STARK — Interim / Quarterly Report 2019

Nov 8, 2019

Stark Technology Inc.(2480)

2019Q3 Investor Conference

Safe Harbor Notice

There are variety of factors which may influence statements or contents been drafted within this presentation, therefore we strongly recommend audience to refer to the information on published MOPS website in case has been any adjustment made.

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STI General Information

• Founded in 1993, public traded in 2001

• 485+ Employees

• The largest domestic system integrator in Taiwan

• One of Taiwan’s top 500 service enterprises company.

• Rated as Taiwan’s top 6% - 20% company over the 5[th] Corporate Governance Evaluation

• Dedication to service and maintain 1,600+ majority of the 2,000+ company enterprise business

• Providing more than 40 products & solutions to service our customers

• Our vision is to assist our customers to become a

• Information Service Provider

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STI Service Network

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Sales Operation – by Industries

Sales BU Industr / Product / Re ion y g IBM products, High-tech industries, E-commerce, Finance, and BU1 Automobiles, the main area in Hsinchu and middle Taiwan. High-tech manufacturing, Defense, Military, and Traditional 、 BU2 production, Education, the main area in Hsinchu Taoyuan and South Taiwan Finance, insurance, telecommunications, small and medium enterprises, manufacturing in Taipei BU6 The public sector including government, medical care, and education. The main area in Tai ei and East Taiwan p Private telecommunications, film and television media, energy, BU8 water and electricity, the main area in Taipei BU9 Chun hwa Telecom g

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We’ve been worked and working on:

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Cloud Services & Data Analytics
Infrastructure
internet
Enterprises Enterprise/PC
Factories
Security Cloud
Big Data & Cable
Medical Enterprise Apps Computing Broadband
Cloud Cloud Home/PC
Data Integration
SmartTV
Deep Learning
Buyers, Analytics Mobile APP
4G/5G
Sponsors FSI Cloud
(Fintech, Blockchain) WiFi
IoT
Factory
Automation
Smart Mobile
Industry 4.0 LoRa
Developers, NB-IoT
Content Providers,
IoT Devices
Consumers
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、 、 Inter-connect : Telecomm Broadband/Cable Internet 、 、 、 Multi-Screens : PC NB/Pad Smartphone SmartTV

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Information Technologies

Portal Personalization Content Mgmt Single sign-on

eCommerce Vertical Apps. Enterprise Apps Professional OSS, VAS High Freq. Trade ERP,CRM,SCM IoT Services Probe/CEM by Trade MES, PLM AML (Environmental Monitoring) Travel Medical Gov’t MFG Telco FSI Consulting Design EAI@SOA Middleware Data Integration@BI Deployment Integration Data Mgmt. Security

System & Platform Resource Mgmt (CPU/GPU/VM/Container/Bare Metal)

Networking Platform Load Balancing Network Mgmt

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、 AI (Machine Deep Learning)

Data Science Training Modeling Inference Who? : Auto ML Who? : AI Engineer Who? : End users . Rapid ML/DL modeling, . Process customization . Manpower constraint . ML/DL inference deployment

STI : ML, DL computing hardware/software framework integration

• 3[rd] party alliance : Industrial domain consultant, Semi-auto. Tool vendor

• AI Solution Consultant Auto ML  Stack holder lead project  IT lead project  End-to-end solution planning  Manpower constraint  DL@GPU  Time to deployment  Tech. staff training  min. data input, max.  Workload@CPU or @GPU

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Security Cloud Service model

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Strategic alliance
Public Cloud
Service offering
Internet (AWS,Azure,GCP)
System inter-connect
Security Service
HQ office
Vendor
Branch office
Security
Intelligence Security Cloud
Vendor Service SmartMoble@Employee
 Secure connection,
Secure AIoT inter-connect
management, threat EAR app platform
platform
analysis & report
services
Access
 Cyber Threat Authentication Open API Biz. partner
Intelligence analysis &
detection services
 Secure access ：
e.g.
authentication, Access Secure Medical Apps access
Management
authorization & apps. Authorization Customers
Secure payment service
Platform services
.
.
RESTful API
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Tel-Communication Technologies (5G)

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IP Core Network

Small Cell

OTN/Metro OTN (5G Back-Haul)

