SUNSPRING OVERVIEW
Sep 2017
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Disclaimer 2
• The information contained in this confidential document ("Presentation") has been prepared by Sunspring (the "Company"). It has not been fully verified and
is subject to material updating, revision and further amendment.
• While the information contained herein has been prepared in good faith, neither the Company nor any of its shareholders, directors, officers, agents,
employees or advisers gives, has given or has authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy,
reliability or completeness of the information in this Presentation, or any revision or supplement thereof, or of any other written or oral information made or
to be made available to any interested party or its advisers (all such information being referred to as "Information") and liability therefore is expressly
disclaimed. Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers takes any responsibility for, or will
accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of, the accuracy or completeness or
injury of the Information or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising, from the
use of this Presentation or the information.
• Neither the issue of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with any
transaction and the right is reserved by the Company to terminate any discussions or negotiations with any prospective investors. In no circumstances will the
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Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this
Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent.
• This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents,
employees or advisers. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making
such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections or opinions contained herein necessarily
involve significant elements of subjective judgment, analysis and assumptions and each recipient should satisfy itself in relation to such matters.
• This Presentation includes certain statements that may be deemed “forward-looking statements”. All statements in this discussion, other than statements of
historical facts, that address future activities and events or developments that the Company expects, are forward-looking statements. Although the Company
believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future
performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to
differ materially from those in forward-looking statements include market prices, continued availability of capital and financing, general economic, market or
business conditions and other unforeseen events. Prospective Investors are cautioned that any such statements are not guarantees of future performance and
that actual results or developments may differ materially from those projected in forward-looking statements.
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
SUNSPRING IS YOUR MOST
RELIABLE SOURCE
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S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Executive Summary
Sunspring is a leading supplier of global kitchen & bath plumbing fitting
brands, serving a US$4.5 bn total addressable market globally.
Zinc products are our strategic focus and we are the No.1 supplier
worldwide for zinc components in the global kitchen & bath plumbing
industry.
Over the last 40 years, Sunspring has built a strong customer base of well-
known global brands, who capture >60% of North American and European
market through these long-term partnerships.
Zinc conversion trend presents a major industrial opportunity; Sunspring is
well-positioned to leap.
Sunspring aims to be the best total solution provider in a market with great
potential opportunity through disciplined investment in automation and
talent.
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S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Agenda
Company Highlights
Core Strengths
Strategies for Sustainable Growth
Financial Performance
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S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
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Company Highlights
Core Strengths
Strategies for Sustainable Growth
Financial Performance
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Taichung, Taiwan Headquarters, Innovation
Technology Center and
Sunspring Automation
Employee: 1,000-
Zhaoqing & Zhuhai, Guangdong Manufacturing facility
Employee: 4,300+
Kentucky & Michigan, USA Manufacturing facility
North Carolina, USA Distribution facility
Employee: 100-
Sunspring Overview 7
• Sunspring is the manufacturing solution provider for global kitchen & bath fitting brands
• Key products: components and modules for faucets, showering, and accessories
• Year of establishment: 1974
• Ticker: 2062 TW
• 2016 Revenue:NT$6.2bn
• Market capitalization: NT$ 62bn (as of Sep 30, 2017)
• Total employee number: 5,400-
• 6 locations globally, including 5 manufacturing plants
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Sunspring Timeline 8
1997 Zhaoqing, Guangdong
1st China manufacturing
facility
1974 Chang Hwa, Taiwan
Sunspring founded
1999 Taichung, Taiwan
Headquarter established
2001 Los Angeles, USA
1st US distribution facility 2002 North Carolina, USA
2nd US distribution facility
2004 Zhuhai, Guangdong
2nd China manufacturing
facility 2006 Kentucky, USA
Acquired Gamco
2007
Michigan, USA
Acquired H&H Tubing
2015 Taichung, Taiwan
Innovation & Technology
Center and Sunspring
Automation established
2007
Listed on TWSE
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Sunspring Serves the Fitting Industry
• *Source: Fittings& Fixtures- Freedonia, World Plumbing to 2018, Feb 2015.
