TTC — Investor Presentation 2021

Apr 19, 2021

Taiwan Tea Corp. 2021

QIC Taiwan CEO Week
April | Taipei

Disclaimer

The presentation and the relevant information mentioned in this material, including operating performance, financial performance and the business outlook, have been compiled from both internal and external resources.

These forward-looking statements involve known and unknown risks, uncertainties and other factors, including price variation, competition, global economy, exchange rate movement and market demand, which may cause actual results to differ materially from those implied by such forward-looking statements.

This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient should satisfy itself in relation to such matters.

The forward looking statements expressed in this material reflect the Company’s current view about the future as of today. The Company is not responsible for any updates if there are any changes in the future.

Executive Summary

Established in 1950, Taiwan Tea (2913 TT) is dedicated in three major business lines: 1) Tea cultivation, tea leaf and tea product manufacturing and marketing; 2) Agriculture tourism; and 3) Land development

TTC is the 2nd largest landowner in Taiwan with land asset of 3,747 ha, current market cap is US$ 480 mn (2021/4/13). 2020/3M2021 revenue was NT$ 312mn/ 91mn

In 2019, Mr. Wu, Ching-yuan was elected as the Chairman of Taiwan Tea. Chairman Wu committed to focus on core business, and pledged to boost the tea leaf manufacturing and shipment to turn around the business.

Taiwan Tea also leverage its tea garden and tea culture to develop tourism business. At the same time, the management team actively review its own land assets for further development and collaboration, to create sustainable revenue and profit.

Strong Leadership

Chairman: Wu, Ching-Yuan

Chairman Wu graduated from National Taipei University of Technology and hold the associate degree in Mechanical engineering，he also holds a Masters degree in architecture & Urban Planning from Chung Hua University.

Mr. Wu was elected to be the Chairman in 2019

Chairman Wu introduced successful experience of Sanyang Motor and up to date industrial technology, to accelerated the development of the largest plantation: Laupi tea garden, and completed the entire 452 ha plantation. Meanwhile, Chairman Wu actively reviewed the land asset for proper utilization.

Under his leadership, Taiwan Tea’s revenue has grown 4.3% in 2020 and the net loss has been shrunk from $0.18 per share in 2019 to $0.02 in 2020.

TTC’s Way to Success

Maintain and strengthen TTC’s leading position in the tea market in Taiwan, and achieve sustainably profitable.
Taiwan Tea’s tea leaf production will quadruple and reach 3,000 tons/ year by 2025.
Leveraging tea plantations and land in the beautiful mountainous areas with great potential for tourism and leisure, and become a solid second revenue and profit stream.
The land capital of Taiwan Tea should be utilized properly. With continuous revitalization and reinvestment, to maximize the value of the land.
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Tea Production

Photo Credit: https://ezgo.coa.gov.tw/zh-TW/Front/News/Detail/1279

Tea Garden & Factories

熊空茶廠、大寮茶文館

復興茶廠、大溪老茶廠

XIONGKONG TEA GARDEN
DAXI TEA FACTORY
Area: 5.423 ha
Cultivars : Organic Green Tea, black tea and Oolong Tea
Area: 3.4 ha
Cultivars : Green tea & black tea

三義茶廠、銅鑼茶廠

魚池茶廠、日月老茶廠
SANYI、TONGLUO TEA FACTORY
ANTIQUE ASSAM TEA FARM
Area: 16 ha
Cultivars : Oriental Beauty Tea
Area:20 ha
Cultivars : TTES No. 8、No. 18、No. 21

精製廠、老埤農場
鹿篙咖啡莊園
LAUPI TEA FARM
Area:717 ha
(Tea Garden Approx. 452ha)
Cultivars: TTES No. 8,No. 2,No. 17,No. 18, Chin-Shin Da Pan and Shi-Ji-Chun (Four Season)

LUGAO COFFEE GARDEN

Coffee Garden field: 13 ha
Local specialty : Sun Moon Lake Coffee

Notes:

First Smart Tea Garden in Taiwan

We set up 6 micro-weather station and soil moisture sensor to monitor the parameters of plant growth, to analyze the best condition for cultivation.
Micro-weather management
Applying precision irrigation technology developed by Netafim. With 14,000 drip holes per hectare covering over 94% of planting area, we managed to save 70% of irrigation water and 50% of fertilizer.
Precision irrigation
We applied 3 platforms to collect big data: 1) Smart Agri-management Platform(SAMP) for product traceability; 2) Dispatching App to monitor productivity of each production unit; and 3) Plant doctor App to monitor the entire process of cultivation.
Big data management
We started our organic plantation in 2003. TTC pledged to produce our tea leaf at the highest safety and highest quality standard. We also use biodegradable bioplastic for our product packaging.
Organic and High Quality

