Winmate — Investor Presentation 2021

Aug 18, 2021

WINMATE INC
Enabler of Enterprise Mobility
3416 TT

2021Q2 INVESTOR PRESENTATION

Notes:

Welcome to Winmate

2021Q2 Results Highlights
Revenue for the quarter reached a record high level of NT$611 million, up 4.5% QoQ and up 64.5% YoY.

Gross margin was 34.3%, maintained at the same level as 1Q21, despite facing component shortage.

Operating income was NT$108 million, up 3.5% QoQ and up 75.7% YoY.

Net income to parent was NT$96 million, up 17.5% QoQ and up 66.9% YoY.

EPS reached NT$1.33.
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Notes:

Sales by Product Type

1H21 Sales by Region

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NT$m
1,846
1,666
1,565
1,196
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Financial Highlights

Chart: Quarterly Revenue Trend

Category	Revenue (NT$m)	Growth(YoY)
3Q19	411.502	0.156898907487897
4Q19	406.279	-0.04813459411841892
1Q20	349.98799999999983	-0.12795788141315534
2Q20	371.45599999999985	-0.16801763160429237
3Q20	555.8249999999997	0.3507224752249082
4Q20	568.256	0.39868415546951746
1Q21	584.698	0.6706229927883246
2Q21	611.139	0.6452527351826325

Chart: Quarterly Margin Trend

Category	Gross Margin (LHS)	Operating Margin (RHS)	Net Margin (RHS)
3Q19	0.3743991523735	0.16307575661843682	0.1466870148869265
4Q19	0.3672451689602467	0.15920586591972521	0.13410242714981577
1Q20	0.38927334651473766	0.1621169868681213	0.15004800164577078
2Q20	0.38442238111647176	0.1651204987939352	0.1551381590282564
3Q20	0.32776863221337665	0.15979310034633223	0.13685602482795842
4Q20	0.32315188928933464	0.14841198333145642	0.12292347111161177
1Q21	0.34306428275793677	0.17813298489134577	0.1399765348949373
2Q21	0.3428647165374819	0.17635431546669428	0.15734063772726026

Chart: Earnings & Growth Trend

Category	Operating Profit	Net Income to Parent	Net Income Growth(YoY)
3Q19	67.10599999999998	60.362	0.340752093467493
4Q19	64.68199999999999	54.483000000000004	-0.21745687488330026
1Q20	56.73900000000001	52.515	-0.08500888594626621
2Q20	61.335	57.627	-0.1644870382184074
3Q20	88.817	76.06800000000001	0.26019681256419586
4Q20	84.336	69.85199999999999	0.28208799074940855
1Q21	104.154	81.844	0.5584880510330381
2Q21	107.777	96.15699999999998	0.6686102000798241

Chart:

Category	EPS
3Q19	0.8400000000000003
4Q19	0.7500000000000003
1Q20	0.7300000000000003
2Q20	0.8
3Q20	1.05
4Q20	0.9700000000000003
1Q21	1.1299999999999992
2Q21	1.33
NT$
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Notes:

Consolidated Income Statement – 2Q21
| NT$ million | 2Q21 | 1Q21 | 2Q20 | QoQ (%) | YoY (%) |
| --- | --- | --- | --- | --- | --- |
| Net Revenue | 611 | 585 | 371 | 5 | 65 |
| Gross Profit | 210 | 201 | 143 | 4 | 47 |
| Gross Margin | 34.3% | 34.3% | 38.4% | | |
| Operating Expenses | 102 | 96 | 81 | 6 | 25 |
| Opex % of Sales | 16.7% | 16.5% | 21.9% | | |
| Operating Income | 108 | 104 | 61 | 3 | 76 |
| Operating Margin | 17.6% | 17.8% | 16.5% | | |
| Net Non-Operating Income (Loss) | (6) | (2) | (2) | | |
| Pre-Tax Income | 102 | 102 | 60 | (1) | 70 |
| Income Tax Expense | 6 | 20 | 2 | | |
| Minority Interest | 0 | 0 | 0 | | |
| Net Income to Parent | 96 | 82 | 58 | 17 | 67 |
| Net Margin | 15.7% | 14.0% | 15.5% | | |
| EPS (NT$) | 1.33 | 1.13 | 0.80 | 18 | 66 |
| | | | | | |
| ROE (annualized) | 17.5% | 14.5% | 10.9% | | |
| Depreciation & Amortization | 14 | 14 | 8 | | |
| CAPEX | 3 | 5 | 12 | | |
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Notes:

