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USI CORPORATION
(Stock Code:1304)
Investor Conference
2020.05.25
1/29
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
2/29
General Information of USI Business Review and Outlook
Finance Information
Q&A
Presentation Outline
3/29
General Information of USI
Reported By: Mark Wu (Vice President of Sales & Marketing Dept.)
4/29
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$55,700M Revenue (2018)
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Production Facility
• 4 sets of High-Pressure
Autoclave Production
Lines
Annual
Capacity
• LDPE/EVA Total at
150KMT
Main Products
• Low Density
Polyethylene Resins
(Injection/Film Grades)
• Ethylene Vinyl Acetate Copolymer Resins (Foaming/HMA/PV Grades)
High Pressure LDPE/EVA Plant
6/29
Production Facility
• 1 set of Gas Phase
Production Line
Annual
Capacity
• HDPE/LLDPE Total at
130KMT
Main
Products
• High Density
Polyethylene Resins
(Injection/Yarn/
Rotation Grades)
• Linear Low Density Polyethylene Resins (Blown Film/Casting Grades)
Low Pressure HDPE/LLDPE Plant
7/29
Business Review and Outlook
Reported By: Mark Wu (Vice President of Sales & Marketing Dept.)
8/29
Crude oil / Ethylene Monomer • Ethylene price fluctuated in H1, 2019 due to annual maintenance season
and the influence of crude oil price; the price went down in H2, 2019
due to new capacities. In 2020, ethylene price declines tremendously
due to the outbreak of COVID-19 and down trend of oil price.
Source from: ICIS
0
200
400
600
800
1000
1200
0
10
20
30
40
50
60
70
80
Brent C2 NEA
($/b) ($/MT)
2019 2020
9/29
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
10/29
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
11/29
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.
12/29
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.
13/29
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.
14/29
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
16/29
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%
17/29
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%
18/29
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.
19/29
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.
20/29
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.
23/29
USI Corporation and Subsidiaries
Consolidated Financial Information
Reporter :Amy Kuo, Manager of Accounting Dept.
Date : May 25, 2020
24/29
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
25/29
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
26/29
EPS vs DPS
27/29
28/29
Thanks for attending the conference and your kind support.
Company Website:http://www.usife.com.tw
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