USI CORPORATION

(Stock Code：1304)

Investor Conference

2020.05.25

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This presentation includes the Company’s current

information. Any development or adjustments thereof will

be published according to laws, regulations or rulings. The

Company is not obligated to update or revise this

presentation.

The information in this presentation is not for investment

advices.

Disclaimer

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General Information of USI Business Review and Outlook

Finance Information

Q&A

Presentation Outline

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General Information of USI

Reported By: Mark Wu (Vice President of Sales & Marketing Dept.)

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May 26, 1965 Established Date

NT$11,888M (up to Mar. 31, 2020) Capital

476 (up to Mar. 31, 2020) No. of Employees

Individual：NT$11,000M

Consolidated：NT$55,700M Revenue (2018)

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Production Facility

• 4 sets of High-Pressure

Autoclave Production

Lines

Annual

Capacity

• LDPE/EVA Total at

150KMT

Main Products

• Low Density

Polyethylene Resins

(Injection/Film Grades)

• Ethylene Vinyl Acetate Copolymer Resins (Foaming/HMA/PV Grades)

High Pressure LDPE/EVA Plant

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Production Facility

• 1 set of Gas Phase

Production Line

Annual

Capacity

• HDPE/LLDPE Total at

130KMT

Main

Products

• High Density

Polyethylene Resins

(Injection/Yarn/

Rotation Grades)

• Linear Low Density Polyethylene Resins (Blown Film/Casting Grades)

Low Pressure HDPE/LLDPE Plant

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Business Review and Outlook

Reported By: Mark Wu (Vice President of Sales & Marketing Dept.)

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Crude oil / Ethylene Monomer • Ethylene price fluctuated in H1, 2019 due to annual maintenance season

and the influence of crude oil price; the price went down in H2, 2019

due to new capacities. In 2020, ethylene price declines tremendously

due to the outbreak of COVID-19 and down trend of oil price.

Source from: ICIS

0

200

400

600

800

1000

1200

0

10

20

30

40

50

60

70

80

Brent C2 NEA

（$/b） （$/MT）

2019 2020

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EVA Prices Review

Source from: ICIS

300

500

700

900

1100

1300

1500

1700

USD

/MT

EVA Price Trend

EVA 14%~20% CFR CMP EVA 22%~30% CFR NEA Ethylene CFR NEA

2020 2019

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PE Prices Review

Source from: Platts

300

400

500

600

700

800

900

1000

1100

1200

USD

/MT

PE Price Trend

HD YARN CFR FEA HD INJ CFR FEA Ethylene NEA

2020 2019

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EVA Business Review：Q1-Q3, 2020

• COVID-19 went viral globally and made market demand strangled. The

outbreak started in China after Chinese New Year and cities were imposed on

lockdown, which delayed the start of operation. The outbreak in China came to

be under controlled so the production resumed gradually in March. However,

the epidemic raged in Europe, the US, and Japan one after another. Overall, the

trade and economy decreased tremendously due to low production and the

restriction of transportation.

• In March, the oil price war between Saudi Arabia and Russia broke out.

Disregard of the declined oil demand, Saudi Arabia cut the price and increased

the production. The price war led to severe imbalance of supply and demand

and a new low level of oil price.

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EVA Business Review：Q1-Q3, 2020

• The postpone of the Olympic games in Tokyo, the closing down of the

footwear brands stores, the pulled off orders of the shoes outsourcing

manufacturers, and the laying off of the workers were the factors made

foam grade EVA market shrink significantly.

• Solar grade EVA and hot melt grade EVA users put off the orders

delivery during the outbreak after Chinese New Year. The demand

became dull. Users tended to use feedstock inventory instead of placing

new orders.

• The sales volume of Q1, 2020 decreased by 11% comparing to that of

Q1, 2019.

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LDPE/HDPE/LLDPE Business Review：Q1-Q3, 2020

• Due to the outbreak of COVID-19, crude oil and ethylene prices dropped

significantly. The price trend of HDPE / LLDPE / LDPE went downward

correspondingly. Only the HDPE demand in domestic market was not affected by

the outbreak.

• HDPE: the demand of export market declined while the domestic demand increased. The sales volume of Q1, 2020 decreased by 2.16% comparing to that of Q1, 2019.

• LLDPE: In order to maintain only regular customers, a price system implemented to balance supply and demand. The sales volume of Q1, 2020 decreased by 20% comparing to that of Q1, 2019.

• LDPE：Very limited quantity to supply to regular customers. The OEM production was provide by affiliated company APC. The sales volume of Q1, 2020 decreased by 8% comparing to that of Q1, 2019.

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Source from :

1.IEA (International Energy Association)

2.Energy trend

3.IHS

4.Bloomberg New Energy Finance

Global PV Demand

18

28 30

41 45

56

75

98 97

115 115

0

30

60

90

120

150

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

2010~2020 Global PV Installations

(GW

)

(est.)

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China EVA Demand

Year Production Import Export Demand Self-sufficiency rate

2015 340 892 52 1,110 30%

2016 420 940 60 1,300 32%

2017 555 1,035 64 1,526 36%

2018 631 976 48 1,558 40%

2019 736 1079 60 1,782 41%

2020 (Q1) 192 269 11 450 43%

0

200

400

600

800

1000

1200

1400

1600

1800

2015 2016 2017 2018 2019 2020 (Q1)

Production Imp. Exp. Demand

Unit: KMT

Reference: Chem99,

China Customs Data

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EVA Export Sales by Area

2019 2020 Q1

CHINA/HK 78%

SOUTH EAST ASIA 17%

TAICHUNG FREE TRADE

ZONE 2%

OTHER 3%

CHINA/HK 68%

SOUTH EAST ASIA 27%

INDIA 1%

OTHER 4%

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HDPE Export Sales by Area

2019 2020 Q1

CHINA/HK 61%

SOUTH EAST ASIA 18%

MEXICO 13%

OTHERS 8%

CHINA/HK 70%

SOUTH EAST ASIA 15%

MEXICO 13%

OTHERS 2%

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Business Outlook of 2020 Crude oil：

After petroleum exporting countries raised the production and the outbreak of

COVID-19, the oil price went down swiftly. For the being, it is on a rational price

level. However, the recovery of demand and the prospect of global economy may

not be optimistic. It will lead to a conservative outlook for oil price in 2020.