Consolidated Income Statement – 1H21
| NT$ million | 1H21 | 1H20 | YoY (%) |
| --- | --- | --- | --- |
| Net Revenue | 1,196 | 721 | 66 |
| Gross Profit | 410 | 279 | 47 |
| Gross Margin | 34.3% | 38.7% | |
| Operating Expenses | 198 | 161 | 23 |
| Opex % of Sales | 16.6% | 22.3% | |
| Operating Income | 212 | 118 | 79 |
| Operating Margin | 17.7% | 16.4% | |
| Net Non-Operating Income (Loss) | (8) | 8 | |
| Pre-Tax Income | 204 | 126 | 62 |
| Income Tax Expense | 26 | 15 | |
| Minority Interest | 0 | 0 | |
| Net Income to Parent | 178 | 110 | 62 |
| Net Margin | 14.9% | 15.3% | |
| EPS (NT$) | 2.46 | 1.53 | 61 |
| | | | |
| ROE (annualized) | 16.5% | 10.5% | |
| Depreciation & Amortization | 27 | 16 | |
| CAPEX | 8 | 18 | |
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Notes:

Consolidated Balance Sheet – 2Q21
| NT$ million | 2021/6/30 | | 2021/3/31 | | 2020/6/30 | |
| --- | --- | --- | --- | --- | --- | --- |
| | $ | % | $ | % | $ | % |
| Cash and Cash Equivalents | 598 | 17 | 838 | 25 | 496 | 18 |
| Notes and Accounts Receivable, Net | 337 | 10 | 333 | 10 | 169 | 6 |
| Inventories | 488 | 14 | 451 | 14 | 377 | 14 |
| Other Current Assets | 961 | 28 | 620 | 19 | 601 | 22 |
| Fixed Assets | 947 | 28 | 952 | 29 | 957 | 36 |
| Other Long-term Assets | 103 | 3 | 92 | 3 | 85 | 3 |
| Total Assets | 3,434 | 100 | 3,286 | 100 | 2,686 | 100 |
| Notes and Accounts Payable, Net | 252 | 7 | 210 | 6 | 186 | 7 |
| Other Current Liabilities | 573 | 17 | 282 | 9 | 438 | 16 |
| Non-Current CB Payable | 482 | 14 | 480 | 15 | 0 | 0 |
| Other Non-Current Liabilities | 18 | 1 | 16 | 0 | 13 | 0 |
| Total Liabilities | 1,325 | 39 | 987 | 30 | 638 | 24 |
| Common Stock | 725 | | 725 | | 722 | |
| Total Equity | 2,109 | 61 | 2,298 | 70 | 2,048 | 76 |
| Book Value per Share (NT$) | 29.1 | | 31.7 | | 28.4 | |
| Key Indices | | | | | | |
| Current Ratio ( Current Assets / Current Liabilities) | 289% | | 456% | | 263% | |
| Net Cash to Equity | 48% | | 41% | | 51% | |
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Dividend Payout & Capex
| NT$ million | 2016 | 2017 | 2018 | 2019 | 2020 |
| --- | --- | --- | --- | --- | --- |
| Net profit | 184 | 134 | 205 | 241 | 256 |
| Dividend Paid | 181 | 180 | 188 | 217 | 290 |
| DPS (NT$) | 3.0 | 2.5 | 2.6 | 3.0 | 4.0 |
| Payout ratio (%) | 98% | 134% | 92% | 90% | 113% |
| Dividend yield (%) | 4.9% | 4.4% | 4.7% | 4.9% | 5.1% |
| Capex | 49 | 18 | 12 | 488 | 30 |
| Capex/Sales (%) | 3.6% | 1.3% | 0.8% | 29.3% | 1.6% |
Note: 2016-2020 Yield calculated using market cap on the day prior to ex-dividend date.
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Notes:

