UPC - Investor Presentation 2024 | FinancialReports.eu

6 June, 2024

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Agenda

Reporter Market Outlook and Manager June Chang New Business Company Development VP & CFO Financial Performance Simon S.C. Wu Finance & Administration Function Ann Bih President Q & A Simon S.C. Wu VP & CFO

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Disclaimer

This presentation may contain forward-looking statements that reflect the current assumptions, estimates and our own information and other sources information now available planning, based upon
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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1. Market
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Development
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Copyright
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2024 UPC Technology Corp.
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Group
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Founded
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August 1976
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•
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•
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Number of Employees： 1,914 (as of 31 March, 2024)

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Revenue
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2023：NT$73.2 Billion (US$2.3 Billion) 2024 Q1 YTD : NT$17.8 Billion (US$0.6 Billion)

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•
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•
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Taiwan Stock Exchange listed (Y1989): code 1313

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We are committed to providing the most professional and satisfying products and services to our customers.

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Panjin, Liaoning
Zhenjiang,
Jiangsu
Taizhou, Jiangsu
Nanchong,
Sichuan
Taipei(HQ)
Zhongshan, Guangdong
Zhuhai, Guangdong
UPCHK
Linyuan,
Bangkok, Kaohsiung
Thailand
Ho Chi
Minh,
Vietnam
Kuantan,
Malaysia
Manufacturing & Logistics Center
Marketing center 5
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General & Green Plasticizers
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Low molecular weight (LMW) phthalates (DEHP、DBP)
High molecular weight (HMW) phthalates (DINP、DPHP)
• Hydrogenated Plasticizer (DINCH/UN899)
Phthalic Anhydride (PA)
Maleic Anhydride (MA)
• Fumaric Acid (FA)
Terephthalates (DOTP、DINTP)
Adipate Plasticizer (DOA、DINA、DPHA)
Trimellitate Plasticizer (TOTM、TINTM 、TPHTM)
Linear Plasticizer (DnDP、911P、810TM、TNOTM)
Polymeric Plasticizer (UN600 series)
Bio-based Plasticizer (ESBO、DOS)

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PVC Resin
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Total Capacity 4,958 KTPA

suspension PVC

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UPR & Polyols
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UPR
• Polyester Polyol

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6
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Plasticizer Capacity Equivalent to DEHP
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Y2023
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Sales Volume :
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KTPA
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Sales Volume Breakdown by Products

Sales Volume Breakdown by Region JP/KR Europe China 1.3 % 0.1 % 87.0 % America 0.7 % M. East SEA & Taiwan 2.3 % & Africa S.Asia 0.9 % 6.7 % Oceania 0.3 %

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World Economic Outlook

IMF forecasts global growth to hold steady in 2024 to 2025

OECD forecasts Inflation to drop to 2.5% in Q4

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OECD
10%
Inflation
8.6%
Forecast
EU 2.6%
US 2.4%
CN 1.3%
2021 2022 2023 2024
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Source：OECD (Organization for Economic Cooperation and Development)

Inflation has declined, and Fed rates have decreased.
USA: stable economy and strong labor market; potential
inflation concerns
Uncertainties continue to constrain economic growth
Geopolitical risk (Russia-Ukraine war/Israel-Palestine Conflict)
Red Sea crisis escalates
Conflict between China and USA.
China's real estate industry varying, with local debt and overcapacity; 'Trade-in' policy to stimulate consumption in cars, appliances, home renovations, and housing

Source：IMF, April 2024 World Economic Outlook

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International Energy Trend

Crude Oil Price

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EIA Forecast •
Russia-Ukraine crisis: OPEC+ oil output cuts
•
Implications for Output cut of 3.66 M bpd has been
global oil markets extended to the end of 2025
•
Additional voluntary cut of 2.2 M
bpd has been extended to SEP 2024,
and gradually phased out then
•
Ample supply in non-OPEC+
curbs prices
EIA forecasts • Global oil demand growth led
crude oil prices
by China and India
to range
•
between $80-90 Slower economic growth
per barrel from weakens demand
2024 to 2025.
•
Slower EV sales (driving range,
COVID-19 pandemic
charging issues)
•
Goldman Sachs: Oil Demand
to Grow Until 2034
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Source：EIA (U.S. Energy Information Administration), SHORT-TERM ENERGY OUTLOOK

