TPCC

Taiwan Prosperity Chemical Corporation

2Q/2016

Investors’ Conference

August 18, 2016

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Disclaimer

The forward-looking statements contained in this presentation are

subject to risks and uncertainties and actual results may differ

materially from those expressed or implied in these forward-looking

statements.

Taiwan Prosperity Chemical Corporation makes no representation or

warranty as to the accuracy or completeness of these forward-looking

statements and nor does Taiwan Prosperity Chemical Corporation

undertake any obligation to update any forward-looking statements,

whether as a result of new information or future events.

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Agenda

• Company Snapshot

• Corporate Strategy

• 2Q/2016 Financial Results

• Business Overview

• Capital Expenditure

• 2H/2016 Business Outlook

3

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Taiwan Prosperity Chemical Corp.

Established: May, 1991

Headquarter: Taipei, Taiwan

IPO in Taiwan: October, 2007

Paid in Capital: NT$ 2,920 million

Market Cap:

(as of 12/08/2016 , NTD 14.25 per share) NTD 4,161million

(USD/NTD=31.4) ( USD 133 million )

Production facility: Lin Yuan, Kaohsiung, Taiwan

Employees: 164

(as of 06/30/2016)

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Production Facility

Kaohsiung

(TPCC)

Beijing

Shanghai

1.Cumene

(460 KTA)

2.Phenol/Acetone

(360 KTA/221 KTA)

3.Bisphenol-A

(107 KTA)

4.Anone

(150 KTA)

5.MAN

(40 KTA)

6.H2-I

(7K Nm3/hr)

H2-II

(8.1K Nm3/hr)

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Agenda

• Company Snapshot

• Corporate Strategy

• 2Q/2016 Financial Results

• Business Overview

• Capital Expenditure

• 2H/2016 Business Outlook

6

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2016 Corporate Strategy

Flexible adjust product portfolio Not to pursue the full production

Minimize offshore feedstock procurement

VolumeVolumeVolumeVolume 2015/1H2015/1H2015/1H2015/1H 2016/1H2016/1H2016/1H2016/1H

Foreign procurement 53%53%53%53% 44%44%44%44%

Domestic procurement 47%47%47%47% 56%56%56%56%

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Maximum product margin by adjust sales strategy:

1.Increase Domestic Bulk Sales (Domestic Bulk Sales have better Gross Margin than Export Bulk Sales )

2.Increase Drum Sales Volume

(Drum Sales have better Gross Margin than Bulk Sales )

Volume Volume Volume Volume Phenol Phenol Phenol Phenol AcetoneAcetoneAcetoneAcetone

2015/1H2015/1H2015/1H2015/1H 2016/1H2016/1H2016/1H2016/1H 2015/1H2015/1H2015/1H2015/1H 2016/1H2016/1H2016/1H2016/1H

Domestic Domestic Domestic Domestic 70%70%70%70% 78%78%78%78% 35%35%35%35% 47%47%47%47%

DrumDrumDrumDrum 5%5%5%5% 9%9%9%9% 1%1%1%1% 3%3%3%3%

The best combination of product sales

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Management Team prompt response

Deploy PDA patrol & Monitor

daily energy consumptionYoung MA

join management

team

Financial officers visit site to seek

cost down opportunities

weekly

Review market situation and

reset bid price weekly

Invite site supervisor to

participate management

meetings

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1.Market survey High Value –added Derivative

from current product

(Phenol 、Anone & MAn)

2.Explore Electronic cleaning solvent fromAcetone & Anone

Develop High Value-added Derivative

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Agenda

• Company Snapshot

• Corporate Strategy

• 2Q/2016 Financial Results

• Business Overview

• Capital Expenditure

• 2H/2016 Business Outlook

11

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2Q/2016 Statement of Comprehensive Income

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2016 Jan-Jun Statement of Comprehensive Income(In NT millions except otherwise noted) 2016/1H 2015/1H YoY %

Net Sales 4,376 7,199 (39.2)

COGS (4,407) (7,838) 43.8

Gross Profit (31) (640) 95.2

Gross Margin -0.7% -8.9% 8.2

Operating Expense (147) (219) 33.0

Operating Income (178) (859) 79.3

Operating Margin -4.1% -11.9% 7.9

Non-operating Income/(Expense) (101) (124) 18.5

Income before Tax (279) (983) 71.6

Income Tax Benefit/(Expense) (10) (14) 27.9

Net Income (Loss) (289) (997) 71.0

Net Margin -6.6% -13.8% 7.2%

Other Compresensive Income (Loss) 66 (13) 600.0

Total Comprehensive Income (Loss) (223) (1,010) 77.9

Basic EPS (NT$) (0.99) (3.41) 2.4

ROE -16.6% -40.8% 24.2%

ROA -3.4% -13.9% 10.5%

Total Assets 11,681 12,857 (9.1)

Total Liabilities 8,164 8,154 0.1

Total Shareholders' Equity 3,517 4,703 (25.2)

Free Cash Flow 290 732 (60.4)

Free Cash Flow = Operating Cash Flow - CAPEX -LTInvestment

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Sales/ GM & PAT

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2Q/2016 Statement of Cash Flow(In NT millions except otherwise noted) 2Q / 16 1Q / 16 2Q / 15

Cash Flows From Operating Activities

Income before Tax 28 (307) (326)

Adjustments to reconcile income

to net cash provided by operating activities160 516 570

Net cash generated from operating activities 188 210 245

Cash Flows From Investing Activities (40) 24 (241)

Cash Flows From Financing Activities 137 (82) (87)

