processing

Downstream

• Jewelry Brand

• Store

• Department

• Store

• Discount Mall

• E-Commerce

• （ Catalogue and B2C platform ）

• Social Network

• group buying

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Customer & Jewelry Matrix

International Regional Trader/depart B2C e- Local Jewelry Jewelry national ment retailer commerce Retailer Brand jewelry brand

OEM/ODM ODM/ODM ODM /Costume ODM/Costume /Affordable luxury /Affordable luxury Jewelry Jewelry jewelry jewelry

OBM/Agent Brand/Costume Jewelry and Affordable fine jewelry

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Jewelry Market Segment

Fine Jewelry • High-end jewelry • Luxury jewelry • Affordable luxury jewelry

Imitation Jewelry • Costume jewelry • Fake jewelry • Ornamental jewelry

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Regal ’s Target Market

Affordable luxury jewelry

• Semi-precious stone with precious metal and gold plated

• HS code

12%

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88%

Costume Jewelry

• Semi-precious stone with base metal gold

• Affordable plated )

• Luxury • HS code 711719

• 12% of RH’s revenue

711311+711390

• 88% of RH’s revenue

Costume

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Jewelry Export - Thailand

Thailand is the top three exporter of jewelry in Asia HS#7113 (except Hong Kong) 2017 Global Jewelry Major Exporting Countries ($1 Billion)

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15. Japan 1.7
14. Germany 2
13. Singapore 2.2
12. Indonesia 2.6
11. Thailand 3.7
10. Turkey 4.1
9. United Arab Emirates 4.3
8. United Kingdom 4.7
7. France 5
6. Hong Kong 6.2
5. Italy 7
4. India 9.8
3. United States 10.3
2. China 11.1
1. Switzerland 11.2
0 2 4 6 8 10 12
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Jewelry Export Growth…Thailand (USD Billion) Thailand's 2018 Jewelry (7113) exports are flat But COSTUME (7117) increased 26%

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4.00 3.74
3.62 3.57 3.67
3.50
3.00
2.50 7113
2.00 7117
1.50 多項式 (7113)
多項式 (7117)
1.00
0.38 0.41 0.34 0.43
0.50
-
2015 2016 2017 2018 F
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2018 Thailand HS 7113 main export destination

2018 Thailand HS 7113 main export destination

ITALY JAPAN SWITZERLAND UNITED KINGDOM AUSTRALIA UNITED ARAB EMIRATES CHINA HONG KONG GERMANY UNITED STATES 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

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2018 Thailand HS 7117 main export destination 2018 Thailand HS 7117 main export destination

JAPAN SWITZERLAND SPAIN UNITED KINGDOM HONG KONG GERMANY FRANCE UNITED STATES SINGAPORE LIECHTENSTEIN 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

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Thailand Jewelry Export Growth ..... Flat Regal’ piece in Sterling Jewelry Export …..Bigger

99% of Regal jewelry products are directly exported or indirectly exported, Regal's 2017 silver and gold-plated jewelry production accounted for 3.4% of Thailand's exports. In August 2018, it jumped to 7.1% (why? mainly from the large increase in Customer P plating parts

First 8 Months Year 2018 Bn Baht

2017 Bn Baht

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70
45
60
60.9 40
50
35 38.33
40 30
25
30
20
20 15
10
10
2.1 5 2.73
0 0
Thailand Silver + Jewelry Regal Production Thailand Silver + Jewelry Regal Production
Plating Exports Plating Exports
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Thailand Jewelry Export Growth…Flat Regal’ piece in Costume Export …..Bigger

99% of Regal costume jewelry products are directly exported Regal's 2017 costume jewelry output accounted for 2.5% of Thailand's exports. Jumped to 4.2% in August 2018

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First 8 Months year 2018 Bn
Baht
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2017 Bn Baht
Baht
Regal Production 0.29
Regal Production 0.37
Thailand Costume Jewelry Thailand costume Jewelry
11.55 8.93
Exports Exports
0 5 10 15 0 2 4 6 8 10
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Jewelry processing revenue...gold manufacturing and electroplating complementary

1,200,000,000 1,000,000,000 800,000,000 600,000,000 400,000,000 200,000,000 0

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■ Jewelry Processing Revenue ■ Gold Manufacturing Revenue ■ Plating Processing Revenue

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The growth determinant of the combined revenue is mainly from electroplating processing.

