TSRC — Investor Presentation 2018

Nov 15, 2018

8 201 TSRC – Global Specialty Polymers Investor Conference, 15[th] Nov 2018

Disclaimer

The information presented and referred herein are based upon the information obtained internally and externally from our company. In light of the forward-looking operational results, financial condition and business results, they might be different from those information expressly or impliedly presented herein due to various factors, including but not limited to market risks, supply chains, market demand and our upcoming high-quality products.

We undertake no obligation to publicly update or revise any statements regarding those information presented and referred herein in the event of any further changes or updates to the information presented herein.

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AGENDA

1. Introduction

• Joseph Chai, CEO & President

2. YTD September 2018 Financial

• Edward Wang, CFO

Performance

3. TSRC 5-year Business Planupdate- progress on Organic Growth Strategy

• Joseph Chai, CEO & President

4. Q&A

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Introduction 1 Joseph Chai, CEO & President [ ]

TSRC Key Events

2018

• JUNE Elected the 16[th] Board of Directors &

Independent Direct at the shareholder meeting

OCTOBER

• Established TSRC (Vietnam). Co. Ltd.

• Ms. Nita Ing assumed Chairman of the Board

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APRIL

AUGUST

• Increased shareholdings at Indian Synthetic Rubber Private Ltd. (ISRPL) to 50%

• Set up a new production line for Advanced Shoe Materials (ASM) at Gangshan, Taiwan

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YTD September 2018 Financial Performance [2] Edward Wang, CFO

Financial Performance – YTD Sep 2018

Financial Highlights

• Revenue of NT$ 22,746 million.

• Operating profit of NT$ 1,104 million.

• Net income after tax of NT$ 829 million, or NT$1.00 per share

Business Update

• Slower auto growth in China and abundant supply of low-price natural rubber limit volume and spread for synthetic rubber business.

• Strong performance by TPE and Applied Materials business.

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Strong Earnings Increase

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Sales Volume (KMT)
-6%
366 344
YTD SEP'17 YTD SEP'18
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Revenue (NT$M)
-8%
24,671
22,746
YTD SEP'17 YTD SEP'18
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Gross Profit (NT$M)
+13%
2,715
2,398
YTD SEP'17 YTD SEP'18
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Operating Profit (NT$M)
+31%
1,104
842
YTD SEP'17 YTD SEP'18
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TSRC Business with 71% of sales linked to Asian Market

TSRC Revenue % by Geography

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Asia 71% NT$ 16,199 million

Americas 15% NT$ 3,344 million

14% EMEANT $ 3,203 million

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Strong Net Income and EPS Improvement

• Two extraordinary items in 2017; (1)TAMC impairment losses of $280M, and (2) $154M gain from THSR disposal.

• Gross Profit improved due to better product mix and relative stable feedstock price.

• Strong Net Income contributed by solid joint ventures’ performance and strong financial management results.

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Net Income (NT$M) EPS (NT$)
+48% +48%
829 1.00
562 0.68
YTD SEP'17 YTD SEP'18 YTD SEP'17 YTD SEP'18
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5-Year Business PlanUpdate-Progress on [3] Organic Growth Strategy Joseph Chai, CEO & President

5-Year Business Plan Objectives

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To transform TSRC to become a growth oriented profitable global enterprise in specialty materials

• Increase specialty business ratio to above 50% of portfolio

• Grow Operating Income substantially

• Improve Operating Profit % above current level

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Three Key Strategies

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Strength Business
Organic Growth Margin Expansion
Portfolio
• New Products • New Market • Operation
Segments Optimization
•
Geographic
• •
Expansion New Technology Process and Quality
Platforms Excellence
•
Commercial
•
Excellence Programs Merger & Acquisitions
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Organic Growth Strategy–Making Good Progress

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New Products

Geographic Expansion

Commercial Excellence Programs

New Advanced Significant Growth Sales & Profit SEBS Line at in Advanced Shoe Growth in India Nantong, China Materials

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HSBC (Hydrogenated Styrenic Block Copolymers) has a wide range of Applications

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Organic Growth- Expand SEBS Capacity

New Products

• New SEBS technology & products for existing and new applications including medical, e.g. IV Bag, Set, and Tubing

Geographic Expansion

• 20,000 metric tons per annum new capacity for Advanced SEBS at Nantong, China

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Building a Best-in-class SEBS Line to Serve Existing & New Products and Applications

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Focus Market
Plastics Modification,
Product & Technology D
Automotive, Medical Devices
High Vinyl, Low Styrene,
(FDA & Medical GMP)
High Flow SEBS C
(TSRC in-house proprietary
Capacity & Investment
B
SEBS technology)
20,000 Metric Tons
(US$99 millions)
Start-up A
October 2019
Nantong
Advanced
SEBS
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ASM (Advanced Shoe Materials) Enable Superior Footwear Performance

One-step Rebound Anti-slip Damping Softness Injection

• • • • •

• Outstanding Abrasion High impact Less operation Soft and rebound with resistant absorption cost comfortable • • •

• stable Grip and release Lightweight, Improve hand sustaining improvement pain in heel & transparency feel effect thenar and good coloring

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process

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Organic Growth- Expand ASM Business

New Products

• Innovative materials for the foam midsole, to meet one-step moulding, fashion, lightweight, and green recycle requirements

Geographic Expansion

• Increase geographical sales through new production capacities in Gangshan, Taiwan and Vietnam

Commercial Excellence Programs

• 3-way joint development of ASM with Global Brands and Footwear manufacturers

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Expand the Capacities of TSRC ASM

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1 Shanghai, CHN
•
2,000 metric tons (Existing)
2 Gangshan, TWN
•
8,000 metric tons (Existing)
•
1,200 metric tons (New in 2018)
3 Binh Duong, VNM
•
7,000 metric tons (New in 2020)
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India is one of the Fastest-growing Economies in the World

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India’s economy is picking up and growth prospects look bright—partly thanks to the implementation of recent policies, such as the nationwide goods and services tax and the country opening up more to foreign investors.

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8.2%
7.7% 7.7% 7.7% 7.7%
7.4% 7.1% 7.3% 7.4%
6.7%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Indian Growth Rate of GDP (% per year)
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Source: International Monetary Fund (October 2018)

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Solid Progress made by TSRC and Indian JV Partners despite Challenges

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2010

Incorporation of Indian Synthetic Rubber Private Ltd. (ISRPL)

2011

Start to construction of the ESBR site

2014

Start production at ISRPL

2016

ISRPL’s utilization rate 60% & TSRC increased share at ISRPL to 34.02%

2018

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ISRPL’s utilization rate >80% & TSRC acquired Marubeni’s share at ISRPL and increased shareholding to 50%

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Stabilized Business in 2017 and Positioned JV for Positive Growth

+481% Sales Volume +226% +297% (Base Year = 2014) +575% Net Sales +262% +150% (Base Year=2014) Net Income (869) (943) (110) 365 (NT$ M) 2014 2015 2016 2017

Sales Volume (Base Year = 2014)

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Summary

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2 TSRC 5-Year
Business Plan
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3 TSRC Vision

1 YTD 2018 Business Performance

YOY business improvement over 2017 despite very challenging synthetic rubber business environment

Solid execution of TSRC 5- year Business Plan – 3 examples on progress made in driving Organic Growth strategy

Maintain our momentum toward our vision to become a Global Specialty Materials Company

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Q&A

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THANKS

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