UPC — Call Transcript 2020

Nov 23, 2020

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UPC Technology Corp. Investor Conference

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23 November, 2020

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CONTENT

1. Company Introduction

2. Development Strategy

3. Financial Performance

4. Q & A

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UPC Technology Corporation

• Founded：August 1976

• Chairman：Matthew F.C. Miau

• President：Yi-Shaw Ko

• Revenue (Y2019)：NT$62.7 Billion (US$2.03 Billion)

• Number of Employees：2000

• Taiwan Stock Exchange listed (Y1989)：code 1313

Specialty Logistics Chemical Service

Core Chemical

Worldwide >4,000 customers

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UPC in Asia

• 8 manufacturing and logistics centers in Taiwan/ China/ Malaysia

• Affiliated companies in Thailand & Vietnam to serve SEA customers

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Core Chemicals Business

 General Plasticizer

• DEHP

• DBP

• DINP

• DPHP

• UN488(DOTP)

 PVC

• Phthalic Anhydride (PA)

• Maleic Anhydride (MA)

• Fumaric Acid (FA)

Products and Services

Specialty Chemicals Business

Logistics & Service Business

 Specialty Plasticizer

 Terminal operation

• Hydrogenated Plasticizer (UniHydro® UN899)

• Tank farm storage

• Warehouse storage

• Polymeric Plasticizer (UN600 series)

• Transportation

• Linear Plasticizer (UN200/UN291/UN380/TNOTM)

• Import / Export handling service

• Adipate Plasticizer (DOA/DINA/DPHA)

• Trading

• Trimellitate Plasticizer (TOTM/TINTM)

• Engineering

• Bio-based Plasticizer (ESBO/DOS)

• Energy Service

• Other Specialty Plasticizer (UN518/UN168/ DINT)

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• Unsaturated Polyester Resins

• Polyester Polyol

• 、 、

• Fatty Ester (2EHP 2EHS NBS)

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Logistics & Service Business

Provide comprehensive and JIT service

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Chemical Tank Farm & Warehouse Road Transportation
•
Tank/Flexitank container, Packing cargo
•
Chemical Tank Farm truck, Liquid/Gas/Powder/Insulation tank
• Serve the customers in the whole China 監控中心
Taizhou, Zhuhai, Panjin
•
Own Fleet
•
3 [rd] Party Fleet
•
Warehouse
Taizhou, Zhenjiang
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Logistics & Service Business

Jetty capacity

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Taizhou, Jiangsu
 Own Jetty
•
50,000 DWT
Panjin , Liaoning
 Own Jetty
•
50,000 DWT
•
10,000 DWT
Zhenjiang, Jiangsu
 3 [rd] party Jetty
•
30,000 DWT
Zhongshan , Guangdong
 Own Jetty
•
5,000 DWT
Nanchong, Sichuan
 Own Jetty Zhuhai, Guangdong
• 500 DWT  3 [rd] party Jetty
• 500 DWT •
80,000 DWT
(planning)
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The Supply Chain
Scale Scope
Vertical and horizontal integration
Raw Material UPC product Downstream
Chlorine
EDC VCM PVC
Ethylene
Adipic acid PVC plastics
TMA
PTA Plasticizers
mono-Alcohols
(2EH, INA) Alkyd resin, Dyes,
Pigments, Paint solvents
OX PA Synthetic leather, Adhesive,
UV coating, Shoe Sole, Rigid
Polyester Polyol Foam
Casting, transparent art ware,
Imitated crystal, Molding resin,
Glycols (MEG, PG) FA Marine resin, laminated glass
UPR
fiber, Cooling tower, Quartz
stone
- Alkyd resin, Pesticide
N Butane MA
Paper additives, Adhesive
Fatty Acid Fatty Ester Lubricant, Cosmetics
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Total Capacity of 3.67 million tons per year

