IR publication – March 2019

Far Eastern New Century (TWSE: 1402)

1

About FENC

Far Eastern New Century (“FENC”) is a publicly traded company (http://www.fenc.com/?lang=en) in Taiwan with a market

capitalization of approximately US$5 billion. It’s a constituent of the MSCI ESG Leaders Indexes and FTSE4Good

Emerging Index. FENC is also the flagship company of Far Eastern Group and has diversified businesses ranging from

production business, to property development and investments. The production business spans the petrochemical,

polyester, and textiles businesses.

Regarding its production business, FENC aims to expand its green material business by increasing its scale of recycled

products. After expanding its capacities in Taiwan and Japan, FENC has become one of the world’s largest post-consumer

recycled polyester producers. With high quality and speed to market, FENC’s products have been accepted and adopted

by well-known global brands including Coca-Cola, Nike and Adidas.

FENC is a global top-three PET producer in terms of capacity and the leading PET producer in Asia. Currently, FENC has

production sites in Taiwan, China, and Vietnam. From an Asian producer to a global producer, FENC grew via organic and

inorganic growth, including asset acquisitions in the United States in 2018. FENC’s strategy is to strengthen its position as

a leading polyester producer by maintaining long-term client partnerships, upgrading its product mix and enhancing

research and development capabilities.

Currently FENC has total investment properties of 200,000 pings (662,000 square meters) in Taiwan, the majority of which

are located in prime areas of northern Taiwan. The Taipei Far Eastern Telecom Park (Tpark) project in Banqiao, New

Taipei City is one of FENC’s development priorities.

The majority of the Company’s investment portfolio is listed companies on the Taiwan Stock Exchange with proven track

records, including Asia Cement Co., Far EasTone Telecommunications Co., Far Eastern International Bank, Oriental Union

Chemical Co., Far Eastern Department Stores Limited, and Everest Textile Co. Limited, thus providing the Company

consistent dividend and investment income each year.

2

• Company Highlights

• Company Overview

• Strategic Summary

– Production business strategy

– Property development plan

– Dividend policy

– CAPEX

• Financials

• Recent Achievements & CSR

Table of Contents

3

• A constituent of the MSCI ESG Leaders Indexes, FTSE4Good Emerging Index & TWSE CG 100 Index

• Consistent Dividends Payout (refer to page 18)

• Management Efforts on the Production Business (refer to page 7-13)

• With a fully integrated polyester value chain, the combined operating margin of the Production Business turned a loss of

NT$ -2.2 bn in 2012 to a profit of NT$ 4.7 bn in 1-3Q, 2018. The turnaround in operating margin is attributable to:

− Long term client partnerships and a better product mix.

− R&D efforts: The Taiwan in-house R&D center is able to

leverage the vertically integrated production line,

e.g. recycled-PET, and also cooperates with well-known

brand clients to customize specialty products.

− From an Asian to a global producer: FENC grew via organic

growth or acquisitions in order to better service existing clients

locally, such as Coca Cola, Nike, Columbia, and avoid antidumping duties imposed across borders. (refer to page 8)

− Asia’s largest recycled PET producer: FENC has invested deeply in the recycled PET industry for over 30 years.

Capacity expansion starting in Taiwan then Japan to meet strong demand from the brands green missions.(refer to page 12)

• Investment Properties (refer to page 14-17)

• Investments & Others (refer to page 6)

Company Highlights

4

• Year of establishment: 1954

• Employees: 32,089

• Asset allocation as of Sep 30, 2018 (Total assets: NT$ 546 billion / Book value per share: NT$ 37.8 /share)

Business Segments Production Sites Capacity (As of Dec 31 2017)

Pro

du

cti

on

Petrochemical Taiwan & Shanghai PTA: 1.58 mm tons/yr

Polyester

Taiwan,

Shanghai,

Suzhou,

Wuhan,

Japan,

Malaysia

Polymer: 2.07 mm tons/yr

PET: 1.36 mm tons/yr

PSF: 494K tons/yr

Polyester Filament: 92K tons/yr

Others

Nylon 6,6 filaments: 21K tons/yr

PET Sheets: 132K tons/yr

PET films: 20K tons/yr

Recycled-PET(R-PET): 225K tons/yr

Textiles

Taiwan,

Suzhou,

Wuxi,

Vietnam

Yarn: 513K spindles/yr

Knitted Fabrics: 25K tons/yr

Industrial Fabrics: 21K tons/yr

Industrial Yarn: 124K tons/yr

Apparels: 6 mm dozens/yr

Property Various locations in

Northern Taiwan

Total size: 200k pings

(662k sq meters)

Telecom

(Far EasTone)

Integrated service

provider - mobile,

fixed line, ISP, etc.

