presented by kenneth tsao / citibank taiwan may, 2005 客戶關係管理與高科技業融資實務...

Presented byKenneth Tsao / Citibank Taiwan

May, 2005

客戶關係管理與高科技業融資實務客戶關係管理與高科技業融資實務The Practice of Relationship Management &The Practice of Relationship Management &

Hi-tech Industry Financing Hi-tech Industry Financing

http://www.ntu.edu.tw/chinese/PageN.php

http://www.ntu.edu.tw/chinese/PageB.php

Practice of Relationship Management

Organization for Relationship Management

Spirit of Relationship Management

New Development of Relationship Management

Case Study

Practice of Financing Hi-tech Industry – take TFT-LCD as an example

Credit Fundamental & TFT-LCD Industry

Financial Analysis of TFT-LCD Industry

Stress test and Projection

Table of Contents



Loan Corporate Finance

Treasury Cash Trade ECM, DCM and M&A

Global Accounts High Low Medium High Medium Low

Local Large Corporate High High High High High High

Middle Market Medium Medium High High High Low

Financial Institution Medium Medium High Medium Medium High

Corporate & Investment Bank Organization

Customer Group V.S. Product Groups



Contact Window between Bank and Customers

Four Major functions:

Customer Satisfaction / Service

Credit Monitoring / Decision

Business Origination / Execution

Cross-Selling Bank’s Products




Customer Satisfaction/Service -- I

Information Collection:

Newspaper, Stock Price, Magazines...

Clients’ Financials/Trend

Research Reports...

Industry Information...

Promotion, Personnel

Corporate culture

Peers cross checking, competitors information…

Wallet size, Share of Wallet, Share of mind



Customer Satisfaction/Service -- II

Actions:

Identify Key Decision Makers.

Phone Call, Lunch/Dinner, Golf...

Be familiar with Key Decision Makers: family, birthday, hobbies, mobile phone…

Be familiar with Key Decision Makers’ working schedule

Customer Activities: Product seminar, Important Festivals

Attend customers’ events: Annual Dinners, investor seminar, …



Customer Satisfaction/Service -- III

Value Add:

Presentation skills

Sending research reports

Debt/Bond market update capabilities

Funding Suggestion / Financial Advisor

Product Knowledge

Industry Specialist

Market events, new market...

Solution provider



Safe Guard of Bank

Capability of Financial Analysis

Industry Knowledge

Plant Visit

Senior Management Assessment

Cross Checking

Dual Control Functions

Credit Monitoring



Identify Business Opportunities

Knowing your bank

What’s the position of your competitors

Product Knowledge

The desire to win “Mandate”

Execution Capability

Team work

Business Origination / Execution



Maximize Banks Revenue

Return on Asset, Return on Equity

Relationship with your product teams

Better Utilize Bank’s Resources

Good Reward System

Cross Selling Bank’s Products



How to be a Good Relationship Manager



Good Account Officer

Work Hard

People Sensitivity

Financial/Product Knowledge

Teamwork

Self-Driven

Integrity



RM

ECM

FX Trade

Corporate FinanceCash

Middle Office

Back Office

Global Connection

Cu

stom

er

Product Groups

How to be a good Relationship Manager



The Trend of Relationship Management



The Trend of Account Management

Industry Focus.

More Profit/Performance Driven.

New Products.

Balance between Account Officers / Product Groups.

Partnership Accounts.

Cross Border Coordination.



Relationship Management Case Study



Hard Working / Provide Solutions

Information Collection.

Relationship build up in 2000.

Introduce product teams.

Activities

Periodically Review: Share of Mind/Wallet

Relationship Trigger Event

Case Study I -- Relationship Build Up



From Simple Product to Sophiscated Products:

Cut in relationship by other bank’s mistake / 1996

Build up relationship by serious syndication loans / 1996 - 2001.

FX/Trade/Cash Service / 1996 - 2001

Capital Market Service / 2000 - 2001.

M&A Advisory / 2001.

Global Custodian Service / 2002.

Case Study II -- Cross Selling



Sensitive about Bank’s Asset:

Sign of weakness

Information collection / Relationship

Manage banks portfolio

Integrity

Dual Control Function

Case Study III -- Credit Monitoring



Actions:

Identify opportunities

Customer needs

Customer decision process

Where is your competitors?

