tongtai machine & tool co. 2015 result analyst meeting

2016 Copyright © Tongtai Machine & Tool Co., Ltd.0

Tongtai Machine & Tool Co.

2015 Result Analyst Meeting

Tongtai Machine & Tool Co.(4526.TW)

Spokesperson -Lu Yen 2016.04


Disclaimer

The forward-looking statements contained in this presentation aresubject to risks and uncertainties and actual results may differmaterially from those expressed or implied in these forward-lookingstatements. Tongtai Machine & Tool Co., Ltd makes no representationor warranty as to the accuracy or completeness of these forward-looking statements and nor dose Tongtai Machine & Tool Co., Ltdundertake any obligation to update any forward-looking statements,whether as a result of new information or future events.


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Agenda

Introduction of Tongtai Group

2015 Financial Report

Future Prospects


Tongtai Group Strategy


Company profile

Mr. Ryozo Yoshii

Founder

Mr. Jui-Hsiung Yen

Chairman

• Established January 9th, 1969

• Japanese founder Mr. Ryozo Yoshii• Capital US$ 85.3M (Dec., 2015)• Date of listing (IPO) September 15th, 2003• Stock code 4526.TW• Chairman Mr. Jui-Hsiung Yen• Employee (Tongtai/Group) 870/2,000 people (Jan., 2016) • Factory locations Taiwan(2), China(1)

• Main products Machining centers, CNC lathes, PCB drilling• 2015 turnover Group: US$ 306M ( rate=1:30)

• HQ location Taiwan Southern Science Park (66,116m²)

• Main products Machining centers, CNC lathes, PCB drilling•Subsidiary Honor/Apec/Quicktech/PCI SCEMM/Anger


The structure of TTG

Tongtai Machine &

Tool Co. Ltd


Global Strategy

2016 Copyright © Tongtai Machine & Tool Co., Ltd.

CNC machining centers

& CNC lathes

• World’s leading provider of Turnkey solutions with various type machines

• Horizontal/ Vertical

machining centers and CNC lathes, horizontal milling and boring machine

PCB

manufacturing machines

• Taiwan / China

• Top 3 in the world (30%)

• Main competitors- VIA (Japan) - Schmoll (Germany)

Competitive position with worldwide manufacturers

75%25%


Main Product of TTG


End user analysis Machine tools- Focus on automotive and aerospace industry (Double A) PCB- Focus on PCB industry and China market

Automotive,

41%

Others, 16%

Electronics,1

4%

Agency &

Dealer, 9%

Aerospace&

Medical, 5%

Mold, 4%

Metal

working, 4%

Machine,

3%

Motorcycle,

2%Motor, 2%

Rim, 0.20%

2015-Group revenue

Electronics,

96%

Automotive,

4%

2015-PCB rev. NT1,067 million

Automotive,

46%

Others,

18%Agency, 10%

Aerospace &

Medical, 6%

Metal

working, 5%

Machine, 4%

Mold,4% Motor, 3%

Electronics,

3% Motorcycle,

2%Rim, 0.30%

2015-Machine tools rev. NT8,122 million

Source: Tongtai Group A/D office


Global ranking in 2014

1stamong Taiwanese machine tool makers

Ranked 41stin the world


Recent Award Records

2011 2012 2013 2014 2015 2016

Top 100 Taiwan Brands Awards(Bureau of Foreign Trade, MOEA)

Potential Taiwan MittelstandAward

Industrial Excellence Award

National Brand Yushan Award

22th Taiwan Excellence Award

24th Taiwan Excellence Award


2015 Financial Results


Sales Revenue Analysis

Unit: million NT$

Others

Anger

Tongyu

PCI

Quicktech

Apec

Honor

Tongtai-PCB

Tongtai-Machine tools



Consolidated Revenue-By product/region

Prod

uct

Lathe, 27%

VMC, 43%

HMC, 11%

PCB, 20%

2014 REVENUE

NT9,074 MILLION

Lathe, 25%

VMC, 37%

HMC, 20%

PCB, 11%Transfer center, 8%

2015 REVENUE

NT9,189 MILLION

Taiwan, , 16%

China, 54%

Asia, 17%

Europe, 9%

America,

3%Others, 1% 2014

Taiwan, 13%

China, 46%

Asia, 13%

Europe, 22%

America,

5%

Others,

1%

2015

Reg

ion



Sales Revenue by Industry

Machine to

ols

PCB

Electronics

96%

Automotive

4%

2014-PCB Revenue NT2,407 million

Automotive,

46%

Others,

18%Agency, 10%

Aerospace&

Medical, 6%

Metal

working, 5%

Machine, 4%

Mold, 4%

Motor, 3%

Electronics, 3%

Motorcycle,

2%

Rim, 0.30%

2015-Machine tools revenue

NT8,122million

Automotive,

55%Agency,

18%

Others, 9%

Rim, 8%

Motorcycle

, 5%

Aerospace&

Medical, 4% Motor, 2%

2014-Machine tools revenue

NT6,668 million

Electronics

96%

Automotive

4%

2015-PCB Revenue NT1,067 million



The reason for higher gross profit: The main products of two new subsidiaries (PCI/Anger) are high gross profit machine types→HMC& Large-sized machines

Unit: Million NT$

Raw

Material,

86%

Labor+ overhead,

14%

Asia

Raw

Material,

67%

Labor+Overhead

, 33%

Europe


Results highlight -Gross profit from operations(Rate )

