TGI — Investor Presentation 2018

Nov 23, 2018

Stock Code:1802

TAIWAN GLASS IND. CORP.
Spokesperson: Lin, C M
GM, Finance Dept.

Provide satisfactory products to our customers through advanced technology and Total Quality Management (TQM).

2018-11-23

Notes:

This brief and the related information issued meanwhile were obtained from internal and external data of the Company and the operation perspectives, it reflected the viewpoints to the future. If there is any change or adjustment in the hereafter, the Company has no responsibility to remind or update.

The Company did not issue financial forecasts. The financial, business or Q&A explanations may differ from actual result in the future. The reasons of differences may include the changed market demand, unsettled factory and material price, industrial competition, international economic situation, exchange rate fluctuation, suppliers and retailers supply chain, and etc. which can not be controlled by the Company.

Introduction of Taiwan Glass Group
Production Facilities
Product Introduction
General Operation Situation of 2018
Situation and Development of the Market
Q&A

Notes:

| Founded on | 1964年 |
| --- | --- |
| Capital | NTD$29.08 billion |
| Chairman | Mr. Lin, Por Fong |
| Number of Employee | 14,679 (until 2018.9.30) |
| Date of Listing | Listed in 1973 |
| Main Products | Flat Glass Fiberglass Glassware |

Notes:

TGI 19th Directors / 2nd Audit Committee

(Number from left side to right side)
| Lin, P F | Front Row 4 | Lin, P S | Front Row 5 | Lin, P C | Front Row 6 | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Lin, F C | Front Row 3 | Chen, C C | Front Row 2 | Hwang, T Y | Front Row 1 | Peng, C H | |
| Lim, H T | Front Row 8 | Hsu, L L | Front Row 7 | Lin, C H | Back Row 4 | Su, Y T | Back Row 3 |
| Lin, C Y | Back Row 5 | Lin, C M | Back Row 6 | Chen, C C | Back Row 2 | Tsai, T M | Back Row 1 |

| | | | | |
| --- | --- | --- | --- | --- |
| Taiwan Taichung Factory (TF) | Taiwan Lukang Flat Glass Factory (TF-4) | TG Qingdao Glass Co., Ltd. (QFG) Qingdao Rolled Glass Co., Ltd. (QRG) | TG Changjiang Glass Co., Ltd. (CFG) TG Kunshan Glass Co., Ltd. (TKG) | TG Chengdu Glass Co., Ltd. (CDG) |
| 250,068 M2 | 260,343 M2 | 429,126 M2 | 404,770 M2 | 452,027 M2 |
| 1 Furnace 140,000 mt/y | 1 Furnace 200,000 mt/y | 1 Furnace 150,000 mt/y | 3 Furnaces 602,000 mt/y | 2 Furnaces 547,500 mt/y |

| | | | | |
| --- | --- | --- | --- | --- |
| TG Huanan Glass Co., Ltd. ( HNG) | TG Donghai Glass Co., Ltd. (DHG) | TG Tianjin Glass Co., Ltd. (TJG) | TG Xianyang Glass Co., Ltd. (TXY) | TG Anhui Glass Co., Ltd. (TAH) |
| 364,907 M2 | 398,096 M2 | 300,448 M2 | 452,703 M2 | 572,643 M2 |
| 1 Furnace 328,500 mt/y | 2 Furnaces 400,000 mt/y | 1 Furnace 180,000 mt/y | 1 Furnace 438,000 mt/y | 1 Furnace 438,000 mt/y |

天津廠

| | | | |
| --- | --- | --- | --- |
| Taiwan Changpin Factory (TC) | TG Changjiang Glass Co., Ltd. (CFG) | TG Chengdu Glass Co., Ltd (CDG) | TG Huanan Glass Co., Ltd. ( HNG) |
| 272,480 M2 | 404,770 M2 | 452,027 M2 | 364,907 M2 |
| 1 Line 4,000,000 m2/y | 1 Line 4,000,000 m2/y | 2 Lines 8,000,000 m2/y | 1 Line 4,000,000 m2/y |