The compound growth rate of jewelry processing revenue in the past three years is 5.8%.

Surpassing the negative growth of 2017, the processing income of gold manufacturing in 2018 has returned to grow.

Electroplating processing revenue has a compound growth rate of 17.5% per quarter.

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Gold manufacturing and electroplating processing income tends to 50%

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2015Q12015Q22015Q32015Q42016Q12016Q22016Q32016Q42017Q12017Q22017Q32017Q42018Q12018Q22018Q3

■ Gold Manufacturing Revenue contribution ■ Plating Processing Revenue contribution

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Plating gross profit slowed down... large amount leads to bargaining and cost structure changes. Gold manufacturing gross profit increased slightly... Due to price of complicated skilled work 60.0% 50.0% 40.0% ■ Gross Profit 30.0% ■ Gross Profit 20.0% 10.0% 0.0% 2015Q12015Q22015Q32015Q42016Q12016Q22016Q32016Q42017Q12017Q22017Q32017Q42018Q12018Q22018Q3

■ Gold Manufacturing Gross Profit ■ Plating Processing Gross Profit

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Gold manufacturing’s cost structure from raw material processing JEWELRY MAKER to crafts management SOLUTION COMPANY

70% 60% 50% 40% 30% 20% 10% 0% 2015Q12015Q22015Q32015Q42016Q12016Q22016Q32016Q42017Q12017Q22017Q32017Q42018Q12018Q22018Q3

■ Gold Manufacturing RM ■ Gold Manufacturing DL ■ Gold Manufacturing OH

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Plating earns from technology Gold Manufacturing earns from management

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

■ Gold Manufacturing Revenue before tax ■ Plating Processing Revenue before tax

2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3

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25%

When REGAL OEM transfer out plating process, minority shareholders took 49% of the plating profit.... However, the plating factory made REGAL 51% profit when it received orders from third party.

20%

15%

10%

5% 0%

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■ Gold Manufacturing Revenue before tax ■ Plating Processing Revenue before tax (51% Parent Company)

2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3

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Proportion of electroplating processing shipments from external customers

70% 60% 50% ▬ Proportion of plating processing from 40% external customers 30% 20% 10% 0%

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2018/Q3 hit a record high of 890 million. The cumulative revenue of the first three quarters of 2018 reached 2.31 billion, a 44% increase over the same period last year.

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1000
894
800 728
684 689
Q1
597 608
600
495 499 Q2
393 Q3
400
Q4
200 多項式 (Q1)
0
2016 2017 2018
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Due to the before-tax profit rate of the parent company... Gold Manufacturing > Plating Revenue Contribution... Gold Manufacturing > Plating

2018/Q3 EPS hit a new record of 2.31; accumulated EPS of first three quarters is 4.82 , 74% higher than the same period last year.

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2.5
EPS by Quarter 2.31
2.17
2 1.84
1.42
1.5
1.33
1.14 EPS
1.06 1.09
1 多項式 (EPS)
0.74
0.57
0.46
0.5
0
16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3
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Here we are…..

Material vs Classic Essence Reflections Series Silver Products Rose Gold Products ▬ Shine Products ▬

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Current Competitive Advantage

Quick solution & response to fast fashion trends Gold manufacturing and plating form a complementary order to provide hot-selling gold-plated parts for international brands

Plan downstream platform for own brand products and other regional brands

Expand midstream control in jewelry industry value chain

• Invest and merge electroplating company to

• expand production capacity for external customers • Establish International Headquarters (IHQ) for tax

• and investment incentives, and layout ASEAN 10+3

Professional jewelry ODM / OEM / OBM one-stop supplier

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15
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Thank You Stock Code :4807

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