YGG — Interim / Quarterly Report 2021

Sep 6, 2021

Safety First  Quality  Speed  Teamwork  Excellence 2021 Q3 Online Investor’s Briefing Yeong Guan-KY (1589)

September 7, 2021

Disclaimer

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Outline

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Section One: 公司策略 Business Updates & Strategy

Section One: 公司策略 2021 Q2 Financial Highlights Section Two: Market Trends 營運目標 Section Three: ndix 永冠簡介 App

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Business Updates & Strategy

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Offshore Wind Taiwan Team

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• Offshore Wind Taiwan team (YGG, SRE, J&V Energy, Tianli Offshore Wind) plans to build a new large-scale wind farm development project Formosa 4 and Formosa 5 off Miaoli. The potential total installation capacity is 4.4GW (million kW), which can meet the electricity demand of about 4.5 million homes.

• YGG can gain valuable insights to offshore wind market from the perspective of developers.

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Taichung Plant to Start Production in 2022

• Timeline: Construction started in 2020, targeting trial production by Q2 2022.

• Capacity: 80,000-100,000 tons/year.

• 45K by 2023, 60K by 2024, 80K by 2025

• Advantages:

• Customers nearby (Siemens/MVOW)

• Localization requirements

• Proximity to harbor

• Government incentives

• US Supply Chain Focused

• Capex

• Phase 1: NT$ 5.22bn to reach 45k output

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Taiwan
Strait
Siemens Factory
YG Site
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Received Construction License in mid January 2021. Construction underway per original plans.

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Construction depends on COVID-19 Situation

• Construction starts in 2021. Production to begin in 2023.

• Phase 1: 60,000 tons/year capacity. Onshore Wind, Plastic/Industrial machineries.

• Advantages:

• 968,000 m² site with industrial development potential.

• 8 years tax-free and 5 years halved tax incentives.

• EIA approved, can be developed in stages

• US Supply Chain focused

• Capex: estimated NT$ 2.6 billion for Phase 1

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Total Area
968,000 m²
1 hr drive from 3 nearby sea
距離3個主要港口約1
ports
小時車程
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Thailand’s Board of Investment is reviewing Yeong Guan’s application in due process. Factory design being finalized.

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Outlook for 2021 and Beyond

 Near Term (1-2 years)

• Develop new customers with the global economic recovery

• For 2021, we expect steady demand from Wind and growth from other industries, translating to a 5-10% growth of 185,000194,000 tons output.

• Taichung factory for wind castings: production in 2022

 Mid Term (3-5 years)

• Thailand plant: Construction starts in 2021. Production begins in 2023.

• Capacity reaches 250,000 tons/yr.

 Long Term (5-10 years)

• Sustainable operations & succession planning

• Building upon ESG framework  Corporate social responsibility  Capacity reaches 300,000 tons/yr

出貨噸數預估（千噸） Estimated Shipments (thousand tons)

200 180

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180 176
164
160
152 151
146
140 134
120
100
80
2015 2016 2017 2018 2019 2020 2021E
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2021 Q2 Financial Highlights

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Raw Material increases affect Margin

• Plastic Injection Molding/Industrial machinery demand continues to grow, wind energy demand stable.

• Pig Iron and Steel Scrap costs increased dramatically in Q2 2021.

Gross Margin

Return on Equity

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25% 26% 6%
24% 4% 2%
22% 20% 1% 1%
-1%
11% 2,431 2,488
2,235 1.94 2.11
2,136 2,146 1.82
1.27
1.13
1,130
-1.06
1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21
Revenue NT$ millions EPS NT$ dollar
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2021 Q2 Net Earnings Analysis

Unit NT$ Thousand Operating Interests Other Losses Exchange Interest Fees Income Tax Net Earnings Margin Income Rate Earnings

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Plastics/Industrial Machinery demand grows

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 2021 Q2 Revenue composition: Renewables 46.2%, Plastic Injection 24.5%, Industrial Machinery 29.3%
 Plastic Injection Molding/Industrial Machineries demand grows, while Renewables demand remains steady.
3,000,000 80.00%
70.00%
2,500,000
60.00%
2,000,000
50.00%
1,500,000 40.00%
30.00%
1,000,000
20.00%
500,000
10.00%
0 0.00%
3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21
Renewables Plastic Machines Industrial Machinery Revenue NT$ millions
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2021 Q2 Revenue Analysis

Revenue by Application (%)

Revenue by Currency (%)

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NTD
Industrial EUR 5%
10%
Machinery
29%
RMB
73%
USD
12%
Injection
Renewables
Molding
46%
Machines
25%
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2021 Q2 Income Statement

