SUNON — Annual Report 2017

Mar 12, 2018

SUNONwealth Electric Machine Industry Co., Ltd

2017 Operation results 2421.TW / 2421 TT

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Safe Harbor Notice

This presentation is based on the information obtained from various sources which the Company believes to be reliable. But at some point in the future, there are a variety of factors which could cause actual results to differ materially from those statements. Therefore, please refer to the information on MOPS website as the main basis if any adjustment has been made.

(http://mops.twse.com.tw/mops/web/index)

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Thermal & Thermal Management

All electronic devices and circuitry generate excess heat and thus require thermal management to improve reliability and prevent premature failure. The amount of heat output is equal to the power input, if there are no other energy interactions.There are several techniques for cooling including various styles of heat sinks, thermoelectric coolers, forced air systems and fans, heat pipes, and others.

Passive Cooling Active Cooling

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Heat sinks Heat pipes Liquid cooling Cooling Fan
Vapor chamber
From Wikipedia, the free encyclopedia
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Thermal
Module
Thermal Module
Heat Heat Ambient
TIM Fan
Chip Copper temperature
pipes sinks
meet
Heat heat transfer heat dissipation system
Operating
temperature
Photo source: Internet
SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT) Page 4
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Cooling Fan (Server)

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Photo source: Internet

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Cooling Fan (Auto)

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37 YEARS

Innovative Energy-Saving Motor Design & Technology

Company Overview

Established：1980

Employees ： 500 people (Taiwan) 7400 people (China) Turnover ：NTD$ 10.95 Bn (Y2017) Factories ： Kaohsiung Plant (Taiwan) Kun Shan Plant (China) Foshan Plant (China) Beihai Plant (China) Hefei Plant (China)

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Motor 0.1W 1500 Watts Fan 3mm 80mm 200mm 630 mm 3000mm 7000mm

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Growth
Pattern
Million (NTD) PM2.5 Air Purifier and
Automotive electronics
SUNON enters LED lighting industry
Received orders from STB Became the only supplier for Philips
and automotive manufactures
Received orders from
Financial Cisco, ZTE, Huawei major telecom
Crisis and Cloud Data manufactures
Received order from major
telecom manufacture
SUNON enters Cloud Data Center
Received orders from Facebook and Google
Focus on Micro Cooling Device
The only supplier for NB OEM
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SUNON Research

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PANTENTS

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• Global Over 1,000 sales representatives, 12 subsidiaries and offices, and over 130 distributors around the world.

• Support • 7 research centers which provide a worldwide technological service network for quick and efficient services.

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Europe China / Foshan China / Kunshan Taiwan Taiwan Taipei Japan/ Yokohama U.S.A.
Research Center Research Center Research Center Research Center Research Center Research Center Research Center
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World Leading Motor Technology

MagLev Shockproof System System

Sound Ultra Energy Quality Thin Efficient Analysis 92% 3mm Thickness efficiency

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Outstanding Technology

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MAGNETIZATION MOTOR EFFICIENCY VIBRATION FREQUENCY MATERIAL ANALYSIS
SIMULATION ANALYSIS ANALYSIS SPECTRUM ANALYSIS AND RESEARCH
Total motor, thermal, ventilation solution
SOUND QUALITY THERMAL ANALYSIS STRUCTURAL SIMULATION HIGH VOLTAGE DIRECT
ANALYSIS ANALYSIS CURRENT(DC)
ELECTRICITY
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SUNON Product Line

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Motor Fan
Ventilation Cooling
System Module
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Fan & Blower

Fan Size 8mm- 630mm DC Axial Fan DC Blower AC Axial Fan Mighty Mini Fan Water proof Fan Explosion-proof Fan Fan Tray

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Dual Blower
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EC Axial Fan
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EC Blower EC Centrifugal Fan

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Cooling Module

Passive Cooling Module Active Cooling Module Liquid cooling Module

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Motor

Highly Energy efficient motor 0.1W ~ 1500W

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The application of high horsepower motors

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Ventilation

Eco ventilation solution

Ventilation Fan

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HVLS Ceiling Fan

Flow2 One

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Case Study

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Products Application

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50% 2016 2017
41.4%
40% 36.1%
30%
20.4%
20% 15.6% 16.0% 17.6%
10.7% 10.5% 10.7%
9.0%
10%
4.2%
3.9%
2.0% 1.9%
0%
LED Lighting Automobile Distribution Home Industrial Telecom & IT & OE
Appliances Medical E. Server
SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT) Page 18
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Revenue Performance

UNIT: NTD (K)