# of subs: 7.2 mm (As of Dec 2018)

Investment &

Others Cement, retail, financial services…etc.

Company Overview

Company Overview

Production

59%

Property

3%

Investment

& Others (Including

Telecom)

38%

• Revenue breakdown in 1-3Q, 2018

Production

33%

Property

28%

Investment

& Others (Including

Telecom)

39%

5

Strategy Go

Green

Go

Global

Total Solution (Products + Services)

Invest in the

Future

Strategic Summary

Stable

Investment

Income

Transformation

of

Production

Business

Monetization

of

Property

Business

Sound Financials & Stable Dividend Policy

In 2017, 26% of the Production

Business revenues is derived

from green products.

Company Overview

6

Value of Major Investments - Listed Companies

(NT$ million)

Note: 5,353 million shares of FENC common stock were issued and outstanding as of 30 Sep 2018.

Company Overview

Stock code Investees Holdings Book value

(2018.9.30)

Market value

(2019.3.11)

1102 TT Asia Cement 26% 22,155 32,777

1460 TT Everest Textile 26% 1,186 1,460

1710 TT Oriental Union Chemical 31% 6,030 6,901

2606 TT U Ming Marine 0% - -

2845 TT Far Eastern International Bank 16% 6,137 5,858

2903 TT Far Eastern Department Stores 24% 7,374 5,509

4904 TT Far EasTone 38% 28,596 88,951

Total 71,477 141,457

7

A Leading Integrated Polyester Producer

WORLDWIDE TOP 2

Recycled-PET

ASIA PACIFIC TOP 1

Nylon 6,6 Filament

WORLDWIDE TOP 3

PET Resin

ASIA TOP 1

PET Sheet

WORLDWIDE TOP 2

Nonwoven Polyester Staple Fiber

Production business strategy

8

Go Global: From An Asian to A Global Producer

New Capacity Starts

Commercial Run Location Unit

Nameplate Capacity

2017 2018 2019(E) 2020(E)

Petrochemical PTA Taiwan K Tons/year 1,000*

Polyester PET

United States K Tons/year

360

Vietnam 400

R-PET Japan K Tons/year 50

Textiles Fabrics Vietnam K Tons/year 10.8

Apparel Vietnam MM Dozens/year 4

Note : * One old PTA line was phased out while the new PTA line in commercial operations, thus the net increase in capacity is 1 million tons/year.

** The Corpus Christi (CC) JV project with Alpek & Indorama is excluded in the above table. CC JV project with an annual planned capacity of

PET 1.1 MM and PTA 1.3 MM tons has received FTC approval and has completed the acquisition on 28 Dec. 2018 (EST). Each party has the

right to off-take one-third of the capacity and to source its feedstock independently.

• New expansion plans via organic growth or acquisitions:

Production business strategy

• FENC’s production sites: Taiwan, China, Vietnam, United States, Japan and Malaysia.

9

Total Solution (I) : Close Customer Partnerships

Production business strategy

10

Fabric clients Apparel clients

Brands

Filaments

provider

fabric apparel

Pull

Currently: Two way communication partnership with brand clients

Total Solution (II) : From Reaction to Creation

• What’s changed?

– Marketing to brands directly:

1) Pull-through strategy: to

anticipate future trends by creating

innovative filaments

2) “FEX”: FENC’s B2B total solution

brand Award winning innovations

raised its profile amongst brands.

– Scale-up of the downstream

capacity: Vietnam expansion project

is to fill the gap in limited fabric &

apparel capacity

Filaments

provider

Many

fabric clients

fabric

Many

apparel clients

apparel

Brands

Before: One way communication clients decided materials

Push

Production business strategy

(Capacity)

Fabric

Apparel

New

capacity

New

capacity

11

What Differentiates FENC from Peers?

• Vertical integration: the only producer manufacturing from raw material PTA to providing total solution

services to brand clients

• Award winning innovations: modifying polymer “gene” (technology built in) by R&D team and thus

producing textiles difficult for peers to clone. Smart, functional & sustainable textiles.

• Close customer partnerships: chosen as their strategic partners by well-known brands.

