Ticker Symbol: 2633

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Taiwan High Speed Rail Corporation 2017.4Q Fubon Investment Forum

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Disclosures

The information contained in this presentation and its accompanying announcements, including content relating to business outlooks, financial operations, and business forecasts, is based on information derived from internal corporate data and external economic developments as a whole.
The Company's actual operations, financial conditions, and operational performance may differ from forecasted information; this may be due to various factors including but not limited to market demand, changes in policies and regulations and overall economic conditions, and other factors or risks beyond the Company’s control.
The information provided in this presentation reflects the Company's current views about the future; correctness, completeness, or reliability of said views are not explicitly or implicitly expressed or warranted. The Company is not responsible for updating or amending changes or adjustments made to the contents of this presentation, if such changes or adjustments should occur in the future.
For the convenience of readers, this presentation has been translated into English from an original Chinese version. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, information in the Chinese-language presentation shall prevail.

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AGENDA

I. ABOUT THE COMPANY II. CURRENT OPERATIONS OVERVIEW III. MARKET OVERVIEW IV. PROSPECTS

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I. ABOUT THE COMPANY

1. Company History

2. System Map

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1. Company History

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Established in May 1998.
Signed Construction and Operation Agreement
(“C&OA”) with the MoTC in July 1998:
35 years for construction and operation.
Commenced construction in Q1 2000 and commenced operations in Jan 2007.
Signed a NT$382bn refinancing contract with 8 local banks in Jan 2010.
Extended the concession period from 35 years to 70 years, effective Oct 2015.
Established 3 new stations (Miaoli, Changhua, and Yunlin) on HSR route in Dec 2015.
Established Nangang station in July 2016.
Went public in Oct 2016.

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2. System Map

台北站 Taipei 板橋站 Banciao 南港站 Nankang 桃園站 Taoyuan 新竹站 Hsinchu 六家基地 Lioujia Depot 苗栗站 Miaoli 烏日基地台中站 Taichung Wurih Depot 彰化站 Changhua 雲林站 Yunlin 太保基地嘉義站 Chiayi Taipao Depot 台南站 Tainan 燕巢總機廠 Yanchao Main Workshop 左營站 Zuoying 左營基地 Zuoying Depot

• 12 stations, 4 depots and 1 workshop. • Total route length: around 350 km • Peak speed: 300 km/hour

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N
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II. CURRENT OPERATION OVERVIEW

1. Operational Performance

2. Financial Performance

3. 2017 Projects and Major Events

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1. Operational Performance

1) Train Frequency

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(Daily Frequency)

WEEKEND

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WEEKDAY
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2) Ridership

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(‘000/day)

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11.9%
5.3%
1.1%
6.9%
6.7%
12.7%
14.2%
6.1%
96.1%
 Five-year CAGR (’12~’16): +4.9%
 1~3Q’17 Ridership: +7.0% YoY growth
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3) Loading Factor

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(%)

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 Long-term stable growth in loading factor.
(vs JR Central: 63.9% @FY’16)
Operational
Performance 2007.1.5 ~ 2017.9.30
Train Services 499,419
Reliability 99.57%
Punctuality 99.45% (delay < 5-min)
0.22 min
Average Delay Time
(vs JR Central: 0.4 min @FY’16)
Accidents resulting
0
in Liabilities
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2. Financial Performance

1) Financial Reporting

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 Income Statement

(NT$mn)	1~3Q’17	1~3Q’17	1~3Q’16	1~3Q’16	Variance Amount	Variance %
Operating revenues	32,026	100.0%	30,062	100.0%	1,964	6.5%
Operating costs	(18,007)	-56.2%	(19,127)	-63.6%	1,120	-5.9%
Gross Profit	14,019	43.8%	10,936	36.4%	3,084	28.2%
Operating expenses	(788)	-2.5%	(682)	-2.3%	(107)	15.7%
Net Operating Income	13,231	41.3%	10,254	34.1%	2,977	29.0%
Non-operating income and expenses
Interest expenses	(5,718)	-17.9%	(6,363)	-21.2%	645	-10.1%
Stabilization reserve	(2,600)	-8.1%	0	0.0%	(2,600)	-
Others	34	0.1%	(135)	-0.4%	169	125.3%
Net Income before Tax	4,947	15.4%	3,756	12.5%	1,191	31.7%
Income tax	(870)	-2.7%	(629)	-2.1%	(241)	38.3%
Net Income	4,077	12.7%	3,127	10.4%	950	30.4%
EPS	0.72		0.56