• ** Source: Company estimates. Based on Sunspring customers purchasing amount in faucet components/modules
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Kitchen & Bath Plumbing
Fixture
Cabinet
Furniture
Brass Zinc Plastic
Fitting & Fixture
Ceramic
Fitting
Global market size
estimate
$9bn**
$4.5bn**
Market segments we serve
$86bn*
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Kitchen & Bath Plumbing 10
Fitting Fixture Cabinet & Furniture
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
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Company Highlights
Core Strengths
Strategies for Sustainable Growth
Financial Performance
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Core Strengths
No. 1 Zinc Solutions
Solid Customer Portfolio & Partnership
Dedicated Management
Team
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Kitchen & Bath Fitting Industry
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Johnny C.F. Yang Founder/ Group President
50+ yrs. experience
Scott Yang Chairman/ CEO
20+ yrs. experience
Dedicated Management Team 13
Joyce Yang Sr. VP of CEO office 15yrs.+
Ken Slusher Sr. VP of Operations, North America 35yrs.+
Curtis Shih Sr. VP of Manufacturing, China 35yrs.+
Stone Tsai Sr. Director of Innovation & Technology 35yrs.+
Jing-Fa Cheng Sr. Director of Operations, China
Jeff Yang Sr. Director of Innovation & Technology 30yrs.+
Minson Wang Sr. Director of Innovation & Technology 25yrs.+
Richard Hu Sr. Director of Customer Service 35yrs.+
Robert Wang Sr. Director of Customer Service
Jeans Yeh Senior VP of IT 30yrs.+
Feng-Yao Ko Sr. Director of Customer Service 30yrs.+
Jing-Fang Huang Sr. Director of Innovation & Technology 40yrs.+
Micro Su Sr. Director of HR 20yrs.+
40yrs.+
30yrs.+
Yu-Chun Chou Sr. Director of Innovation & Technology 20yrs.+
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Solid Customer Portfolio & Partnership
North America
64%
Asia 16%
Europe 20%
Global Sales Mix
* Other includes home improvement hardware
and other applications
Kitchen & Bath 90%
Other* 10%
Industries Served
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Our customers account for > 60% of faucet market share in North American and Europe
Note:Y201709YTD
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Business Strategy 15
Finished
Goods
Zinc Modular
Components
Brass
Plastic
Deliver on Customer Expectations
Reduce Operational Cost
Speed To Market
Functional Decorative
OD
M
OE
M
Mo
du
lar
Com
po
nent
Com
po
nent
Be the “Solution Provider” in Zinc, Brass, Plastic
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
No. 1 Zinc Solution Provider 16
Global No. 1 zinc die casting manufacturer in kitchen & bath
plumbing fitting
61% 64% 68% 70% 72% 74% 73%
34% 32% 29% 27% 25% 23% 24%
5% 4% 3% 3% 3% 3% 3%
2011 2012 2013 2014 2015 2016 201709YTD
Product Mix: Nearly 70% from Zinc
Zinc Brass Other
Note: Zinc includes zinc components and modules. Brass includes brass components and modules.