Chasing Mandate

Key Decision Point and Win the Mandate

Follow up

Case Study IV -- Deal Implement



高科技產業融資實務 – 以 TFT-LCD 為例



Global TFT-LCD Industry

2005 Q1 Global TMC Review



The Fastest Growing Industry in the World

Due to the strong demand from the end users, global TFT-LCD industry growth rate in the past two years are over 30%

Looking forward, global TFT-LCD industry is expected to have over 20% yoy growth rate in 2004.

18.016.0

23.0

30.0

37.0

0

510

15

20

2530

35

40

FY00 FY01 FY02 FY03E FY04F

Global TFT-LCD Market S ize

US$bn

-11.1% 43.8%

30.4%

23.3%

Source: IDC (Dec. 2003)



Why TFT-LCD? A Flat World!



TFT-LCD is two times bigger than Foundry & DRAM

Global TFT-LCD industry has been “two times” larger than global foundry and DRAM in ’03/’04 and is expected to have higher growth rate in the next two years



What is TFT-LCD?TFT-LCD stands for Thin-Film Transistor Liquid-Crystal Display.

Three major components in TFT-LCD Module :

TFT Array Substrate (Glass) Backlight Unit Color Filter Substrate

The basic structure of a TFT-LCD panel may be thought of as two glass substrates sandwiching a layer of liquid crystal. The front glass substrate is fitted with a color filter, while the back glass substrate has transistors fabricated on it.



TFT-LCD Production Process

Bare Glass TFT Array Color Filter Substrate Assembly Cutting

LC InjectionPolarizer AttachingBacklight Unit AssemblyTFT-LCD Panel

Array Process

Module Process

Cell Process



TFT-LCD Panel by Generation



Credit Evaluation Points

2005 Q1 Global TFT-LCD Review



Industry Industry Structure Industry Cycles/Trends Market Share / Competitive Position KSFs vs. Strategy

Management Management Ability - in relation to Strategy, Economy,

Industry & Competitive Environment Management Integrity Ownership Organizational Structure

Credit Analysis - How to Determine a Company’s Risk?



Financial Analysis Historical Basis

Operating PerformanceGrowthMargins: Operating vs. Non-Operating

Liquidity & Cash FlowCash Cycle & Working CapitalCurrent Ratio: Short-Term Assets vs. Liabilities

Capital StructureLeverage: Borrowed vs. Self-FundedNet Worth

Credit Analysis (Cont.) - How to Determine a Company’s Risk?



Financial Analysis (cont.)Forecast

Assumption vs. Industry Outlook, Market Position and Company Strategy

Financing Flexibility vs. Funding Needs Level of Internal Generated Cash Banking Relationship Access toward Capital Market

Financing and Hedging Strategy Appropriateness Suitability




Way-Out AnalysisSource of Way-out and Level of ReliabilitySupport or Security Appraisal

Relationship and Account StrategyShare of Wallet SizeCross-Sales Opportunity in Non-Lending ProductsCredit Strategy and Credit Limit

Risk SummaryRisks and Mitigates Associated with the ExposureJustification for Exception on Stability CriteriaExpectation on Future Risk Profile




Price change on TFT-LCD Industry




ASP update: February 2005 update - TV



The Outlook of TFT-LCD Industry

The outlook remains bright given LCD is the most popular display technology.

The growth of LCD TV market is critical for overall TFT-LCD industry.

The cyclical volatility in supply/demand should stabilize with LCD TV expansion.

Source: Lehman Brothers Oct., 2004



Global Top Ten TFT-LCD Players

Top 10 TFT-LCD players are from Korea, Taiwan and Japan in terms of production capacity.

Source: Display Search 1Q04 (page42)

Q4, 2003 TFT-LCD Realistic Capacity by Company



Financial ComparisonTFT-LCD Industry




Taiwan TFT-LCD Customer Performance Sales Revenue

Source: The companies and Citibank’s estimate

* TFT-LCD realted sales accounts for 58% of CPT’s sales in 2004..

** Innolux, established in 2003, belongs to Hon Hai group. Its ramp-up of G4.5 and G5 lines is in 4Q,2004.

Taiwanese TFT-LCD players experienced strong sales growth in 2004. Their total FY04 revenue is expected to reach NT$493Bn, representing over 50% yoy growth.

