SPC — Interim / Quarterly Report 2020

Nov 19, 2020

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Success Prime Corporation Stock Code：2496

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CONTENT

01 Overview of Success Prime Corporation and Subsidiaries

02 Operating Performance 03 Chen-Li Education 【 】Operating Mode and Future Outlook 04 Chen-Li Elm 【 】Operating Mode and Future Outlook

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Company Profile

Founding Time Chairman Min-Chun Chen CEO Shu-Ling Tseng Employees 234

Success Prime Corporation (2496) founded in 1991

NT$ 191,854 thousands

Capital

Education Business Unit：82% (2020/1-9M) Optical Fiber Business Unit：18% (2020/1-9M)

Major Service Item

Note：The Board of Directors Approved the disposition of Prime Optical Fiber Corporation in July

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Organizational Structure

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100%
100%
Chen-Li
Chen-Li Education
(Xiamen)
% of Rev.：74%
100%
100%
Here
Chen Li Elm
% of Rev.：6%
% of Rev.：1%
60% 60%
Li-Ren Chen-Li Zhi-Yi
Education Education
% of Rev.： 1% % of Rev.：0.2%
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Business Strategy of Education Group

Professional Steady Teaching Team Resource Integration

Complete K-12 vertical integration. Cooperate with the pioneer of area. Expand the market share of education industry.

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Shareholding of Directors

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Unit：thousand shares
4,400
4,239
4,183
4,163
4,200
4,000
3,860
3,800
3,600
3,460 3,460 3,460
3,433 3,433 3,438
3,400
3,200
3,000
2020 年 1 月 2020 年 2 月 2020 年 3 月 2020 年 4 月 2020 年 5 月 2020 年 6 月 2020 年 7 月 2020 年 8 月 2020 年 9 月 2020 年 10 月
Shareholding of Directors
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Operating Performance

