Winmate — Investor Presentation 2021

Apr 6, 2021

WINMATE INC Enabler of Enterprise Mobility 3416 TT INVESTOR PRESENTATION April 2021

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, mobile, rugged solutions made for the most challenging industrial conditions worldwide.

2020 Total sales: USD65m 2020 Gross margin: 35% 2020 ROE: 12%

Market Cap: USD180m

2020 Net cash: USD35m Net cash to equity: 46%

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

400+ Employees Worldwide 150+ R&D Engineers

EXECUTIVE SUMMARY

Winmate to undergo multi-year growth from Enterprise Mobility trend 2020 was a big year for us, as we garnered two of the biggest rugged tablet orders from two tier-one clients. That solidified us as one of the key enabler of Enterprise Mobility, and a key rugged tablet solution providers in the market. We aim to achieve 20-30% revenue growth per annum for the next few years as we continue to gain market share through the prevalence of Enterprise Mobility. We aim to become the #1 rugged tablet solution provider in the world. 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 is key. High growth, High net cash to equity, Robust dividend policy While we aim to achieve 20-30% revenue growth per annum for the next few years, we also have strong balance sheet – 2020 net cash to equity is 46%. We are also committed to return our earnings back to our shareholders. We have paid out an average of 103% (including retained earnings) in that past 5 years. We expect our payout ratio to be around +75% going forward.

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A G E N D A

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Key concept: Enterprise Mobility Industry Outlook

Who we are & What we do Growth Strategy Commitment to Sustainability Financial Performance

ENTERPRISE MOBILITY

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KEY CONCEPT: ENTERPRISE MOBILITY

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01

Enterprise Mobility is an approach to work in which employees can do their jobs from anywhere using a variety of devices and applications.

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Commonly refers to the use of mobile devices, such as smartphones and tablets. 02

MORE MOBILITY NEEDED FROM THE INDUSTRIAL SPACE

Early adaptors of Enterprise Mobility in the industrial space include Utilities, Mining, Oil & Gas, and Field Service industries due to their widely dispersed 03 workforce. Rugged tablets became one of their best tools due to mobility. More and more manufacturing companies are using rugged tablets for even more mobility on the production line, warehouse, service center. It is 04 also part of smart manufacturing transformation.

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INDUSTRY OUTLOOK

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RUGGED TABLET OFFERS THE MOST MOBILITY IN ENTERPRISE MOBILITY

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• We only look at the industrial segment (Global rugged display market) under Enterprise Mobility, the market size is about USD7.5bn, growth is about 6-7% per annum.

Rugged Tablet & Rugged Notebook

• The Global rugged display market encompasses rugged display, rugged PDA, rugged tablet, and rugged NB;

• Within the industrial space, the trend of Enterprise Mobility is causing a demand shift towards rugged tablet and rugged NB, from stationary products such as rugged display and Embedded PC;

• Especially we see the shift towards rugged tablet;

Source: Market study report, Winmate estimates

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ENTERPRISE MOBILITY – RUGGED TABLET THE BIGGEST BENEFICIARY

US$1bn

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Rugged Tablet Market

• We expect double-digit YoY growth within the rugged tablet segment and could double in 5 years ;

• • While our overall sales is expected to grow at around 20-30% per year on the back of Enterprise Mobility , in addition to market share gain vs Japanese peers ;

US$2bn

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2021

2025

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WHO WE ARE & WHAT WE DO

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WHAT IS RUGGED TABLET?

• Rugged tablets are designed to withstand hard knocks, long drops, high or low temperatures, moisture, dust and more, some are even designed to withstand explosion (for oil rigs, military usage) , yet still provide a great user experience at the same time.

• Rugged tablets have been put through rigorous testing to make sure they can survive the extreme conditions. A few examples of mission critical usage: Oil and Gas, marine, military, aerospace, medical, etc.

• While production line, field services, logistics, warehouse, use other types of rugged tablets.