7660

77

3016

10583 89

33 27

152

126 118

4058

0

50

100

150

200

AU Chi-Mei CPT Hannstar QDI

FY02 FY03 FY04F

(NT$Bn)



Taiwan TFT-LCD Customer PerformanceOperating Margin

Due to increasing demand and improving yield rate, all Taiwanese TFT- LCD players reported handsome operating profit in 1H04. However, the unexpected price drop impaired their margins in 3Q04.

Source: The companies

* CPT numbers only represent TFT-LCD business

30% 29%

24%

18%

22%

32%

28%25%

21%

10%12%

10%8%

23%

-3%-5%

0%

5%

10%

15%

20%

25%

30%

35%

AU Chi-Mei CPT* Hannstar QDI

1Q04 2Q04 3Q04



Global TFT-LCD Players Performance

All global TFT-LCD players showed decreased EBITDA margin in 3Q04 due to declining panel price.

Source: The companies

* The figures of LCD-Division of CPT and Samsung

46% 45%43% 43%

37% 35% 34%

25%

30%

25%

33%

25%

19%17%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Samsung* LGP AUO CMO QDI CPT* Hannstar

1Q04 3Q04



Profit Margin still maintain at good level after the price downturn in 2004

AUO CMO CPT QDI Hannstar

Net Sales 160,171 128,458 115,140 58,081 40,048

Growth Rate % (YoY) 52.7% 55.5% 29.4% 110.6% 21.5%

Operating EBITDA 36,915 37,253 25,205 16,902 9,660

Operating Profit 30,000 22,682 12,763 7,667 4,107

Operating Margin (%) 18.7% 17.7% 11.1% 13.2% 10.3%

Net Income 26,224 21,365 11,784 7,784 2,979

Net Margin (%) 16.37% 16.63% 10.23% 13.40% 7.44%

(In NT$MM)2004E

Taiwan TFT-LCD Players Performance in 2004



Capital Structure is improved in 2004 due to Equity injection and profit generation


Cash & Marketable Sec. 21,439 10,092 34,136 33,284 19,789

Total Debt 85,921 48,552 38,285 53,829 40,628

- Short-term debt 1,000 4,707 1,500 9 920

- Current portion of LT debt 7,296 8,653 17,748 4,796 13,797

- Long-term debt 77,625 35,192 19,037 49,024 25,911

TNW 115,921 101,135 98,158 60,610 56,555

Current ratio 1.8 1.3 1.3 2.5 1.4

Tangible Leverage 1.0 0.7 0.8 1.2 0.9

Cash Cycle Days 28 56 5 60 38

Days of Inventory(Year End) 59 58 50 75 59

Days of Receivable(Year End) 74 83 95 70 52

Days of Payable(Year End) 105 85 140 85 73

(In NT$MM)2004E

Taiwan TFT-LCD Players Performance in ‘04 (cont’d)



Heavy Capex is the major cash outflow v.s. cash generation from operation and fund raising


I. Cash Source

Gross operating fundgeneration

56,915 37,253 25,205 16,902 9,660

Net change in working capital -20,304 -9,496 -1,367 -4,525 -5,748

Increase in ST Debt 699 1,500 0 0 0

Increase in LT Debt 59,615 7,493 2,174 27,800 16,580

Sub-total of cash source 96,925 36,750 26,011 40,177 20,492

II. Cash Use

CAPEX -81,709 -50,000 -32,005 -31,500 -30,811

Increase in investment 0 177 -100 -1,292 0

Repayment of ST Debt 0 0 -2,214 0 -670

Repayment of LT Debt -6,892 -6,499 -3,324 -6,070 -6,125

Dividends Paid -5,223 -1,430 0 0 0

Sub-total of cash use -93,824 -57,752 -37,642 -38,862 -37,606

Others -1,912 6,942 17,377 15,343 11,601

Change in cash andmarketable sec.

