Winmate — Investor Presentation 2020

Aug 31, 2020

WINMATE INC. 3416 TT INVESTOR PRESENTATION AUGUST 2020

COMPANY SNAPSHOT

Winmate Inc. (3416 TT)

We are a pioneer in rugged mobile computing technology, particularly in rugged tablet. We have provided business leaders with reliable, rugged solutions made for the most challenging industrial conditions worldwide.

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Market Cap: USD150m

2019 Total sales: USD56m 2019 Gross margin: 37% 2019 ROE: 11% 2019 Net cash: USD32m

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50+ Distribution Channels (ODM, OEM, Direct, SI)

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400+ Employees Worldwide 150+ R&D Engineers

EXECUTIVE SUMMARY

2020 is a breakout year 2020 is a big year for us, as we garnered two of the biggest rugged tablet orders from two tier-one clients. This solidifies us as one of the key rugged tablet and display solution vendors in the market, and as a result we have gained a lot of exposure and traction from our potential clients. We aim to achieve 20-30% revenue growth per annum for the next 3 years and our market share to triple in three years.

Continue to attack our key verticals with our market-ready solutions As our economy of scale continues to rise, our plan is to attack aggressively on our key verticals to further enhance our scale efficiency and operating leverage. As most solutions are customized for certain verticals, the use-case from one company to another would be similar, as with all the certifications. Time to market will be fast. High growth, High net cash to equity, Robust dividend policy – While we aim to achieve 20-30% revenue growth per annum for the next 3 years, we also have strong balance sheet 2Q20 net cash to equity is 51%. We are also committed to return our earnings back to our shareholders. We have paid out an average of 103% (including retained earnings) over the past 5 years. We expect our payout ratio to be around +75% going forward.

A G E N D A

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Who we are & What we do Industry outlook Growth strategy Financial Performance

WHO WE ARE & WHAT WE DO

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MILESTONES & TRANSFORMATION

Transforming to an IPC company

Apple launched 1[st] gen iPad

Bid for Mercedes Benz worldwide service centers rugged tablet orders (large quantity) but failed

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2019
2010 2014
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1996 2008 2005 2010 Started out as Touch Winmate was one First major panel (ELO) distributor of the first to breakthrough with in Taiwan successfully Mercedes Benz develop Rugged (small order) Tablet

Five years later, Winmate beat all the vendors and garnered the Mercedes Benz bid for their service centers globally

Garnered many order inquiries after winning this large project

OUR PRODUCTS – TOUCH DISPLAY CENTRIC SOLUTIONS

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Transportation Warehouse & Logistics Vehicle Diagnostics Healthcare
8”~10.1” 7”~10.1” 11.6”~13.3” 4.3”~13.3”
Rugged Tablet Series Vehicle Mounted Computer Series Ultra Rugged Tablet Series Medically Certified
Rugged Tablet Series
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KEY CUSTOMERS

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WHY CUSTOMERS CHOOSE WINMATE

Client-centric design philosophy yields accurately defined products

Different from traditional R&D led design, our design philosophy is based on what the end client needs (led and defined by our Chairman), resulting in product best suited for each niche/specific usage.

Many clients also use our market-ready solutions due to well-defined specs, basically eliminating 1.5-2 years of design process and certification time.

In-house lamination process to ensure best touch module quality

Given that our DNA is from touch panel, we understand the importance of touch module as it is the only human machine interface (HMI) for tablets. Our in-house touch module ensures high standards in touch sensitivity, light transmittance and product longevity.

Modularized functions and features

The most complete line of rugged tablet solutions

Customization is key. We are able to customize features and functions for end customers specific needs and usage, resulting in superior products and faster time to market (faster time to market by 3-6 months)

Our rugged tablet product line ranges from 4.3” to 13.3”. The most complete line in the industry. Suitable for all different types of applications.

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KEY ENTRY BARRIERS IN RUGGED PRODUCTS

Strong rugged In order to meet extreme environmental challenges, such as extreme temperatures, sunlight, dustproof, design team waterproof, explosions, etc.

Talented To enable IoT industrial applications Software team System Integration For Rugged & Industrial Mobile Devices Experience Own lab to Decreases time to market when we can perform all the tests to ensure product certification by third simulate tests parties goes smoothly for certifications We hold multiple production certifications needed to manufacture embedded systems and rugged Manufacturing products such as ISO 9001, 13485, 14001, IECQ QC80000, ATEX IECEx C1D2, etc capability In-house developed testing program to ensure high product quality

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SALES BY PRODUCT TYPE

SALES BY BRAND (2019)

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NT$m Industrial Display / Rugged Display
Rugged Tablet / Embedded Computing
2,000 Others
1,666
1,565
1,415
15%
1,500 18%
18%
1,000
82%
78%
78%
500
4% 4% 3%
0
2017 2018 2019
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2019 SALES BY REGION

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14.5%
42%
ASIA
EUROPE 4%
30%
TAIWAN
AMERICAS
9.5%
OTHER REGIONS
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INDUSTRY OUTLOOK