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Condensed Income Statement

3Q20 3Q19 YOY 2020/1-3Q 2019/1-3Q Operating Revenue 189,907 227,478 -16.52% 600,711 655,857 Operating Costs 91,509 120,262 -23.91% 317,698 362,273 Gross profit 98,398 107,216 -8.22% 283,013 293,584 Gross Profit Margin 51.81% 47.13% － 47.11% 44.76% Operating Expenses 71,647 78,277 -8.47% 230,552 230,279 Operating Profit 26,751 28,939 -7.56% 52,461 63,305 Operating Profit Margin 14.09% 12.72% － 8.73% 9.65% Non-operating Income and Expenses 9,165 441 10.77% 11,721 3,958 Net Income after Tax 31,830 27,076 17.56% 54,374 59,928 EPS(NTD) 1.65 1.40 17.86% 2.84 3.14 Unit: NT$ thousands	3Q20 3Q19 YOY 2020/1-3Q 2019/1-3Q Operating Revenue 189,907 227,478 -16.52% 600,711 655,857 Operating Costs 91,509 120,262 -23.91% 317,698 362,273 Gross profit 98,398 107,216 -8.22% 283,013 293,584 Gross Profit Margin 51.81% 47.13% － 47.11% 44.76% Operating Expenses 71,647 78,277 -8.47% 230,552 230,279 Operating Profit 26,751 28,939 -7.56% 52,461 63,305 Operating Profit Margin 14.09% 12.72% － 8.73% 9.65% Non-operating Income and Expenses 9,165 441 10.77% 11,721 3,958 Net Income after Tax 31,830 27,076 17.56% 54,374 59,928 EPS(NTD) 1.65 1.40 17.86% 2.84 3.14 Unit: NT$ thousands	3Q20 3Q19 YOY 2020/1-3Q 2019/1-3Q Operating Revenue 189,907 227,478 -16.52% 600,711 655,857 Operating Costs 91,509 120,262 -23.91% 317,698 362,273 Gross profit 98,398 107,216 -8.22% 283,013 293,584 Gross Profit Margin 51.81% 47.13% － 47.11% 44.76% Operating Expenses 71,647 78,277 -8.47% 230,552 230,279 Operating Profit 26,751 28,939 -7.56% 52,461 63,305 Operating Profit Margin 14.09% 12.72% － 8.73% 9.65% Non-operating Income and Expenses 9,165 441 10.77% 11,721 3,958 Net Income after Tax 31,830 27,076 17.56% 54,374 59,928 EPS(NTD) 1.65 1.40 17.86% 2.84 3.14 Unit: NT$ thousands	3Q20 3Q19 YOY 2020/1-3Q 2019/1-3Q Operating Revenue 189,907 227,478 -16.52% 600,711 655,857 Operating Costs 91,509 120,262 -23.91% 317,698 362,273 Gross profit 98,398 107,216 -8.22% 283,013 293,584 Gross Profit Margin 51.81% 47.13% － 47.11% 44.76% Operating Expenses 71,647 78,277 -8.47% 230,552 230,279 Operating Profit 26,751 28,939 -7.56% 52,461 63,305 Operating Profit Margin 14.09% 12.72% － 8.73% 9.65% Non-operating Income and Expenses 9,165 441 10.77% 11,721 3,958 Net Income after Tax 31,830 27,076 17.56% 54,374 59,928 EPS(NTD) 1.65 1.40 17.86% 2.84 3.14 Unit: NT$ thousands	3Q20 3Q19 YOY 2020/1-3Q 2019/1-3Q Operating Revenue 189,907 227,478 -16.52% 600,711 655,857 Operating Costs 91,509 120,262 -23.91% 317,698 362,273 Gross profit 98,398 107,216 -8.22% 283,013 293,584 Gross Profit Margin 51.81% 47.13% － 47.11% 44.76% Operating Expenses 71,647 78,277 -8.47% 230,552 230,279 Operating Profit 26,751 28,939 -7.56% 52,461 63,305 Operating Profit Margin 14.09% 12.72% － 8.73% 9.65% Non-operating Income and Expenses 9,165 441 10.77% 11,721 3,958 Net Income after Tax 31,830 27,076 17.56% 54,374 59,928 EPS(NTD) 1.65 1.40 17.86% 2.84 3.14 Unit: NT$ thousands	3Q20 3Q19 YOY 2020/1-3Q 2019/1-3Q Operating Revenue 189,907 227,478 -16.52% 600,711 655,857 Operating Costs 91,509 120,262 -23.91% 317,698 362,273 Gross profit 98,398 107,216 -8.22% 283,013 293,584 Gross Profit Margin 51.81% 47.13% － 47.11% 44.76% Operating Expenses 71,647 78,277 -8.47% 230,552 230,279 Operating Profit 26,751 28,939 -7.56% 52,461 63,305 Operating Profit Margin 14.09% 12.72% － 8.73% 9.65% Non-operating Income and Expenses 9,165 441 10.77% 11,721 3,958 Net Income after Tax 31,830 27,076 17.56% 54,374 59,928 EPS(NTD) 1.65 1.40 17.86% 2.84 3.14 Unit: NT$ thousands	3Q20 3Q19 YOY 2020/1-3Q 2019/1-3Q Operating Revenue 189,907 227,478 -16.52% 600,711 655,857 Operating Costs 91,509 120,262 -23.91% 317,698 362,273 Gross profit 98,398 107,216 -8.22% 283,013 293,584 Gross Profit Margin 51.81% 47.13% － 47.11% 44.76% Operating Expenses 71,647 78,277 -8.47% 230,552 230,279 Operating Profit 26,751 28,939 -7.56% 52,461 63,305 Operating Profit Margin 14.09% 12.72% － 8.73% 9.65% Non-operating Income and Expenses 9,165 441 10.77% 11,721 3,958 Net Income after Tax 31,830 27,076 17.56% 54,374 59,928 EPS(NTD) 1.65 1.40 17.86% 2.84 3.14 Unit: NT$ thousands
	3Q20		3Q19	YOY	2020/1-3Q	2019/1-3Q
Operating Revenue	189,907		227,478	-16.52%	600,711	655,857
Operating Costs	91,509			-23.91%	317,698	362,273
		91,509	120,262
Gross profit	98,398		107,216	-8.22%	283,013	293,584
Gross Profit Margin		51.81%	47.13%	－	47.11%	44.76%
Operating Expenses	71,647		78,277	-8.47%	230,552	230,279
Operating Profit	26,751		28,939	-7.56%	52,461	63,305
Operating Profit Margin	14.09%	14.09%	12.72%	－	8.73%	9.65%
Non-operating Income and Expenses	9,165		441	10.77%	11,721	3,958
Net Income after Tax	31,830		27,076	17.56%	54,374	59,928
EPS(NTD)	1.65	1.65	1.40	17.86%	2.84	3.14