1,189 -14,060 5,746 16,658 -5,513

III. Cash flow key ratios

Debt / Op. EBITDA*** 1.51 1.30 1.52 3.18 4.21

Interest Coverage Ratio 23.76 26.40 26.63 25.12 8.56

Debt Service Coverage**** 5.90 3.70 1.35 3.09 0.65

(In NT$MM)2005F (Stress Test)

Taiwan TFT-LCD Players Performance in ‘04 (cont’d)



Way-Out AnalysisTFT-LCD Industry




Taiwan TFT-LCD Portfolio

ADR US$660MM (2Q02) ECB US$250MM (4Q02) ECB US$145MM (4Q02) ECB US$180MM (1Q03) ECB US$175MM (1Q03)ADR US$480MM (2Q04) ECB US$200MM (3Q03) GDR US$89MM (4Q03) GDR US$306MM (4Q03) GDR US$200MM (3Q03)

GDR US$579MM (4Q03) ECB US$230MM (1Q04) ECB US$270MM (1Q04) ECB US$250MM (4Q03)ECB US$225MM (4Q04) ECB US$295MM (4Q04) ADR US$300MM (1Q04)

: Citigroup arranged ECB US$140MM (4Q04)Total: US$1140MM Total: US$1029MM Total: US$689MM Total: US$1051MM Total: US$1065MM

HannstarAUO CMO CPT QDI

Active ECM & Global Loan Fund Raising: Total 18 ECM transactions with amount of US$4,974MM during 2002-2004. Meanwhile, there are also 10 significant syndications happened during 2002-2004.

US$MM Total Syndication AmountCitibank participate

FY02 3,873 FY02/03 5,058

FY04 6,653

Limited Credit Appetite on Term Exposure:

TFT-LCD syndication loan: Large size & longer tenor (e.g. US$2BN 7-year syndication for AU and ChiMei in 2004); Major in local currency; Club deal type syndication.



Source: The companies as of Nov. 2004

Taiwan TFT-LCD players Fund Raising in 2004

Total fund-raising of Taiwanese TFT-LCD players amounts to around US$12bn in 2004.

Purpose Instrument Amount (US$MM) Timing RemarksSyndication 1,818 2Q04 NT$60BnADR 480 2Q04

Module Plant Syndication 150 4Q04 ChinaSyndication 1,303 1Q04 NT$43BnSyndication 2,015 2Q04 NT$66.5Bn

ECB 230 1Q04

Cash Injection 436 2Q04 NT$14.4BnSyndication 1,152 2Q04 NT$38BNECB 225 4Q04 ECB 270 1Q04SPO 291 2Q04 NT$9.6BnLocal CB 326 2Q04 NT$10.76BnSyndication 909 3Q04 NT$30BnECB 295 4Q04ADR 300 1Q04 ECB 140 4Q04Syndication 606 1Q04 NT$20BnCash injection 182 2Q04 NT$6Bn

G5/6 Fab

G5/6 Fab

CPT

QDI

AUO

CMO

G6/G7 Fabs

G5.5/G7 Fabs

Hannstar

Innolux

G5/6 Fab

G4.5/G5 Fabs



G3 G3.5 G4 G4.5 G5 G5.5 G6 G7

Samsung 1 1 11 (120K)

1 (2Q04, 120K)1 (2Q05, 60K)

LG Philips 1 1 2 (170K) 1 (3Q04, 90K)

AU 3 11 (1Q04; 50K)1 (4Q04, 70K)1 (1Q05, 60K)

1 (1Q05, 90K) Halt

Chi Mei 1 (75K) 1 (65K) 1 (88K)1 (1Q04; 120K)1 (3Q05, 90K)

1 (1Q05;120K)

Halt

CPT 1 (35K) 1 (65K)1 (75K)

1 (1Q05; 75K)1 (2Q05; 90K)

Hannstar 21 (3Q04; 20K)1 (2Q05; 100K)

Halt

QDI 1 (45K) 1 (3Q04; 60K) 1 (3Q05; 60K)

Innolux 1 (4Q04;30K) 1 (4Q04; 30K)

Sharp 1 2 1 (1Q04) 1 (3Q06)

Substrate Size(mm x mm)

550x650600x720620x750

680x800 730x9201100x12501000x1200

1,300x1,500 1,500x1,8001,500x1,850

1,870x2,200

Price Drop Leads to Expansion Slow-down of Taiwanese Players

Due to 2H04 unexpected ASP drop and overcapacity concern, AUO and CMO have announced to postpone their next-generation fabs (slow ramp-up in G6 and delay in G7) while Hannstar decided to halt their G6 investment.



