USI — Investor Presentation 2021

Nov 24, 2021

USI CORPORATION (Stock Code ： 1304)

Investor Conference

2021.11.24

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Disclaimer

This presentation includes the Company’s current information. Any development or adjustments thereof will be published according to laws, regulations or rulings. The Company is not obligated to update or revise this presentation.

The information in this presentation is not for investment advices.

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Presentation Outline

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General Information of USI Business Review and Outlook Finance Information Q&A

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General Information of USI

Reported By: Mark Wu (Vice President of Sales & Marketing Dept.)

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Established Date

Ma 26 1965 y ,

Ca ital p

NT$11,888M (up to Sep. 30, 2021)

No. of Employees

466 (up to Sep. 30, 2021)

Individual ： NT$10,200M Revenue (2020) Consolidated ： NT$50,200M

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High Pressure LDPE/EVA Plant

• Main Products

• Facility Capacity •

• • • Low Density Polyethylene 4 sets of High-Pressure LDPE/EVA Total at Resins

• Autoclave Production 150KMT (Injection/Film Grades)

• Lines • Ethylene Vinyl Acetate Copolymer Resins (Foaming/HMA/PV Grades)

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Low Pressure HDPE/LLDPE Plant

Production Annual Main Facility Capacity Products 1 set of Gas Phase • HDPE/LLDPE Total at • High Density Polyethylene Resins Production Line 130KMT (Injection/Yarn/ Rotation Grades)

1 set of Gas Phase • HDPE/LLDPE Total at Production Line 130KMT

• 1 set of Gas Phase

• Linear Low Density Polyethylene Resins (Blown Film/Casting Grades)

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Business Review and Outlook

Reported By: Mark Wu (Vice President of Sales & Marketing Dept.)

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• Rising oil prices drove naphtha hiking.

• • Ethylene prices supported by higher raw materials costs.

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（$/b） （$/MT）
Brent C2 NEA
90 1400
80
1200
70
1000
60
800
50
40
600
2020 2021
30
400
20
200
10
0 0
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Source from: Platts

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EVA Prices Review

EVA Price Trend

EVA 14%~20% CFR CMP

EVA 22%~30% CFR NEA

Ethylene CFR NEA

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4100
3900
3700
3500
3300
3100
2900
2700
2500
2300
2100
1900
1700
1500 2020 2021
1300
1100
900
700
500
300
USD/MT
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Source from: ICIS

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PE Prices Review

PE Price Trend

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HD YARN CFR FEA HD INJ CFR FEA Ethylene NEA
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1300
1200
1100
1000
900
800
700
2020 2021
600
500
400
300
USD/MT
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Source from: Platts
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Business Review of 2018 to Q3, 2021

Comparison of Sales Volume

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300
271
253 256
250
202
200
150
100
50
0
2018 2019 2020 2021 Q1~Q3 Unit: KMT
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Q1~Q3 of 2020 & 2021 Sales Volume Comparison

Jan.~Sep., 2020 Jan.~Sep., 2021 Variance Total 197,925 201,787 +3,862

Unit：MT

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• China new EVA capacity gradually released in Q2 coupled with cautious buying interest in EVA of PV industry. The surplus of EVA caused market prices start falling in June. In view of seriously lagging behind the installation target in China for H1, Chinese government successively launched stimulus plans made PV demand significantly increased since August. After that the price of EVA started soaring and hit an all-time high in October.

• In Southeast Asia was affected the outbreak of Q3 seriously by

• COVID-19 virus mutation attack which led to the closure of the city resulted in production stagnation thus seriously affected the operation of shoes industries. International OEM factories therefore transferred their orders in response.

• EVA: Sales in the first three quarters of 2021 increased by 14% over the same period in 2020.

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• The of the Texas ice storm in led to a PE impact February tighter supply

• and a sharp rise in PE prices. As the supply recovered in Q2, the prices of PE fell. In Q3, PE prices moved upwards along with the increase of upstream costs.

• HDPE: Due to the slowdown of the epidemic, our domestic and foreign sales for personal protection equipment market decreased caused sales fell. Sales in the first three quarters of 2021 are 12% lower compared with the same period in 2020.

• LLDPE: Sales volume increased by strengthening sales to downstream clients. Up to Q3 of 2021 it increased by 17% compared with the same in 2020.

• LDPE: Maintain sales to existing customers and OEM by APC. Sales in the first three quarters of 2021 decreased by 8% compared to the same period in 2020.