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Sunspring Value Proposition 17
Background
• Zinc is 1/3 of the material cost of copper
• Regulation changes favorable to Zinc conversion
• Zinc conversion to extend from US to Europe & Asia
• Housing demand – US remains stable and Europe has bottomed out
Our Effort
• Sunspring is an early mover since 1990s
• Sunspring masters the Zinc production with stable yield & shorter lead time
• Sunspring partners with all global brands for Zinc solutions
• Sunspring’s solid financials will support its leadership on all fronts
Sunspring Answers
On-going Zinc
Conversion
From Zinc to Total
Solution
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Sunspring Offers the Best Solutions 18
0
50
100
Regular Brass Low/No-LeadBrass
SunspringHybrid
Manufacturing costs for faucet components
Regular
Brass = 100 20-40%
3-13%
Savings
*Note: Hybrid modules: zinc body + no-/low-lead brass or plastic waterway
Increased demand for quality coupled with more stringent
regulations
Push for continued cost reduction, both
in product and processes
Global market requires rapid
response capability to capitalize on
emerging opportunities
Source: Company estimates
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Competitive Zinc Solutions 19
Our new hybrid modules* provide 20-40% cost-saving vs
regular brass
*Note: Hybrid modules: zinc body + no-/low-lead brass or plastic waterway
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
We Aim to Be a Total Solution Provider 20
We intend to achieve our goal by
Extending our leadership position in Zinc solutions
Using Zinc solution as a platform to integrate other services
Offering one stop manufacturing solution to customers
Gaining market share
Market segments we serve
In-house* Others
Sunspring, ~4%
In-house*
Others Sunspring, >10%
Now Future
Source: Company estimates * Note: Customer in-house manufacturing
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
21
Company Highlights
Core Strengths
Strategies for Sustainable Growth
Financial Performance
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Investment for Sustainable Growth 22
• Resolve capacity bottleneck
• Improving China labor management
Optimizing existing manufacturing facility
• Three-stage automation program: Manufacturing efficiency and quality improvement
• New plant in Taichung: Capacity expansion in Central Taiwan Science Park
• Enhancement to management team for future growth
Solutions with long-term perspectives
Invest for Future Growth with Disciplined Financing
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Automation: Aim for sustainable growth
and minimize financial volatility
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• Maintain a sustainable gross margin ~25%
• Aim to manage operating expenses ~10%
• Disciplined capex management
• Optimize China labor management
Interim goals
• Produce sustainable growth and minimize volatility in financial performance
Long-term goals
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Stage I (2012-2015) Stage II (2015-2019) Stage III (2016-2022)
Focus Automation for existing manufacturing process
Integrated Cell Automation Intelligent Manufacturing System
Key Objective Improve yield stability & reduce labor dependency
Stabilize yield rate & efficiency, reduce material handling wastes rate
Improve yield & optimize efficiency, real time process control
Capacity New - Innovation & Tech Center- Taichung -
Total Zinc: 13,200 MT/yr Brass: 4,800 MT/yr
Zinc: 18,000 MT/yr Brass: 4,800 MT/yr
Zinc: 18,000 MT/yr Brass: 4,800 MT/yr
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Note: Metric ton (MT)
Three-Stage Automation Roadmap
2012-2013 2014-2015 2016-2017 2018-2019 2020-2021 2022-2023
China Manufacturing Operation
North America Manufacturing Operation