Stress TestTFT-LCD Industry




Stress Test Price v.s. Display Search Price

Stress Test PriceRed Line

Display Search ForecastBlue Line

Source: Display Search, Nov., 2004



Taiwan TFT-LCD Stress Test ASP Assumption (revise date: 11/25/2004)

Year: 2004F 2005F 2006F 2007F 2008F 2009F 2010F 2011F 2012F

Price Movement - Monitor Below 13.3" Ave. Unit Price stress 200 170 160 150 140 130 120 120 120

13.3" Price Changes (%) 8.1% -15.0% -5.9% -6.3% -6.7% -7.1% -7.7% 0.0% 0.0% 14.1" Ave. Unit Price (USD)stress 185 140 126 110 100 95 95 95 95

14.1" Price Changes (%) 2.2% -24.3% -10.0% -12.7% -9.1% -5.0% 0.0% 0.0% 0.0% 15" Ave. Unit Price (USD) stress 200 135 115 110 105 100 100 100 100

15" Price Changes (%) 2.0% -32.5% -14.8% -4.3% -4.5% -4.8% 0.0% 0.0% 0.0% 17" Ave. Unit Price (USD) stress 240 150 135 125 120 115 115 115 115

17" Price Changes (%) -10.1% -37.5% -10.0% -7.4% -4.0% -4.2% 0.0% 0.0% 0.0% 19" Ave. Unit Price (USD) stress 300 190 170 150 140 135 135 135 135

19" Price Changes (%) -21.1% -36.7% -10.5% -11.8% -6.7% -3.6% 0.0% 0.0% 0.0%

Price Movement - TV 20" LCD TV Panel Ave. Unit Price (USD) 320 210 180 160 150 140 140 140 140

20" Price Changes (%) -20.0% -34.4% -14.3% -11.1% -6.3% -6.7% 0.0% 0.0% 0.0% 27" LCD TV Panel Ave. Unit Price (USD) 710 450 360 330 300 270 270 270 270

27" Price Changes (%) - -36.6% -20.0% -8.3% -9.1% -10.0% 0.0% 0.0% 0.0% 32" LCD TV Panel Ave. Unit Price (USD)1,020 650 520 465 450 410 410 410 410

32" Price Changes (%) -15.0% -36.3% -20.0% -10.6% -3.2% -8.9% 0.0% 0.0% 0.0% 37" LCD TV Panel Ave. Unit Price stress 1,730 900 750 630 600 550 550 550 550

37" Price Changes (%) 0.0% -48.0% -16.7% -16.0% -4.8% -8.3% 0.0% 0.0% 0.0% 42" LCD TV Panel Ave. Unit Price stress N/A 1,800 1,260 945 756 642 550 550 550

42" Price Changes (%) - -30.0% -25.0% -20.0% -15.1% -14.3% 0.0% 0.0% 47" LCD TV Panel Ave. Unit Price stress N/A 3,200 2,600 2,300 2,000 1,750 1,550 1,350 1,200

47" Price Changes (%) - -18.8% -11.5% -13.0% -12.5% -11.4% -12.9% -11.1% 50" LCD TV Panel Ave. Unit Price stress N/A 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000

50" Price Changes (%) - -9.1% -10.0% -11.1% -12.5% -14.3% -16.7% -20.0%



Stress Test Worksheet –Take AU as an example (1)Production Monthly motherglass Panels per