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PVC Market Overview

Global PVC demand in 2023: 46.13 million tons; China: 20.85 million tons (45% of global)
PVC demand growth slows; China's capacity growth in 2023-2025 exceeds demand growth, market oversupply persists

China PVC Supply-Demand Trend

China PVC application

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Capacity YoY
Demand YoY
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Source: Chemical Market Analytics by OPIS (2024.05)

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PVC Market Overview

UPC PVC Sales Statistics

UPC PVC Sales Industry Trends

KTPA

擴大對玩具、文具等兒童用品及醫材行業行銷
Zhongtai Chemical in Xinjiang was included in the "Uyghur Forced Labor Prevention Act" restriction entity list in SEP 2023.
This prompted heightened supplier requirements for exported products in the supply chain.
Chinese wire and cable, and flooring industries, are relocating abroad.
UPC is increasing sales in industries such as toys and stationery for children, and medical products.

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PVC Market Overview

PVC-VCM Price Trends in Asia (Monthly Average)

Forecast

Global PVC oversupply and weak demand in China. Short-term improvement is unlikely.
• Skyrocketing shipping costs hinder PVC exports.
Shortage of vessels, containers, and transportation capacity
• Red Sea crisis
Peak shipping season
Chinese EV exports surge to avoid potential high tariffs
Trade barriers
PVC BIS effective in India from August 26, 2024
• Antidumping investigation on PVC by the Indian government

• CMA forecast PVC price

$828/MT in 2024
$844/MT in 2025

Source: Chemical Market Analytics by OPIS, a Dow Jones company.

CMA forecast PVC-VCM price spread • $153/MT in 2024
$167/MT in 2025

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Plasticizer Market Overview

Global plasticizer demand reached 9.44 M tons in 2023. UPC's total sales volume was 1.35 M tons, accounting for approximately 14% of the global market share.

Percentage of Sales Volume by Type of Plasticizer

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Plasticizer demand in China reached 5.1 M tons in 2023. UPC's sales volume was 1.11 M tons, accounting for approximately 22% of the mainland China market share.

	Annual Demand in China (million tons)	UPC Market Share (%)
DOP (DEHP)	1.3	34%
DINP	0.4	80%
DOTP	1.9	12%
Others	1.33	9%
Total	5.1	22%
UPC aims to further increase DOTP market share:

• FEB 2023, Zhuhai site started production with 60k tons of DOTP.

AUG 2023, Panjing site started production with 60k tons of DOTP.

• OCT 2023, Taizhou site started production with 60k tons of DOTP.

Source: UPC

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Plasticizer Market Overview

In 2023, China's economic recovery after the pandemic was weaker than expected, with a sluggish real estate sector and overall weak consumer spending.

In 2024, with cautious consumer spending, UPC must diversify its export channels. Expand marketing in Japan (the closure of outdated local capacities)

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Outdated equipment in Japan's petrochemical industry is being phased out due to lack of competitiveness.
MGC : 40k tons PA plant in Mizushima closed in JAN 2025
CG Ester : 45k tons plasticizer plant in Mizushima closed in MAR 2025
Japan's annual DINP import demand is around 36k tons.
Future projections suggest a rise in Japan's demand for plasticizers and PA.
UPC's DINP exports to Japan represented around 60% of its import market share in 2023.
UPC aims to further increase its market share in Japan through expanded marketing efforts.

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Plasticizer Market Overview

INEOS TMA factory was reported to be shut down in April, reducing global TMA capacity to 185 KTPA.

TMA tight supply, price was triply inflated  Cost of TOTM has increased by 13k RMB

2024 MAY 30 : 50,000 RMB/MT

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Closed
Global Capacity in 2024
of TMA
250KTPA
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2024 JAN : 15,000 RMB/MT

– UPC Alternatives of TOTM

The properties are equivalent to TOTM
Anqing Yicheng's 20 KTPA TMA plant has not started
production due to technical issues.
Anhui Taida plans to expand its TMA capacity by 30
KTPA in 2025.
Jiangsu Evergreen plans to build an 80 KTPA TMA plant.

UN6XX series: Polyester Plasticizers

With the same proportion of plasticizer, the PVC product is softer.

