SUNON — Interim / Quarterly Report 2019

Aug 7, 2019

==> picture [721 x 136] intentionally omitted <==

==> picture [324 x 321] intentionally omitted <==

SUNONwealth Electric Machine Industry Co., Ltd 2019 Q2 Operating Results 2421.TW / 2421 TT

Page 1

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

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)

==> picture [85 x 17] intentionally omitted <==

Page 2

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

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

==> picture [601 x 223] intentionally omitted <==

----- Start of picture text -----

Heat sinks Heat pipes Liquid cooling Cooling Fan
Vapor chamber
----- End of picture text -----

From Wikipedia, the free encyclopedia

==> picture [85 x 17] intentionally omitted <==

Page 3

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

==> picture [663 x 494] intentionally omitted <==

----- Start of picture text -----

Thermal
Module
Thermal Module
Heat Heat Ambient
Chip TIM Copper Fan temperature
pipes sinks
meet
Heat heat transfer heat dissipation system
Operating
temperature
Photo Source :Internet
----- End of picture text -----

==> picture [85 x 17] intentionally omitted <==

Page 4

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

Cooling Fan (Server)

==> picture [212 x 171] intentionally omitted <==

==> picture [451 x 301] intentionally omitted <==

Photo Source :Internet

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

==> picture [33 x 11] intentionally omitted <==

----- Start of picture text -----

Page 5
----- End of picture text -----

==> picture [318 x 173] intentionally omitted <==

==> picture [721 x 473] intentionally omitted <==

----- Start of picture text -----

Cooling
Fan
(Auto)
----- End of picture text -----

==> picture [85 x 17] intentionally omitted <==

Page 6

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

38 YEARS

Innovative Energy-Saving Motor Design & Technology

E s t a b l i s h e d E m p l o y e e s F a c t o r i e s T u r n o v e r (Taiwan) (China) (Taiwan) (China) USD$ 1980 550 7300 1 3 397[M] (Year 2018)

==> picture [149 x 88] intentionally omitted <==

==> picture [122 x 48] intentionally omitted <==

==> picture [47 x 47] intentionally omitted <==

Motor 0.1W 1500 Watts Fan 8mm 80mm 120mm 250 mm 3000mm 7300mm

==> picture [85 x 17] intentionally omitted <==

Page 7

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

Growth Pattern

==> picture [721 x 458] intentionally omitted <==

----- Start of picture text -----

Million (NTD) Server, Data center
Received orders from STB SUNON enters LED lighting industry
and automotive manufactures Became the only supplier for Philips
PM2.5 Air Purifier and
Automotive electronics
Received orders from
Cisco, ZTE, Huawei major telecom
Financial
and Cloud Data manufactures
Crisis
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
SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT) Page 8
----- End of picture text -----

==> picture [721 x 523] intentionally omitted <==

----- Start of picture text -----

SUNON
Research
PANTENTS
3000
[2671]
[2568]
2500 2006 2157 [2298] [2454]
2000 [1825]
[1695]
1451 [1586]
1500
1000
500
0
2 [009] 2 [010] 2 [011] 2 [012] 2 [013] 2 [014] 2 [015] 2 [016] 2 [017] 2 [018]
SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT) Page 9
----- End of picture text -----

• 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.

==> picture [653 x 358] intentionally omitted <==

----- Start of picture text -----

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
----- End of picture text -----

==> picture [85 x 17] intentionally omitted <==

Page 10

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

World Leading Motor Technology

Sound MagLev Shockproof Ultra Energy Quality System System Thin Efficient Analysis

==> picture [138 x 101] intentionally omitted <==

==> picture [139 x 104] intentionally omitted <==

3mm Thickness

==> picture [138 x 101] intentionally omitted <==

----- Start of picture text -----

92%
efficiency
----- End of picture text -----

==> picture [139 x 102] intentionally omitted <==

==> picture [85 x 17] intentionally omitted <==

Page 11

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

Outstanding Technology

==> picture [144 x 85] intentionally omitted <==

==> picture [124 x 86] intentionally omitted <==

==> picture [129 x 78] intentionally omitted <==

==> picture [138 x 84] intentionally omitted <==

==> picture [580 x 24] intentionally omitted <==

----- Start of picture text -----

MAGNETIZATION MOTOR EFFICIENCY VIBRATION FREQUENCY MATERIAL ANALYSIS
SIMULATION ANALYSIS ANALYSIS SPECTRUM ANALYSIS AND RESEARCH
----- End of picture text -----