Capacity (K) motherglass 2003F 2004F 2005F 2006F 2007F 2008F 2009F 2010FL2-Gen 3.5 (610*720) 45.0 Below 13.3" 15.0 6 90 90 90 90 90 90 90 90 14.1" 20 6 120 120 120 120 120 120 120 120 17" 10 4 38 38 38 38 38 38 38 38 Yield Rate 90% 90% 90% 90% 90% 90% 90% 90% Capacity utilization 96% 96% 90% 90% 90% 90% 90% 90%L3-Gen 3.5 (610*720) 35.0 14.1" 9.0 6 54 54 54 54 54 54 54 54 17" 26 4 104 104 104 104 104 104 104 104 Yield Rate 90% 90% 90% 90% 90% 90% 90% 90% Capacity utilization 97% 97% 90% 90% 90% 90% 90% 90%L5-Gen 3.5 (600*720) 60 14.1" 25 6 150 150 150 150 150 150 150 150 17" 35 4 140 140 140 140 140 140 140 140 Yield Rate 95% 95% 95% 95% 95% 95% 95% 95% Capacity utilization 97% 97% 90% 90% 90% 90% 90% 90%L6-Gen 4 (680*880) 50 15" 50 6 300 300 300 300 300 300 300 300 Yield Rate 95% 95% 95% 95% 95% 95% 95% 95% Capacity utilization 100% 95% 95% 90% 90% 90% 90% 90%L8A-Gen 5 (1100*1250) 50 17" 50 12 600 600 600 600 600 600 600 600 Yield Rate 80% 85% 90% 90% 90% 90% 90% 90% Capacity utilization 50% 80% 90% 90% 90% 90% 90% 90%L8B-Gen 5 (1100*1300) 70 17" 35 12 840 420 420 420 420 420 420 26"/ 27" 35 6 210 210 210 210 210 210 210 Yield Rate 70% 90% 90% 90% 90% 90% 90% Capacity utilization 50% 80% 90% 90% 90% 90% 90%L8C-Gen 5 (1100*1300) 70 17" 35 12 420 420 420 420 420 420 26"/ 27" 35 6 210 210 210 210 210 210 Yield Rate 70% 90% 90% 90% 90% 90% Capacity utilization 25% 90% 90% 90% 90% 90%L9-Gen 6 (1500*1850) 90 19" 20 20 400 400 400 400 400 400 32" 35 8 280 280 280 280 280 280 37" 35 6 210 210 210 210 210 210 Yield Rate 50% 80% 80% 80% 80% 80% Capacity utilization 30% 65% 80% 90% 90% 90%L10-Gen 7 (1870*2200) 60 42" 60 6 360 360 360 360 Yield Rate 60% 80% 80% 80% Capacity utilization 75% 90% 90% 90%Overall Capacity Utilization Rate 87.7% 83.2% 67.9% 85.2% 86.6% 90.0% 90.0% 90.0%



Stress Test Worksheet –Take AU as an example (2)

Monthly Shipment (K units) 2003F 2004F 2005F 2006F 2007F 2008F 2009F 2010FBelow 13.3" 78 78 73 73 73 73 73 7314.1" 289 289 269 269 269 269 269 26915" 285 271 271 257 257 257 257 25717" 492 955 1,097 1,401 1,401 1,401 1,401 1,40119" 60 208 256 288 288 28826"/27" 74 188 340 340 340 340 34032" 42 146 179 202 202 20237" 32 109 134 151 151 15142" 0 162 259 259 259Total Monthly Shipment (K) 1,144 1,666 2,031 2,803 3,072 3,240 3,240 3,240

Total Sales 2003F 2004F 2005F 2006F 2007F 2008F 2009F 2010FBelow 13.3" (,000 USD) 163,590 186,624 148,716 139,968 131,220 122,472 113,724 104,97614.1" (,000 USD) 628,215 641,684 452,239 407,015 355,331 323,028 306,877 306,87715" (,000 USD) 670,320 649,800 438,615 353,970 338,580 323,190 307,800 307,80017" (,000 USD) 1,577,324 2,749,346 1,973,916 2,269,814 2,101,680 2,017,613 1,933,546 1,933,54619" (,000 USD) 11,400 35,360 38,400 40,320 38,880 38,88026"/27" (,000 USD) 626,220 1,014,930 1,469,664 1,347,192 1,224,720 1,102,248 1,102,24832" (,000 USD) 327,600 908,544 999,936 1,088,640 991,872 991,87237" (,000 USD) 340,200 982,800 1,016,064 1,088,640 997,920 997,92042" (,000 USD) 1,837,080 2,351,462 1,996,877 1,710,720Total Sales (,000 USD) 3,039,449 4,853,674 4,707,616 6,567,136 8,165,483 8,580,085 7,789,743 7,494,838exchange rate 34.5 33.0 32.0 32.0 32.0 32.0 32.0 32.0Total Sales (NT$MM) 104,861 160,171 150,644 210,148 261,295 274,563 249,272 239,835Sales growth 38.5% 52.7% -5.9% 39.5% 24.3% 5.1% -9.2% -3.8%Blended ASP (US$) 221 243 193 195 222 221 200 193

Total COGS (NT$MM) 94,287 106,005 158,504 190,900 202,415 189,264 187,634Implied COGS (% of sales) 58.9% 70.4% 75.4% 73.1% 73.7% 75.9% 78.2%Deprciation (% of sales) 16.8% 22.7% 17.4% 13.9% 13.2% 12.7% 11.6%