Net Increase In Cash And Cash Equivalents 285 151 (83)

Cash And Cash Equivalents, Begining Of Period 467 316 261

Cash And Cash Equivalents, End Of Period 752 467 178

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(In NT millions except otherwise noted) 1H/16 1H/15

Cash Flows From Operating Activities

Income before Tax (279) (983)

Adjustments to reconcile income

to net cash provided by operating activities677 1,932

Net cash generated from operating activities 398 949

Cash Flows From Investing Activities (17) (312)

Cash Flows From Financing Activities 55 (599)

Net Increase In Cash And Cash Equivalents 436 38

Cash And Cash Equivalents, Begining Of Period 316 140

Cash And Cash Equivalents, End Of Period 752 178

1H/2016 Statement of Cash Flow

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Solid Financial Structure

17

Current Ratio

Debt Ratio (L/A)

Book Value per share

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Agenda

• Company Snapshot

• Corporate Strategy

• 2Q/2016 Financial Results

• Business Overview

• Capital Expenditure

• 2H/2016 Business Outlook

18

TPCC 19Source :TPCC

CPC Propylene/BenzeneCPC Propylene/BenzeneCPC Propylene/BenzeneCPC Propylene/Benzene(USD/(USD/(USD/(USD/MTMTMTMT))))

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Phenol/BPA/Anone monthly average Price (USD/MT)

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Worldwide Phenol Capacity & Demand Outlook

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Unit：：：：KT/YR 2014 2015 2016 ( E ) 2017 ( E )

Phenol Capacity 12,536 12,876 13,151 13,657

Bisphenol A 4,233 4,514 4,635 4,897

Phenolic Resins 2,567 2,640 2,723 2,889

Anone 1,221 1,176 1,153 1,142

Others 1,409 1,442 1,485 1,561

Phenol Demand 9,430 9,772 9,996 10,489

Capacity - Demand 3,106 3,104 3,155 3,168

Utilization Rate, % 75% 76% 76% 77%

Year 2012 2013 2014 2015 2016 2017 2018 Total

New Phenol Plant 2 2 1 3 2 2 1 13

Capacity (KT/YR) 420 700 75 800 550 495 200 3,240

Over supply situation will be improved gradually after 2018

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0

500

1,000

1,500

2,000

2,500

3,000

2014 2015 2016 2017

Capacity Demand

China Phenol Capacity & Demand

22

Capacity Annual Grouth Rate:11.6% Demand Annual Grouth Rate:8.6%

E E

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TPCC Sales Volume in Recent Years

(Unit : MT)

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2011201120112011 2012201220122012 2013201320132013 2014201420142014 2015201520152015 1H 1H 1H 1H 2016201620162016

601,101 601,101 601,101 601,101 624,392 624,392 624,392 624,392 527,039 527,039 527,039 527,039 538,790 538,790 538,790 538,790 446,866 446,866 446,866 446,866 179,693 179,693 179,693 179,693

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2011 2012 2013 2014 2015 1H 2016(E)

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Sales Destination of 2014 vs 2015 vs 1H/2016

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0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Taiwan India America North Asia China Others South &East Asia

Middle-East

2014 43.1% 15.4% 13.5% 8.4% 6.1% 6.1% 5.4% 2.0%

2015 47.9% 20.7% 0.8% 3.7% 17.4% 1.0% 4.5% 4.0%

2016 53.4% 9.9% 0.0% 7.7% 14.0% 1.5% 9.3% 4.1%

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Agenda

• Company Snapshot

• Corporate Strategy

• 2Q/2016 Financial Results

• Business Overview

• Capital Expenditure

• 2H/2016 Business Outlook

25

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Capital Expenditures

0

100

200

300

400

500

600

700

2011 2012 2013 2014 2015 2016E

Million NT$

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Agenda

• Company Snapshot

• Corporate Strategy

• 2Q/2016 Financial Results

• Business Overview

• Capital Expenditure

• 2H/2016 Business Outlook

27

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2H/2016 Business Outlook -1• Benzene

1. In 2H/2016, there are several Aromatics scheduled turnaround including

FCFC in Taiwan, JX Nippon in Japan and SKGC in Korea .And it influences

the Benzene supply .

• Propylene

1. Because Shell , Singapore restarts its production line, the slight shortage

of Propylene in 1H/2016 will be improved.

2. CPC Taoyuan Refinery can offer 100% contract volume after their

turnaround over April-May. However, RFCC in southern Taiwan cut

Propylene supply to 90-95% contract volume in Q3 due to reliabilities

issues .

3. Considering more stable supply in 2H/2016, so expect Propylene price

should be more stable than 1H/2016.

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2H/2016 Business Outlook-2

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• Phenol Chain Market – Macro economics in U.S. and Europe recovergradually, but macro economics in China is still slow. Demand growth rate will be weak in 2016. In Asia, three new plants (800,000 MT) have been already on stream in 2015, another two new plants, PTT and Kumho (550,000 MT), shall be on stream in Q2 2016. Utilization rate reduced due to oversupply. However, most new capacity has been on stream since 2012. The situation of oversupply will be improved gradually .

• Corporate strategy – To cope with threats in over supply market, TPCC take following actions to achieve minimum loss in 2H/2016.

� Minimize Propylene offshore procurement and Acetone export. Concentrate local market and aim better profits markets

� Flexible adjust product portfolio to maximize sales profit.

� Continue to reduce Plant related cost and expenses by close monitor and control

� Business strategy – Our strategy is to increase our sales to different countries/areas to reduce the dependence on China market.

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Thank You

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