Global #1 PA and Plasticizer Supplier

30% market share in Greater China

 Plasticizer capacity : 2237 KTPA

 PA capacity : 622 KTPA

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2. Development Strategy

Towards Green Chemistry. Create Sustainable Future

BECOME ZERO CARBON EMISSION Carbon Neutrality

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The Core Values

Continuous innovation as the driving force

• Management system

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Management system
Develop eco-friendly, green and •
Process safety
low-carbon plasticizers •
Industrial safety
•
Adopt energy saving and carbon EHS
•
reduction technology Risk
•
Unlimited environmental
Green Supply Chain
investment
Industry 4.0-Smart Management
Innovation
•
Corporate Social
•
Resource & waste
Responsibility
recycling/utilization •
Sustainability Sustainable
•
Zero pollution Circular
Development
•
Zero emission Economy
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• Develop eco-friendly, green and low-carbon plasticizers

• environmental protection

• • Risk

• Adopt energy saving and carbon reduction technology

• Unlimited environmental investment

• Green Supply Chain

• Industry 4.0-Smart Management

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Development Focus

High value added, Environmental sustainability, Low carbon

 Non-P hydrogenated plasticizer

Eco-Friendly

 High-carbon chain plasticizer (INA to replace 2EH ) Non-Toxic - Non Phthalate

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BioSustainability

Circular Economy

Biomass  Bio-based Plasticizer - Low Carbon

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 Waste & by-product recycling/utilization  Waste heat convert to steam : clean energy

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Provide Comprehensive Range of Non-Phthalates Green Plasticizer Products

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UniHydro [®] UN899
Hydrogenated
UN610
Plasticizer
UN615
TOTM(TEHTM)
Trimellitate Polymeric UN620
UN399(TINTM)
Plasticizer
Plasticizer UN630
UN640
、
DOA DINA
UN380(810TM)
UN100(DPHA) Linear
Adipate TNOTM
Plasticizer
Plasticizer
Vegetable oil: Polymeric :
• ESBO • UN9430 Bio-based Terephthalate UN488(DOTP)
Other
• DOS • UN9470 Plasticizer
Plasticizer
• UN9138 Specialty
• Plasticizer
UN9375
UN499(DINT)
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Hydrogenated Plasticizer– UniHydro[®] UN899

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Hydrogenation
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cyclohexane ring
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aromatic benzene ring
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UniHydro [®] UN899
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DINP Diisononyl phthalate

1,2-cyclohexane dicarboxylic acid, di-isononyl ester

Safety Application

UN899 Capacity : 240 KTPA (Global #1)

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• Gloves
• First aid ball
•
Medical equipment
Panjin
80 KTPA
•
Kids toys
• Infant care products China
•
Food contact packaging
Taizhou
80 KTPA
Taiwan
• PVC leather 80 KTPA
• Floor
• Plastic sheet
Malaysia
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Medical

• Gloves

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• First aid ball

• Medical equipment

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Human contact
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Daily use articles
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Hydrogenated Plasticizer– UniHydro[®] UN899

Lower carbon emission compared with general plasticizer

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LCA
(life cycle assessment)
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compare with DOTP

On production side

UN899 could reduce 53% CO e emission 2

On raw material side

UN899 could reduce 29% CO e emission 2

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The CO e emission 2 of 1 ton UN899 produced is 1022 kg lower than DOTP

If UPC’s 240 KTPA UN899 capacity fully replace DOTP in the market, the total CO 2e reduction is expected to reach 245 KTPA

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equal to 638 times carbon absorption of Da'an Forest Park per year

Save 24.5 million trees

• CO2 absorption capacity of a tree : 10kg/y (average)

• CO2 absorption capacity of Da'an Forest Park : 384.6 MT/y

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Turn to High-carbon chain plasticizer

Develop INA based plasticizer products (INA to replace 2EH )

Replace phthalates Replace DEHP Replace DOTP Replace DOA Replace TOTM

* has excellent property : heat resistance, low volatility, less smoke during processing and product durability

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China plasticizer market share by type - Low carbon chain - (alcohol backbone C3 C6 ) restriction