Gross Profit Margin

Gross Profit


Result highlight-EPS

Unit: NT$


Cash Dividends

Stock Dividends


Consolidate Profit and Loss Statement of 2015


2016 Copyright © Tongtai Machine & Tool Co., Ltd.

Consolidate Balance Sheet of 2015 (Mil, NT$) 2014.12.31 2015.12.31

$ % $ %

Cash 1,282 9% 1,288 9%

A/R 3,958 29% 3,797 26%

Inventories 4,709 34% 4,874 34%

Other current assets 553 4% 380 3%

Property , plant and equipment

2,475 18% 3,144 22%

Other non-current assets 820 6% 879 6%

Total assets 13,797 100% 14,357 100%

Bank loan 3,270 24% 4,167 29%

A/P 2,667 19% 2,294 16%

Other liabilities 1,501 11% 1,483 10%

Total equity 6,359 46% 6,412 45%

Total liabilities and equity 13,797 100% 14,537 100%



Future Prospects


•2nd Tongtai factory is expected to launch in H2,2016

• Continue seeking relevant partners and integrate the resource of the group to grow

•T-TAC activities and expansion

• Set up new bases in developing countries .ex: Iran、India….

• New technology adaption. New market development

• Focus on automotive and aerospace industry

New product

R&D

Business

model

Productivity adjustment

Group

Expansion

Growth strategy of Machine tools department


Laser

Additive Manufacturing

Ultrasonic

Additive Manufacturing (AM) includes laser cladding and laser hardening.

Laser cladding is used to fix the surface of the mold. Laser hardening is able to change the material characteristics for satisfying customers’ needs.

Brittle materials machining, including Sapphire, Zirconia, Ceramic, Glass, Hardened steel.

New Technologies for Satisfying Customers’ Needs


T-TAC expansion plan

TTAC - Shenzhen(2014)TTAC-Thailand (Est. 2016 Q3)

TTAC - Tongtai HQ (2013)TTAC- China HQ (Est. 2017)

TTAC - Switzerland(2015)

TTAC-North China (Est. 2017)TTAC Wuhan- (Est. 2016 Q4)

Product manufacturing

testing

Machining technology

Machine technology

Training

Technology exhibits

Tongtai’s skilled engineers will manufacture the first piece to confirm the client’s specifications.Introducing innovative technologies and added extra functions. T-TAC suggests the most suitable solutions.

Our staff will test current problems, and provide possible solutions.

T-TAC is open for training current clients, potential customers, agents, and affiliated employees to strengthen their abilities.

T-TAC is an excellent platform to launch new products by cooperation with software/hardware suppliers.

Tongtai-Technical Application Center is the realization ofManufacturing Servitization . Customers could get more technicalsupport by using TTAC. TTAC is expanded to all over the world stepby step


First Tongtai open house on Mar.2016

46 machines which were newly developed

in the past two years were demonstrated

More than 1,000 guests visited Tongtai in 2 days


Integrate group resource to focus on automotive industry

OEM Tier1 Tier2 Tier3 Tier4車廠汽配廠 (鑄造廠 / 壓鑄廠 / 鍛造廠)含加工高精度加工廠一般外包廠 JOB SHOP

Tongtai ● ● ● ●

PCI ● ●

ANGER ● ● ●

OEM → 特性特性 ← Tier4管銷費用高管銷費用低產線彈性化低產線彈性化高單機(線)產量高單機(線)產量低加工物少樣加工物多樣材料特定材料不特定加工設備專用性高加工設備專用性低全球性佈局產業聚落供應鏈成員條文一般性驗收條款營運風險高營運風險低計畫性投資接單性投資

操作人員素質高操作人員素質低

售服成本高售服成本低

TTG GROUP VS. 汽車產業供應鏈

汽車供應鏈產業特性

供應鏈

公司

TTG vs Automotive supply chain

The feature of automotive supply chain


It is estimated that the growth of PCB industry in 2016 is conservative. IEK expects the growth rate of global PCB material in 2016 is 1.6%; 2.3% in 2017

Competitive analysis

Focus on low-end customers. Lack of capital. Second-hand machines or some basic machines are acceptable

Focus on middle to low-end customers. Speed is the first priority.The request for precision is not high. Price competition!

High-end customer：semiconductor、FPC、LCD、servo board、ceramic boardMiddle-end customer：automotive、4/6 layer PCB、consumer electronicsLow-end customer：SSB、DSB 、appliance board…(lower precision)

Customers who request for High Quality and Highprecision

Tongtai

VIA、SCHMOLL

Other small Chinese companies

Han’s Laser、Ta Liang、Dar harnq、Anderson

PCB market strategy-By Product


PCB market strategy-By Region

•Take Shenzhen as the center and

expand to other cities

•Rely on the channels of the agency which arranged by the headquarters

•Take Suzhou as the center. The area includes Jiangsu.Zhejiang.Anhui.

Shandong and Northern China

• Provide advanced machine testing opportunities to large-scale Taiwanese company

Taiwan East China

South China

OthersFocus on China and Hongkong-invested company

Technical service

20%10%

65%5%

Focus on Taiwan-invested company

Agency

China(6)

Japan(2)

South east

Asia(1)

Korea(2)

UK(1)

USA(1)

tongtai machine & tool co. 2015 result analyst meeting

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