➜ Cost-Effective

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Plasticizer Market Overview

– – – OX PA 2EH DOP Price Trends in East China (RMB/MT)

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2023
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2024
DOP
2EH
OX
PA
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Source: Oilchem.net

In H2 2023, the supply and demand for 2EH were tightly balanced, with increasing plant shutdowns for maintenance driving up 2EH prices.
However, new 2EH production capacity was insufficient:
Ningxia Baichuan experienced a delayed trial run in May 2023 and was expected to start operations only at end of the year.
Zibo Noao began production in mid-November 2023.
The weak demand for plasticizers resulted in oversupply, and prices could not keep pace with the rise in raw material costs.
In Q1 2024, domestic supply & imports of 2EH increased, but demand failed to keep pace, resulting in a significant price decline.
OX-PA prices remained stable to slightly upward, while DOP faced continued cost pressures.
In H2 2024, new 2EH production capacities were gradually started, stabilizing prices.

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Statistics on 2EH Capacity and Expansion Plans of Makers in China

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From 2024 to 2026, the expected increase in 2EH production capacity is 2.59 M tons.

KTPA

Planned NBA/2-EH Projects:

Rongsheng Energy Technology (Inner Mongolia): 400 KTPA
Rongsheng New Materials (Taizhou): 900 KTPA
Shenghong Refining & Chemical (Lianyungang): 300 KTPA
Fuhai Group New Energy (Dongying): 200 KTPA
HW PETROCHEM: 400 KTPA
Xuecheng Energy (Shandong Weijiao Group): 250 KTPA

(*Capacity from NBA converted to 2EH not included.)

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PA Market Overview

The price spread between domestic/imported OX increased, prompting a new high level in export

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Source: Oilchem.net
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The prices of PA and its raw material OX continue to invert.

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OX
OX-based PA
NAP-based PA
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Since 2024, the decrease in OX supply has led to an uptick in its prices.
- The price spread between domestic/imported OX has widened, and Reliance India reduced production in Q2, prompting Chinese makers to increase export volumes.
- In China, Zhenhai Refining and Sinopec Jinling also reduced OX production in Q2, leading to supply constraints.
The OX shortage resulted in a PA reduction, causing a rebound in prices. But the persistent inversion between PA and OX prices led to losses.
Terminal demand for PA did not substantially improve, with low operating rates for plasticizers and UPR.
Facing competition from NAP-based PA at low prices (with the gap exceeding RMB 300/MT).
There's a push to explore export markets, but India still has BIS certification restrictions on imports from China.
Copyright © 2024 UPC Technology Corp

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Sustainable Development

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Sustainable Development Projects Producing environmentally friendly DOTP from recycled PET through alcoholysis. Planning new plant for PET bottles recycling and processing in upstream supply chain.

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DOTP plasticizer
PET Bottles PET Bottle Bales r-PET Flakes
Chemical
Recycling EG
UPR
-
by product
Recycle Processing
(Under Evaluation) r-PET granules
Mechanical
Recycling
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Sustainable Development Projects

Assessing Bio-based Products from Palm Oil in Southeast Asia, including Fatty Acids (Alcohols), Plasticizers, and Lubricant Esters

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Crude Palm Oil
(CPO)
Refined Palm Oil
Fatty Fatty
Acids Alcohols
Special Bio-
Ester Plasticizer
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Sustainable Development Projects Assessing Low-Concentration CO2 Capture and Reuse in Anhydride Plant Tail Gas

Scope 1 emissions are 60% of total emissions

Applying Higee Processes for CO2 Capture

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Unit : 1,000 MT-CO2e
845
788
718
40%
60%
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Scope 1 : From Process & Burning fuel (direct emissions) Scope 2 : From electricity, heat, steam (Indirect emissions)

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PA plant MA plant
PA/MA Process Tail Gas (CO2 3% v/v)
Sodium/Potassium
Hydroxide Aqueous Carbon Capture
Solution System
Carbonate Aqueous
Solution
Wastewater Algae
Neutralization Cultivation
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Sustainable Development Projects

Evaluating a Collaborative Project to capture CO emissions from furnace gases and producing low-carbon chemicals.

