T.S.M.C. — Investor Presentation 2017

Sep 19, 2017

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台灣苯乙烯工業股份有限公司
Taiwan Styrene Monomer Co.
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Taiwan Styrene Monomer Co. Investor Conference

2017.09.19

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Disclaimer

This report discloses forecast on operation and revenue. The actual result might be different from today’s forecast as the company could not control the uncontrollable factors the forecast was based on.

These uncontrollable factors could come from all directions including the change of supply and demand, price adjustment, competition, global economy, supply chains and exchange rates and many other unpredictable factors.

TSMC is not responsible for updating the contents in this report shall any changes occur or would TSMC send out notifications or reminders for the same. This report does not solicit investments and should not be used as investment guide; TSMC is not responsible for any loss or damage incurred due to this report.

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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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Agenda

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Corporate Profile
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Market Review & Outlook
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Financial Review
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Q & A
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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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1 Corporate Profile

Company Highlight

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Listed on Consolidated
Founded Paid In Capital
TWSE Revenue (2016)
Nov. 16, 1979 Aug., 1987 174.9 M USD 466.3 M USD
Managing Group Employee Taipei HQ Office
8F.-1, No.6, Sec. 1, Roosevelt Rd., Taipei
+886-2-2396-6007
Chairman : YC Wu
201
GM : CD Wu (by May 11, 2017)
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Kaohsiung Plant Linyuan Industrial Park No.7, Gongye 1st Rd., Kaohsiung +886-7-641-4511

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TSMC Group
Petrochemical Materials Electronics Environmental Investment Hospitality
& Construction Development
Engineering
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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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1 Corporate Profile

Quality Policy

Taiwan Styrene Monomer Corporation

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Technology
Enhance professional technologies
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Services
Provide comprehensive services
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M

C

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Consistency
Ensure quality consistency
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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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1 Corporate Profile

Major Products

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|||||
|---|---|---|---|
|Capacities|Sales by|
|Products|Applications|(tons/year)|Products|
|The major source material for polystyrene (PS),|
|acrylonitrile butadiene styrene (ABS), styrene-|340,000|
|butadiene rubber (SBR) and other polymers.|
|95.08%|
|The specialty chemical mainly used as a desorbent|
|for producing Para-xylene in Parex process and Fluxy|7,000|
|1.97%|
|process.|
|The by-product of the styrene production process,|
|Toluene|
|8,700|
|mainly used as an organic solvent.|
|1.40%|
|Ethyl-|The intermediate product of the styrene production|
|380,000|
|benzene|process, used as the solvent of polystyrene.|
|0.10%|

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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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1 Corporate Profile

SM Production Materials and Products

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ABS
Acrylonitrile Butadiene Styrene
EPS
Expanded Polystyrene
HIPS
Benzene High Impact Polystyrene
Ethyl- PS
乙苯
benzene Polystyrene
Ethylene SBR
Styrene-Butadiene Rubber
TPE
Thermoplastics Elastomer
Others
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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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1 Corporate Profile

SM Downstream Products and Applications

Name	Acronym	Products and Applications	Products and Applications
Acrylonitrile Butadiene Styrene	ABS	auto parts, household appliances, computer case, acrylic board, toys, motorcycle case, luggage case
Expanded Polystyrene	EPS	packaging, insulation, construction, artwork and floating materials, partition board, ice box, cake box
High Impact Polystyrene	HIPS	keyboard, mouse, computer case, disposable tableware
Polystyrene	PS	CD/DVD box, ballpoint pen, X'mas light
Styrene-Butadiene Rubber	SBR (SSBR)	rubber/color soles, tire
Thermoplastics Elastomer	TPE	auto, electronic & household appliances
Unsaturated Polyester Resins	UPR	thermoset composite applications, button
Emulsion Styrene- Butadiene Rubber	E-SBR	mats, rubber goods and others

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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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1 Corporate Profile

TSMC Clients

The major SM clients are domestic PS, ABS and SRB manufacturers which includes home appliance, mechanical, automobile, electronic and packaging industries. As for PDEB, the clients are chemical plants across the world.