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Profitability

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60%
52%
47%
50%
45% 45%
44% 44%
43%
40%
30%
20%
17%
13%
11%
10% 8% 14%
10%
5% 12% 4%
10%
5% 8%
7%
4%
0%
2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3
毛利率 營業淨利率 稅後淨利率
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Education Revenue

200,000 180,000 160,000 140,000 120,000 100,000 181,516 80,000 166,656[ 169,242 ] 164,508 154,135 157,812 146,138 60,000 40,000 20,000 - 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3

Unit: NT$ thousands

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Dividend Policy Unit：NTD；%

	2017	2018	2019
EPS	9.37	7.18	4.41
Non-reimbursable rights issue retroactively adjusted EPS Stock Dividend	8.92 0.5	7.18 -	4.01 1.0
Cash Dividend	6.5	4.0	1.5
Distribution Yield (NTD)	7.0	4.0	2.5
Dividend Payout Ratio (%)	75%	56%	57%
ROE	21.65%	16.12%	9.75%
ROA	15.30%	9.92%	5.86%

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Chen Li Education Co., Ltd.

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Business Locations

North Students：8,163 % of Rev.： 75%

Centre Students：2,261 % of Rev.： 16%

Southern Students：1,415 % of Rev.： 9%

11 Locations in Taiwan Complete K12 system Administration office Taipei Shilin Neihu Banqiao Xindian Xinzhuang Headquarters Branch Branch Branch Branch Branch Hsinchu Fengyuan Taichung Branch Branch Branch Chiayi Tainan Branch Branch

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Business Locations

Complete K12 system

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Elementary 4Branchs School Taipei, Banqiao, Taichung, Tainan

Middle High School 9Branchs School 11Branchs Taipei, Shilin, Neihu, Banqiao, Taipei, Shilin, Neihu, Banqiao, Xindian, Xinzhuang, Hsinchu, Xindian, Hsinchu, Xinzhuang, Fengyuan, Taichung, Taichung, Tainan Chiayi, Tainan

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Brands

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Diversified co-brands
Full range of subjects
陳立 張維 江浩
數學 英文 英文
張暘 唐宇 李哲
物理 物理 化學
姜孟希殷琴 柯舜 立言
生物團隊 地科 國文
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2020 Operating Mode

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Operating System

Operating Center

Chen-Li Brand & Business Development Strategy

HR & Organizational Effectiveness Management Teachers Development

Development Integration Planning Course Development and Market Development

Profit

Planning, Course, Teacher Admission Developing, Marketing Charges

Sign up, Choose Course

Coaching and relationship Start maintenance the Brand build Class

Operating Activity

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2020 High School Promotional Mode

Full Subjects

Third Grade Math, English, Mandarin, Science, Physical, Chemistry , Society

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Plural Subjects All-round Development

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Professional Certification, Interview

Second Grade

Math, English, Mandarin, Physical, Chemistry

Professional Certification First Grade Math, English, Mandarin, Science Diversification Increase Revenue！ Single Subject

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First Grade-Positive Growth of Revenue

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Unit: NT$ thousands
2018 Jan-Sep 2019 Jan-Sep 2020 Jan-Sep
First
125,755 98,669 112,434
Grade
% of High
School Rev. 29% 26% 30%
YOY
-3%
Outline of 108 courses
The worst year for Sub-replacement fertility
Adjusted Marketing Planning
Increase in percentage of revenue
※In 2020, Pre-first grade break through the three-year base scale recession cycle
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Second Grade-the Crucial Moment of Outline 108 Course
Unit: NT$ thousands
2018 Jan-Sep 2019 Jan-Sep 2020 Jan-Sep
Second
149,559 127,601 128,312
Grade
22
% of High
34% 33% 34%
School Rev.
YOY
-1%
In response to outline 108 course, expanding multi-
The rule of entrance exam affects exam subjects selection
subjects is inevitably
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Second Grade-the Crucial Moment of Outline 108 Course

The last year of Outline 99 Course The rule of entrance exam affects exam subjects selection

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Third Grade-Maximize Benefits

Third Grade-Maximize Benefits	Third Grade-Maximize Benefits	Third Grade-Maximize Benefits	Third Grade-Maximize Benefits
Unit: NT$ thousands
	2018 Jan-Sep	2019 Jan-Sep	2020 Jan-Sep
Third Grade	160,836	157,424	134,732
% of High School Rev.	37%	41%	36%
YOY
-5%

The uncertainly of entry threshold for target university increase the demand of participation for exam subjects

Adapting to the rule of entrance exam shrinks the demand of multi-subjects.

