Jinan Acetate Chemical 4763 TT

4Q19 Results Presentation

March 2020

2019 Performance

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ü 2019 was a record year for Jinan Acetate and itis possible that 2020 will be even better.

ü The BOD has proposed an NT$4.7/share cashdividend for 2019 earnings.

ü Record Highs were achieved in the followingareas in 2019:

• Sales of NT$2.2bn, up 25% YoY.• Operating Income of NT$391m, up 141% YoY.• Net Income of NT$330m, up 46% YoY.• EPS NT$6.52, up 34% YoY.• Full year ROE reached 27%.

ü Our utilization rate was 95%.

ü Our acetate flake plant is achieving near peak efficiency in its 3rd year of operation.

ü Selling prices stabilized, raw material input prices normalized.

ü Market share expansion continued as we sold to more clients in new markets.

ü Sales of acetate flake grew 45% YoY to NT$631m.

A Banner Year What Were the Enabling Factors?

2020 May Be Even Better than 2019

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Business Fundamentals are Strong

Sales rose 15% YoY in Jan-Feb, in spite of the negative effects of theCOVID-19. We currently have order visibility through May, and demandremains robust.

We will add 1k tonnes of acetate tow capacity in April & 5k tonnesof acetate flake capacity in June/July. This amounts to an 8%increase in tow capacity and an 25% increase in flake capacity.

Acetate tow selling prices are expected to rise by 2-3% thisyear, while key raw material input prices for wood pulp andacetic anhydride should be stable and below 2019 levels. Wehave locked in our 2020 pricing for wood pulp already.

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Mitigating Factors Regarding the 2020 Outlook

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The Impact of COVID-19

is Uncertain

As part of our 1K expansion of acetate tow capacity, we will shut down ouracetate tow capacity for about 7 working days in April. This may result in areduction of NT$30-40m in revenue that month.

Our plastic flake business for eyeglasses has been negatively impacted.Through February, acetate flake revenue was up 18% YoY, but accountedfor only 20% of total revenue vs 29% in fiscal 2019. Post-CNY resumption ofproduction at colored plastic acetate sheet plants in southeastern Chinawas delayed due to COVID-19. Production has resumed, but eyeglassdemand in the the US and EU could possibly be impacted going forward.

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With countries closing their borders, our ability to ship may be impacted. Sofar, all shipping is normal. If there are disruptions, we may gain businesswithin China.

Some clients could face liquidity shortfalls. However, our clients are mostlystate-owned enterprises, often with monopoly status, and have strongcashflow and healthy balance sheets, we believe this will not be a problem.

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Sales Breakdown

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Acetate Tow, 71%

Acetate Flake, 29%

Jan. through Dec. 2019

Acetate Tow Acetate Flake

Acetate Tow, 75%

Acetate Flake, 25%

Jan. through Dec. 2018

Acetate Tow Acetate Flake

0.0%

10.0%

20.0%

30.0%

40.0%

0.0%

10.0%

20.0%

30.0%

40.0%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

Quarterly Margin Trend

Gross Margin Operating Margin Net Margin*

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NT$m

Revenue and Margin Trend• 4Q19 revenue rose 30% YoY and 8% QoQ to NT$607m, a new record high.

• Gross and operating margins have been trending up since 2Q18, on production efficiency improvements, vertical integration into

acetate flakes, strong top line growth, and stabilization in raw material prices.

• 4Q19 operating margin reached a record high 21.9%, increasing from 17.5% in 3Q19. Gross margin reached a record high 35.2%, the

third quarter in a row above 30%.

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-35%

-20%

-5%

10%

25%

40%

0

130

260

390

520

650

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

Quarterly Revenue Trend

Revenue (NT$m) Growth(YoY)

* Note: On this page, Net Margin numbers exclude the mark-to-market paper gain/loss from the 2Q17 CB issue.

0.00

0.50

1.00

1.50

2.00

2.50

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

EPS*

EPS*

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NT$m

Earnings and Growth Trend

NT$

* Note: On this page, all Net Income & EPS numbers, as well as related growth calculations, exclude the mark-to-market paper gain/loss from the 2Q17 CB issue.

• 4Q19 Operating Income rose 129% YoY and 35% QoQ to NT$133m.