Unit: Thousand NTD	2Q 2021	1Q 2021	QoQ	2Q 2020	YoY
Revenue	2,234,752	2,145,708	4.1%	2,135,664	4.6%
GrossProfit	450,231	550,607	-18%	465,019	-3.2%
Gross Margin	20%	26%	↓6PP	22%	↓2PP
OperatingExpense	367,676	351,088	4.7%	310,608	18.4%
OperatingIncome	82,555	199,519	-58.6%	154,411	-46.5%
Operating Profit Ratio	3%	9%	↓6PP	7%	↓4PP
NonOperatingItems	40,887	(42,526)	196.1%	68,353	-40.2%
Profit beforeTax	123,442	156,993	-21.4%	222,764	-44.6%
Profit after Tax	140,978	125,705	12.1%	193,094	-27.0%
EPS (Basic $NTD)	1.27	1.13		1.82

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2021 H1 Balance Sheet

Unit: Thousand NTD	1H 2021	2020	Δ %	1H 2020	YoY
Total Assets	17,213,984	16,394,386	5.0%	13,636,832	26.2%
Cash	1,923,082	2,682,852	-28.3%	1,581,766	21.6%
NR & AR	3,526,949	3,516,934	0.3%	2,707,002	30.3%
Inventory	1,689,744	1,324,434	27.6%	1,354,009	24.8%
Total Non-Current Assets	7,940,468	6,980,605	13.8%	6,516,012	21.9%
Total Liabilities	8,239,555	7,630,444	8.0%	6,118,893	34.7%
Bank Loans	4,087,388	3,498,085	16.9%	4,160,440	-10.3%
NP & AP	1,837,982	1,646,381	11.6%	1,069,589	71.8%
Total Equity	8,974,429	8,763,942	2.4%	7,517,939	19.4%
Common Stock	1,106,175	1,106,175		1,056,175

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Market Trends

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Global Warming for 30 years

 United Nations reports: global average temp to increase by 1.5 Celsius. Extreme weather events more common.

• This report will be reviewed again at COP26 held in Glasgow, UK in November. Countries are expected to further limit emissions in order to control global warming to within 1.5 Celsius.

Source: UN, IPCC

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US Wind Market Developments

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 In 2020, US installed 17 GW of new wind energy, expects to add 21 GW more in 2021

Various States declares 2030 wind energy installation targets: New York 30 GW, California 30 GW, Virginia 12 GW, New Jersey 12 GW, Maryland 12 GW

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 Biden Administration: Achieve net zero greenhouse gas emissions by 2050. By 2030, reduce greenhouse gas emissions by at least 50% compared to 2005 levels

• Build 30 GW of Offshore Wind by 2030

• US Department of Energy to spend USD 3 billion on offshore wind development

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US Wind Market Developments

• Fmr. Pres. Trump’s 25% tariffs against Chinese Wind castings still in effect.

• YGG Taichung will be an strategic supplier for wind assembly plants in US (GE, SGRE, Vestas)

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Source: PIIE

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EU Wind Market Developments

• EU announces Fit for 55 Plan (reduce GHG emissions 55% by 2030)

• Plan includes raising renewable energy in the overall electricity mix from 32% to 40%

• EU current renewables is 180 GW, but 451 GW is needed by 2030. Growth is 30 GW/year.

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Carbon Neutrality by 2050

 International Energy Agency forecasts huge growth in renewables to reach 2050 goal

• If governments increase wind investments, wind market can reach 160 GW/year by 2025

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EU and US demand grows/Transport Constraints

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 EU/US/Japan demand for Plastic Injection molding and industrial machinery castings remain high  Delta variant causes congestion at major Asian-Pacific sea ports.

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PMI in mainland China / Iron Ore Market Trend

• Mainland China’s PMI sees downward trend in recent months,

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Appendix

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Yeong Guan Overview

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 Nearly half a century in the foundry industry
 Founded in Taiwan in 1971, investing in China since 1992. Now with 6 factories. Design Casting
 Around 2,500 employees
 2020 Revenue reached NT$ 8.18 billion, with 176,000 tons of castings shipped Total
Assembly Machining
Solution
 Annual capacity of 200,000 tons
 Lead the Industry in Environment, Health and Safety (EHS) Best
Welding Painting
Practices
 Several of our plants have earned recognition from local regulatory authorities.
 EHS qualification is required to gain long-term order flows from Tier 1 MNCs.
Renewables
 The installation of high standard, environmental friendly equipment enhances our
cost-competitiveness
 The 7th Corporate Governance Evaluation Score
 Ranked amongst the 66%~80% percentile for listed companies.
 Amongst electrical machinery stocks with market value of NTD 5 billion to NTD 10
billion, we rank in the 61%~100% percentile.
Plastic Industrial
Injection Machinery
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Historical Income Statement