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Global PV Demand

2010~2021 Global PV Installations

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180 (Est.)
160
150 139
115
120
98 97
90
75
56
60
45
41
28 30
30
18
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
(GW)
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Source from:

1. IHS

2. Wood Mackenzie

3. IEA

4. CPIA

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China EVA Demand

Year	Production	Import	Export	Demand	Self-sufficiency rate (%)
2017	555	1,035	64	1,526	36%
2018	631	976	49	1,558	40%
2019	736	1096	60	1,771	42%
2020	741	1177	54	1,864	40%
2021Q1~Q3	706	852	47	1,510	47%

Unit：KMT

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2000
1800
1600
1400
1200
1000
800
600
400
200
0
2017 2018 2019 2020 2021
(Q1~Q3)
Reference: Chem99,
Production Import Export Demand China Customs Data
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Operation Outlook In 2021

Oil ：

With production under control and global demand gradually recovered, it is estimated that oil prices will continue to stay at high-end next year.

Ethylene ：

In H1 of 2021 the production affected by the unexpected severe cold hit in the USA and the worldwide fixed maintenance in spring caused global supply became tighter. In the second half of this year, there were new production capacity joined in China and South Korea thus supply increased. However, from the end of this year till H1 of 2022 in Taiwan, Japan, and South Korea, there will be another wave of turning around. Thus, it is estimated the ethylene supply may be flat.

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Operation Outlook In 2021

PE & EVA ：

 Global carbon reduction and green energy issues are gradually implemented. Long-term demand of solar energy market is optimistic. However, in the short-term raw materials costs are rising and EVA prices hit a record high that we need to pay attention to the actual PV installation progress and the impact of the successive launch of new EVA production capacity in China and South Korea.  Energy prices getting higher leads the cost of raw materials more expensive coupled with expensive shipping costs and unstable shipping schedules challenges 2022. China has implemented dual control of energy consumption caused downstream power shortages affecting production. In addition, the COVID-19 virus keeping mutated enhances the impact on global economy in short term. Constantly close monitoring customer demand change.

• Promote high-performance EVA products and improve the quality of HD products. Continue developing high-end market customers.

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Gulei Petrochemical Project

• Taiwan and China each holds 50%

• Total investment (Taiwan & China)：30.39 Billion RMB

.

Sales and production of Ethylene, Propylene, Butadiene, Ethylene Vinyl Acetate copolymers (EVA), Ethylene Oxide (EO), Ethylene Glycol (EG), etc.

• 2016/11 Fujian Gulei Petrochemical Co. Ltd. was established.

• 2017/12 Opening ceremony of Fujian Gulei Petrochemical Co. Ltd. was launched.

• 2018/08 Overall design of Gulei Petrochemical Project was approval.

• 2019/05 The Land Usage Proposal and Infrastructure Plan were reviewed.

• 2019/06 Project construction was started

• 2021/03 Test-run of PP item was successfully performed

• 、 、

• 2021/08 Test-run of Steam cracker SM EO/EG item was successfully performed

• 2021/10 Test-run of SBS item was successfully performed

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USI Corporation and Subsidiaries

Consolidated Financial Information

Reporter :Amy Kuo, Manager of Accounting Dept. Date ： 2021.11.24

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USI Corporation Consolidated Statements of Income

			(In millions of NTD, except per share data)	(In millions of NTD, except per share data)	(In millions of NTD, except per share data)	(In millions of NTD, except per share data)
	2021 1/1-9/30	2020 1/1-9/30	YoY%	2020 FY	2019 FY	2018 FY
Sales	52,405	34,627	51.3%	50,201	55,657	60,893
Cost ofgoods sold	39,883	28,733	38.8%	39,721	48,924	55,098
Gross profit	12,522	5,894	112.4%	10,480	6,732	5,795
grossprofit ratio	24%	17%		21%	12%	10%
R&D expenses Selling and administrative expenses	3,297 319	2,225 260	48.2% 22.5%	3,221 363	3,385 416	3,440 422
Operating income	8,906	3,410	161.2%	6,896	2,932	1,933
operating income ratio	17%	10%		14%	5%	3%
Non-operating income(loss)	448	89	400.5%	227	434	597
Income before income taxes	9,354	3,499	167.3%	7,123	3,366	2,530
Income taxes	1,984	765	159.2%	1,440	820	654
Net income	7,370	2,734	169.6%	5,683	2,545	1,876
net income ratio	14%	8%		11%	5%	3%
Net income attributable to
- USI Corporation	3,600	1,113	223.6%	2,410	1,281	540
- non-controlling interests	3,770	1,621	132.5%	3,273	1,264	1,336
Basic Earnings Per Share	3.36	1.04		2.25	1.19	0.50

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USI Corporation

Financial ratio analysis-Consolidated

	2021 1/1-9/30	2020 1/1-9/30	2020 FY	2019 FY	2018 FY
Operating income margin(%)	17	10	14	5	3
Net income margin(%)	14	8	11	5	3
Debt ratio(%)	37	39	37	45	47
Current ratio(%)	199	249	225	222	205
Quick ratio(%)	156	202	185	177	155
Accounts receivable turnover days	44	50	54	52	50
Inventory turnover days	36	43	42	43	45

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Thanks for attending the conference and your kind support.

Company Website：http://www.usife.com.tw

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