| | | | |
| --- | --- | --- | --- |
| TG Tianjin Glass Co., Ltd. (TJG) | TG Xianyang Glass Co., Ltd. (TXY) | TG Taichang Architectural Glass Co., LTd. (TTAR) | TG Wuhan Architectural Glass Co., Ltd. (TWAR) |
| 300,448 M2 | 452,703 M2 | 199,525 M2 | 222,000 M2 |
| 1 Line 4,000,000 m2/y | 1 Line 4,000,000 m2/y | 1 Line 4,000,000 m2/y | 1 Line 4,000,000 m2/y |

| | | | |
| --- | --- | --- | --- |
| Taiwan Taoyuan Factory (TT) | Taiwan Lukang Factory (TL) | Taichia Glass Fiber Co., Ltd. (TGF) | Taichia Chengdu Glass Fiber Co., Ltd. (TCD) |
| 181,181 M2 | 260,343 M2 | 323,539 M2 | 362,668 M2 |
| 2 FRP Fiberglass Fabric 75,000mt/y | 2 Electronic Grade FRP Fiberglass Fabric 25,000 mt/y | 4 Electronic Grade FRP Fiberglass Fabric 56,000 mt/y | 1 Electronic Grade FRP Fiberglass Fabric 30,000 mt/y |

| Container & Tableware | Ultra-Thin Glass | Photovoltaic Glass | |
| --- | --- | --- | --- |
| | | | |
| Taiwan Hsinchu Factory (TS) | Taiwan Taichung Factory (TF-5) | TG Fujian Photovoltaic Glass Co., Ltd. (FPG) | TG Yueda Solar Mirror Co., Ltd. (TYSM) |
| 129,090 M2 | 250,068 M2 | 388,822 M2 | 266,400 M2 |
| 5 Container ：170,000 mt/y | 1 Ultra-Thin Glass 21,480 mt/y | 1 Photovoltaic Glass 219,000 mt/y | Solar Mirror Glass 72,000 mt/y |
| 2 Tableware & Kitchenware：10,000 mt/y | | | |

Automotive Glass

| Taiwan Autoglass Ind. Corp. (TAGC) | TG Yueda Autoglass Co., Ltd. (TYAU) |
| --- | --- |
| 250,068 M2 | 132,755 M2 |
| 1 Automotive Glass 250,000 units | 4 Automotive Glass 600,000 units |

| Silver Award | TGI has been awarded silver price for the past three years in the "Traditional Manufacturing" category incorporate sustainability report award. |
| --- | --- |
| 2 times | Convened two sessions of our ”Corporate Social Responsibility Committee” in 2017. |
| 8 categories | TGI identified eight categories of stakeholders, including shareholders/investors/financial institutions, employees, business customers, suppliers, contractors, sub-contractors, dealers and government/authorities. |
| 198 copies | Questionnaires are distributed among stakeholders, according to the communication between stakeholders and TGI and the degree of stakeholders' influence and importance in a total of 198 questionnaires are collected. The impact of each TGI's material issues is accessed by 22 senior executives. |
| 10 Major Aspects | In 2017, we identified a total of 10 major perspectives and an effective management policy was assigned to each of these perspectives. |

Achievements of Green Production in 2017
| 400 million | In 2017 invested a total of 400 million in the plan to promote environmental policy. |
| --- | --- |
| 180,000 tons | Recycled 180,000 tons of scrap glass in 2017. |
| 61% | Taoyuan Factory recycled 61% of its waste in 2017. |
| 12.2% | The product water consumption intensity of glass container dropped by 12.2% compared to 2016. |
| 55% | Environmental equipment, pollution-handling expense, environmental management system and training expenses increased by 55% compared to 2016. |
| -59,481 GJ | Heavy crude oil consumption was 1,480 kiloliters lower than 2016 and the heating value dropped by 59,481GJ. |
| ISO 50001 | The Taoyuan and Hsinchu Factory, for better energy management, implemented the ISO 50001 energy management system to maximize its energy efficiency through systematic examinations. |
| 5.35% | Hsinchu Factory increased its water recycle rate by 5.35% compared to 2016. |

TGI’s main products include flat glass, fiberglass, and glassware. There was no any violation of regulations related to product health & safety, labeling and marketing and no product’s sale was prohibited in 2017.
Flat glass is one of the core products of TGI. With production plants based in Taiwan and China, TGI's major markets reach Taiwan, China, Japan, Korea, North America, Middle East, Australia, Europe, South Africa and so forth. TGI was not involved in any anti-competitive behavior, anti-trust and monopoly practices or legal proceedings in 2017.