Note: 1 Polyester = 0.83 PTA + 0.33 MEG

1 PTA = 0.67 PX + 0.03 acetic acid

1 MEG = 0.6 Ethylene + oxygen + water Production business strategy

Production Business (Smart from the Start : R&D Efforts) Outsourced Feedstock

Green products please refer to page 12

Natural Gas

Food Packaging

Non-food Packaging

Apparel

PTA

MEG

PX

Ethylene

Naphtha

Nylon 6,6 Filament

Nylon 6,6 Flake

Polyester Staple Fiber Non-

Apparel Polyester Filament

• Germanium (鍺觸媒) &

titanium catalyst (鈦觸媒)

PET to replace antimony

catalyst (銻觸媒) PET

• PET heat shrinkable films

• A-PET (Amorphous) sheets

• Nonwoven

−Low melt fibers

−Hygiene

• Industrial use

−Airbag / safety belt

−Tire cord / conveyor belt

PET Resin

Polyester Polymer

TopDry®

12

Go Green: Asia’s Largest Recycled PET Producer

Recycled

bricks

R-PET chips

Shredded &

Cleaned flakes

Post-consumer Bottles

• R-PET market: Strong demand from the brands green missions

• Key milestones for brand supply:

Green products certification:

– Safe for food packaging use

Secure feedstock supply & add new capacity

– Cooperation with Brands & NGOs to collect waste plastic

bottles, e.g. Adidas’s “For the Oceans” program.

– China’s plastic waste import ban began in Jan 2018.

Production business strategy

20

90

225

300

2012 2015 2018 2021(E)

R-PET Annual Capacity (K tons/year)

13

Invest in the Future: Post Consumer Textile Recycling

~ 30% of the

polyester

output

~ 70% of the

polyester

output

Commercial Run From Lab to Trial Run

• FENC® TopGreen® rTex is a world’s first that will be able to recycle the polyester from all types

of post-consumer textiles, including mixed streams.

Note: Video introduction please refer to https://www.youtube.com/watch?v=6rs5Eb2uKN8

Production business strategy

14

New Book Value (Market value using

“fair value model” under

TW IFRS on Sep 30, 2018)

• Total land holdings: approximately 570k pings (1,887k sq meters)

• Investment properties as at Sep 30, 2018: approximately 200k pings (662k sq meters)

Land Holdings Owned by FENC

NT$ 35.3 BN

NT$ 125 BN

Old Book Value Market Value (After future

land development)

Property development plan

After disposing

investment properties

Gain on disposal of

investment properties

(P&L)

Special reserve

Unappropriated earnings

(Balance sheet)

Total distributable

income

15

Banqiao Size: 85,772 pings (283,905 sq meters)

Book value: 60~65% of investment properties

Investment Properties – Major Pieces of Land

a) Land holdings in Taipei City include self-use and investment properties

b) 1 ping = 3.31 sq m = 35.58 sq ft

Taipei City (Note a)

Size: 1,651 pings (5,465 sq meters)

Yilan (SPA resort) Size: 32,035 pings (106,036 sq meters)

Phase I plan: villa concept, around 200 rooms

Hualien Size: 9,446 pings (31,266 sq meters)

Others Size: 9,556 pings (31,663 sq meters)

Property development plan

Taishan & Wugu Size: 16,829 pings (55,704 sq meters)

Tau Yuan City Size: 38,270 pings (128,441 sq meters)

16

Developed area

(2008-2018)

Developing area

(2019-2021)

Developing area

(after 2021)

• Target tenants for commercial office buildings

A smart green campus, with sole property ownership, integrated with residential zones (for sale),

commercial offices (for lease), a medical center, a college, and a hypermarket in the neighborhood

Taipei Far Eastern Telecom Park (Banqiao)

Property development plan

Car Park

South

park

TPKC.D

North

Park

New Taipei City

Library

Residential

III

TPKA

Residential

II

Taiwan

Power

17

• No. 1 commercial office building (TPK-A)

– 11-floor building, with 2 floor underground parking lot

– GFA: 18.7k pings (62k sqm)

– Current tenants: Amazon Web Service (AWS),

Ericsson, Telecom Technology Center, etc.

• No. 1 residential product “California Dream”

– Close proximity to the Far Eastern Hospital MRT

station

– 14-floor building, with 3 floor underground parking lot

– 2 to 4 bedrooms designed for typical Taiwan families

– Sales of phase I in 2009

GFA: 19.3k pings (64k sqm), and around 396 units

ASP at around NT$ 420k/ping (US$ 4k/sqm)

– Sales of phase II in 2016

GFA: around 5.5k pings (18k sqm), or 154 units

ASP at around NT$ 553k/ping (US$ 5k/sqm)

• New A-Mart hypermarket started its

operation in April 2015

Development Plan

2008 - 2018 2019 and After (Planned)

• Commercial office buildings

– TPK-C (FETone IDC center)

