YL — Investor Presentation 2019

Nov 19, 2019

TW ： 2201

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YULON MOTOR CO., LTD. Investor Conference

2019/11/19

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Disclaimer Statement

1. This document is provided by Yulon Motor Co., Ltd. (the “Company"). Except for the numbers and information included in the Company's financial statements, the information contained in this document has not been audited or reviewed by any accountant or independent expert. The Company makes no express or implied representations or warranties as to the fairness, accuracy, completeness, or correctness of such information or opinions. This document is provided as of the date herein and will not be updated to reflect any changes hereafter. The Company, its affiliates and their representatives do not accept any responsibility or liability for any damage caused by their negligence or any other reasons, nor do they accept responsibility or liability for any loss or damages arising from the use of this document or the information contained herein or anything related to this document.

2. This document may contain forward-looking statements, including but not limited to all statements that address activities, events or developments that the Company expects or anticipates to take place in the future based on the projections of the Company toward the future, and various factors and uncertainness beyond the Company's control. Therefore, the actual results may differ materially from those contained in the forward-looking statements.

3. This document is not and cannot be construed as an offer to purchase or sell securities or other financial products or solicitation of an offer. ‡

4. The copyright of this document is owned by the Company and / or our affiliates and may not be directly or indirectly reproduced, redistributed or forwarded to any other person and may not be published in whole or in part for any purpose.

Copyright © Yulon Motor, All rights reserved.

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Agenda

Agenda Time Speaker - Opening Chen Hsiang Yao – President Financial Results & Future Prospects 10 min Lo Wen Yi – Vice President Chen Hsiang Yao – President Q&A 20 min Lo Wen Yi – Vice President

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Financial Results & Future Prospects

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	2019/1~10 Sales Volume in Taiwan	2019/1~10 Sales Volume in Taiwan	2019/1~10 Sales Volume in Taiwan	2019/1~10 Sales Volume in Taiwan	2019/1~10 Sales Volume in Taiwan	2019/1~10 Sales Volume in Taiwan	2019/1~10 Sales Volume in Taiwan	2019/1~10 Sales Volume in Taiwan	2019/1~10 Sales Volume in Taiwan	2019/1~10 Sales Volume in Taiwan	2019/1~10 Sales Volume in Taiwan
	Brand		Sales volume				Growth rate		Market share %
		Domestic /Imported	2018/1~10		2019/1~10		2019/1~10	Total	**2019/1~10 **	**2018/1~10 **	difference
			Units	Total	Units	Total
	Nissan	Domestic	26,646	28,991	27,740	30,282	4.1%	4.5%	8.1%	7.7%	0.4%
		Imported	2,345		2,542		8.4%		0.7%	0.7%	0.0%
	LUXGEN	Domestic	8,759	8,759	3,565	3,565	-59.3%	-59.3%	1.0%	2.5%	-1.5%
		Imported	0		0		0.0%		0.0%	0.0%	0.0%
	MITSUBISHI	Domestic	39,537	41,259	38,018	39,530	-3.8%	-4.2%	11.1%	11.4%	-0.3%
		Imported	1,722		1,512		-12.2%		0.4%	0.5%	-0.1%
	YULON GROUP subtotal	Domestic	74,942	79,009	69,323	73,377	-7.5%	-7.1%	20.2%	21.5%	-1.3%
		Imported	4,067		4,054		-0.3%		1.2%	1.2%	0.0%
	TOYOTA	Domestic	58,421	99,008	56,332	113,916	-3.6%	15.1%	16.5%	16.8%	-0.3%
		Imported	40,587		57,584		41.9%		16.8%	11.7%	5.1%
	FORD	Domestic	11,197	13,970	13,856	16,754	23.7%	19.9%	4.0%	3.2%	0.8%
		Imported	2,773		2,898		4.5%		0.8%	0.8%	0.0%
	MAZDA	Domestic	0	19,214	0	11,957	-	-37.8%	0.0%	0.0%	0.0%
		Imported	19,214		11,957		-37.8%		3.5%	5.5%	-2.0%
	HONDA	Domestic	29,128	31,657	23,701	25,767	-18.6%	-18.6%	6.9%	8.4%	-1.5%
		Imported	2,529		2,066		-18.3%		0.6%	0.7%	-0.1%
	HYUNDAI	Domestic	8,963	9,524	7,963	9,268	-11.2%	-2.7%	2.3%	2.6%	-0.3%
		Imported	561		1,305		132.6%		0.4%	0.2%	0.2%
	BENZ&BMW	Domestic	0	39,653	0	39,349	0.0%	-0.8%	0.0%	0.0%	0.0%
		Imported	39,653		39,349		-0.8%		11.5%	11.4%	0.1%
	OTHERS	Domestic	4,765	55,858	4,286	51,956	-10.1%	-7.0%	1.3%	1.4%	-0.1%
		Imported	51,093		47,670		-6.7%		13.9%	14.7%	-0.8%
	Total market	Domestic	187,416	347,893	175,461	342,344	-6.4%	-1.6%	51.3%	53.9%	-2.6%
		Imported	160,477		166,883		4.0%		48.7%	46.1%	2.6%