Profit Margin will be hit significantly under the Stress Test in 2005


Net Sales 150,644 125,961 117,344 55,255 41,311

Growth Rate % (YoY) -0.6% -1.9% 1.9% -4.9% 3.2%

Operating EBITDA 36,202 22,673 14,361 12,709 4,317

Operating Profit 2,035 1,638 -3,897 -804 -3,736

Operating Margin (%) 1.4% 1.3% -3.3% -1.5% -9.0%

Net Income -1,644 -1,620 -6,418 -1,027 -5,052

Net Margin (%) -1.10% -1.29% -5.47% -1.90% -12.23%


TFT-LCD Stress Test Result 2005



Balance Sheets still show a healthy status


Cash & Marketable Sec. 13,030 6,541 18,135 10,037 3,182

Total Debt 197,209 88,192 78,597 67,603 30,911

- Short-term debt 0 27,000 1,500 9 5,000

- Current portion of LT debt 9,633 9,243 10,414 14,174 4,792

- Long-term debt 112,992 51,949 66,683 53,420 21,119

TNW 109,943 105,553 101,740 67,853 62,424

Current ratio 1.4 0.9 1.3 1.1 0.9

Tangible Leverage 1.4 1.1 1.2 1.3 0.7

Cash Cycle Days 28 80 35 95 48

Days of Inventory(Year End) 74 65 60 85 69Days of Receivable(YearEnd)

59 95 105 90 52

Days of Payable(Year End) 105 62 130 80 73


TFT-LCD Stress Test Result 2005 (Cont’d)



Heavy Capex will drive the cash level down


I. Cash Source

Gross operating fundgeneration

36,202 22,673 14,361 12,709 4,317

Net change in working capital 2,536 -7,600 -6,025 -3,637 -664

Increase in ST Debt 0 22,293 0 0 4,080

Increase in LT Debt 45,000 26,000 58,060 18,570 0

Sub-total of cash source 83,739 63,366 66,396 27,641 7,733

II. Cash Use

CAPEX -76,030 -60,000 -71,878 -53,975 -20,000

Increase in investment 0 0 -100 0 0

Repayment of ST Debt -1,000 0 0 0 0

Repayment of LT Debt -7,296 -8,653 -17,748 -4,796 -13,797

Dividends Paid -3,934 0 0 0 0

Sub-total of cash use -88,260 -68,653 -89,726 -58,771 -33,797

Others -3,887 1,736 10,000 7,882 9,457

Change in cash andmarketable sec.

-8,408 -3,551 -13,330 -23,248 -16,607

III. Cash flow key ratios

Debt / Op. EBITDA*** 3.39 3.90 5.47 5.32 7.16

Interest Coverage Ratio 9.84 7.00 5.25 12.53 3.28

Debt Service Coverage**** 2.70 1.80 1.09 0.84 0.71


TFT-LCD Stress Test Result 2005 (Cont’d)



Appendix:Individual Names Analysis

(Example)



DiscussionAccount Name: AU Optronics

Taiwan PRC

ProjectsG5 Phase II Fab(70K/MG/Month);Color Filter Plant

Module Assembly(300K/month)

Capital NT$10bn US$50MM

Term Loan NT$25bn US$100MM

Total amount NT$35bn US$150MM

USD Nil NilNTD NT$9Bn NilTotal amount NT$9Bn Nil

Working Capital Total amount US$200MM US$80MMFinanced by cash on hand and STomnibus facilities provided bylocal banks; already in place

ST US$700MM US$30MMLT US$430MM (IRS) Nil

Total amount US$1,130MM US$30MM

Nil NilOthers

Customer Needs

FX Hedging

Country

Term Loan RefinancingRefinanced by NT$15bn undrawnsyndicated term loan closed byChinatrust last Nov.

Projected Sales Increase in 2003 (%) 28.52%

CAPEX Funding

Taiwan G5 Phase II Fab & ColorFilter Plant: Citibank and eitherother banks have been mandatedto arrange NT$25bn 7-yrsyndicated term loan. Expect toclose by the end of SEP03.

PRC: We are in the discussionwith the company for itsUS$100MM term financing.



presented by kenneth tsao / citibank taiwan may, 2005 客戶關係管理與高科技業融資實務...

Documents