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Blast furnace
Capturing
gas
Purifying
CO
Converter
gas
Converting CO into
-
low carbon chemicals
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Future Development

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Products Development
• -
Developing high value plasticizers and ester products to
fully utilize the production capacity
• -
Developing sustainable low carbon green chemicals using
biomass feedstocks
•
Implement circular economy, recycle waste materials to
develop sustainable products
•
Develop PA/MA downstream products
• -
Low carbon transformation. Introducing carbon capture
technology and developing carbon utilization products.
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Logistics Business
•
Expanding business opportunities for docks, warehouses,
and storage tanks
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2. Financial Performance

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2024 UPC Technology Corp.
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(Billion NTD)

2020~2024/Q1 Consolidated Revenue

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2023YTD Sales Revenue by Product

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Main Products Revenue & YoY Growth rate
Sales Revenue Breakdown
2023YTD vs
( 2022YTD)
(Billion NTD)
+6%
2023YTD
Total Revenue
73.2 Billion NTD
(YoY +1%)
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2024/Q1 Sales Revenue by Product

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Main Products Revenue & YoY Growth rate
Sales Revenue Breakdown
vs
(2024/Q1 2023/Q1)
(Billion NTD)
+15%
2024/Q1
Total Revenue
17.8 Billion NTD
(YoY +12%)
+2%
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2023YTD Sales Volume by Product

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Main Products Sales Volume & YoY Growth rate
Sales Volume Breakdown
(2023YTD vs 2022YTD)
+9%
2023 YTD
Sales Volume
1,950 KTPA
+25%
(YoY+7.6%)
-16%
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2024/Q1 Sales Volume by Product

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Main Products Sales Volume & YOY Growth rate
Sales Volume Breakdown
vs
(2024/Q1 2023/Q1)
+0.1%
2024/Q1
Sales Volume
443 KTPA
+13%
(Y0Y+3%)
+4%
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2020~2024/Q1 Net Income after Tax & EPS

Net Income after Tax (Billion NTD)

EPS (NTD)

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2020~2024/Q1 Financial ratio：Financial structure (%)

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(%)
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(%)
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2020~2024/Q1 Financial ratio：Solvency (%)

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(Billion NTD)

2020~2024 Capital Expenditures

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1.1
2024/Q2~Q4
2024/ Q1
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法說簡報檔案下載

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Thank You!
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2024 UPC Technology
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www.upc.com.tw

AI assistant

UPC — Investor Presentation 2024

51771_rns_2024-06-06_3e86b311-1c2e-4699-8803-d808195e5ba1.pdf

Agenda

Disclaimer

Sales Volume Breakdown by Products

World Economic Outlook

IMF forecasts global growth to hold steady in 2024 to 2025

OECD forecasts Inflation to drop to 2.5% in Q4

Source：IMF, April 2024 World Economic Outlook

International Energy Trend

Crude Oil Price

PVC Market Overview

China PVC Supply-Demand Trend

China PVC application

Source: Chemical Market Analytics by OPIS (2024.05)

PVC Market Overview

UPC PVC Sales Statistics

UPC PVC Sales Industry Trends

KTPA

PVC Market Overview

PVC-VCM Price Trends in Asia (Monthly Average)

• CMA forecast PVC price

Source: Chemical Market Analytics by OPIS, a Dow Jones company.

Plasticizer Market Overview

Source: UPC

Plasticizer Market Overview

Plasticizer Market Overview

TMA tight supply, price was triply inflated  Cost of TOTM has increased by 13k RMB

– UPC Alternatives of TOTM

UN6XX series: Polyester Plasticizers

Plasticizer Market Overview

– – – OX PA 2EH DOP Price Trends in East China (RMB/MT)

Source: Oilchem.net

Statistics on 2EH Capacity and Expansion Plans of Makers in China

KTPA

Planned NBA/2-EH Projects:

PA Market Overview

The prices of PA and its raw material OX continue to invert.

Sustainable Development

Sustainable Development Projects

Scope 1 emissions are 60% of total emissions

Applying Higee Processes for CO2 Capture

Sustainable Development Projects

Future Development

2. Financial Performance

2020~2024/Q1 Consolidated Revenue

2023YTD Sales Revenue by Product

2024/Q1 Sales Revenue by Product

2023YTD Sales Volume by Product

2024/Q1 Sales Volume by Product

2020~2024/Q1 Net Income after Tax & EPS

EPS (NTD)

2020~2024/Q1 Financial ratio：Financial structure (%)

2020~2024/Q1 Financial ratio：Solvency (%)

2020~2024 Capital Expenditures

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