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DEHP、DBP、DIBP :

• classified as hazardous

• current market share of 41%

• gradually replaced by green products

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• DINCH
• DOA
• TOTM…
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High carbon chain (alcohol backbone ≧ 7C) safety alternatives

• INA-based plasticizers • DINCH

• • DINP

• • DINTP

• • DINA

• • TINTM

• Encourage customers convert to green plasticizers

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Implement circular economy to rebuild the value chain

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Zero
Value
-emission Circular
reconstruction
-pollution model
-waste
-
Process Waste/by product /
Application
Recycled materials
FA Secondary Plasticizer
FA acid sludge -
process UN510 D
R-Alcohol Secondary Plasticizer
-
DOP D
Plasticizer
Process Plasticizer cake PVC Compound
PA waste water FA
PA
、
process PA-light Viscosity reducer
、
Polyol UPR
PTA DOTP
Recycled
PET
Bottle
Alcoholysis MEG UPR
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Recovery process waste heat to produce steam

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• Captive use :

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• plasticizer/PVC process

• • heating

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• Captive use :

• Turbine generator (TG) generate roughly 195 M KWH/y

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• Surplus steam sold to neighboring plants. Build energy resource exchange model

Steam, the clean energy generated from PA/MA plant

Mtons steam to reduce 1.16 Mtons CO e UPC produce 5.15 2 emission per year

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622 KTPA of PA capacity
Steam
5.15
70 KTPA of MA capacity Mtons/y
1.16 Mtons CO e emission reduction
/y 2
= save 115 Million trees
(including recovery = equal to 3007 times carbon
flash steam) absorption of Da'an Forest Park
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• CO2e emission factor of steam : 224.6 kg-CO2/mt-STM * CO2 absorption capacity of a tree : 10kg/y (average)

• CO2 absorption capacity of Da'an Forest Park : 384.6 MT/y

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Other energy-saving and carbon-reduction measures : reduce about 17,495 tons of CO2e emissions per year

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Pallet
recycle &
Reduce
17495 ton
CO e
2
FIBC (Flexible
Recovery Intermediate
PA-Heavy Bulk Containers)
& PA-Light recycle & reuse
as fuel
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Actions to support environmental sustainable development

Join RSPO, purchase certified palm oil

ESG rating 7 in materials industry in Greater China

Source : MioTech Technology

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Environmental Social Governance

Sign Responsible Care Global Charter

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3. Financial Performance

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2015 ~ 2020/Q3 Consolidated Revenue

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Billion (NTD)

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2015 ~ 2020/Q3 Production and Sales Volume

2015~2019 average growth rate (YoY) • Production : 11.18% • Sales : 10.58%

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2020/Q3 YTD Revenue Breakdown by Products (%)

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Logistics
Specialty
5%
4%
Anhydride
11%
2020/Q1-Q3
Revenue
Plasticizer
PVC 35 Billion NTD
61%
19%
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2015~2020/Q3 Net Income after Tax & EPS

EPS (NTD)

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2015~2020/Q3 Financial ratio：Solvency (%)

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(%)
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2015~2020/Q3 Financial ratio：Financial structure (%)

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2015~ 2020 Capital Expenditures

Billion (NTD)

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Disclaimer
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• This presentation may contain forward-looking statements that reflect the current assumptions, estimates and plannings, based upon our own information and other sources information now available to us so far. These information including all business prospects or forward-looking statements may be affected by unknown risks, uncertainties and other factors up to change or cause actual results to differ materially.

• Meanwhile, this presentation is not intended to represent complete statement of the Company (UPC), industry or future development.

• Except as required by law, we undertakes no obligation to publicly update or revise the information contained in this whether as a result of new presentation,

• information, future events or otherwise.

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THANK YOU

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THANK YOU
Commitment to a Better Tomorrow
聯成化學科技股份有限公司
UPC Technology Corporation
www.upc.com.tw
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www.upc.com.tw

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