• 4Q19 Net Income rose 54% YoY to NT$97m. 4Q19 EPS was NT$1.93, up 41% YoY. Our Net Income and EPS have shown positive YoY growth for 6 consecutive quarters.

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-100%

-25%

50%

125%

200%

0

40

80

120

160

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

Earnings & Growth Trend

Operating Profit Net Income to Parent* Net Income Growth(YoY)*

Unit: NTD million 4Q19 3Q19 4Q18 QoQ (%) YoY (%)

Net Revenue 607 561 466 8 30 Gross Profit 214 171 133 25 61

Gross Margin 35.2% 30.4% 28.6%Operating Expenses 81 72 75 12 8

OPEX/Sales 13.3% 12.9% 16.1%Operating Income 133 98 58 35 129

Operating Margin 21.9% 17.5% 12.5%MTM Gain (Loss) on CB (non-cash) 5 21 2 Other Non-Operating Income (Loss), Net (4) (20) (1)Pre-Tax Income 133 110 60 21 121 Income Tax Expense 32 5 (1)Minority Interest 0 4 (4)Net Income to Parent 102 102 66 1 56

Net Margin 16.8% 18.1% 14.1%EPS (NT$) 2.02 2.01 1.41 1 43

ROE – not annualized 8.4% 8.9% 5.6%Depreciation 25 25 22CAPEX 52 25 73

Consolidated Statements of Income - Quarterly

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Unit: NTD million 2019 2018 YoY(%)

Net Revenue 2,175 1,739 25 Gross Profit 673 421 60

Gross Margin 31.0% 24.2%Operating Expenses 282 259 9

OPEX/Sales 13.0% 14.9%Operating Income 391 162 141

Operating Margin 18.0% 9.3%MTM Gain (Loss) on CB (non-cash) 0 55Other Non-Operating Income (Loss), Net (13) (7)Pre-Tax Income 378 210 80 Income Tax Expense (47) 14 Minority Interest 2 (1)Net Income to Parent 330 225 46

Net Margin 15.2% 12.9%EPS (NT$) 6.52 4.85 34

ROE 27.0% 18.4%Depreciation 98 87CAPEX 128 190

Consolidated Statements of Income – 2019 vs 2018

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Unit: NT$ million2019/12/31 2019/09/30 2018/12/31

$ % $ % $ %Cash and Cash Equivalents 589 23 408 17 369 16 Notes and Accounts Receivable, Net 438 17 444 18 312 13 Inventories 243 9 272 11 321 14 Other Current Assets 260 10 241 10 232 10 Fixed Assets 827 32 842 34 864 37 Other Long-term Assets 230 9 238 10 219 9 Total Assets 2,586 100 2,445 100 2,317 100

Current CB Payable 457 18 452 18 0 0 Other Current Liabilities 748 29 698 29 529 23 Non-Current CB Payable 0 0 0 0 440 19 Other Non-Current Liabilities 9 0 10 0 56 2 Total Liabilities 1,214 47 1,160 47 1,025 44

Common Stock 511 511 465

Total Equity 1,373 53 1,285 53 1,291 56 Book Value per Share (NT$) 24.7 23.1 25.7Key Indices

Current Ratio ( Current Assets / Current Liabilities) 127% 119% 233%

Net Debt to Equity -5% -6% -14%10

Consolidated Balance Sheet – 2019

免責聲明

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•The information contained in this confidential document ("Presentation") has been prepared by Jinan Acetate Chemical Co., Ltd. (Cayman) (the "Company"). It has not been fully verified and is subject to material updating, revision and further amendment. While the information contained herein has been prepared in good faith, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers gives, has given or has authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision or supplement thereof, or of any other written or oral information made or to be made available to any interested party or its advisers (all such information being referred to as "Information") and liability therefore is expressly disclaimed. Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers takes any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of, the accuracy or completeness or injury of the Information or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this Presentation or the information.

•Neither the issue of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with any transaction and the right is reserved by the Company to terminate any discussions or negotiations with any prospective investors. In no circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent.

•This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient should satisfy itself in relation to such matters.

•This Presentation includes certain statements that may be deemed “forward-looking statements”. All statements in this discussion, other than statements of historical facts, that address future activities and events or developments that the Company expects, are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, continued availability of capital and financing, general economic, market or business conditions and other unforeseen events. Prospective Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in forward-looking statements.

Thank You

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