Small Cell SD-WAN Gateway (Software-Defined WAN) (5G IP Core)

CWDM/NG-PON (5G Front-Haul)

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Products & Solutions

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Info. Security
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Data Comm.
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Software Development Tools
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Open Systems
STI Professional Service
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Resource MGMT.
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Data MGMT.
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Telcomm.
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Nokia Networks
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Balance Sheet Overview (Consolidated)

Units:NT$ thousand

	2019/9/30	2019/9/30	2018/12/31	2018/12/31	2018/9/30	2018/9/30
	AMT	%	AMT	%	AMT	%
Cash and cash equivalents	**1,153,632 **	**25% **	**1,310,169 **	**26% **	1,261,214	28%
Accounts receivable(including contract assets)	730,262	15%	828,304	16%	777,954	17%
Inventories	1,403,166	**30% **	**1,697,084 **	**34% **	**1,370,863 **	31%
Property,Plant and equipment	456,062	10%	460,339	9%	462,858	10%
Total Assets	**4,656,078 **	**100% **	**4,963,595 **	**100% **	**4,476,561 **	100%
Current Liabilities	1,862,993	**40% **	**2,267,502 **	**46% **	**1,897,699 **	42%
Equity	2,692,686	**58% **	2,639,555	**53% **	**2,526,294 **	57%

Source: Market Observation Post System

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Income Statements Overview (Consolidated)

Units: NT$ thousand

			Units:	Units:	NT$ thou
	2019Jan.-Sep.		2018Jan.-Sep.
Item	AMT	%	AMT	%	YOY
Revenues	3,938,101	**100% **	3,342,424	100%	17.8%
Gross profit	949,803	24%	977,465	29%	-2.8%
Operating expense	576,728	15%	624,359	19%	-7.6%
Operating income	373,075	9%	353,106	10%	5.7%
Other income	41,621	1%	22,722	1%	83.2%
Pre-tax income	414,696	10%	375,828	11%	10.3%
Net income	323,658	8%	283,116	8%	14.3%
EPS(NT$)	**3.04 **		2.66		14.3%

Source: Market Observation Post System

Note:2019Q3 revenue and increased by 595,677K from the last year, mainly due to the long period of construction of some large-scale projects.; EPS was NT$3.04

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Comparison of Consolidated Income

Units: NT$ thousand

2019Q3 2019Q2 QoQ Revenues 1,343,946 1,201,525 11.9% Gross profit 283,646 305,336 -7.1% Gross profit% 21% 25% -16.9% Operating income 95,579 121,571 -21.4% Pre-tax income 120,649 130,892 -7.8% Net income 94,995 105,987 -10.4% EPS 0.89 1.00 -11.0% QoQ Comparison of 2019Q3	2019Q3 2019Q2 QoQ Revenues 1,343,946 1,201,525 11.9% Gross profit 283,646 305,336 -7.1% Gross profit% 21% 25% -16.9% Operating income 95,579 121,571 -21.4% Pre-tax income 120,649 130,892 -7.8% Net income 94,995 105,987 -10.4% EPS 0.89 1.00 -11.0% QoQ Comparison of 2019Q3	2019Q3 2019Q2 QoQ Revenues 1,343,946 1,201,525 11.9% Gross profit 283,646 305,336 -7.1% Gross profit% 21% 25% -16.9% Operating income 95,579 121,571 -21.4% Pre-tax income 120,649 130,892 -7.8% Net income 94,995 105,987 -10.4% EPS 0.89 1.00 -11.0% QoQ Comparison of 2019Q3	2019Q3 2019Q2 QoQ Revenues 1,343,946 1,201,525 11.9% Gross profit 283,646 305,336 -7.1% Gross profit% 21% 25% -16.9% Operating income 95,579 121,571 -21.4% Pre-tax income 120,649 130,892 -7.8% Net income 94,995 105,987 -10.4% EPS 0.89 1.00 -11.0% QoQ Comparison of 2019Q3	YoY Comparison of 2019Q3	YoY Comparison of 2019Q3	YoY Comparison of 2019Q3	YoY Comparison of 2019Q3
	2019Q3	2019Q2	QoQ		2019Q3	2018Q3	YoY
Revenues	1,343,946	1,201,525	11.9%	Revenues	1,343,946	1,019,661	31.8%
Gross profit	283,646	305,336	-7.1%	Gross profit	283,646	304,814	-6.9%
Gross profit%	21%	25%	-16.9%	Gross profit%	21%	30%	-29.4%
Operating income	95,579	121,571	-21.4%	Operating income	95,579	98,000	-2.5%
Pre-tax income	120,649	130,892	-7.8%	Pre-tax income	120,649	107,097	12.7%
Net income	94,995	105,987	-10.4%	Net income	94,995	81,933	15.9%
EPS	0.89	1.00	-11.0%	EPS	0.89	0.77	15.6%