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ROBUST MARKET SHARE GAIN IN RUGGED TABLET

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In 2019, we occupied 5% of market in terms of shipment
Rugged Tablet Market
20%
Dell, 12% Zebra, 12% Winmate,
5.0%
Getac, 12% 15%
Others, 10%
22%
Panasonic,
37% 5%
0%
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We aim to occupy 15-20% shipment market share by 2022, which could translate into roughly 20-30% revenue growth per annum Winmate Market Share

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2019 2020F 2021F 2022F
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Source: VDC, Winmate Estimates

Source: VDC, Winmate Estimates

GROWTH STRATEGY

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OUR RUGGED SOLUTIONS ARE GAINING MOMENTUM

• Continue to attack key verticals where we already have market-ready solutions

• Enterprise mobility - Look for opportunities in enterprises collecting Big Data. We believe rugged tablet is the best way for data collection.

Industrial Market (Full Rugged & Ultra Rugged)

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Mobile computing for Vehicle Warehouse & Logistics for
Diagnostics (810G/IP65~68) inventory management
Ultra-Rugged Tablet with Rugged Handheld Tablet
Automation Industrial Warehousing Field Service Oil & Gas VIBRATION 4 ft.DROP SHOCK
& Logistics Chemical
(IIOT)
ATEX and C1D2, Zone2
MIL-STD-810G/810F
collecting data in remote
certified rugged design
rig and pipeline locations for Aviation
Food &
Heavy Duty Transportation Public Safety
Beverage
Mission Critical (Military Standard & Medically Certified)
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Marine

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Military

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Healthcare
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Meet the regulatory requirements of the Marine industry (IEC60945/IACS-E10/DNV)

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Military-grade (C1D2/ATEX/461F/810G) for challenging tasks and tough environments

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Healthcare-grade (UL60601/ISO13485) Rugged Tablet

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FINANCIAL PERFORMANCE

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CONSOLIDATED INCOME STATEMENT – 2Q20

NT$ million	2Q20	1Q20	2Q19	QoQ	YoY
Net Revenue 371 350 446 6 (17)
Gross Profit 143 136 166 5 (14)
Gross Margin 38.4% 38.9% 37.1%
Operating Expenses 81 80 91 2 (10)
SG&A percent of Sales 21.9% 22.7% 20.3%
Operating Income 61 57 75 8 (18)
Operating Margin 16.5% 16.2% 16.8%
Net Non-Operating Income (Loss) (2) 9 10
Pre-Tax Income 60 66 85 (9) (30)
Income Tax Expense 2 13 16
Minority Interest 0 0 0
Net Income to Parent 58 53 69 10 (16)
Net Margin 15.5% 15.0% 15.4%
EPS(NT$) 0.80 0.73 0.96 10 (17)
ROE (annualized) 10.9% 9.6% 13.1%
Depreciation 6 6 7
CAPEX 12 5 2

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CONSOLIDATED INCOME STATEMENT– 1H20 vs 1H19

NT$ million	1H20	1H19	YoY (%)
Net Revenue 721 848 (15)
Gross Profit 279 312 (11)
Gross Margin 38.7% 36.8%
Operating Expenses 161 172 (6)
SG&A percent of Sales 22.3% 20.3%
Operating Income 118 140 (16)
Operating Margin 16.4% 16.5%
Net Non-Operating Income (Loss) 8 18
Pre-Tax Income 126 158 (21)
Income Tax Expense 15 32
Minority Interest 0 0
Net Income to Parent 110 126 (13)
Net Margin 15.3% 14.9%
EPS(NT$) 1.53 1.75 (13)
ROE (annualized) 10.5% 12.2%
Depreciation 12 13
CAPEX 18 9

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CONSOLIDATED BALANCE SHEET – 2Q20

NT$ million		2020/6/30		2020/3/31		2019/6/30
		$	%	$	%	$	%
Cash and Cash Equivalents	496 19 457 18 734 27
Notes and Accounts Receivable, Net	169 6 158 6 236 9
Inventories	377 14 286 11 280 10
Other Current Assets	601 22 614 24 911 34
Fixed Assets	957 36 952 38 492 18
Other Long-term Assets	85 3 82 3 53 2
Total Assets	2,686 100 2,548 100 2,707 100
Notes and Accounts Payable, Net	186 7 127 5 196 7
Other Current Liabilities	438 16 215 9 450 17
Total Non-Current Liabilities	13 1 10 0 13 0
Total Liabilities	638 24 352 14 659 24
Common Stock	722 722 722
Total Equity	2,048 76 2,196 86 2,048 76
Book Valueper Share(NT$)	28.4 30.4 28.4
Key Indices
Current Ratio ( Current Assets / Current Liabilities)	263% 443% 335%
Net Cash to Equity	51% 47% 78%