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12,000,000 Revenue Growth rate 18%
10,946,728
10,690,822
10,109,156 16%
10,000,000 9,533,345
15.5% 14%
8,256,495
7,708,731
8,000,000 12%
10%
6,000,000
8%
4,000,000 7.1% 6%
6.0%
5.8% 4%
2,000,000
2%
2.4%
0 0%
Y2012 Y2013 Y2014 Y2015 Y2016 Y2017
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SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT) Page 19
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Profit Margin

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Gross Margin
30%
21.98% 22.95% 23.33% 21.35% 22.42%
22.86% 23.47% 22.59% 22.43%
20.47%
10% 17.53% 19.69% 21.14% 22.44% 20.32%
-10% Q1 Q2 Q3 Q4 Y
Y2015 Y2016 Y2017
Operating Margin
10%
7.92% 8.15%
8% 6.91%
6.01% 8.24%
7.81% 5.39%
6%
6.39% 6.51% 6.50%
5.92%
4%
4.34%
3.46%
2% 2.67%
0.83%
0%
Q1 Q2 Q3 Q4 Y
Net Margin
10%
7.36%
8% 6.44% 6.29%6.42% 6.32% 6.74% 6.01%
6% 5.12% 5.66% 5.05% 5.51%
4.44%
4% 3.07%
2.26%
2% 1.30%
0%
Q1 Q2 Q3 Q4 Y
SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT) Page 20
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Earning & Cash Dividend

UNIT: NTD

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3.0 2.62
2.5 2.28 2.3
2.0
2.0 1.77
1.51 1.5
1.5 1.22 1.2
1.0 1.0
0.83
1.0
0.5
0.0
EPS Cash Dividend
Y2012 Y2013 Y2014 Y2015 Y2016 Y2017
Payout R. 120.48% 81.97% 79.47% 84.75% 87.72% 87.79%
SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT) Page 21
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Medium Term Drivers

EC motor IoT & 5G Automobile for HVACR Industry 4.0 Application AI/HPC & Cloud Home Application Gaming Air Purifier Computing VR MR AR Photo source: Internet Page 22

Appendix I

CONSOLIDATED STATEMENT	CONSOLIDATED STATEMENT	CONSOLIDATED STATEMENT	CONSOLIDATED STATEMENT	OF COMPREHENSIVE	OF COMPREHENSIVE	OF COMPREHENSIVE	INCOME
NT$ M	2013	2014	2015	2016	2017	2014	2015 2016 Growth YOY(%)		2017
OPERATING REVENUES	8,256	9,533	10,109	10,691	10,947	15.47%	6.04%	5.76%	2.39%
GROSS PROFIT	1,780	1,953	2,054	2,398	2,454	9.72%	5.17%	16.75%	2.34%
INCOME FROM OPERATIONS	384	418	439	695	756	8.85%	5.02%	58.31%	8.78%
INCOME BEFORE INCOME TAX	441	525	584	833	842	19.05%	11.24%	42.64%	1.08%
NET INCOME attribute to owners	306	379	442	572	657	23.86%	16.62%	29.41%	14.86%
EPS (NT$)	1.22	1.51	1.77	2.28	2.62
Gross Margin	21.56%	20.49%	20.32%	22.43%	22.42%
Operating Margin	4.66%	4.38%	4.34%	6.50%	6.91%
Net Margin(*)	3.71%	3.98%	4.37%	5.35%	6.01%

(*)Net Margin=Net Income attribute to owners / Revenue

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Appendix II

2014 2015 2016 2017 TOTAL ASSETS 6,778 7,324 7,523 8,391 8,813 8.06% 2.72% 11.54% 5.03% Cash 1,183 961 1,269 1,338 1,387 -18.77% 32.05% 5.44% 3.66% A/R, N/R 2,001 2,440 2,439 2,871 2,724 21.94% -0.04% 17.71% -5.12% Inventories 1,154 1,338 1,480 1,377 1,744 15.94% 10.61% -6.96% 26.65% PP&E 1,814 1,810 1,775 2,182 2,294 -0.22% -1.93% 22.93% 5.13% CONSOLIDATED BALANCE SHEETS NT$ M 2013 2014 2015 2016 2017 Growth YOY(%)

TOTAL LIABILITIES 3,067 3,364 3,516 4,324 4,639 9.68% 4.52% 22.98% 7.28% Short-term loans 576 497 464 454 636 -13.72% -6.64% -2.16% 40.09% A/P 1,653 1,934 2,084 2,469 2,550 17.00% 7.76% 18.47% 3.28% Long-term loans 0 0 0 320 320 TOTAL EQUITY 3,711 3,960 4,007 4,067 4,174 6.71% 1.19% 1.50% 2.63% Days sales outstanding 83 85 88 91 93 Days sales of inventory 59 60 64 63 67 Current Ratio 1.6032 1.635 1.6317 1.5336 1.4898

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2421.TW / 2421 TT

www.sunon.com

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