Taiwan Manufacturing Operation
Manufacturing Automation
Integrated Cell Automation
Intelligent Manufacturing System
Integrated Cell Automation
Integrated Cell Automation
Intelligent Manufacturing System
Innovation & Technology Center
Integrated Cell Automation
Intelligent Manufacturing System
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
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Company Highlights
Core Strengths
Strategies for Sustainable Growth
Financial Performance
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Key Financial Indicators 26
5,353
5,928 6,170
6,777
6,195
3,055
20.1%
26.3%
22.4% 23.0%
25.5%
19.2%
2012 2013 2014 2015 2016 201709YTD
Gross Margin %
Revenue NT$ million
540
961
682 732
826
306
10.1%
16.2%
11.1% 10.8%
13.3%
6.8%
2012 2013 2014 2015 2016 201709YTD
Operating Margin %
Operating Profit NT$ million
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Key Financial Indicators 27
328
905
622 624
746
197
2.01
5.55
3.82 3.83 4.58
1.21
2012 2013 2014 2015 2016 201709 YTD
EPS (NT$)
Profit attributable to owners of the parent (NT$ million)
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
5-Year Income Statement 28
NT$ Million 2012 2013 2014 2015 2016 201709
YTD YoY (%)
2012 2013 2014 2015 2016
Sales Revenue 5,353 5,928 6,170 6,777 6,195 4,524 0.1 10.7 4.1 9.8 (8.6)
Gross Profit 1,073 1,559 1,380 1,558 1,579 868 4.8 45.2 (11.5) 12.8 1.3
Operating Profit 540 961 682 732 826 306 32.6 78.0 (29.0) 7.3 12.9
Income before Tax 553 1,110 788 809 967 298 9.6 100.5 (29.0) 2.7 19.5
Net Income 328 905 622 624 746 197 (20.3) 176.1 (31.3) 0.3 19.6
EPS (NT$) 2.00 5.55 3.82 3.83 4.58 1.21 (20.6) 176.1 (31.2) 0.3 19.1
Gross Margin (%) 20.1 26.3 22.4 23.0 25.5 19.2
Operating Margin (%) 10.1 16.2 11.1 10.8 13.3 6.8
Net Margin (%) 6.1 15.3 10.1 9.2 12.0 4.3
ROE (%) 7.8 20.1 12.6 12.6 14.0 3.7
ROA (%) 5.7 13.4 7.9 7.3 7.0 2.0
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
5-Year Balance Sheet
NT$ Million 2012 2013 2014 2015 2016 201709
YTD YoY (%)
2012 2013 2014 2015 2016
TOTAL ASSETS 5,911 7,844 8,341 9,733 11,854 12,574 (4.8) 32.7 6.4 16.7 23.5
Cash 1,499 3,096 2,595 386 670 530 (3.5) 106.6 (16.1) (85.1) 73.8
NR & AR 1,140 1,220 1,380 1,512 1,342 1,116 12.9 7.0 13.1 9.6 (11.2)
Inventory 691 853 1,011 1,275 1,177 1,769 (5.1) 23.5 18.5 26.1 (7.6)
Fixed Asset 2,206 2,364 2,778 4,808 7,567 7,919 (13.4) 7.2 17.5 73.1 57.4
TOTAL LIABILITIES 1,770 2,956 3,357 4,595 6,361 7,208 (5.6) 67.1 12.0 36.9 38.4
Bank Loans 1,017 2,075 2,276 3,455 5,035 5,770 (9.5) 104.0 9.7 51.8 45.7
NP & AP 260 298 363 477 404 488 (25.4) 14.7 21.8 31.4 (15.3)
TOTAL EQUITY 4,141 4,888 4,984 5,138 5,493 5,366 (4.4) 18.0 3.0 3.1 6.9
A/R turnover days 73 73 77 78 76 74 Inventory turnover days 61 64 71 80 101 109
A/P turnover days 26 23 25 29 28 25
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S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
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Quarterly Financials
1,283
1,563 1,624
1,458 1,398
1,541 1,594 1,637 1,541
1,693 1,700 1,842
1,644
1,455 1,536 1,560 1,530 1,525 1,469
194 267 291 209
158 167 173
184 158 161
166 246
221 163 201 241 182
99 25
203 234 254 214
89
118 199
216
125 110
174 214 215 116 207 208 185
5 8
25.6% 27.7% 26.5% 25.3% 21.6% 22.0% 22.3% 23.4% 22.6% 21.4% 22.0%
25.7% 25.4% 23.9% 24.8% 27.8%
23.6% 19.5%
14.3%
15.1% 17.1% 17.9% 14.4%
11.3% 10.9% 10.9% 11.2% 10.3% 9.5% 9.7% 13.4% 13.4% 11.2% 13.1% 15.4%
11.9% 6.5%
1.7%
0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
NTD Million
Net Sales Operating MarginNet Income (Attribute to Parent) Gross Margin RateOperating Margin Rate
S u n s p r i n g Is Y o u r M o s t R e l i a b l e S o u r c e
Passion Dedication Excellence Integrity Reliability
PRIDE
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