11-floor building; GFA of 10.2k pings (33.8k sqm)

– TPK-D (No.2 commercial office building)

16-floor building; GFA of 17.7k pings (58.5k sqm)

The combined land area of TPK C&D: 4.7K pings (15k sqm)

• No. 2 residential product (Residential IV-part 1)

– 27-floor building; land area of 1.5k pings (5k sqm)

– GFA (for sale): 7k pings (23k sqm)

Property development plan

18

Dividends Payout History

Dividend policy

19

• Historically, the maintenance CAPEX

was covered by the depreciation

expense

• Re-expansion period starting from 2010

to grow and transform

• Major new CAPEX items:

From 2010 to 2015

– Production Business: PTA expansion and

energy cost saving projects in Taiwan,

recycled-PET expansion plans in Taiwan and

Japan, nonwoven hygiene products in China,

Nylon 6,6 filament in Taiwan and China.

– Property Business: the office building TPK-A

and the entire infrastructure of the Tpark

From 2016 onwards

– Vietnam expansion plan: to build the 3rd

production site targeting textile products and

PET resins for food packaging.

– U.S. M&A projects: to acquire M&G PTA &

PET assets.

– R-PET expansion plan: to build a new line in

Japan.

– Tpark: the construction of new office buildings

and residential products.

CAPEX – Excluding Telecom Business Segment

CAPEX

5-year

Average

Depreciation:

NT$ 6.5 bn

CAPEX

20

Key Financial Highlights (IFRS-consolidated Base)

(1) EPS is calculated using adjusted outstanding shares (deducting treasury stock). Note:

(NT$ million) YoY

Revenues 61,799 100% 56,374 100% 10% 167,195 100% 217,847 100% 215,856 100%

Profit from Operations 5,018 8% 5,462 10% -8% 13,515 8% 15,434 7% 14,537 7%

1,652 3% 1,061 2% 56% 4,885 3% 4,114 2% 1,874 1%

Interest Expenses-Net (630) -1% (503) -1% n.a. (1,727) -1% (2,119) -1% (2,046) -1%

Gain on revaluation of investment property 128 0% 200 0% -36% 570 0% 1,040 0% 3,269 2%

Others (26) 0% (16) 0% n.a. 1,869 1% (1,577) -1% (1,674) -1%

Consolidated Income before Tax 6,142 10% 6,203 11% -1% 19,112 12% 16,892 8% 15,960 7%

Tax Expenses 704 1% 845 1% -17% 2,861 2% 2,691 1% 3,257 1%

Consolidated Net Income 5,438 9% 5,359 10% 1% 16,251 10% 14,201 7% 12,703 6%

Attributable to:

Shareholders of the Company 3,476 6% 3,600 7% -3% 10,852 7% 8,066 4% 6,308 3%

Non-Controlling Interests 1,962 3% 1,758 3% 12% 5,400 3% 6,135 3% 6,395 3%

EPS (NT$)(1) 0.70 0.72 2.17 1.61 1.26

Depreciation & Amortization 5,249 8% 5,207 9% 1% 15,603 9% 20,513 9% 19,338 9%

EBITDA(Excluding FETone)(2) 8,283 5% 7,779 4% 6,034 3%

Total Assets 546,217 100% 516,766 100% 513,460 100%

Total Debt 280,920 51% 261,227 51% 261,268 51%

Net Interest-bearing Debt 174,697 32% 168,066 33% 160,148 31%

Total Equity 265,297 49% 255,539 49% 252,193 49%

202,181 37% 194,360 37% 190,886 37%

Non-Controlling Interests 63,116 12% 61,179 12% 61,306 12%

Book Value Per Share 37.8 36.3 35.7

Return on Equity 7.3% 4.2% 3.3%

2016

Investment Income(Equity method)-Net

Total Shareholders' Equity of

Parent Company

3Q18 3Q17 1-3Q, 18 2017

(2) EBITDA(Excluding FETone) = Profit from operations(excluding FETone) + Depreciation & Amortization(excluding FETone)

21

Performance by Business Segments

Production Business

Production Business

Note: (1) Investment & Others segment includes investment income (loss) from equity-method investees, i.e. ACC, OUCC, FEIB and share disposal gain (loss), etc.

