STARK — Interim / Quarterly Report 2021

Mar 4, 2021

Stark Technology Inc.(2480)

2020Q4 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

• 521+ 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 6[th] Corporate Governance Evaluation

• 2020/07 Included in the "Corporate Governance 100 Index“

• 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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Awards

• 2020/10 Won the two awards of “2020 Executive Performance Evaluation'' and “2020 Best Partner'' by Far EasTone Telecom

• 2019 Best Supplier of Taiwan Mobile and 2020 Best Supplier of Fubon Financial

• Fortinet _2019 Self-improvement Award

• Hitachi Vantara_FY19 Top Reseller of the Year

• VMware_2020 Highest Growth Partner Award

• HPE_FY20 Top Reseller of the Year

• Cisco_FY20 Rising Star Award

• Fujitsu_Best Select Partner of the Year 2019

• Lenovo_2020 Best Solution Sales Award

• IBM_2020 Best LinuxOne Breakout Award

• NetApp_FY20 Best partner Award

• HPE FY20 Best partner Award

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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  Stack holder lead project  End-to-end solution planning  DL@GPU  Tech. staff training

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Auto ML  IT lead project  Manpower constraint  Time to deployment  min. data input, max.  Workload@CPU or @GPU

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(MSSP) Managed Security Service Provider

Global CTI Platform

Global CTI Platform Identity mgmt.@Cloud STI Security Gears Deployment VA@Cloud Security Services & Fine tuning - On Premise API Security@Cloud Security Services

API Security@Cloud

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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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Meet up 5G + MEC@AI@Cloud

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Smart City
GOV. Cloud
Cloud@CN
Medical AI @DL,ML EntertainmentA/R, V/R AI@DL,ML Training @Cloud
Autonomous Car
Cloud
Automobile
AI @DL,ML
Mobile APP
FSI Cloud
(Fintech, Blockchain) AI @DL,ML
AI @DL,ML IoT
MFG.
Automation
Industry 4.0
New Inference Feed
MEC : Multi-Access Edge Computing
Training
Data Feed
Non-MEC Services Non-MEC Services
Edge@RAN
MEC Services MEC Services
MEC Servers
Inference@Edge
BS1 BS2
New Inference Training
Feed Data Feed
Inference@End-Point
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Products & Solutions

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

Units:NT$ thousand

	2020/12/31	2020/12/31	2019/12/31	2019/12/31	2018/12/31	2018/12/31
Item	AMT	%	AMT	%	AMT	%
Cash and cash equivalents	**1,348,404 **	**24% **	1,567,177	**30% **	**1,310,169 **	26%
Accounts receivable(including contract assets)	1,108,125	20%	874,148	17%	838,305	16%
Inventories	1,957,859	**34% **	1,470,524	**29% **	1,697,084	34%
Property,Plant and equipment	453,651	8%	452,727	9%	460,339	9%
Total Assets	5,743,047	**100% **	5,113,720	**100% **	4,963,595	100%
Current Liabilities	2,807,884	**49% **	2,211,857	**43% **	2,267,502	46%
Total Liabilities	2,914,035	**51% **	2,315,992	**45% **	2,324,040	47%
Equity	2,829,012	**49% **	2,797,728	**55% **	2,639,555	53%

Source: Market Observation Post System

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Income Statements Overview (Consolidated)

Units: NT$ thousand

	2020 Jan.-Dec.	2020 Jan.-Dec.	2019 Jan.-Dec.	2019 Jan.-Dec.
Item	AMT	%	AMT	%	YOY
Revenues	5,542,811	**100% **	5,521,432	100%	0.4%
Gross profit	1,377,627	**25% **	1,345,072	24%	2.4%
Operating expense	834,206	15%	824,015	15%	1.2%
Operating income	543,421	10%	521,057	9%	4.3%
Other income	57,088	1%	48,661	1%	17.3%
Pre-tax income	600,509	11%	569,718	10%	5.4%
Net income	497,618	9%	446,501	8%	11.4%
EPS(NT$)	4.68		4.20		11.4%

