UPC — Investor Presentation 2017

Nov 13, 2017

UPC Technology Corporation Investor Conference

13 November, 2017

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CONTENT

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1. Company Introduction

2. Development Strategy

3. Financial Performance

4. Q & A

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1. UPC Introduction

• Founded ： August 1976

• Chairman ： Matthew F.C. Miau

• President ： Yi-Shao Ko

• Revenue (Y2016) ： NT$42.4 Billion (US$1.31 Billion)

• Number of Employees ： ~1700

• Taiwan Stock Exchange listed (Y1989) ： code 1313

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Our market covers Taiwan, China, Southeast Asia, Northeast Asia,
South Asia, USA, Canada, the Middle East and New Zealand.
> 10,000 customers globally
Specialty Logistics
Chemical Service
Core
Chemicals
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UPC’s Deployment in Asia

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Zhenjiang, Jiangsu Panjin, Liaoning
Taizhou, Jiangsu
Nanchong, Sichuan UPC Taipei office
Taiwan
China
Zhongshan, Guangdong
Linyuan, Kaohsiung
UPCHK
Zhuhai, Guangdong Kuantan, Malaysia
Malaysia
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Manufacturing/Logistics Center

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Core Business

 Phthalic Anhydride  Maleic Anhydride  Fumaric Acid  PVC Resin  General Plasticizer  Phthalate

• DEHP

• DNOP

• DINP

• DIDP

• DPHP

• DBP

• DIBP

• Terephthalate (DOTP)

• Trimellitate

• (TOTM, TNOTM)  Adipate (DOA)

UPC Business

Specialty Chemical Business

• Specialty Plasticizer

• Hydrogenated (UN899)

• Polymeric (UN600series)  Adipate (DINA, DIDA)  Benzoate (DEGDB)

• Maleate (DOM, DBM)

• Fumarate (DOF)  Bio-based

  • Sebacate (DOS, DBS)

  • Citrate (ATBC)

  • Epoxide (ESBO)

  • Succinate (UN9429)

 UPR

• Polyester Polyol

• Fatty Ester

• Lubricant Ester

Logistics and Service Business

• Terminal operation

• Tank farm storage

• Warehouse storage

• Transportation

• Import / Export handling service

• Trading

• Engineering

• Energy Service

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Raw UPC
The Supply Chain Application
Material product
Chlorine
EDC VCM PVC
Ethylene
mono alcohols
(2EH, INA…)
Adipic acid PVC plastic products
TMA Plasticizers
PTA
Alkyd resin, Dyes,
Pigments, Paint solvents
OX PA
Synthetic leather,
Polyester Polyol Adhesive, UV coating,
Shoe Sole, Rigid Foam
Glycols
FA Boat, Button, Casting,
(MEG, PG…)
UPR Artistic Object, FRP,
BMC/SMC
N-Butane MA Alkyd resin, Pesticide
Paper additives, Adhesive
Fatty Acid Fatty Ester Lubricant, Cosmetics
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Raw UPC
Application
Material product
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Global #1 PA and Plasticizer supplier

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UPC production capacity by product (KTPA)

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60%
1,862
Total capacity of 3100 KTPA in end 2017
•
Plasticizer : 1862 KTPA
•
PA : 622 KTPA
20%
622 14%
450
4%
2%
121 52
PLASTICIZER PA PVC UPR.POLYOL MA.FA
Global #1 Global #1
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Logistics Capability in Greater China Transport and Storage of DG and General cargo

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 Chemical Tank Farm Sites

• Taizhou

• Zhuhai

• Panjin

• Warehouse Sites

• Taizhou

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• Zhenjiang

• Road Transportation

• Tank/Flexitank container, Packing cargo truck, Liquid/Gas/Powder/Insulation tank

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• Owned Fleet in Southern、Eastern、 Southwest、Northeast

• 3[rd] Party Fleet covered all China area

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Logistics Capability in Greater China Transport and Storage of DG and General cargo

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Taizhou, Jiangsu
 Owned Jetty
•
50,000 DWT
Zhenjiang, Jiangsu
 3 [rd] party Jetty
•
30,000 DWT
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 Jetty capacity

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Panjin , Liaoning
 Owned Jetty
•
50,000 DWT
•
10,000 DWT
(Q3/2017 completed)
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Zhongshan , Guangdong  Owned Jetty • 5,000 DWT Nanchong, Sichuan  Owned Jetty(floating) Zhuhai, Guangdong • Alongside Jialing river  3[rd ] party Jetty Major tributary of the • 80,000 DWT Yangtze (Planning)