Ethylene：

In H1, 2020, the ethylene demand is suppressed due to COVID-19 outbreak and

low crude oil price. It also affects to lower the ethylene production rate. In H2,

2020, if the epidemic is under controlled and the oil price turns stable, the

operation rate from the upstream to the downstream in the industrial chain can be

raised gradually which is a stimulation to the economy. The ethylene supply is

expected to be stable.

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Business Outlook of 2020 PE & EVA：

While COVID-19 outbreak came to be under controlled in China,

the domestic demand was expanded and the consumption was

stimulated. With the termination of lockdown in other countries, and

the stabilized oil price, the overall demand is expected to come back

slowly.

According to several investigation reports, the equipment

installation for solar energy in 2020 is similar to it in 2019. The

demand of solar grade EVA in 2020 remains steady.

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Business Outlook of 2020 PE & EVA：

Recently, the demand for face masks and other sanitary materials

has increased. The sales momentum of HDPE is expected to extend

till Q2 to meet needs of customers.

Consistently promote niche EVA products. Improve the quality of

HDPE products. Develop markets for high-end applications.

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Gulei Petrochemical Project

Items

Investment

Fujian Gulei Petrochemical Co. Ltd.

Milestone

Ethylene、Propylene、Butadiene、Ethylene

Vinyl Acetate copolymers(EVA)、Ethylene

Oxide(EO)、Ethylene Glycol(EG), etc.

• Total investment (Taiwan and China) :

approximately 30.39 billion RMB

• According to USI Board’s FID (March 2016),

USI will indirectly invest the Gulei Project in

Fujian Province, China, via a third place. The

amount of investment will not exceed NT $ 8

billion. Capital will be in place consecutively

after government’s approval.

Taiwan and China each holds 50 % of

the joint venture company's shares.

• Registration of Fujian Gulei Petrochemical Co. Ltd.

was complete in November 2016.

• Opening ceremony of Fujian Gulei Petrochemical

Co. Ltd. was launched in December 2017.

• Overall design of Gulei Petrochemical Project was

approved in August 2018.

• The land usage proposal was reviewed and approved

by the Gulei Committee in May 2019.

• Basic design of Gulei Petrochemical Project was

approved in July 2019 and completed in Jan. 2020.

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Gulei Petrochemical Project Progress

Equipment installation of

naphtha cracker

Pipeline network installation

of polypropylene process

• Long lead time equipment ordering process reached 100 % completion

• Sub-long lead time equipment ordering process > 99 % completion

• Overall progress of Gulei Petrochemical Project > 60 %

Framework installation of

EO reactor

* Long lead time equipment refers to equipment with a delivery period of more than 1 year; sub-long lead time equipment refers to equipment with a

delivery period of 6 to 12 months.

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USI Corporation and Subsidiaries

Consolidated Financial Information

Reporter :Amy Kuo, Manager of Accounting Dept.

Date : May 25, 2020

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11,356 13,493 -15.8% 55,657 60,893 58,134

9,517 11,933 -20.2% 48,924 55,098 51,007

1,839 1,560 17.9% 6,732 5,795 7,127

16% 12% 12% 10% 12%

762 841 -9.3% 3,385 3,440 3,360

85 111 -23.3% 416 422 389

992 609 63.0% 2,932 1,933 3,378

9% 5% 5% 3% 6%

(103) 147 -169.8% 434 597 108

Income before income taxes 889 756 17.7% 3,366 2,530 3,486

244 173 40.8% 820 654 776

646 583 10.8% 2,545 1,876 2,710

6% 4% 5% 3% 5%

217 253 -14.4% 1,281 540 1,111

429 329 30.3% 1,264 1,336 1,599

0.20 0.24 1.19 0.50 1.06

adjusted 1.04

*Note:Non-operating income(loss) included discontinued operations income(loss)

USI Corporation

Consolidated Statements of Income

YoY%2017

FY

(In millions of NTD, except per share data)

2020

1/1-3/31

2019

1/1-3/31

2018

FY

2019

FY

Sales

Cost of goods sold

Gross profit

gross profit ratio

R&D expenses

Selling and administrative expenses

Earnings per share

Operating income

operating income ratio

- USI Corporation

- non-controlling interests

Net income attributable to

Net income

net income ratio

Non-operating income(loss) *

Income taxes

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Operating income margin(%) 8.7 4.5 5.3 3.2 5.8

Net income margin(%) 5.7 4.3 4.6 3.1 4.7

Debt ratio(%) 43 47 45 47 46

Current ratio(%) 267 208 222 205 237

Quick ratio(%) 212 157 177 155 178

Accounts receivable turnover days 54 56 52 50 48

Inventory turnover days 49 53 43 45 48

2019

FY

2018

FY

2017

FY

USI Corporation

Financial ratio analysis-Consolidated

2020

1/1-3/31

2019

1/1-3/31

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EPS vs DPS

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Thanks for attending the conference and your kind support.

Company Website：http://www.usife.com.tw

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