Flat Glass
TGI’s flat glass has 100% passed the EU CE, US ANSI, Taiwan CNS and other relevant standards. In the production of the flat silver mirror TGI uses advanced lead-free copper process, to avoid heavy metal pollution. TGI also actively promotes the hot-dip process to strengthen glass, even if broken it will become small pieces to reduce harm. Laminated Glass has the PVB interlayer withstands penetration from impact. Even if the glass cracks, splinters will adhere to the interlayer and not scatter. In comparison with other kinds of glass, laminated glass has much higher strength to resist shock, burglary, burst and bullets. Cladding, coating, vacuum and other energy-saving glass has more excellent thermal insulation so it can reduce the heat exchange of indoor and outdoor to save air conditioning usage, and indirectly reduce greenhouse gas emissions.

Green Product - Flat Glass
The new generation energy-saving Low-E glass products can effectively block the radiation from sunlight while allowing most sunlight to enter, which solves the problem of lighting and heat insulation. This product also significantly reduces energy consumption from air conditioners. TGI’s Low-E glass products are in compliance with CNS12681 standard and certified with ISO 9001 standard and IGCC. Currently the product has been vastly used in buildings.

TGI actively promotes the green building concept. The Low-E Glass can reduce 30% energy consumption of air-conditioning, and Low-E vacuum energy-saving glass insulation performance is 4-6 times of ordinary glass chip. The energy-saving products can better conserve energy than other industrial products. Therefore energy-saving buildings will become a key to the energy conservation energy of the country.

Fiberglass
Our Fiberglass Department actively promotes the application of fiberglass in daily life products. Compared to metal supporters, fiberglass has better resistance to corrosion and elements. Fiberglass is low-cost, more durable and has great a strength/weight ratio. Different types of fiberglass, based on their structures and features, are extensively used in thermal insulation, heat insulation, fireproof material and reinforcement.

TG’s fiberglass products all meet RoHS and REACH requirements. For food contact products, a total of 4 meet US FDA standards; 8 meet EU 10/2011 regulation and have Germany’s BfR approval; 2 meet France’s requirements for drinking water (CAS). The quality of our products meets CNS national standards. We print the CNS logos on labels according to different customer requirements. The packaging labels of fiberglass fabric and fiberglass yarn are marked with RoHS compliance logos.

Glass container, tableware, and kitchenware
Glass containers, with excellent transparency, showcase the real color of anything inside the container. They also have the advantages of easy sealing and flavor preservation. Furthermore, glass containers can be heated up gradually without deforming. TGI’s glass containers come in various shapes. A suitable container can further highlight your product’s texture.
The manufacturing facility of the container, tableware, and kitchenware has received FSSC 22000 certification; moreover, it has obtained ISO 50001 in 2017. All products meet Taiwan’s Sanitation Standard for Food Utensils, Containers and Packages. TGI can also provide products that meet RoHS and REACH standards based on clients’ requests. For our heat-resistant products, all of our baby feeding bottles meet EU’s latest EN 14350 standard. All of our coffee pots come with heat-resistant labeling. TGI has established a waste glass recycling factory where waste glass is cleaned and recycled. This company periodically sends samples from this factory to SGS to test for lead content. Due to an increase in export-share, TGI has a USD 5,000,000 global product liability insurance covering all the products.

Green Products – Glassware
TGI began acquiring German NNPB glass-blowing technology in 1983 in order to meet the needs of the market and enhance environmental protection. This technology produces attractive, lightweight bottles of uniform thickness. More recently, TGI has participated in technological cooperation with Germany’s Heye-Glass Group, producing more than 200 million bottles per year. Lightweight bottles are the product of future trends in the glass container market. Besides helping customers cut production costs, lightweight bottles are environmentally friendly, as their production consumes fewer resources and energy.
Advantages of Lightweight Bottle
Conserves raw materials use. It has the same strength despite a thinner bottle wall.
Reduces energy consumption.
Reduces clients’production costs.
Glass containers are 100% recyclable and will not destroy the earth’s ecological environment.

| Example: 1-liter liqueur bottle originally weighed 540g. After the implementation of the NNPB technology, the bottle weighs 480g, 12.5% lighter. |
| --- |
Asia’s Top Quality Heat-resistant Baby Feeding Bottle
Starting on June 1, 2011, China banned the baby bottles containing bisphenol A, which is also regulated in countries worldwide. TGI container factory started the production of heat-resistant borosilicate bottles from April of 2013. These bottles have the CTE of 33, which is certified by AGR (American Glass Research) with leading quality in Asia.