Source: Market Observation Post System

Note:China subsidiary’s revenue of consolidated: 2020 4.3%;2019 6.6%

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Consolidated Revenues

1,200,000 1,250,000 1,300,000 1,350,000 1,400,000 1,450,000 1,500,000 1,550,000 1,600,000 1,650,000	1,573,932 1,334,795 1,583,331 2020Q4 2020Q3 2019Q4 QoQ 17.9% YoY -0.6% 5,510,000 5,515,000 5,520,000 5,525,000 5,530,000 5,535,000 5,540,000 5,545,000	Units: NT$ thousand YoY 0.4%
		5,542,811
		5,521,432
		2020 2019

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Consolidated Gross profit%

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QoQ YoY YoY
1.5pt 0.3pt 0.5pt
25.5%
24.9%
25.3%
24.9%
24.8%
25.0%
25.0%
24.7%
24.5% 24.6%
24.5%
24.0% 24.4%
24.4%
23.8%
24.3%
23.5%
24.2%
23.0%
24.1%
2020Q4 2020Q3 2019Q4 2020 2019
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Consolidated Operating expenses

0 50,000 100,000 150,000 200,000 250,000 300,000	227,791 177,861 220,859 25,470 23,576 26,428 253,261 201,437 247,287 2020Q3 2020Q2 2019Q3 Research and development expenses Administrative expenses Operating expenses QoQ 25.7% YoY 2.4% 660,000 680,000 700,000 720,000 740,000 760,000 780,000 800,000 820,000 840,000 860,000	Units: NT$ thousand 740,530 725,235 93,676 98,780 834,206 824,015 2020 2019 Research and development expenses Administrative expenses Operating expenses YoY 1.2%

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Consolidated Operating income

Units: NT$ thousand

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000	144,893 116,452 147,982 2020Q4 2020Q3 2019Q4 QoQ 24.4% YoY -2.1% 505,000 510,000 515,000 520,000 525,000 530,000 535,000 540,000 545,000 550,000	YoY 4.3%
		543421
		,
		521,057
		2020 2019

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Consolidated Operating income%

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QoQ YoY
YoY
0.5pt -0.1pt
0.4pt
9.4%
9.9%
9.3%
9.3%
9.8%
9.2% 9.8%
9.2%
9.1% 9.7%
9.0%
9.6%
8.9%
9.5%
8.8%
9.4%
8.7%
8.7% 9.4%
8.6%
9.3%
8.5%
8.4% 9.2%
2020Q4 2020Q3 2019Q4 2020 2019
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Consolidated Net income

Units: NT$ thousand

105,000 110,000 115,000 120,000 125,000 130,000 135,000 140,000	137,442 116,363 122,843 2020Q4 2020Q3 2019Q4 QoQ 18.1% YoY 11.9% 420,000 430,000 440,000 450,000 460,000 470,000 480,000 490,000 500,000 510,000	YoY 11.4%
		497618
		,
		446,501
		2020 2019

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Consolidated Net income%

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QoQ YoY YoY
0pt 0.9pt 0.9pt
9.0% 9.2%
8.8% 8.7% 8.7% 9.0%
9.0%
8.6%
8.8%
8.4%
8.6%
8.2%
8.4%
8.0%
8.2%
7.8% 8.1%
7.8%
8.0%
7.6%
7.8%
7.4%
7.2% 7.6%
2020Q4 2020Q3 2019Q4 2020 2019
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Consolidated EPS

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QoQ YoY YoY Units: NT$
17.3% 11.2%
11.4%
4.80
1.35
4.68
4.70
1.30 1.29
4.60
1.25
4.50
1.20 4.40
1.16
4.30
1.15
4.20
4.20
1.10
1.10
4.10
1.05
4.00
1.00 3.90
2020Q4 2020Q3 2019Q4 2020 2019
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Sales Revenue & Net Income

Sales Revenue

Net Income

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Sales Revenue Units:NT$ Net Income Units:NT$
thousand thousand
5,800,000 600,000
5,600,000 5,542,811 5,521,432 497,618
500,000
446,501
5,400,000
404,220
400,000
5,200,000
5,000,000 300,000
4,800,000
4,648,442 200,000
4,600,000
100,000
4,400,000
4,200,000 0
2020 2019 2018 2020 2019 2018
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EPS & Capital