==> picture [270 x 21] intentionally omitted <==

----- Start of picture text -----

SOUND QUALITY THERMAL ANALYSIS
ANALYSIS
----- End of picture text -----

==> picture [284 x 32] intentionally omitted <==

----- Start of picture text -----

STRUCTURAL SIMULATION HIGH VOLTAGE DIRECT
ANALYSIS CURRENT(DC)
ELECTRICITY
----- End of picture text -----

==> picture [136 x 95] intentionally omitted <==

==> picture [138 x 91] intentionally omitted <==

==> picture [129 x 93] intentionally omitted <==

==> picture [132 x 97] intentionally omitted <==

==> picture [85 x 17] intentionally omitted <==

Page 12

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

SUNON Product Line

==> picture [314 x 310] intentionally omitted <==

----- Start of picture text -----

Motor Fan
Ventilation Cooling
System Module
----- End of picture text -----

==> picture [104 x 71] intentionally omitted <==

==> picture [85 x 17] intentionally omitted <==

Page 13

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

Fan & Blower

==> picture [696 x 277] intentionally omitted <==

----- Start of picture text -----

Fan Size
8mm- 250mm
DC Axial Fan DC Blower AC Axial Fan
Mighty Mini Fan Water proof Fan Explosion-proof Fan
Fan Tray
----- End of picture text -----

==> picture [93 x 71] intentionally omitted <==

EC Axial Fan

==> picture [89 x 81] intentionally omitted <==

==> picture [92 x 80] intentionally omitted <==

==> picture [251 x 17] intentionally omitted <==

----- Start of picture text -----

EC Blower EC Centrifugal Fan
----- End of picture text -----

==> picture [85 x 17] intentionally omitted <==

Page 14

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

Cooling Module

==> picture [697 x 351] intentionally omitted <==

----- Start of picture text -----

Active Passive
Cooling Cooling
Module Module
Liquid
cooling
----- End of picture text -----

==> picture [85 x 17] intentionally omitted <==

Page 15

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

Motor Highly Energy efficient motor 0.1W ~ 1500W

==> picture [216 x 130] intentionally omitted <==

==> picture [229 x 156] intentionally omitted <==

----- Start of picture text -----

DC motor
----- End of picture text -----

==> picture [238 x 199] intentionally omitted <==

==> picture [113 x 112] intentionally omitted <==

==> picture [484 x 70] intentionally omitted <==

----- Start of picture text -----

Commercial
HVACR
Refrigerator / Freezer
EC horsepower motor
EC motor
----- End of picture text -----

==> picture [239 x 86] intentionally omitted <==

==> picture [237 x 86] intentionally omitted <==

==> picture [85 x 17] intentionally omitted <==

Page 16

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

Ventilation Eco ventilation solution

==> picture [721 x 415] intentionally omitted <==

----- Start of picture text -----

Ventilation Fan Flow2 One HVLS Fan
SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT) Page 17
----- End of picture text -----

Products Application & YOY Growth

==> picture [687 x 356] intentionally omitted <==

----- Start of picture text -----

50% 2016
2017
40%
35.5%
2018
30%
2019YTD 25.0%
20% 41.4%
13.7% 36.1%35.5%
8.7% 8.9% 22.8%
10% 6.5% 20.4%
1.6% 15.6%16.0%15.9% 17.6%
9.0% 10.7% 9.8% 10.5%10.7%10.0%
2.0% 1.9% 1.8% 3.9% 4.2% 4.3%
0%
LED Lighting Automobile Distribution Home Industrial Telecom & IT & OE
Appliances Medical E. Server
-19.9% -21.2% -20.8% -24.5% 7.9% -9.8%
32.0%
----- End of picture text -----

==> picture [85 x 17] intentionally omitted <==

Page 18

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

Revenue Performance

UNIT: NTD (K)

==> picture [583 x 346] intentionally omitted <==

----- Start of picture text -----

11,965,298
12,000,000 20%
10,690,822 [10,946,728 ]
15.5%
9,533,345 [10,109,156 ]
10,000,000 15%
8,256,495
9.3%
7,708,731
8,000,000 10%
7.1%
6.0% 5.8%
6,000,000 5%
2.4% 5,140,836
4,000,000 0%
2,000,000 -5%
-8.7%
0 -10%
Y2012 Y2013 Y2014 Y2015 Y2016 Y2017 Y2018 2019H1
Revenue Growth rate
----- End of picture text -----

==> picture [85 x 17] intentionally omitted <==

Page 19

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

Profit Margin

==> picture [576 x 431] intentionally omitted <==

----- Start of picture text -----

30%
Gross Margin
21.6%
19.4%
20% 22.0% 23.0% 23.3%21.6% 21.4% 22.4%
22.9% 20.4% 23.5% 22.6% 19.6% 22.4% 20.1%
20.5% 18.3%
10% 19.7% 21.1% 22.4% 20.3%
17.5%
0%
Q1 Q2 Q3 Q4 Y
Y2015 Y2016 Y2017 Y2018 Y2019
Operating Margin
10%
8%
7.9% 5.8% 8.2% 8.2%
7.6%
6% 7.8% 6.9%
6.0% 6.4% 6.5% 6.5%
5.9%
4% 2.7% 4.9% 5.4% 5.0%
4.4% 4.3%
3.5%
2% 2.7%
2.6%
0.8%
0%
Q1 Q2 Q3 Q4 Y
Net Margin
10%
8%
5.9%
6% 7.4%
3.9% 5.7% 6.1% 6.4% 6.4% 6.5% 6.3% 6.7% 5.5% 6.0%
4% 5.1% 6.3% 5.1% 5.1%
4.6% 4.4%
2% 2.3% 2.6% 3.1%
0% 1.3%
Q1 Q2 Q3 Q4 Y
----- End of picture text -----