Flat Glass
China

The flat glass market has been steady since 2017 and the market price has no significant change. Therefore, the profit of Q1~Q3 in 2018 was increased than in 2017. Since the reform of flat glass supply was effective in China, and the effect of US-China trade war, the supply and demand of flat glass market is expected to be influenced by several uncertain factors in the next year, such as unpredictable fuel cost increasing, if the export tax refund can drive the increase of downstream processing glass exports or not, and the implement power of environmental rules. However, based on safety considerations, the designs of new high curtain wall are laminated and hollow. One set is composed of three or four flat glass so the amount of glass is increased. It can remain sales volume. For cost, due to the growth of raw materials and fuel costs, the profit of flat glass factories is expected to decrease.

Taiwan

Taiwan Glass Ind. Corp. is the only sizable glass manufacturer in Taiwan with the only Coating Production Line for architecture in Taiwan. It introduced the vacuum sputtering coating equipment and technology of Von Ardenne to produce high effect energy-saving glass with high transparency and low heat transmission to apply to green buildings, being the leader of the market in Taiwan.

In 2018, the amount of remained house in Taiwan is raising. The supply and demand of real estate market need a period of time to be adjusted. Therefore, the sales volume of flat glass in 2018 is lower than before. The Company strives for government infrastructure, private construction projects, orders from malls, and increasing projects of a homecoming trend among Taiwanese entrepreneurs for US-China trade war.

To sum up, the flat glass production capacity of 2019 is approximately equal to the production capacity of 2018. There is no plan for expansion. It’s hard to predict the perspective of whole flat glass market due to uncertain factors. Nevertheless, TGI’s quality is good enough to meet the demands on market changes for secondary processing and clients’ demands. TGI develops its market steadily by providing clients with excellent products and quality service, building clients’ trust in the products and the Company.

Fiberglass Fabric
In fiberglass, the technology and quality of fiberglass products are always the core competency of TGI. In particular, the capacity of electronic fiberglass fabric is accounts for 16% of the global market. For the material of PCB, TGI has successfully developed products with global leading technology. It meets the demand of mobile devices, electronic products for automobile and IoT, and continues to hold the market trend to supply products to high-end clients.

For FRP, this year, TGI signed an agreement for technology cooperation, manufacturing and supply with Owens Corning, the global leading manufacturer of fiberglass. It is expected to start production in Q3 of 2019. Through this agreement, TGI obtains the most advanced fiberglass formulation and technology in the world. It will help to increase capacity to 80,000 tons from 60,000 tons, cut production costs and provide clients with higher performance and more environmental products. Furthermore, it will also boost domestic clients’ composite material quality and market competitiveness.

The fiberglass products which are made in China and sold to U.S.A are under 3%. It will not be affected by US-China trade war because these products can return to Taiwan for production if it is necessary.

Glass Container

The Dept. of Glassware was set up decades ago and has started to actively develop the market of export sales since 2007. In recent years, TGI confronted the competition of alternative packing materials. PET and carton have the advantages of lightweight, low-priced, and flexible in design, however, the glass packing material being irreplaceable for high-priced refrigerated beverage, beer and wine. TGI has lightweight bottle technology to reduce clients’ production costs, and its experienced technology can lower the limitation of product design. We continues to popularize the environmental aspect to clients by developing glass packing material. Moreover, the Company invested in equipment for producing heat-resistant bottle in 2003, which is only the third one in the world. After introducing and promoting to clients for years, the quality and technology are accepted by international famous brand companies supplied to European laboratory equipment and glass feeding bottles in Asia. Considering the effects of orders diverted from US-China trade war, TGI will achieved glassware production lines expansion in Q2 of 2019 for increasing capacity to receive high-end products.

TGI continues to improve the automated inspection equipment and employee training, and passed all food safety regulations certifications. It strives to maintain clients in niche market, avoid the threat of low-price competition, and move toward the B2C market by boosting the development of high value added products.

Q&A

Thanks for your attention.
Have a great day.