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FINANCIAL HIGHLIGHTS

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NT$m
Annual Revenue Trend
1,800
10.6%
1,600
5.1%
0.1% 6.4%
1,400
-11.2%
1,200
1,517 1,347 1,415 1,565 1,666
1,000
2015 2016 2017 2018 2019
Revenue Growth(YoY)
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Annual Margin Trend

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20.0% 40.0% 38.3% 30.0%
38.4%
36.9%
35.3%
34.4% 25.0%
10.0% 35.0%
20.0%
16.6% 16.3%
15.7%
0.0% 30.0%
12.9% 15.0%
11.5%
14.5%
-10.0% 25.0% 14.0% 13.7%
13.1%
10.0%
9.5%
-20.0% 20.0% 5.0%
2015 2016 2017 2018 2019
Gross Margin (LHS) Operating Margin (RHS) Net Margin (RHS)
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NT$
EPS & ROE
4.00
3.00 12.8%
11.3% 11.3%
9.8%
2.00
7.2%
1.00
3.52 3.06 2.18 2.84 3.34
0.00
2015 2016 2017 2018 2019
EPS ROE
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NT$ Dividend Payout
20.0% 4.0 160%
15.0% 3.0 134% 120%
10.0% 2.0 99% 98% 80%
92% 90%
5.0% 1.0 40%
3.5 3.0 2.5 2.6 3.0
0.0% 0.0 0%
2015 2016 2017 2018 2019
Dividend per share Payout %
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INCOME STATEMENT HIGHLIGHTS

NT$ million	2015	2016	2017	2018	2019		YoY (%)	YoY (%)	YoY (%)	YoY (%)	YoY (%)
							2015	2016	2017	2018	2019
Sales Revenue	1,517	1,347	1,415	1,565	1,666		0.1	(11.2)	5.1	10.6	6.4
Gross Profit	581	517	487	553	615		7.0	(11.0)	(5.7)	13.6	11.2
Operating Profit	252	212	163	203	272		5.9	(15.8)	(23.0)	24.2	34.2
Net Non-Operating Income (Loss)	1	4	(11)	39	15		(97.4)	339.7	(397.7)	-	(60.8)
Pretax Income	253	216	152	242	287		(6.4)	(14.6)	(29.3)	58.7	18.8
Net Income	212	184	134	205	241		(9.1)	(13.0)	(27.0)	52.4	17.6
EPS (NT$)	3.52	3.06	2.18	2.84	3.34		(14.6)	(13.1)	(28.8)	30.3	17.6
Gross Margin	38.3%	38.4%	34.4%	35.3%	36.9%
Operating Margin	16.6%	15.7%	11.5%	12.9%	16.3%
Net Margin	14.0%	13.7%	9.5%	13.1%	14.5%
ROE	12.8%	11.3%	7.2%	9.8%	11.3%

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BALANCE SHEET HIGHLIGHTS

NT$ million	2015	2016	2017	2018	2019		Percent of total assets (%)	Percent of total assets (%)	Percent of total assets (%)	Percent of total assets (%)	Percent of total assets (%)
							2015	2016	2017	2018	2019
TOTAL ASSETS	1,908	1,929	2,473	2,502	2,485		100.0	100.0	100.0	100.0	100.0
Cash	410	617	1,096	762	433		21.5	32.0	44.3	30.5	17.4
NR & AR	133	120	157	210	194		7.0	6.2	6.3	8.4	7.8
Inventory	181	236	281	289	254		9.5	12.2	11.3	11.6	10.2
Fixed Assets	496	511	496	495	487		26.0	26.5	20.0	19.8	19.6
TOTAL LIABILITIES	264	307	367	405	326		13.8	15.9	14.8	16.2	13.1
NP&AP	115	148	197	182	84		6.0	7.7	8.0	7.3	3.4
TOTAL EQUITY	1,644	1,621	2,106	2,097	2,159		86.2	84.1	85.2	83.8	86.9
A/R turnover days	41	34	36	43	44
Inventory turnover days	76	92	102	103	95
A/P turnover days	43	58	68	69	46
Cash conversion cycle	74	68	70	77	93

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DIVIDEND PAYOUT & CAPEX

NT$ million	2015	2016	2017	2018	2019
Net profit	212	184	134	205	241
Dividend Paid	211	181	180	188	217
DPS (NT$)	3.5	3.0	2.5	2.6	3.0
Payout ratio	99%	98%	134%	92%	90%
Dividend yield	6.8%	4.9%	4.4%	4.7%	4.9%
Capex	31	49	18	12	488
Capex/Sales	2.0%	3.6%	1.3%	0.8%	29.3%

Note: Yield calculated using market cap on the day prior to ex-dividend date.

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SAFE HARBOR STATEMENT

The following presentation contains projections and statements related to future business performance developments involving Winmate Inc. that may be seen as forward-looking statements. Actual events and results may differ materially from what is in the statements and are to several risks and uncertainties what are projected forward-looking subject beyond Winmate's control.

The forward-looking statements in this report reflect the views of Winmate as of the date they are made. Winmate Inc. does not intend, nor are obligated to revise or update these forward-looking statements in light of new events or information.

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