==> picture [85 x 17] intentionally omitted <==

==> picture [38 x 11] intentionally omitted <==

----- Start of picture text -----

Page 20
----- End of picture text -----

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

Earning & Cash Dividend

UNIT: NTD

==> picture [631 x 301] intentionally omitted <==

----- Start of picture text -----

3.0
2.62
2.5 2.28 2.41 2.3
2.0 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 Y2018
Payout
120.48% 81.97% 79.47% 84.75% 87.72% 87.79% 82.99%
R.
----- End of picture text -----

==> picture [85 x 17] intentionally omitted <==

Page 21

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

Medium Term Drivers

==> picture [721 x 463] intentionally omitted <==

----- Start of picture text -----

Energy Storage Industry 4.0 5G
Automobile
System Inverter / Drive Application
5G Wi-Fi
IoT ,AI & Cloud Industrial
Gaming Air Purifier
Computing Ventilation
Photo Source :Internet
SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT) Page 22
----- End of picture text -----

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

Appendix I

		CONSOLIDATED BALANCE	CONSOLIDATED BALANCE	CONSOLIDATED BALANCE	CONSOLIDATED BALANCE	SHEETS
NT$ M	2015	2016	2017	2018	2018Q2	2019Q2	2016	2017 Growth	2018 YOY(%)	2019Q2
TOTAL ASSETS	7,523	8,391	8,813	8,972	9,170	8,610	11.54%	5.03%	1.80%	-6.11%
Cash	1,269	1,338	1,387	1,145	1,403	1,331	5.44%	3.66%	-17.45%	-5.13%
A/R, N/R	2,439	2,871	2,724	3,091	3,005	2,610	17.71%	-5.12%	13.47%	-13.14%
Inventories	1,480	1,377	1,744	1,794	1,871	1,518	-6.96%	26.65%	2.87%	-18.87%
PP&E	1,775	2,182	2,294	2,378	2,347	2,373	22.93%	5.13%	3.66%	1.11%
TOTAL LIABILITIES	3,516	4,324	4,639	4,832	5,301	4,745	22.98%	7.28%	4.16%	-10.49%
Short-term loans	464	454	636	843	630	506	-2.16%	40.09%	32.55%	-19.68%
A/P	2,084	2,469	2,550	2,671	2,723	2,228	18.47%	3.28%	4.75%	-18.18%
Long-term loans	0	320	320	220	230	220			-31.25%	-4.35%
TOTAL EQUITY	4,007	4,067	4,174	4,139	3,869	3,865	1.50%	2.63%	-0.84%	-0.10%
Days sales outstanding	88	91	93	89	93	101
Days sales of inventory	64	63	67	68	73	74
Current Ratio	1.6317	1.5336	1.4898	1.4247	1.3342	1.2268

==> picture [85 x 17] intentionally omitted <==

Page 23

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

Appendix II

CONSOLIDATED STATEMENT OF	CONSOLIDATED STATEMENT OF	CONSOLIDATED STATEMENT OF	CONSOLIDATED STATEMENT OF	CONSOLIDATED STATEMENT OF	COMPREHENSIVE INCOME	COMPREHENSIVE INCOME	COMPREHENSIVE INCOME	COMPREHENSIVE INCOME
NT$ M	2015	2016	2017	2018	2018H1	2019H1	2016	2017 Growth	2018 YOY(%)	2019H1
OPERATING REVENUES	10,109	10,691	10,947	11,965	5,634	5,141	5.76%	2.39%	9.30%	-8.75%
GROSS PROFIT	2,054	2,398	2,454	2,402	1,093	1,056	16.75%	2.34%	-2.12%	-3.39%
INCOME FROM OPERATIONS	439	695	756	602	219	222	58.31%	8.78%	-20.37%	1.37%
INCOME BEFORE INCOME TAX	584	833	842	784	309	257	42.64%	1.08%	-6.89%	-16.83%
NET INCOME attribute to owners	442	572	657	605	251	206	29.41%	14.86%	-7.91%	-17.93%
EPS (NT$)	1.77	2.28	2.62	2.41	1.00	0.82
Gross Margin	20.32%	22.43%	22.42%	20.08%	19.40%	20.54%
Operating Margin	4.34%	6.50%	6.91%	5.03%	3.89%	4.32%
Net Margin(*)	4.37%	5.35%	6.00%	5.06%	4.46%	4.01%

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

==> picture [85 x 17] intentionally omitted <==

Page 24

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)

==> picture [261 x 259] intentionally omitted <==

==> picture [216 x 42] intentionally omitted <==

==> picture [90 x 90] intentionally omitted <==

www.sunon.com

==> picture [85 x 17] intentionally omitted <==

Page 25

SUNONwealth Electric Machine Industry Co., Ltd. (2421.TW / 2421 TT)