Units:NT$ thousand

Capital

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EPS
Units:NT$ thousand
5 4.68 1,200,000
1,063,603 1,063,603 1,063,603
4.5 4.20
1,000,000
4 3.80
3.5
800,000
3
2.5 600,000
2
400,000
1.5
1
200,000
0.5
0 0
2020 2019 2018 2020 2019 2018
2020 2019 2018
ROE 17.69 16.42 15.64
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Dividends Policy

Dividends in recent years

Units:NT$

Year	2020	2019	2018	2017	2016	2015	2014
Amount	4.3	4.45	3.42	2.62	2.1	2	2

EPS in recent ears y

Units:NT$

EPS in recentyears							Units:NT$
Year	2020	2019	2018	2017	2016	2015	2014
Amount	4.68	4.2	3.8	2.56	2.25	2.02	2.01

Payout ratio in recentyears Units:%	Payout ratio in recentyears Units:%	Payout ratio in recentyears Units:%	Payout ratio in recentyears Units:%	Payout ratio in recentyears Units:%	Payout ratio in recentyears Units:%	Payout ratio in recentyears Units:%	Payout ratio in recentyears Units:%
Year	2020	2019	2018	2017	2016	2015	2014
Ratio	**91.9% **	**106.0% **	**90.0% **	**102.3% **	**93.3% **	99.0%	99.5%

Note ： Payout ratio in year 2019 due to the adjustment of IFRSs to shareholders’ equity which can be part of distribution

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2020 Sales Revenues by Type

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PC
Peripheral
1%
5%
Application Software
13%
Consulting/Maintenance
28%
System Platform &
Application Server
14%
Enterprise Network
23%
Storage
16%
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Revenue:5.543billion

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Comparison of Sales Revenues by Type

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%			1%
		5% 5% 1% 2%	5% 1%
		13% 9%	8%
		14% 14%	14%
		17%	17%
		16%
		22%	22%
		23%
		28% 31%	32%
	2020 2019 Consulting/Maintenance Enterprise Network Storage System Platform & Application Server Application Software Peripheral PC Other Project		2018

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Compare Sales Revenues by Type

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2,000,000
1,800,000 1,726,228
1,551,755
1,600,000
1,400,000 1,260,850
1,190,875
1,200,000
925,619
1,000,000
866,201 745,551
800,000 782,044 712,979
600,000 509,292
400,000 283,754
300,882
200,000 109,020
74,201 12,846
11,028 0 1,119
0
Unit:NT K$ 2020 2019
Product
3,980,028 3,781,239
Sales
Consulting
/Maintenance [1,551,755 1,726,228 ]
2020 2019 Other 11,028 13,965
Revenue:5.543billion Revenue:5.521billion Total 5,542,811 5,521,432
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2020 Sales Revenues by Industry

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Transportation and Biomedical
traditional manufacturing Other 2%
8% 6%
Financial insurance
10%
Electronic
related(Including
Semiconductor)
46%
Government education
unit
11%
Telecommunications
17%
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Revenue:5.543billion

Comparison of Sales Revenues by Industry(Accumulated)

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100%
2% 3% 2%
6% 6% 6%
90%
8% 7% 8%
80% 8% 8%
10%
70% 12%
11% 15%
60%
18%
17%
18%
50%
40%
30%
46% 46%
43%
20%
10%
0%
2020Q4 2019Q4 2018Q4
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(Accumulated)

	Comparison of Sales Revenues by Region(Accumulated)
82.0% 84.0% 86.0% 88.0% 90.0% 92.0% 94.0% 96.0% 98.0% 100.0%
	1.2% 0.9% 1.3%
	4.6%
	7.0%
	10.4%
	942%
	. 92.1%
	88.3%
	2020 2019 2018 Taiwan China(Including HK) Other

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Quarterly revenue status

Units:NT$ thousand

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Q & A Thank you!!