(NT$ million) 3Q18 3Q17 YoY 1-3Q, 18 2017 2016

Reclassified for Presentation Purposes

Gross Revenue

Petrochemical 17,116 7,415 131% 32,322 30,426 31,401

Polyester 20,404 16,487 24% 52,878 61,970 59,463

Textiles 9,618 9,089 6% 26,412 34,054 33,946

Telecom 21,059 22,865 -8% 64,346 92,070 94,344

Property 1,873 1,427 31% 5,581 7,943 8,896

Investment & Others (1) 3,016 3,944 -24% 9,041 11,039 6,935

Subtotal 73,086 61,227 19% 190,580 237,502 234,986

Inter-company Sales 9,606 3,734 157% 18,458 15,281 17,053

Revenue-net 63,479 57,494 10% 172,122 222,220 217,932

Profit from Operations

Petrochemical 1,202 (62) n.a. 1,346 (1,262) (1,275)

Polyester 853 296 188% 2,727 1,007 693

Textiles 89 369 -76% 587 1,091 1,178

Telecom 3,283 3,735 -12% 10,115 14,216 15,024

Property 189 137 37% 632 760 1,009

Investment & Others (1) 1,014 2,029 -50% 2,890 3,809 158

Subtotal 6,629 6,504 2% 18,297 19,620 16,787

Other Adjustments 69 78 -11% 144 187 (174)

Reclassified Profit from Operations 6,699 6,581 2% 18,442 19,808 16,613

For Reconciliation Purposes

- 1,652 1,061 56% 4,885 4,114 1,874

- Dividend Income 29 59 -51% 42 259 203

Profit from Operations 5,018 5,462 -8% 13,515 15,434 14,537

Investment Income(Equity method)-Net

22

Recent Achievements & CSR

• Issued NT$ 3 billion green bond in 2018 for investing in green projects

• TW (S&P) long-term credit rating: TW A+

• Board independence: Three independent directors

• Remuneration & audit committees: Established separately in 2011 and 2015

• A constituent of the MSCI ESG Leaders Indexes (MSCI ESG Rating – Industrial

Conglomerates: A), FTSE4Good Emerging Index & TWSE CG 100 Index

• FENC has reached Management Level in the Carbon Disclosure Program (CDP).

• CSR report: awarded “Best Report of the Year” by Taiwan Corporate Sustainability Award (TCSA) in 2017

• CSR achievements:

- Awarded “TOP50 Sustainable Corporates”, “Sustainable Water Management Awards”, “Social Inclusion Award”, “Growth

through Innovation Awards” & “Circular Economy Leadership Awards” by TCSA in 2017

- Ranked “One of the Top 50 Large Enterprises of Excellence in Corporate Social Responsibility” by CommonWealth

Magazine in 2017

- Awarded “Excellence Award in CSR Annual Survey Award - Traditional Industries Group by Global Views Monthly in 2017

Environmental

,

Social

&

Governance

• Selected “the 2018/19 TOP10” by ISPO (TopDry® , TopDry® Non-woven & Wind Guard 3D)

• Awarded “the 2016/17 Gold Award” by ISPO in Munich (Dynafeed® )

• Developed 1st 100% bio-polyester shirt made entirely from plants in April 2016

• Awarded “the 2016 Sustainability Winner” by Adidas (ocean plastic recycled project)

• Co-Developed 1st bio-PET bottle with Coca-Cola in 2014

• Awarded “the 2014 Consumer Decides Award” by Nike

• Awarded “the 2013 Apparel Fabric Supplier of the Year” by Puma

• Awarded “2013 Supplier of the Year” by Coca-Cola

• Awarded “2013 Supplier Innovation Award” by Nike

Client

Relationship

&

Green

Leadership

23

For further information, please contact

IR Team, Finance Department

IR email box: IR@fenc.com

Company website: www.fenc.com

Can also be reached as follows,

Carol Wang (886) 2 2733-8000 ext.8537; wang2002@fenc.com

Chialing Chao (886) 2 2733-8000 ext.8470; chialing@fenc.com

Jarvis Liu (886) 2 2733-8000 ext.8492; jarvisliu@fenc.com

Q&A

24

This presentation is prepared by Far Eastern New Century Corporation (the “Company”) and

is solely for the purpose of corporate communication and general reference only. The

presentation is not intended as an offer to sell, or to solicit an offer to buy or form any basis of

investment decision for any class of securities of the Company in any jurisdiction. All such

information should not be used or relied on without professional advice. The presentation is a

brief summary in nature and does not purport to be a complete description of the Company,

its business, its current or historical operating results or its future prospects.

This presentation is provided without any warranty or representation of any kind, either

expressed or implied. The Company specifically disclaims all responsibilities in respect of any

use or reliance of any information, whether financial or otherwise, contained in this

presentation. Neither this presentation nor any of its contents may be reproduced to a third

party without the prior written consent of the Company.

Disclaimer