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Exxon Mobil Ruhr Oel GmbH Indian Oil Corporation TonenGeneral
USA Germany India Japan
Exxon Mobil OJSC NAFTAN ANPZ S-Oil
Nederland Belarus Kazakhstan S. Korea
Formosa Chemicals & Fiber
Chinese Petroleum Co.
Turkey Taiwan Chi Mei
Petkim Petrokimya
Taita Chemical
Iran Taiwan Synthetic Rubber Corp.
Bandar Imam Petrochemical Co.
LCY Chemical Industry
Esfahan Petrochemical Co.
Eternal Materials
Kuwait
Kuwait Paraxylene Malaysia
Sultanate of Oman Indonesia Petroliam Nasional Berhad
Aromatics Oman Pertamina
United Arab Emirates Saudi Arabia Thailand Singapore
AquaChem SABIC Esso Jurong Aromatics Co.
SATORP Thai Paraxylene Exxon Mobil
PTT Global Chemical
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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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1

Corporate Profile

Company and Production History

M1 plant debottleneck accomplished, SM capacity raised to 140 K tons.

SM1 & SM2 plants debottleneck accomplished. SM total capacity reached 340 K tons.

SM Production

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SM2 plant established, SM total production capacity reached 240 K tons

SM1 plant established, SM production capacity reached 100 K tons. K tons/yr. 300 200 100 0

PDEB2 line established. 3.5 K tons capacity built total capacity of 7.0 K tons achieved Cogeneration plant in operation

PDEB Production

K tons/yr. PDEB1 line established. PDEB plant debottleneck accomplished 8 1.5 K tons capacity built PDEB capacity raised to 3.5 K tons. 6 4 2 0 Overall production cost reduction reengineering project accomplished Energy Saving Multi-function distillation energy-saving projects accomplished

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Plant set up Paid-in capital increased to ~ 4.6 Bn NTD Paid-in capital increased to ~ 4.8 Bn NTD Capital Paid-in capital increased to ~ 5.3 Bn M NTD Paid-in capital increased to ~ 5.6 Bn NTD

Capital increased to ~5,279 M NTD Capital relief to ~5,027 M NTD Board of Directors resolved to buy back common stocks for the cancellation of shares

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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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1 Corporate Profile

Quality, Safety and Environment Systems

Since 1995

ISO-9000 quality management system implemented in 1995 and certified in Nov. of the same year.

Since 1997 Since 1998 ISO-14001 Environmental Joined TRCA (Taiwan Responsibility Care Management System Association) since 1998 and pledge the implemented and certified in health & safety for employees, clients, Dec. 1997. public and environment.

Since 2009 Since 2009 Since 2014 Since 2016 OHSAS-18001 CNS-15506 ISO-14064-1 (CNS Implementation of TOSHMS Occupational Health Occupational Health & 14064-1) Organization (Taiwan Occupational Safety &Safety Management Safety management Quantification & & Health Management) Systems implemented and systems implemented Reporting of Green according to Ministry of Labor certified in Dec. 2009. and certified in Dec. House Gases System and certified for 2009. implemented and Performance Recognition of certified in Jan. 2014. the Occupational Safety and Health Management Systems.

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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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1
Corporate
Profile
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Operational Strategy

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Maximization of Production and Sales
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Continuous process improvement
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Development of high value of new products
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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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2 Market Review & Outlook

Production and Sales

SM Production vs Sales Volume

2016 Sales by Products

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ton
400,000
Ethyl-benzene Toluene
350,000
0.10% 1.40%
PDEB Others
1.97% 1.45%
300,000
250,000
200,000
150,000
100,000
50,000
95.08%
Styrene
0
2012 2013 2014 2015 2016 Year 年
Production Sales
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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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2 Market Review & Outlook

Global SM Supply & Demand

0.0 10.0 20.0 30.0 40.0 50.0 Million Metric Tons Million metric tons	50% 60% 70% 80% 90% 100% 09 10 11 12 13 14 15 16 17 Demand Production Total Capacity ~~Opera~~ting Rate Demand Production Total Capacity Operating rate 2009 2010 2011 2012 2013 2014 2015 2016 2017

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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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2 Market Review & Outlook

World SM Demand Year-on-Year Growth

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2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
2009 09 2010 10 2011 11 2012 12 2013 13 2014 14 2015 15 2016 16 2017 17
N. America W. Europe Middle East Others NE Asia SE Asia World Demand
N. America W. Europe Middle East Others NE Asia SE Asia World demand
Million Metric Tons
Million metric tons
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Taiwan Styrene Monomer Co.
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2 Market Review & Outlook