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1) Financial Reporting

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 Balance Sheet

(NT$mn)	2017.9.30	2016.12.31	2016.9.30
Current assets	13,308	28,728	27,791
Operatingconcession assets	416,357	426,020	429,666
Other non-current assets	6,462	6,459	6,290
TOTAL ASSETS	436,127	461,207	463,747
Current Liabilities	5,377	19,815	19,136
Long-term debt	286,081	316,280	321,750
Long-term billspayable	15,956	-	-
Operatingconcession liabilities	54,393	53,990	53,717
Other non-current liabilities	12,556	10,058	9,456
Total Liabilities	374,363	400,144	404,059
Common stock	56,283	56,283	56,053
Capital surplus	173	173	-
Retained earnings & others	5,308	4,608	3,634
Total Equities	61,764	61,064	59,687
TOTAL LIABILITIES & EQUITIES	436,127	461,207	463,747

1) Financial Reporting

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 Statement of Cash Flows

(NT$mn)	1~3Q’17	1~3Q’16	Variance Amount
Cash & cash equivalents at the beginning of the period	237	2,146	(1,909)
Cash flows from operating activities	14,878	275	14,603
Cash flows from investing activities	16,382	30,682	(14,299)
Cash flows from financing activities	(28,470)	(30,089)	1,619
Effects of exchange rate changes on the balance of cash held in foreign currencies	0	(55)	55
Net increase in cash & cash equivalents	2,790	812	1,978
Cash & cash equivalents at the end of the period	3,027	2,959	69

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2) Net Profits & Operating Revenues  Historical Operating Revenues and Net Income

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(NT$bn)  Operating revenues  Net income

•
Five-year CAGR (’12~’16): +3.6% Five-year CAGR (’12~’16): +22.5%
• • 1~3Q’17: +6.5% YoY 1~3Q’17: +30.4% YoY

Note: If compensation on statutory discount tickets are excluded, operating revenues for FY 2015 would total $39.8bn.

2) Net Profits & Operating Revenues  Revenue Mix

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(NT$bn)	1~3Q’17	1~3Q’16	YoY
Railway revenues	31.12	29.18	+6.6%
Non-railway revenues	0.91	0.88	+3.0%
Total	32.03	30.06	+6.5%

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Note: Non-railway revenues mainly include rental incomes, advertising revenues, and onboard sales.

3) Management Efficiency: EBITDA & EBITDA Margin

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(%)

(NT$bn)

 EBITDA • Five-year CAGR (’12~’16): +3.4% • 1~3Q’17: +6.5% YoY  EBITDA Margin • Over the last 5 years (‘12~’16): 72%~75% (vs JR Central _ Railway: 58.4% @FY’16)

Note: One-time compensation of $12.1bn on statutory discount tickets is excluded in the EBITDA for the year 2015.

4) Financial Risk Management

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(%)
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Early Repayment of
Syndicated Loans
(NT$bn) Amount
4/’16 & 7/’16 21.0
3/’17 21.2
7/’17 20.0
Total 62.2
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5) Earnings Distribution  Dividend Policy

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Taking into consideration current and future developments, investment environments, funding demands, domestic and international competition, shareholder interests, and other relevant factors, the Company has adopted a stable and balanced dividend policy as summarized below:

 The Company shall pay out at least 60% of the earnings available for distribution to shareholders.

 Of this, cash dividends shall exceed 50% of total distribution in any given fiscal year.

 Dividend Histor y

	2015	2016
Cash dividend (NT$/share)	0.65	0.60
Cash dividend over earnings available for distribution (%)	98.5%	89.9%

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6) Corporate Credit Ratings & Market Cap

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(US$bn)

Agency Long-term Short-term Outlook Taiwan Ratings twAA+ twA-1+ Stable Fitch AA+(twn) F1+(twn) Stable

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3. 2017 Projects and Major Events

1) Operational Aspect

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Upgrades to business class services

Provided iTaiwan Wi-Fi system

Obtained TOSHMS and world-class OHSAS 18001 certificates

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Promoted railwayindustry localization, and proposed NT$17bn business opportunities to be spread out over the next decade

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2) Business Aspect

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Integrated multi digital wallet platforms

Launched membership program

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Added mobile payment services (Android & Apple Pay)

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Launched
THSR mobile
application
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3) Finance Aspect (1/2)

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Date

Event

Mar 1, 2017 The Company issued commercial paper totaling NT$16bn for early repayment of syndicated loans. Mar 27, 2017 Board of Directors approved the following capital expenditures:  Replacement of Traffic Control System (TCS); project term: 33 months, total expenditure: JPY6,788 mn (tax inclusive).  Establishment of Aging Bay (AGB; applied to Signal Systems); project term: 24 months, total expenditure: NT$690 mn (tax inclusive). May 24, 2017 2017 Annual General Shareholders’ Meeting passed the following major resolutions:

 Distribution of NT$0.6 cash dividend per common share.  Early election of 13 directors (including 3 independent directors).