The sales volume in Jan.~Oct. 2019 decreased by 1.6% year on year , The proportion of CKD and CBU cars is about 51% ： 49%. Main factors:(1)The mother plant of the technical cooperation policy support and mass production scale of model make the price of imported cars competitive.(2)The product portfolio of imported cars is diversified and the benefits of new model launch.

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Auto Sales in Taiwan Through the Years

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TIV volume (unit: 10K) Growth rate (%)
60.0 40%
29.6%
50.5
30%
50.0
15.5% 41.4 43.0 43.5 42.3 20%
40.0 35.7 -10.5% 36.8 35.5 37.0 41.1 41.5 (F)
34.2 10%
31.9 31.9 11.9%
28.8
30.0 6.4% 0%
4.3% 4.8%
22.2 1.0%
-0.7%
-3.6% -2.6% [-1.9% ] -10%
20.0
-10.5%
-20%
10.0
-30%
-29.3% -30.3%
0.0 -40%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Jan.~Oct.
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※The heavy trucks are excluded in TIV calculation

1. The sales volume in Jan~Qct. 2019 is 342K units, and 1.6% decrease rate year on year.

2. “Chung-Hua Institution for Economic Research“ and “Taiwan institute of Economic Research” predicted economic growth rate of Taiwan are about 2.33% and 2.4% in 2019 respectively. The “Directorate General of Budget” forecast the economic growth rate of Taiwan is about 2.91% showing the economic grow steadily in 2019.

3. Due to the diminishing effect of the old car replacement subsidy policy, Presidential election, the uncertainties of the Mainland CHINA-US trade war, the overall Taiwan auto market is estimated to be 415K units in 2019, and 1.9% decrease rate year on year.

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Auto Sales in MainlandChina Through the Years
TIV volume (unit: 10K) Growth rate (%)
3,500.0 45.5% 50.0%
3,000.0 32.4% 2,802.8 [2,888.0 ] 2,808.1 40.0%
2,600 (F)
2,500.0 25.3% 30.0%
21.8% 1,930.6 [2,198.4 2,349.2 2,459.8 ] 2,065.2
2,000.0 13.5% 1,806.2 [1,850.5 ] 13.9% 13.9% 20.0%
1,500.0 6.7% 1,364.5 4.3% 7% 4.7% 10.0%
2.5% 3.0%
938.1
-2.8%
1,000.0 879.1 0.0%
721.6
575.8
500.0 -10.0%
-7.4%
0.0 -20.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Jan.~Oct.
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Auto Sales in MainlandChina Through the Years

※The heavy trucks are included in TIV calculation

1. The sales volume in Jan.~Qct. 2019 of Mainland China is 20.6 million units, include 17.17 million units passenger car which is declined 11.0% year on year.