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2020 Elementary & Middle School Promotional Mode

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Third Grade 國九
Exam - oriented 應試
Second Grade
Exam - oriented 國八
、Professional
應試、認證、素養
Certification
Elementary & First Grade
小學& 國七
Exam – oriented, The higher grade students
Comprehensive and diversified
應試、認證、素養、競賽
Professional Certification, are, the more requirements
development
Market scale is wide competition of Exam - oriented need.
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Elementary &Middle School- Increase of Revenue

Unit: NT$ thousands 2018 Jan-Sep 2019 Jan-Sep 2020 Jan-Sep

% of High School 91% 88% 86% Rev.

% of Elementary &Middle School 9% 12% 14% Rev. Percentage of elementary and middle school revenue grows steady year by year.

Open New Branchs 1  2  4

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Vision and Change for The Future

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Outline 108 Course The new school system

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Outline 108 Course vs New Rule of Entrance Exam

Multi-versions of Subjects 、 Course Progress is different

• •Chapters are organized differently and progress is different

• •Synchronized teaching schedule is mainstream nowadays

New course under new rule of entrance exam！

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Course schedule follows the progress

Assure the Professional Certification

• •Multiple certificate exam, learning resource demand increases

• •Developing reading skill

• •Exam questions are more academic

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Multiple Course of Professional Certification

Exam / Course of Study / Sub-examination

Changing the •The more ways to entrance the university arrangement of •The requirements vary at different stages Course / Open new course

Industry cooperation, Resource sharing

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Strengthen the integration of online and offline

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The Difference between Online and Offline

1. Build a team of teachers 2. Cooperating through internet

The Nature of Education • Exam - oriented The Environment of Education

• Age from 12~18 (Early 8~11)

The Context of Education

• Active V.S. Interaction

The System of Education

• Entry system of Outline 108 Course

The Current Status of Education

• Family, School and Society

• The class size has changed from large to small

The Change of Education

• Online Class needs verification

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Integrated online and offline services

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Medium Class Special Class
Digital Service Platform Two-Three Teachers
Physical teaching is mainly Online lectures by famous teachers, strict
Digital courses are supplemented management by offline teacher
Online system service + More Professional,
Offline interaction management More customized
Attendance, Score Inquire, Evaluation Data,
Training teachers, Resource sharing
Resource Provision, Exam Debugging,
Counseling and solving puzzles
Counseling
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Strength of Chen-Li Education

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Chen Li Elm

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Textbook

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Business Model

Ａ：Introduction of formal courses in private schools（Math , Science）

• Cooperate with the pioneers , to achieve Profits maximization.

• Ｂ：Cooperated with famous School（Teachers＋Textbook）

• Cooperate with the pioneer of area , to increase brand awareness, retention rate and price.

• Ｃ：Provided supplementary education Know how to cooperator（Teachers training + Course）

• •Based on benchmark school ,our teaching will be satisfied with parents.

• •Authorization method : cooperate first , and then pay. More friendly to cooperators.

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2020 Cooperative partner

Elite private schools !!

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WAGOR
Hua Wen Micro
INTERNATIONAL
School
SCHOOL
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Einstein Academy
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Pu Tai
Elementary
School
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2020 Cooperative partner

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Renren Giraffe

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Chen Li Elm Revenue

Unit: NT$ thousands Private Schools Authorization Schools Other

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154
1,196
107
353
315
1,024 1,882
790
976
330 426
177
2019 Q4 2020 Q1 2020 Q2 2020 Q3
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Future Market

Taipei Hsinchu Taichung 2021 Changhua Cooperate with Private School＆ Nantou Authorization School Chiayi Tainan Kaohsiung

All over Taiwan

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2021 Main Strategy

In-depth development of indicative private schools all over Taiwan

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Increase benchmark
Expand Authorized
school’s student
school actively
retention rate
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Three year Authorized School Promoting Plan

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Chen-Li is everywhere 100 Authorized Schools

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THANK YOU FOR LISTENING