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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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SALES BY PRODUCT TYPE

SALES BY BRAND (2020)

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NT$m Industrial Display / Rugged Display
Rugged Tablet / Embedded Computing
Others
1,846
2,000 1,666
1,565
14%
15%
1,500 18%
1,000
82%
82%
78%
500
4%
4% 3%
0
2018 2019 2020
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2020 SALES BY REGION

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15% 39% ASIA 8% EUROPE 35% TAIWAN AMERICAS 3% OTHER REGIONS

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2021 FOCUS INDUSTRIES & MARKETS

25% Warehouse & Logistics

Vehicle Diagnostics 31% Electric Vehicles

Field Service Heavy Duty Vehicles 20% Oil & Gas/ Public Safety

10% Industrial Automation

Healthcare 7% Applications

7%

Military/ Marine/ Aviation

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GROWTH STRATEGY

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OUR RUGGED SOLUTIONS ARE GAINING MOMENTUM

• Opportunities in Enterprise Mobility – Companies, manufacturing facilities, even mission critical industries are all collecting Big Data.

• Rugged tablet is the best way for data collection due to mobility. Continue to attack key verticals where we have market-ready solutions.

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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WHY CUSTOMERS CHOOSE WINMATE

Client-centric design philosophy yields accurately defined products

In-house lamination process to ensure best touch module quality

Different from traditional R&D led design, our design philosophy is based on what the end client needs (the process is 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.

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, design team sunlight, dustproof, waterproof, explosions, etc.

Talented Software team

To enable our products to connect seamlessly to other IoT industrial applications

System Integration Experience

Design our rugged mobile devices as a part of a larger system

Own lab to simulate tests for certifications

Decrease time to market when we can perform all the tests to ensure product certification by third parties goes smoothly

Manufacturing capability

We hold multiple production certifications needed to manufacture embedded systems and rugged products such as ISO 9001, 13485, 14001, IECQ QC80000, ATEX IECEx C1D2, etc. In-house developed testing program to ensure high product quality

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OUR NEXT STEP: VENTURING INTO RUGGED NOTEBOOK

Oligopoly industry dynamic Total addressable market is about USD2.5-3bn

We know this market – Some of our rugged tablet customer base overlaps with that of rugged notebook

We already own rugged notebook design knowhow, including rugged exterior design, thermal, internal structure, testing and certifications

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COMMITMENT TO SUSTAINABILITY

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CONTINUED ESG EFFORTS

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Materials Sourcing:

• Adopted IECQ/QC 080000:2017 Hazardous Substance Management System

• Comply with RoHS, REACH and regulations of SVHC

• Prohibit use of conflict materials

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Supply Chain Management:

• Supplier evaluation system implemented

• Follow the Code of Conduct of the Responsible Business Alliance (RBA)

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Customer Privacy Protection:

• Regularly conduct annual customer satisfaction surveys to ensure that we judiciously incorporate feedback and maintain strong relationships.

• Vigilant in protecting customer privacy and customer information.

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Green Manufacturing:

• Adopt ISO 14001:2015 Environmental Management System Certification and ISO 14064 Greenhouse Gas Inventory

• CO2 emission intensity has decreased 16.28% in 2019 compared to the base year in 2016.

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CO2e (ton) CO2e/Revenue (ton/NT$mn)
850 0.559 0.567 1
0.505 1
0.468
1
750 0
0
753 803 790 779 0
650 0
2016 2017 2018 2019
Total Energy Consumption (MWh)
1400 Energy/Revenue(MWh/NT$mn) 0.930
1300
1200 0.880
1100 0.893 0.786 0.830
1000 0.761
0.780
900
0.730
800 1,264 1,230 1,268
700 0.680
2017 2018 2019
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Employee Diversity:

• As of December 2019, the number of employees was 353, with a female ratio of 45%.

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Female Male Female/Male (%)
500 45% 45% 48%
450 44% 46%
400 42% 44%
350 41%
42%
300
40%
250 190 193
200 194 191 183 38%
36%
150
10050 138 131 142 158 160 34%32%
0 30%
2015 2016 2017 2018 2019
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Employee Health & Safety:

• Occupational health and safety committee consists of 10 members, 6 of which are workforce representatives.

• No fatal occupational accidents in 2019, and only two minor incidents.

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FINANCIAL PERFORMANCE

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REVENUES & MARGINS

4Q20 Revenues and Margins

• 4Q20 Revenue reached a record high NT$568m, up 2% QoQ and up 40% YoY.

• 4Q20 Gross margin was 32.3% versus 36.7% in the same period last year.