NT$ Million	2016	2017	2018	2019		2020	2021 Q2	2020 Q2	YoY(%) 2017 2018 2019 2020 2021 Q2 vs 2020 Q2 -13.2 -3.2 27.5 3.6 4.6 -40.8 -42 65 30.6 -3.2 -74.2 -183.1 186.5 157.1 -46.1 -74.2 -167.8 195.3 182.4 -44.8 -74.1 -206.2 159.9 215.2 -26.9 -73.2 -208.8 162.1 212.3 -30.2
Sales Revenue	7,374	6,404	6,196	7,900		8,184	2,235	2,136
Gross Profit	2,419	1,432	831	1,371		1,790	450	465
Operating Profit	1,144	295	-245	212		545	83	154
Income before Tax	1,325	342	-232	221		624	123	223
Net Income	997	258	-274	164		517	141	193
EPS (NT$)	8.5	2.28	-2.48	1.54		4.81	1.27	1.82
Key financial ratio (%	)
Gross Margin	33	22	13	18		22	20	22
Operating Margin	16	4	-4	3		6	3	7
Net Margin	13	4	-4	2		6	6	9
OPEX ratio	17	18	17	15		16	17	15

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Historical Balance Sheet

NT$ Million	2016	2017	2018	2019	2020	2021 H1	2020 H1		YoY(%)	YoY(%)	YoY(%)	YoY(%)	YoY(%)
									2017	2018	2019	2020	2021 H1 vs 2020 H1
TOTAL ASSETS	15,052	14,483	14,531	13,521	16,394	17,214	13,637		-3.8	0.3	-7	21.2	26.2
Cash	4,241	3,316	3,153	1,451	2,683	1,923	1,582		-21.8	-4.9	-54	84.8	21.6
NR & AR	2,186	2,026	2,103	2,947	3,517	3,527	2,707		-7.3	3.8	40.1	19.3	30.3
Inventory	1,261	1,256	1,368	1,226	1,324	1,690	1,354		-0.4	8.9	-10.4	8	24.8
Fixed Asset	5,701	6,279	5,920	5,735	5,756	6,449	5,534		10.1	-5.7	-3.1	0.4	16.5
TOTAL LIABILITIES	4,974	4,768	6,250	5,699	7,630	8,240	6,119		-4.1	31.1	-8.8	33.9	34.7
Bank Loans	619	612	4,584	3,858	4,087	3,733	4,160		-1.1	649	-15.8	-9.3	-1.8
NP & AP	1,098	1,136	1,050	990	1,646	1,838	1,070		3.5	-7.6	-5.7	66.3	71.8
TOTAL EQUITY	10,078	9,715	8,281	7,822	8,764	8,974	7,518		-3.6	-14.8	-5.5	12	19.4
Common Stock	1,188	1,188	1,116	1,056	1,106	1,106	1,056		0	-6.1	-5.4	4.7	4.7
Book value per share	82.3	79.3	72.9	72.5	79.2	81.1	71.2
A/R turnover days	116	121	123	117	145	148	159
Inventory turnover days	98	99	97	78	76	86	92
A/P turnover days	82	82	74	57	75	94	70
ROE (%)*	9.8	2.8	-3.2	2.1	6.3	3.1	1.1

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• ROE: Parent company Net income / average common equity

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Quarterly Income Statement

NT$ Million	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21	2Q21
Sales Revenue	1,552	1,951	2,168	2,229	1,130	2,136	2,431	2,488	2,146	2,235
Gross Profit	218	304	390	459	127	465	582	616	551	450
Operating Profit	(38)	47	105	99	(111)	154	290	212	200	83
Income before Tax	(102)	35	101	186	(128)	223	267	262	157	123
Net Income	(106)	19	80	172	(113)	193	207	230	126	141
EPS (NT$)	(1.00)	0.18	0.75	1.62	(1.06)	1.82	1.94	2.12	1.13	1.27
Revenue by Application (%)	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21	2Q21
Renewable Energy	43.3	47.9	59.4	66.6	60.7	67.0	72.8	67.4	60.3	46.2
Injection Molding Machine	26.9	24.3	16.7	14.6	17.7	14.1	11.7	14.4	18.4	24.5
Industrial Machinery	29.8	27.8	23.9	18.8	21.6	18.9	15.5	18.2	21.3	29.3

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Thank you for your consideration!

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Investor Relations Kevin Tsai Office : +886 02 27917198 ext: 17 E-mail : ir@ygget.com

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www.ygget.com

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