UPC — Investor Presentation 2019

Dec 3, 2019

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UPC Technology Corporation Investor Conference December 03, 2019

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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 presentation, whether as a result of new information, future events or otherwise.

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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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UPC Introduction

• Founded：August 1976

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• Chairman：Matthew F.C. Miau

• President：Yi Shao Ko

• Revenue (Y2018)：NT$61.3 Billion (US$2.0 Billion)

• Number of Employees：~1950

• Taiwan Stock Exchange listed (Y1989)：code 1313

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 In Asia

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Products and Services

Specialty Chemicals Business

Core Chemicals Business

Logistics & Service Business

 Specialty Plasticizer

• Hydrogenated Plasticizer (UniHydro® UN899)

• Polymeric Plasticizer (UN600 series)

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

• Mixed Plasticizer

• Adipate Plasticizer (DOA/DINA)

• Trimellitate Plasticizer (TOTM/UN399)

• Bio-based Plasticizer

• (ESBO/DOS)

 General Plasticizer

• DEHP

• DNOP

• DINP

• DPHP

• UN488/DOTP

• DBP

 PVC

 Phthalic Anhydride (PA)  Maleic Anhydride (MA)

• Fumaric Acid (FA)

 Terminal operation

  - **Tank farm storage**

  - **Warehouse storage**

  - **Transportation**

  - **Import / Export**

  - **handling service**

  - **Trading**

  - **Engineering**

  - **Energy Service**

• Other Specialty Plasticizer (UN518/UN168)

• Unsaturated Polyester Resins (UPR)

• Polyester Polyol

• Fatty Ester

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Raw
Material
UPC
product
Application
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Upstream and Downstream Supply Chain

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Global #1 PA and Plasticizer Supplier

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Notes: 1. The production capacity of Plasticizer is on the basis of the DEHP production capacity. 2. The production capacity of Plasticizer and PA includes the volume of captive use.

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2. DEVELOPMENT STRATEGY

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The PVC Outlook

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China : PVC Production

Source：IHS Markit / UPC data (November 2019)

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The PVC Outlook

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• Refer to IHS’ and UPC’s internal data, demand for PVC in China is about

18.8 million tons per year, and it will continue to grow at a rate of 3.23.4% per year in next 10 years. However, the capacity expansion can not keep up with the growth for demand in China. (Capacity expansion rate is about 2.0% per year)

• Per capita apparent consumption of PVC in China is less than 10 kg, so the PVC demand in China still has room for further growth.

• The high pollution and high energy consumption carbide-based PVC plants are strictly limited to add new capacity and force by central Gov. to be phased out in China (capacity < 200KTPA).

• UPC will continue to expand PVC capacity in China and to increase longterm competitive advantage by vertical integration.

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PVC Policies in China

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 ： Ethylene-based PVC

• New capacity addition for caustic soda is prohibited. Existing capacity can only be replaced with equivalent (or less) capacity.

• New ethylene-based PVC plant is prohibited in Yangtze River Delta Economic Zone.

• No more new ethylene-based PVC plant that capacity is less than 300 KTPA.

 Carbide-based PVC：

• The use of high mercury-containing catalysts in carbide-based PVC process is prohibited.

• By 2020, all the carbide-based PVC plants with capacity less than 200KTPA will be forced to shutdown.

• No more new carbide-based PVC plant will be approved in China.

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The Plasticizer Outlook

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2018 Global plasticizer demand distribution

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Global Demand of Plasticizer : about 9000KTPA

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2019 UPC Technology Corporation Investor Conference

Source：IHS / UPC (November 2019)

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The Plasticizer Outlook

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• Continues growth of global PVC demand (especially in China and India) driving the demand of plasticizers to increase.

• World demand for plasticizers is continuously growing at a rate about 3% per year, and the growth for plasticizers in Asia and China is about 5% per year.

• In 2018, the total demand for plasticizers in the China market is 5.0 million tons, accounting for 55% of the global market, with a growth rate about 8.7%.

• Phthalate plasticizers accounted for 52% of the world demand of plasticizers. Meanwhile, the demand for non-phthalate plasticizers is growing rapidly, including:

• UniHydro[®] UN899

• Bio-based plasticizer (incl. ESBO/EFAME…etc.)

• Terephthalate plasticizer (like DOTP)... etc.

• UPC continuously develop non-phthalate plasticizers and expand the capacity to keep leading position in the plasticizer market.

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3. Financial Performance

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2014 ~ 2019 Q3 Consolidated Revenue

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2014 ~ 2019 Q3 Production and Sales Volume

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2019 Q3 YTD Revenue Breakdown by Products (%)

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2014~2019 Q3 Net Income after Tax & EPS

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2014 ~ 2019 Capital Expenditures

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www.upc.com.tw

Thank You

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