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Sales Revenue & Net Income

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Sales Revenue Units:NT$ Net Income Units:NT$
thousand thousand
4,800,000 450,000
4,648,442 404,220
400,000
4,600,000
323,658
350,000
305,667
4,400,000
300,000
4,201,110
4,200,000
250,000
3,938,101
200,000
4,000,000
150,000
3,800,000
100,000
3,600,000
50,000
3,400,000 0
2019Q3 2018 2017 2019Q3 2018 2017
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EPS & Capital

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EPS Capital Units:NT$
Units:NT$ thousand
4.00 3.80 1,200,000
1,063,603 1,063,603 1,063,603
3.50
1,000,000
3.04
3.00
2.56
800,000
2.50
2.00 600,000
1.50
400,000
1.00
200,000
0.50
0.00 0
2019Q3 2018 2017
2019Q3 2018 2017
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2019Q3 Sales Revenues by Type

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PC
Peripheral
2%
5%
Application Software
10%
Consulting/Maintenan
ce
31%
System Platform &
Application Server
14%
Enterprise Network
Storage 20%
18%
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Revenue:3.938billion

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Comparison of Sales Revenues by Type

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%		1%	1%	1%
		5% 2%	5% 1%	5% 1%
		9%	8%	7%
		14%	14%	14%
			17%	19%
		18%
		20%	22%	21%
		31%	32%	32%
	2019Q3 2018 2018Q3 Consulting/Maintenance Enterprise Network Storage System Platform & Application Server Application Software Peripheral PC Other Project

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Compare Sales Revenues by Type

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1,400,000
1,223,236
1,200,000
1,080,941
1,000,000
786,077
800,000
696,225 708,480
624,804
600,000 557,743
476,800
370,911
400,000
198,271
224,587
172,037
200,000
83,181
43,527 9,070 20,782 1,132
2,721
0
2019Q3 2018Q3
Revenue:3.938billion Revenue:3.342billion
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2019Q3 Sales Revenues by Industry

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Transportation and Biomedical
Other
traditional 4%
5%
manufacturing
7%
Financial insurance
8%
Electronic
related(Including
Semiconductor)
44%
Government
education unit
15%
Revenue:3.938billion Telecommunications
17%
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Comparison of Sales Revenues by Industry

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
	5% 6% 6% 4% 2% 3%
	8% 8% 6% 7% 8% 8%
	11%
	15% 12%
	17% 18% 17%
	44% 46% 49%
	2019Q3 2018 2018Q3 Electronic related(Including Semiconductor) Telecommunications Government education unit Financial insurance Transportation and traditional manufacturing Other Biomedical

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Comparison of Sales Revenues by Region

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100.0%
0.8%
1.3% 1.5%
95.0% 8.5%
10.4%
12.4%
90.0%
85.0%
90.7%
88.3%
86.1%
80.0%
75.0%
2019Q3 2018 2018Q3
Taiwan China(Including HK) Other
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Quarterly revenue status

0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000	Units:NT$ thousand 65% 69% 72% 67% 63% 65% 72% 64% 72% 67% 35% 30% 28% 32% 37% 35% 27% 34% 27% 32% 1,343,946 1,201,525 1,392,630 1,306,018 1,019,661 1,018,933 1,303,830 1,052,959 1,116,252 952,064 2019Q3 2019Q2 2019Q1 2018Q4 2018Q3 2018Q2 2018Q1 2017Q4 2017Q3 2017Q2 Product Service Other Revenues

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Q & A Thank you!!