Business Outlook
Strong Order Momentum in Automotive Continues. Orders in Warehouse Logistics and Healthcare will also be Promising

Enterprise Mobility
Rugged Tablet
New Product Line
Outlook
Rapid Multi-Year Growth Trend
Driving Growth in 3 Fast-Growing Verticals (Automotive, Warehouse Logistics and Healthcare)
Entering the Rugged Notebook Market
Confident to Deliver Multi-Year Revenue Growth with Stable Profitability
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Notes:

Winmate to See Rapid Multi-year Growth from The Enterprise Mobility Trend
Key Concept: Enterprise Mobility
Covid-19 has accelerated digital transformation. Enterprise mobility is an essential step in implementing Industry 4.0, edge computing and smart manufacturing, and Winmate’s products allow clients to accelerate the process of rolling out these advanced technologies.

 Rugged Tablet is the Biggest Beneficiary under Enterprise Mobility

Global rugged display market size is about US$7.5bn with growth of 6-7% per annum.
Within the industrial space, the Enterprise Mobility transformation is causing a demand shift towards rugged tablet and rugged NB, from stationary products such as rugged display and Embedded PC.
Winmate expects double-digit YoY growth within the rugged tablet segment and its market size could double in 5 years.

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Notes:

Rugged Tablet: Focus on 3 Verticals
(2021 Target Revenue Mix)

Chart

Category
Vehicle Diagnostics & Electric Vehicles	0.31000000000000016
Warehouse & Logistics	0.25
Healthcare Applications	0.07000000000000002
Other	0.3700000000000001

37%
Other
31%
Vehicle Diagnostics
Electric Vehicles
(including field service, heavy duty vehicles, oil & gas, public safety, industrial automation, marine, aviation, and other)
25%
Warehouse & Logistics
7%
Healthcare
Applications
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Notes:

Rugged Tablet:
Strong Order Momentum in Automotive Continues

Vehicle Diagnostics

8”~14.1”
Ultra Rugged Tablet Series
Received many inquiries of vehicle diagnostics rugged tablets from global luxury car brands

2021
2019

2020
Won a multi-year contract to supply the global service network of a top European car brand
Won rugged tablet orders from a leading global supplier of vehicle diagnostics equipment (will start to ship from next year)
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Notes:

Rugged Tablet:
Orders in Warehouse Logistics & Healthcare are Promising

Warehouse & Logistics

Healthcare

4.3”~13.3”
Medically Certified Rugged Tablet Series
7”~10.1”
Vehicle Mounted Computer Series
Orders for a leading global medical equipment manufacturer to enter mass production

2020

2022
Won a long-term contract to supply rugged tablets to a top US supplier of warehousing and logistics solutions
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Notes:

Entering The Rugged Notebook Market

Rugged Notebook Industry – Oligopoly industry dynamic with a TAM of about US$1.6-2bn.
We know this market – Some of our rugged tablet customer base overlaps with that of rugged notebook.
We already own rugged notebook design know-how for rugged exteriors, heat dissipation, internal structure, testing and certifications.
Will start shipping from 4Q21 and expect to begin contributing to revenue growth from 2Q22.

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Notes:

Confident to Deliver Multi-Year Revenue Growth with Stable Profitability
Revenue Growth
2021: Expect revenue to grow quarter by quarter this year. Aim to achieve a revenue growth of 20-30%, driven by strong demand from the vehicle diagnostics, warehouse logistics, and healthcare industries.
2022-2025: Aim to achieve a revenue growth of 20-30% per year till 2025 on the back of the Enterprise Mobility Transformation and market share gain versus industry peers.
Profitability
2021: Target to maintain gross margin at no lower than 34%, factoring in:
Strong topline growth with greater scale, combining with improved production efficiency
Supply chain remains tight due to structural changes in customers’ inventory policies

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Notes:

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 projected in the forward-looking statements and are subject to several risks and uncertainties what are 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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