2. “HIS Markit” and “International Monetary Fund” predicted economic growth rate of Mainland China are 6.2% and 6.1% in 2019 respectively. The “People‘s Bank of Mainland China” forecast the economic growth rate of Mainland China is between 6% to 6.5% in 2019 showing steady economic growth in 2019. The main reason is that Mainland China-US trade war has affected corporate investment and consumer confidence, the population growth has slowed down and the housing bubble may expand.

3. Despite the impact of Mainland China-US trade war on Mainland China's economy, tightening environmental protection, and the downward pressure on the implementation of the National Sixth Emissions Standard, It is estimated that the overall auto market in China will reach 26.0 million units, and 7.4% decrease rate year on year.

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Consolidated Comprehensive Income Statements

(NT $ Million)	19Q3		18Q3		Difference	Difference
	Consolidated		Consolidated		Consolidated
	Amount	%	Amount	%	Amount	%
Operating revenue	62,834	100%	65,659	100%	(2,825)	-4%
Gross profit	12,912	21%	14,679	22%	(1,767)	-12%
Operating income	(744)	-1%	2,217	3%	**(2,961) **	-134%
Nonoperating income and expense	1,321	2%	2,152	3%	(831)	-39%
Consolidated income before income tax	577	1%	4,369	7%	(3,792)	-87%
Consolidated net income	(1,122)	-2%	2,947	4%	(4,069)	-138%
Other comprehensive income, net	87	0%	(541)	-1%	628	116%
Total comprehensive income	(1,035)	-2%	2,406	4%	(3,441)	-143%
―Owner of the Company	(2,356)	-4%	1,118	2%	(3,474)	-311%
―Non-controlling interests	1,321	2%	1,288	2%	33	3%
EPS	(1.70)		1.11

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Consolidated Balance Sheets

(NT $ Million)	Amount % 19 Q3 Consolidated	Amount % 18 Q4 Consolidated	Difference
			Consolidated
			Amount %
Current assets Noncurrent assets	239,615 73% 86,851 27%	209,300 68% 96,373 32%	30,315 14% (9,522) -10%
Total Assets ―From TAC ―Excluding TAC	326,466 100% 195,555 60% 130,911 40%	305,673 100% 170,815 56% 134,858 44%	20,793 7% 24,740 14% (3,947) -3%
Current liabilities Noncurrent liabilities	213,562 65% 33,514 10%	195,992 64% 26,621 9%	17,570 9% 6,893 26%
Total Liabilities ―From TAC ―Excluding TAC	247,076 76% 175,339 54% 71,737 22%	222,613 73% 150,903 49% 71,710 23%	24,463 11% 24,436 16% 27 0%
Share capital Capital surplus Retained earnings Other equity	15,729 5% 6,526 2% 45,905 14% 11,229 3%	15,729 5% 6,598 2% 49,239 16% 11,494 4%	0 0% (72) -1% (3,334) -7% (265) -2%
Total Equity	79,390 24%	83,060 27%	(3,670) -4%

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Luxgen marketing events

1.Luxgen new model launch ： URX

(1)Luxgen has been held 「 LUXGEN IDEA TAIWAN 」 on Oct. 22[nd ] ,to convey the creative resilience and cross-border value , and it’s expected to be officially launched in Q4.

(2)The new generation of 5+X models URX, with the practical functions of “multiple crossover”, “one vehicle multi-purpose” and “three generations of sharing”, equipped with the difference, such as: ARD expansion Augmented reality display system.

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Real Estate Development - Xindian

• Progress of real estate development in Xindian

• Commercial district

1.Commercial district has started construction in Q2 2017, diaphragm wall and pile engineering has been completed, and the first floor is now being 。 implemented now

1. According to the resolution of the 10/17 interim board of directors of the company, the commercial district changed the original design shape and only developed the mall. The construction floor and area of the new scheme are still being evaluated internally.

2. Residential area

3. According to the resolution of the 10/17 interim board of directors of the company, suspension of application for construcion, and it will be redesigned according to market demand situation.

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