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3) Finance Aspect (2/2)

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Date Event May 31, 2017 Listed on MSCI Taiwan Index. Jun 8, 2017 Board of Directors approved capital expenditures for “Automatic Ticketing System Update and Maintenance Service Procurement Project”; project term: 115 months, total expenditure: NT$601 mn (tax inclusive). Jun 19, 2017 Listed on Taiwan 50 Index. Jul 4, 2017 Early repayment of syndicated loans totaling NT$20 bn. Oct 13, 2017 Starting from the 9th year until the 30th year of the first drawdown date, the markup interest rates of syndicated loan were reduced from 1.08% to 0.92%.

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III. MARKET OVERVIEW

1. Inter-City Transportation

2. Domestic Tourism Market

3. Domestic Railway Infrastructure Projects

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1. Inter-City Transportation

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Year 2013	Short Distance (20~100km)	Medium Distance (100~200km)	Long Distance (200km+)
Weekday	Private Car	Private Car 75%	Private Car 57%
Weekend & Holiday	Private Car 79.7%	Private Car 77%	Private Car 59%

Source: The 5th Taiwan Area Comprehensive Transportation Planning Research Series - Intercity Travel Survey and Preliminary Analysis, Institute of Transportation, MOTC

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2. Domestic Tourism Market

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(mn)

Domestic Inbound Trips by Visitors Citizens 5-Year(’12~’16) CAGR 6.0% 7.9% 2016 Growth Rate (YoY) 6.6% 2.4% (mn)

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(mn)
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Source: Tourism Bureau, MoTC
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3. Domestic Railway Infrastructure Projects

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Broaden domestic rail network and industry value-chain.
HSR-related projects include enhancing connection and accessibility services.
A. Integrate the high speed rail and conventional rail systems.
B. Upgrade and improve conventional rail services in Eastern Taiwan.
C. Move rail tracks above- or under-ground to speed up commuter services.
D. Promote urban mass rapid transit.
E. Build tourism-oriented rail systems for Central and Southern Taiwan.

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IV. PROSPECTS

1. Sustain Revenue Growth Drivers

2. Optimize Company Financial Structure 3. Strengthen In-House Maintenance and Innovative Capabilities

4. Facilitate International Technical Exchanges

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1. Sustain Revenue Growth Drivers

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Revenue Management
Price-Volume Controls
Segment Cross-Industry
Marketing Cooperation
Off-peak Ticket Development of
Promotion Tourism Market
Direct Marketing to Corporate/Individual Members (Evaluating)
Supply and Demand Adaptation: Shift Pattern Review
Transfer: Service:
Ticket Access:
Enhance Enhance
Enhance
Passenger Customer
Sales Force
Force Loyalty
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1) Diversify Product Lineup to Increase Off-Peak Ridership and Revenues

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Source: High-speed rail passenger satisfaction survey conducted in 2015.

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2) Apply Innovative Technology to Digitize Ticketing Channels and Provide Convenient Ticket Services

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Integration of Information Services Multiple Ticket Services (Enterprise APP)

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Value-Added Services

Optimize current ticketing interface.
Door-to-Door  Launch mobile
trip planning. payment.
Shopping portal.  Mobile application
Trip information for multi-ride/
services. periodic tickets.
Social media  Automatic
services. identification of statutory preferential tickets.
(To be completed in 2017) (To be completed in 2017)

 Virtual online customer service.  Improvement mobile communication services at stations and on trains.  Online and mobile shopping.  Big data marketing targeted to members.

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3) Integrate Local Tourist Networks & Make THSR the Backbone of Transit Oriented Tourism

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4) Utilize Big Data Analysis for Better Service: “ THSR Member Tgo” program was officially launched on Oct 26, 2017

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2. Optimize Company Financial Structure

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Issuance of Early direct financial Assessment of repayment of instruments to non-railway syndicated pay off business loans syndicated investments loans

After taking L/T & S/T finance/operation funding demands and liquidity risks, into consideration, the Company made early repayments of syndicated loans:

To ensure appropriate L/T & S/T capital allocation and to enhance profitability, the Company issued the following direct financial instruments (i.e., corporate bonds, commercial papers):

The Company continues to evaluate and develop the opportunities of non-railway business investment to diversify the operation revenues and increase enterprise value.

 Totaling $21.0 bn in Apr ’16 and Jul ’16.  $21.2 bn in Mar ’17.

$20.0 bn in Jul ’17.