Laupi Tea Farm Progress

Progress at the end of 2019
20%
87%

99%
10%

Operating Machines construction
Tea Plantation
Tea Factory construction
Warehouse construction

100%
99%
50%
100%
Progress at the end of 2020

Notes:

Business Highlight-Laupi Tea Farm

Pingdong Branch Office

Dormitory Phase II

Temporary Tea Factory

Tea Tree Nursery

Tea Factory

Warehouse

Tea Area [Phase 3]
(Cultivated area 105 hectares)

Laupi Tea Farm
The total planting area 452 hectares
Tea Area [Phase 1]
(Cultivated area 111 hectares)
Tea Area [Phase 2]
(Cultivated area 126.5 hectares)
Tea Area [Phase 4]
(Cultivated area 109.5 hectares)

Notes:

Laupi Tea Farm Facilities

Pingdong Branch Office/Laupi Tea Farm
Laupi Tea Farm Dormitory Phase II

Laupi Temporary Tea Factory
Tea Tree Nursery

Notes:

Laupi Tea Farm Facilities

Laupi Tea Factory

Laupi Warehouse
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Notes:

Automated Tea production line

Withering
Rolling
Gathering Tea Leaves

Drying
Frying
Fermenting

Tourist Farm

Recreational Business Highlights

Recreation Operating revenue (Unit:NT$Thousand)	2020	2019	YoY	YoY(%)
Xiongkong Tea Garden	17,852	10,294	7,558	73%
Daliao Historical House	2,806	2,624	181	7%
Daxi Tea Factory	34,926	34,414	512	1%
Tongluo Tea Factory	18,465	15,021	3,444	23%
Antique Tea Factory	58,237	67,628	-9,390	-14%
Lugao Coffee Garden	31,074	7,575	23,500	310%
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Notes:

Leisure Business Outlook

To develop tea farm leisure industry

• Establish new leisure farms in line with current business operation
• By applying for leisure farm operating permit to speed up transformation for current farm facilities
• Consolidate the newly approved leisure farm into the TTC leisure franchise

New Leisure
Farm / Pasture
Xiongong second leisure farm?( camping area )
Daxi leisure farm
Shuitou farm?( pasture )
Farm?Transformation
Leisure Industry
Miaoli Tongluo leisure farm expansion
Turn Lugao coffee garden to ?Lugao leisure farm
Leisure Farm?Registered?and Operated
Building License Permitted
Xiongong leisure farm
Shihmen leisure farm
Zhuwei agricultural facility
Xiongong tea factory

Land Development

Land Development - Selected cases

Commercial
Park

TTC Sanyi Industrial/Commercia Park
•In2008, acquired development permission
•In2010, completed water conservation and land preparation
•In2010, completed revising land functional zone

Residential
Project

Miaoli Tongluo Residential Project
•In2014, acquired development permission
•In2019, completed water conservation and land preparation
•In2019, completed revising land functional zone

Commercial Park?Exhibition Hall/Hotel

Land Development
Increase asset value

Miaoli Tongluo Industrial/Commercial Park
•In2014, acquired development permission
•In2019, completed water conservation and land preparation
•In2019, completed revising land functional zone

Recreational
Park

Sun Moon Lake Recreational Project
•In2015, acquired development permission
•In2018, water conservation and land preparation
plan permitted
• Connecting road improvement required

Development Projects
of Next Year
Land asset vitalization is our main goal from 2007
Developed large land cases step into constructing and operating phases
Select potential land to develop in 2021

Profession consulting
Potential cases selection
Financial investment

Land Development strategy

To increase asset value
- Land asset revitalization is our priority, we continue to review our land asset and evaluate potential profit
- Initiate promising development projects in accordance with government’s land policy
- Collaborate with financial partners for the projects completed changing of land category
- Review developable land, and propose to be ruled out from hillside restricted zone

Completed Projects
→ Investment promotion
Miaoli Tongluo?Residential?Project
TTC Sanyi?Industrial / Commercial Park
Miaoli Tongluo ?Industrial / Commercial Park
Land Development Cases
New Projects
→ Official review process
Miaoli Tongluo Industrial Park
Miaoli Tongluo Recreational Park
Reassess Project
→ After Land Act enforcement
Hillside zone revised
→ Zone plan proposed
Laupi Tea Farm
Hillside zone revised
Sun Moon Lake Recreational Project