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The Marketing Regions of Greater China sites
Northeast
China
Russia
Liaoning
North
天津
Northwest China
China
石家莊
Japan
&
Korea
Central
Sichuan China East Jiangsu
China
Southwest
China
South
China
Guangdong Malaysia
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The Marketing Regions of Malaysia site
Japan
&
China Korea
South
Middle
Asia
East
Africa
UPC Malaysia ASEAN
New
Zealand ,
Australia
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2. Development Strategy

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The Long-term Development Strategy

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Growth
Strategy
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Cooperation
Strategy
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Competition
Strategy
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Scope Expansion of product categories develop diversified and customer focused products to expand the category

Scale Expansion of product capacity use self-production and tolling to fully utilize our production capacity and infrastructure to enlarge the market share

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Total capacity of 3106 KTPA in end 2017 Total capacity of 3496 KTPA in end 2018

unit: KTPA

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UniHydro [TM] UN899 + 200KTPA
PVC + 150KTPA
MA + 40KTPA
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Our Green Plasticizers

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類別	產品名稱
 Hydrogenated	UniHydroTM UN899
 Polymeric	UN600、UN610、UN615、UN620、UN630、UN640
 Terephthalate	UN488(DOTP)
 Trimellitate	TOTM、TNOTM、UN380、UN390、UN399
 Adipate	DOA、DINA、DIDA
 Maleate	DOM, DBM
 Fumarate	DOF
 Benzoate	DEGDB
 Bio-based
• Epoxide	ESO
• Succinate	UN9429

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UPC begin China’s first Hydrogenated Plasticizer plant in June, 2017

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hydrogenation
DINP UniHydro [TM ] UN899
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PHTHALATES
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• 1,2-cyclohexane dicarboxylic acid, di-isononyl ester

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•
Odorless
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No odor

Non-toxic

• Pass toxicology test

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• NonEnvironmental-friendly plasticizer

• benzene

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• Reduce the amount of viscosity reducer

• Low VOCs • Reduce VOCs emissions

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The Demand & Trend of UN899

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UN899
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upgrade trend of plasticizer market

DOTP

DINP DEHP (DOP)

The plasticizer demand in China is about 4200 KTPA in 2016

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UN899 is expected to replace 30% of DOTP market  300 KTPA

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The advantages of UPC’s Taizhou PVC plant

• Process

Ethylene-based PVC process. No pollution

• Steam generated from PA plant at the same site for PVC

• Energy plant captive use

• Raw Close to VCM plant. Feedstock VCM shipped by pipeline

• Material

• Customer Close to PVC processing customers

• Own 50,000 DWT jetty for VCM / PVC import and export

• Transport transportation

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The PVC Outlook

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2016~2018 China PVC Supply/Demand (KTPA)

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開工率(%)
OR (%)
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2016~2022 Asian PVC Price Trend (USD/MT)

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• China total PVC capacity 23,125 KTPA

• Carbide-based PVC : 83%

• Ethylene-based PVC : 17%

• Rationalize & environmental inspection policy in China

• the high pollution and high energy

• consumption carbide-based small PVC plants are expected to be phased out gradually afterwards 2020.

Ethylene-based PVC & Carbide-based PVC capacity % in China

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Source：IHS / UPC (November 2017)

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(2) Competition strategy: Cost leadership + Differentiation

 Continuous capacity expansion

Cost

leadership

• Global #1 PA and Plasticizer supplier  Multi-sites / Multi-factories / Modularization & High-efficiency factory construction to reduce investment cost & operational risk  Integrated production & Energy balance to reduce production cost  Form alliance with our supply chain to reduce feedstock cost

• Develop green plasticizers

  • Hydrogenated plasticizer

  • Succinate plasticizer

  • Epoxide plasticizer

• Develop high value added specialty chemicals

• Differentiation

  • PA & MA downstream derivatives

  • C2、C3、C4 based chemicals & downstream derivatives

• Circular economy: reuse the by-products and recycled materials to develop new products

• Logistics service

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(3) Cooperation Strategy : from Competition to Co-opetition

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Competition
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Co-opetition
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Co-operation
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• Co-opetition with the global leading plasticizer manufacturers in the industry value chain to create a win-win situation

RM supply Inbound Factory Outbound Marketing R&D & Logistics Operation Logistics and Sales purchasing

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3. Financial Performance

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2012 ~ 2017 Q3 Consolidated Revenue

Revenue (NTD Billion)

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Oil price (USD/Barrel)
Europe Brent Spot Price
FOB (Dollars per Barrel)
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2012 ~ 2017 Q3 Production and Sales Volume

• 2012~2016 average growth rate (YoY) • Production Qty : +11.8%

• • Sales Qty : +12.5%

• KTPA

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2017 Q3 YTD Revenue Breakdown by Products (%)

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2012~2017 Q3 Net Income after Tax & EPS

EPS NTD Million (NTD )

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2012 ~ 2017 Q3 Capital Expenditures

NTD Million

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www.upc.com.tw

THANK YOU

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