To Ensure Long-Term Financial Stability

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3. Strengthen In-House Maintenance and Innovative Capabilities

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1) Enhance autonomous maintenance capabilities
Cooperate with domestic R&D institutes to establish railway equipment laboratories.
Cooperate with Japanese railway companies to accelerate technology transfers.
Establish electrical, mechanical, and welding factories.

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2) Implement Material Localization

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(NT$mn)

(%)

 THSRC works with national top R&D institutes (i.e. National Chung-Shan Institute of Science and Technology, Industrial Technology Research Institute, etc.) to assist qualified local suppliers in carrying out HSR material development and technology transfers while maintaining standards of traffic safety. The benefits for the Company include shortened delivery period for materials, reduced procurement costs, and fulfillment of corporate social responsibilities while supporting domestic enterprises.

During the period from 2011 to 2016, 88 alternative manufacturers were identified; cost savings were more than NT$1.2 bn, and savings continue to increase every year.

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3) Promote Localization of Taiwan’s Railway Industry

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 The Company hosted a seminar to promote local business opportunities for the Taiwanese railway industry in Aug 2017, and proposed future procurements totaling around NT$17 bn over the next decade.

The current in-house maintenance ratio is over 80% and continues to grow.
The Company hopes to achieve railway materials localization ratios at 30% in 2022 (the current ratio is around 15%).

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5. Facilitate International Technical Exchanges

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In May 2014, THSRC and the International Railway Union (UIC) jointly hosted the 1st UIC Conference on Natural Disaster Management of Railway Systems to establish innovative benchmarks for natural disaster responses in the railway industry.

 In May 2016, the annual meeting of the International High Speed Railway Association (IHRA) was held in Taipei for the first time. This was a significant breakthrough for future international cooperation and exportation of operational know-how and maintenance technologies.

 In June 2017, the Rail Engineering Society of Taiwan partnered with THSRC to host the 2017 Annual Conference to enhance technical and service quality of domestic railways, and to assist the government in future track development projects.

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Conclusion

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[VISION]: To Become a Progressive Platform that Makes Life Better for All To be ranked as one of the top 10 Taiwanese MISSION outstanding brands.

Intelligent Innovative Localized Sustained STRATEGY Transportation Technology in Taiwan Social Care

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Thank You For Your Attention

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AI assistant

THSRC — Interim / Quarterly Report 2017

52174_rns_2017-11-28_63aba104-706f-49f9-b8b7-923ea70ad8a0.pdf

Ticker Symbol: 2633

Disclosures

AGENDA

I. ABOUT THE COMPANY

1. Company History

2. System Map

1. Company History

2. System Map

II. CURRENT OPERATION OVERVIEW

1. Operational Performance

1. Operational Performance

1) Train Frequency

(Daily Frequency)

WEEKEND

2) Ridership

(‘000/day)

3) Loading Factor

2. Financial Performance

1) Financial Reporting

 Income Statement

1) Financial Reporting

 Balance Sheet

1) Financial Reporting

 Statement of Cash Flows

2) Net Profits & Operating Revenues  Historical Operating Revenues and Net Income

(NT$bn)  Operating revenues  Net income

2) Net Profits & Operating Revenues  Revenue Mix

3) Management Efficiency: EBITDA & EBITDA Margin

(%)

(NT$bn)

4) Financial Risk Management

5) Earnings Distribution  Dividend Policy

 Dividend Histor y

6) Corporate Credit Ratings & Market Cap

(US$bn)

3. 2017 Projects and Major Events

1) Operational Aspect

2) Business Aspect

3) Finance Aspect (1/2)

Date

Event

3) Finance Aspect (2/2)

III. MARKET OVERVIEW

1. Inter-City Transportation

1. Inter-City Transportation

2. Domestic Tourism Market

3. Domestic Railway Infrastructure Projects

IV. PROSPECTS

1. Sustain Revenue Growth Drivers

1) Diversify Product Lineup to Increase Off-Peak Ridership and Revenues

2) Apply Innovative Technology to Digitize Ticketing Channels and Provide Convenient Ticket Services

3) Integrate Local Tourist Networks & Make THSR the Backbone of Transit Oriented Tourism

4) Utilize Big Data Analysis for Better Service: “ THSR Member Tgo” program was officially launched on Oct 26, 2017

2. Optimize Company Financial Structure

To Ensure Long-Term Financial Stability

3. Strengthen In-House Maintenance and Innovative Capabilities

2) Implement Material Localization

3) Promote Localization of Taiwan’s Railway Industry

5. Facilitate International Technical Exchanges

Conclusion

Thank You For Your Attention

More from THSRC

THSRC Interim / Quarterly Report 2017