• Operating margin was 14.8% versus 15.9% in the same period last year.

• Net margin was 12.3% versus 13.4% in the same period last year.

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NT$m Quarterly Revenue Trend Quarterly Margin Trend
600 45% 45.0% 25.0%
450 25%
35.0% 20.0%
300 5%
25.0% 15.0%
150 -15%
0 -35% 15.0% 10.0%
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20
Revenue (NT$m) Growth(YoY) Gross Margin (LHS) Operating Margin (RHS) Net Margin (RHS)
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EARNINGS & GROWTH

4Q20 Earnings and Growth

• 4Q20 Operating Income decreased 5% QoQ and increased 30% YoY to NT$84m.

• 4Q20 Net Income decreased 8% QoQ and increased 28% YoY to NT$70m

• 4Q20 EPS decreased 8% QoQ and increased 29% YoY to NT$0.97.

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NT$m NT$
Earnings & Growth Trend EPS
100 75% 1.50
75 50%
1.00
50 25%
0.50
25 0%
0 -25% 0.00
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20
Operating Profit Net Income to Parent Net Income Growth(YoY) EPS
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CONSOLIDATED INCOME STATEMENT – 4Q20

NT$ million	4Q20	3Q20	4Q19	QoQ	YoY
Net Revenue 568 556 406 2 40
Gross Profit 184 182 149 1 23
Gross Margin 32.3% 32.8% 36.7%
Operating Expenses 99 93 85 6 17
SG&A percent of Sales 17.5% 16.8% 20.8%
Operating Income 84 89 65 (5) 30
Operating Margin 14.8% 16.0% 15.9%
Net Non-Operating Income (Loss) 3 5 (10)
Pre-Tax Income 88 94 54 (7) 62
Income Tax Expense 18 18 (0)
Minority Interest 0 0 0
Net Income to Parent 70 76 54 (8) 28
Net Margin 12.3% 13.7% 13.4%
EPS(NT$) 0.97 1.05 0.75 (8) 29
ROE (annualized) 12.9% 14.6% 10.2%
Depreciation & Amortization 12 11 8
CAPEX 6 6 4

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CONSOLIDATED INCOME STATEMENT – 2020

NT$ million	2020	2019	YoY
Net Revenue 1,846 1,666 11
Gross Profit 645 615 5
Gross Margin 34.9% 36.9%
Operating Expenses 354 343 3
SG&A percent of Sales 19.2% 20.6%
Operating Income 291 272 7
Operating Margin 15.8% 16.3%
Net Non-Operating Income (Loss) 16 15
Pre-Tax Income 308 287 7
Income Tax Expense 52 46
Minority Interest 0 0
Net Income to Parent 256 241 6
Net Margin 13.9% 14.5%
EPS(NT$) 3.55 3.34 6
ROE 11.7% 11.3%
Depreciation & Amortization 40 35
CAPEX 30 488

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CONSOLIDATED BALANCE SHEET – 4Q20

NT$ million		2020/12/31	2020/12/31	2020/9/30	2020/9/30	2019/12/31	2019/12/31
		$	%	$	%	$	%
Cash and Cash Equivalents	426 15 377 14 433 17
Notes and Accounts Receivable, Net	234 8 204 8 194 8
Inventories	443 16 422 16 254 10
Other Current Assets	610 22 566 22 572 23
Fixed Assets	955 35 955 36 487 20
Other Long-term Assets	97 4 94 4 546 22
Total Assets	2,765 100 2,617 100 2,485 100
Notes and Accounts Payable, Net	255 9 214 8 84 3
Other Current Liabilities	296 11 259 10 230 9
Total Non-Current Liabilities	12 0 12 1 12 1
Total Liabilities	563 20 485 19 326 13
Common Stock	724 722 722
Total Equity	2,202 80 2,133 81 2,159 87
Book Valueper Share(NT$)	30.4 29.5 29.9
Key Indices
Current Ratio ( Current Assets / Current Liabilities)	311% 332% 462%
Net Cash to Equity	46% 42% 44%

