TSRC — Investor Presentation 2019

Nov 14, 2019

2019

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TSRC – Global Specialty Polymers Investor Conference, 14[th] Nov 2019

Disclaimer

The information presented and referred herein are based upon the information obtained internally and externally from our company. Forward-looking operational results, financial condition and business results 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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© 2019 TSRC, Corp. All Rights Reserved. Confidential and Proprietary

AGENDA

1. Introduction

• Thomas Lin, Deputy Spokesperson

2. YTD September 2019 Financial

• Edward Wang, CFO

Performance

3. TSRC 5-year Business Plan-

• Joseph Chai, CEO

progress update on Strengthen Business Portfolio Strategy

4. Q&A

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© 2019 TSRC, Corp. All Rights Reserved. Confidential and Proprietary

Introduction Thomas Lin, Deputy Spokesperson [1]

YTD September 2019 Financial Performance Edward Wang, CFO [2]

Performance Results – YTD Sep 2019

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Sales Volume (KMT)
+8%
344 373
YTD Sep '18 YTD Sep '19
Gross Profit (NT$M)
-5%
2,715 2,576
YTD Sep '18 YTD Sep '19
Net Income (NT$M)
-23%
829
636
YTD Sep '18 YTD Sep '19
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Revenue (NT$M)
-3%
22,746 22,067
YTD Sep '18 YTD Sep '19
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Operating Profit (NT$M)
-23%
1,104 852
YTD Sep '18 YTD Sep '19
EPS (NT$M)
-23%
1.00 0.77
YTD Sep '18 YTD Sep '19
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© 2019 TSRC, Corp. All Rights Reserved. Confidential and Proprietary

Challenging External Environment

• Global economic slowdown, especially Automotive

• Uncertainties from trade dispute

• Market dynamics and business operations

• Natural Rubber

• Monomer price

• • Industry supply-demand balance

• Increased competitive intensity

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© 2019 TSRC, Corp. All Rights Reserved. Confidential and Proprietary

Actions for Immediate Impacts and Lasting Benefits

• Defend margin while maximizing volume shipment

• Portfolio diversification to address the weakening auto market, footprint expanded into multiple applications and market segments

• No. of Advanced Shoe Material customers continues to increase

• Differentiation toward high-value applications to counter competition from new TPE capacity

• New SEBS line with new technical capability and new ASM capacity will be operational in early 2020

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© 2019 TSRC, Corp. All Rights Reserved. Confidential and Proprietary

5-Year Business PlanProgress update on Strengthen Business [3] Portfolio Strategy Joseph Chai, CEO

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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© 2019 TSRC, Corp. All Rights Reserved. Confidential and Proprietary

Three Key Strategies

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Strengthen 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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© 2019 TSRC, Corp. All Rights Reserved. Confidential and Proprietary

Strengthening Business Portfolio – Progress

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Enhance synthetic rubber product mix (New market segments)

Rapid growth in Applied Materials (New market segments & technology) Building capabilities to deliver long term growth in high value market segments

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Enhance Synthetic Rubber Product Mix – Increase Non-tire Contribution*

17% 26% Synthetic Rubber Non-tire Sales Revenue

17% 34% Synthetic Rubber Non-tire GP Contribution 2015 2018 © 2019 TSRC, Corp. All Rights Reserved. Confidential and Proprietary P.13

*** Synthetic rubber products**

Rapid Growth in Applied Materials – Tripled Advanced Shoe Materials in three years

Advanced Shoe Materials Revenue

Advanced Shoe Materials GP$

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x3
x3.5
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2015 2018

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© 2019 TSRC, Corp. All Rights Reserved. Confidential and Proprietary

Target High Value Market Segments

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Medical

• 5.7% CAGR Global Medical TPE demand

• High quality requirement with strict qualification

• Good fit for advanced HSBC polymer

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Viscosity Modifier (VM)

• Increased HSBC type VM’s demand driven by emission standard

• Oligopoly lubricant additive market needs technical expertise and committed partnership

• High entry barrier support strong long term value

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ASM
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• Healthy lifestyle drives athletic footwear growth

• Technical differentiation key to high margin contribution

• Triangular collaboration to create value

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© 2019 TSRC, Corp. All Rights Reserved. Confidential and Proprietary

Building Technology, Application, and Operation Capabilities

Ca abilities p

A lications pp

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Nantong Advanced
SEBS new line
Medical
TSRC Vietnam
VM
New Shanghai
Application Center
New Platform ASM
Technologies and
assets
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© 2019 TSRC, Corp. All Rights Reserved. Confidential and Proprietary
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Strengthen Business Portfolio

• The new high value market segments and applications enable TSRC to strengthen our specialty chemicals position and long term profitability

• Building a specialty chemicals business requires technology & application capabilities, quality excellence focus, and long term development commitment

• Current economic challenges would not deter our commitment to deliver high value long term return for shareholders

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© 2019 TSRC, Corp. All Rights Reserved. Confidential and Proprietary

Summary

1 YTD 2019 Business Performance

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2 3
TSRC 5-Year
TSRC Vision
Business Plan
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Less robust financial Focused execution of performance due to TSRC 5-year Business weak and challenging Plan – making progress global economy in strengthening our business portfolio

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

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© 2019 TSRC, Corp. All Rights Reserved. Confidential and Proprietary

Q&A

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2020
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© 2019 TSRC, Corp. All Rights Reserved. Confidential and Proprietary

THANK YOU

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