Financials

Historical Cash Dividend 2013-19

NT$ mn	2013	2014	2015	2016	2017	2018	2019
Net Income	$1,023	$833	$760	$310	$622	$-42	$-146
Cash Dividend	$360	$475	$385	$385	$385	$237	$0
DPS (NT$/share)	$0.50	$0.61	$0.50	$0.50	$0.49	$0.30	$0.00
Cash Yield (%)(1)	2.6%	4.0%	3.2%	3.0%	2.8%	1.9%	0.0%
Payout Ratio (%)	33%	53%	50%	124%	61%	-	0%
Ex-div Date	2014/7/16	2015/7/17	2016/7/21	2017/8/25	2018/11/28	2019/8/23	-
Source:TEJ, Capital IQ
?Note 1： Stock price based on closing price the day before Ex-div date

Notes:

5-year Income Statement

NT$ Million	2015	2016	2017	2018	2019	2020		YoY (%)
								2015	2016	2017	2018	2019	2020
Sales Revenue	937	611	2,252	254	299	312		(50.2)	(34.8)	268.7	(88.7)	17.6	4.3
Gross Profit	400	275	740	116	121	125		(36.0)	(31.1)	168.9	(84.4)	4.5	3.1
Operating Profit	74	-38	386	-173	-169	-148		(71.2)	(152.0)	-	(144.8)	-	-
Income before Tax	725	306	605	-54	-173	-33		(17.3)	(57.8)	97.6	(108.9)	-	-
Net Income to Parent	760	310	622	-42	-146	-17		(8.8)	(59.2)	100.6	(106.7)	-	-
EPS (NT$)	1.01	0.40	0.81	-0.05	-0.18	-0.02		(12.9)	(60.1)	100.6	(106.6)	-	-
Key Financial ratio (%)
Gross Margin	42.7	45.1	32.9	45.5	40.4	40.0
Operating Margin	7.9	(6.3)	17.1	(67.9)	(56.5)	(47.3)
Opex ratio	34.8	51.3	15.7	113.4	96.9	87.3
Net Margin	81.1	50.8	27.6	(16.5)	(48.8)	(5.6)

Notes:

5-year Balance Sheet

NT$ Million	2015	2016	2017	2018	2019	2020		YoY (%)
								2015	2016	2017	2018	2019	2020
TOTAL ASSETS	25,733	24,372	23,619	24,356	24,596	25,098		19.1	(5.3)	(3.1)	3.1	1.0	2.0
Cash	167	78	198	186	125	176		(7.6)	(53.2)	153.1	(5.9)	(32.6)	40.5
NR & AR	141	39	21	15	19	18		(42.9)	(72.5)	(46.0)	(26.4)	19.9	(5.5)
Inventory	2,002	2,034	791	823	885	895		0.4	1.6	(61.1)	4.0	7.6	1.2
Fixed Asset	883	3,721	4,272	6,017	6,092	6,504		9.8	321.3	14.8	40.8	1.2	6.8
TOTAL LIABILITIES	9,602	8,314	7,333	8,204	8,832	9,306		46.0	(13.4)	(11.8)	11.9	7.7	5.4
Bank Loans	5,355	3,861	3,351	4,640	5,396	5,923		201.5	(27.9)	(13.2)	38.5	16.3	9.8
NP & AP	46	884	441	18	13	16		(73.0)	1841.5	(50.1)	(95.8)	(28.2)	19.6
TOTAL EQUITY	16,131	16,058	16,286	16,152	15,764	15,792		7.3	(0.5)	1.4	(0.8)	(2.4)	0.2
A/R turnover days	75.7	53.8	4.9	26.2	20.7	21.1
Inventory turnover days	1,357.9	2,195.6	341.1	2,124.9	1,749.5	1,736.3
A/P turnover days	72.7	505.3	159.9	604.4	32.4	28.3
ROE (%)	4.9	1.9	3.8	(0.3)	(0.9)	(0.1)
ROA (%)	3.2	1.2	2.6	(0.2)	(0.6)	(0.1)

Notes:

Q & A
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Notes:

Thank you.
臺北市南港區園區街3號15樓(南港軟體科學園區F棟)
+886-2-26557799
www.ttch.com.tw
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Notes: