YL — Investor Presentation 2019

Sep 27, 2019

TW：2201

YULON MOTOR CO., LTD.?Investor Conference

2019/09/27

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Disclaimer Statement

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Agenda

Agenda	Time	Speaker
Opening	-	Chien Hui Li –Vice President
Financial Results & Future Prospects	10 min	Lo Wen Yi –General Manager
Q&A	20 min	Chien Hui Li –Vice President Lo Wen Yi –General Manager

Financial Results & Future Prospects

2019/1~8 Sales Volume in Taiwan

The sales volume in Jan.~Mar. 2019 decreased by 16.7% year on year,The proportion of CKD and CBU cars is about 52%:48%. 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

41 (F)

The sales volume in Jan~Aug. 2019 is 271K units, and 4.8% decrease rate year on year.
“Chung-Hua Institution for Economic Research“ and “Taiwan institute of Economic Research” predicted economic growth rate of Taiwan are about 2.06% and 2.12% in 2019 respectively. The “Directorate General of Budget” forecast the economic growth rate of Taiwan is about 2.46% showing the economic grow steadily in 2019.
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 410K units in 2019, and 3.1% decrease rate year on year.

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Auto Sales in MainlandChina Through the Years

2,688 (F)

Jan.~Aug.
The sales volume in Jan.~Aug. 2019 of Mainland China is 16.1 million units, include 13.32 million units passenger car which is declined 12.3% year on year.
“Global Insight” and “International Monetary Fund” predicted economic growth rate of Mainland China are 6.3% and 6.2% 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.
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 26.88 million units, and 5% decrease rate year on year.

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Consolidated Comprehensive Income Statements

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Consolidated Balance Sheets

(NT $ Million)

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Automotive value chain strategy transformation(1/4)

1.Light assets, efficiency
By opening up the model platform and researching and developing energy, we strive for multi-customers, share resources, and scale, reduce R&D and operating costs. Luxgen brand operates in a light asset model, integrating value chain functional units and improving operational efficiency.
(1)Establishing Own-brand and open-platform integration project room is responsible for the coordination and integration of Luxgen brand and open platform value chain, includes:R&D, purchase, manufacture and sale, enhancing communication and operational efficiency.
(2)Implementing HT factory and office, and Luxgen brand lean project, adjust the organizational structure, streamline personnel, driving the competitiveness of Luxgen brand.
2.Comprehensive development，Multi-brand OEM
In response to market demand and economies of scale, Yulon actively carried out the transformation of the value chain strategy, fully open up to win multi-customers, domestic and import orders, and enhance professional OEM services.

Notes:

第一季發表U5/U6 「迎賓座椅」與 M7 第二排獨立雙座「Ottoman 座椅」
第二季發表 S5 GT/GT220
第三季發表全新 5+2人座 URX
第三季至 2020 上半年：二款新電動車 U5 EV+ 與 S3 EV+
2020 上半年推出代號 MBU、全新跨界 SUV

Automotive value chain strategy transformation(2/4)

(1)Adiva OEM
Italian brand ADIVA is a heavy-duty locomotive R&D and sales company, which cooperates with Yulon's professional manufacturing capabilities to improve vehicle assembly quality.
Yulon OEM three-wheel heavy-duty locomotive assembly and mold assembly export and logistics operations, export areas including Europe Italy, Japan, Singapore, Hong Kong, Malaysia and other places, the first batch of heavy-duty locomotives have been exported in Aug. this year.

Notes:

第一季發表U5/U6 「迎賓座椅」與 M7 第二排獨立雙座「Ottoman 座椅」
第二季發表 S5 GT/GT220
第三季發表全新 5+2人座 URX
第三季至 2020 上半年：二款新電動車 U5 EV+ 與 S3 EV+
2020 上半年推出代號 MBU、全新跨界 SUV

Automotive value chain strategy transformation(3/4)

(2)Muse OEM(electric logistics vehicle)
Yulon's professional manufacturing capabilities and multi-brand OEM experience have been commissioned to produce Muse France electric logistics vehicles, and related cooperation business is expected. It is expected to sign the contract in Oct. to carry out the production and sales of French Muse electric vehicles, and the future advancement of Opportunities in European electric car market.

Notes:

第一季發表U5/U6 「迎賓座椅」與 M7 第二排獨立雙座「Ottoman 座椅」
第二季發表 S5 GT/GT220
第三季發表全新 5+2人座 URX
第三季至 2020 上半年：二款新電動車 U5 EV+ 與 S3 EV+
2020 上半年推出代號 MBU、全新跨界 SUV

Automotive value chain strategy transformation(4/4)

3.Luxgen new model launch
(1)The Luxgen URX media preview is held in Sep. 2019, and it’s expected to be officially launched in Q4.
(2)URX combines SUV dynamic appearance with MPV variable space, five-seat/seven-seat and other different product settings, will bring 5+X unlimited life imagination to consumers.

Notes:

第一季發表U5/U6 「迎賓座椅」與 M7 第二排獨立雙座「Ottoman 座椅」
第二季發表 S5 GT/GT220
第三季發表全新 5+2人座 URX
第三季至 2020 上半年：二款新電動車 U5 EV+ 與 S3 EV+
2020 上半年推出代號 MBU、全新跨界 SUV

Real Estate Development - Xindian
Progress of real estate development in Xindian
1.Commercial district has started construction in Q2 2017, diaphragm wall and pile engineering has been completed(as attachment),and the first floor is now being implemented now。
2. At present, the building construction is still under construction, but the internal review are still ongoing. Any major changes are subject to the approval of the Board of Directors.

diaphragm wall engineering
pile engineering

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Credit ratings and outlook

On Sept. 2019, Taiwan Ratings affirmed Yulon Motors ratings and outlook
1.Taiwan Ratings affirmed its 'twA-' long-term and 'twA-2' short-term issuer credit ratings on Yulon Motors.
2.The outlook on the long-term rating is stable.
3. Keep ratings and outlook as same as Jan. 2019.

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