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FINANCIAL HIGHLIGHTS

NT$m

Annual Revenue Trend

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2,000
10.8%
10.6%
1,750 6.4%
5.1%
1,500
-11.2%
1,250
1,347 1,415 1,565 1,666 1,846
1,000
2016 2017 2018 2019 2020
Revenue Growth(YoY)
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Annual Margin Trend

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20.0% 40.0% 25.0%
38.4%
36.9%
35.3%
34.9%
34.4%
10.0% 35.0% 20.0%
16.3%
15.7% 15.8%
0.0% 30.0% 12.9% 15.0%
11.5%
14.5%
13.7% 13.9%
13.1%
-10.0% 25.0% 10.0%
9.5%
-20.0% 20.0% 5.0%
2016 2017 2018 2019 2020
Gross Margin (LHS) Operating Margin (RHS) Net Margin (RHS)
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NT$

EPS & ROE

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4.00
3.00
11.3% 11.3% 11.7%
9.8%
2.00
7.2%
1.00
3.06 2.18 2.84 3.34 3.55
0.00
2016 2017 2018 2019 2020
EPS ROE
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NT$

Dividend Payout

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20.0% 4.0 160%
15.0% 3.0 134% 120%
113%
10.0% 2.0 98% 80%
92% 90%
5.0% 1.0 40%
3.0 2.5 2.6 3.0 4.0
0.0% 0.0 0%
2016 2017 2018 2019 2020
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Dividend per share

Payout %

INCOME STATEMENT HIGHLIGHTS

NT$ million	2016	2017	2018	2019	2020		YoY (%)	YoY (%)	YoY (%)	YoY (%)	YoY (%)
							2015	2016	2017	2018	2019
Sales Revenue	1,347	1,415	1,565	1,666	1,846		(11.2)	5.1	10.6	6.4	10.8
Gross Profit	517	487	553	615	645		(11.0)	(5.7)	13.6	11.2	4.8
Operating Profit	212	163	203	272	291		(15.8)	(23.0)	24.2	34.2	7.1
Net Non-Operating Income (Loss)	4	(11)	39	15	16		339.7	(397.7)	-	(60.8)	6.2
Pretax Income	216	152	242	287	308		(14.6)	(29.3)	58.7	18.8	7.1
Net Income	184	134	205	241	256		(13.0)	(27.0)	52.4	17.6	6.2
EPS (NT$)	3.06	2.18	2.84	3.34	3.55		(13.1)	(28.8)	30.3	17.6	6.3
Gross Margin	38.4%	34.4%	35.3%	36.9%	34.9%
Operating Margin	15.7%	11.5%	12.9%	16.3%	15.8%
Net Margin	13.7%	9.5%	13.1%	14.5%	13.9%
ROE	11.3%	7.2%	9.8%	11.3%	11.7%

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BALANCE SHEET HIGHLIGHTS

NT$ million	2016	2017	2018	2019	2020		Percent of total assets (%)	Percent of total assets (%)	Percent of total assets (%)	Percent of total assets (%)	Percent of total assets (%)
							2016	2017	2018	2019	2020
TOTAL ASSETS	1,929	2,473	2,502	2,485	2,765		100.0	100.0	100.0	100.0	100.0
Cash	617	1,096	762	433	426		32.0	44.3	30.5	17.4	15.4
NR & AR	120	157	210	194	234		6.2	6.3	8.4	7.8	8.5
Inventory	236	281	289	254	443		12.2	11.3	11.6	10.2	16.0
Fixed Assets	511	496	495	487	955		26.5	20.0	19.8	19.6	34.5
TOTAL LIABILITIES	307	367	405	326	563		15.9	14.8	16.2	13.1	20.4
NP&AP	148	197	182	84	255		7.7	8.0	7.3	3.4	9.2
TOTAL EQUITY	1,621	2,106	2,097	2,159	2,202		84.1	85.2	83.8	86.9	79.6
A/R turnover days	34	36	43	44	42
Inventory turnover days	92	102	103	95	106
A/P turnover days	58	68	68	46	52
Cash conversion cycle	68	70	77	92	97

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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%	5.2%
Capex	49	18	12	488	30
Capex/Sales	3.6%	1.3%	0.8%	29.3%	1.6%

Note: 2016-2019 Yield calculated using market cap on the day prior to ex-dividend date. 2020 Yield calculated using market cap on 2021/2/26.

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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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