Regional SM Net Trade

6.0

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4.0
2.0
0.0
-2.0
-4.0
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-6.0
2009 09 2010 10 2011 11 2012 12 2013 13 2014 14 2015 15 2016 16 2017 17
N. America N. AmericaW. Europe W. Europe Middle East Others Middle EastOthers NE Asia NE Asia SE Asia SE Asia
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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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2 Market Review & Outlook

China SM Supply & Demand

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12 90
80
10
70
8 60
50
6
40
4 30
20
2
10
0 0
20092009 20102010 20112011 20122012 20132013 20142014 20152015 20162016 20172017
Production Production Domestic Demand D Total Capacityomestic deman d Operating Rate Total Capacity Operating Rate
Million Metric Tons
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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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2 Market Review & Outlook

Taiwan SM Market Analysis

 In 2016, overall SM production was 2,117,966 tons, demand was 1,885,985 tons.

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2,200,000
2,100,000
2,000,000
2,117,966
1,900,000
1,800,000 1,885,985
1,700,000
Production Demand
生產 需求
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 Formosa Chemicals & Fiber exported 517,353 tons SM in 2016. SM downstream customers imported 285,372 tons. The net export was 231,981 tons.

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600,000
500,000
400,000 231,981
300,000
200,000 517,353
285,372
100,000
0
Export 出口 Net Export 淨出口 Import 進口
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• It is forecasted that the Taiwan SM demand is about 1,800~1,880 K tons in 2017. The SM market just barely fulfills Taiwan’s SM demand.

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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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3 Financial Review

TSMC Consolidated Income Statement

TSMC Consolidated Income Statement	TSMC Consolidated Income Statement	TSMC Consolidated Income Statement	TSMC Consolidated Income Statement	TSMC Consolidated Income Statement
Unit：M NTD
	2015	2016	2016 1H	2017 1H
Revenue	13,122	14,073	6,775	7,100
Cost	11,822	11,859	5,720	6,303
Grossprofit	1,300	2,215	1,055	797
Grossprofit rate	10%	16%	16%	11%
Operating expenses	357	415	218	208
Netprofit	944	1,800	837	589
Netprofit rate	7%	13%	12%	8%
Non-operating income	(196)	(134)	(76)	73
Profit before tax	747	1,666	761	662
Tax	(174)	(337)	(174)	(144)
Netprofit of the term	573	1,329	587	518
Profit rate	4%	9%	8%	7%
Net Income Attributed to
- Stockholders of the company	694	1,411	633	538
- Non-controlling Interest	(120)	(83)	(46)	(20)
EPS(NTD)	1.31	2.67	1.20	1.02

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Taiwan Styrene Monomer Co.
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3 Financial Review

TSMC Consolidated Financial Analysis

	2014	2015	2016	2017 1H
Debts ratio (%)	39.83	44.64	35.95	38.12
Current ratio(%)	132.10	134.92	158.92	135.27
Quick ratio(%)	98.49	103.78	112.51	89.94
Average collection turnover(times)	15.96	19.17	16.01	12.36
Average collection days	22.87	19.04	22.79	29.54
Average inventory turnover(times)	19.44	18.30	17.62	21.85
Average inventory turnover days	18.77	19.94	20.71	16.70
Return on total equity(%)	(0.83)	9.37	18.80	14.14
5 0 5 10 15 20 25

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25
20
15
10
5
0
-5
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Taiwan Styrene Monomer Co.
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ROE (%)

3 Financial Review

TSMC EPS & Dividend

		2012	2013	2014	2015	2016
	EPS (NTD)	(0.93)	2.05	(0.07)	1.31	2.67
	Cash dividend (NTD)	-	0.50	-	1.00	2.20
	Stock Dividend from Retained Earnings (NTD)	-	0.50	-	-	-

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3
2.5
2
1.5
1
0.5
0
-0.5
-1
-1.5
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EPS

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Taiwan Styrene Monomer Co.
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4

Q & A

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台灣苯乙烯工業股份有限公司
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Taiwan Styrene Monomer Co.
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台灣苯乙烯工業股份有限公司 Taiwan Styrene Monomer Co.