3689 UDE

Gary Chen

December 2014

Disclaimer • The information contained in this confidential document ("Presentation") has been prepared by UDE (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 Company be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. In furnishing this 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.

2

UDE – World No. 2 in ICM revenues

Founded in 2005

Ticker: 3689 TT

4,300 full-time employees

Dedicated supplier of integrated RJ-45 ports

2013 revenue: NT$4.7B

Headquarters: Taoyuan, Taiwan

Deyang, Sichuan, China plant: High-volume production

Dongguan, Guangzhou, China plant: Product and automation R&D, high value- added production

3

RJ45 Revenues (US$m)

Note: Bel Fuse acquired RJ45 port business of TE Connectivity in March 2013. This chart includes the TE Connectivity revenues in Bel Fuse’s total revenues.

0 50 100 150 200 250

Source: company.

• We are a global leader in the Ethernet technology applications.

• We are one rare manufacturer that is able to combine automated volume production capability with a high degree of product customization.

• While we are proud of our records of healthy growth in profits and 20%+ ROE, we seek investors who believe in our vision for future growth.

• We are not wedded to any single product, but instead seek to leverage UDE manufacturing management expertise to seek out new business opportunities.

4

UDE – young and restless

5

The UDE Strategy

UDE Goals

Commitment to Shareholders

Results Review and Outlook

Financial Performance

6

Optimizing automation + customization

Differentiated product focus

Keeping up with the cloud

Targeting market share gain

The UDE strategy

7

Optimizing automation + customization

Differentiated product focus

Keeping up with the cloud

Targeting market share gain

The UDE strategy

UDE’s market positioning

• UDE positions itself in Ethernet market UDE focuses on the copper connection of the global Ethernet market, where it enjoyed c. 9% market share in 2013 in volume terms.

• ICM is the key focus With key offering of integrated connection module (ICM), UDE aims to gain share within the ICM market and from the discrete segment.

8

Global Ethernet market

Copper connection

(RJ45)

Fiber connection

Discrete jack

Integrated jack (ICM)

~ 9% market share in 2013

UDE’s target market Source: company.

Protection of networking IC and motherboard

Noise Filtering Signal Purification

EMI Control

UDE possesses excellent electromagnetic signal processing and customization capability

Signal Input Signal Filtering System Protection Signal Output

Filter Surge/ESD Protection Integrated Ethernet IC RJ45 LAN Cable

Customized high frequency electromagnetic impedance design to match customer systems

Goal：Maintain high S/N ratio to guarantee complete and rapid signal transmission to the network IC on client motherboard

9

Most diverse application base of any RJ45 producer

MB / AIO PC Networking Set-Top BOX Server Blu-ray Player / Internet TV

Game Consoles Printer

√ √ √ √ √ √ √

√ √ √ √

√ √ √ √

√ √

√ √

√ √

√ √ √

√ √

10 Source: company.

Selling to global leaders in key product categories

11 Source: company.

UDE is a rarity

Product offering

Customer base

Wide range of electrical characteristics and structural options Highly customized with low volume production run capability 8,500 active part numbers 4,700 different models produced each month

Low single client risk : 60% of sales from top ten clients No client accounts for more than 15% of sales, only one client accounts for more

than 10%. 1,300 active client accounts.

Industry attributes

Barriers to entry are high RJ45 Jack industry has only a handful of major players These are UDE, Foxconn, Bel Fuse, Molex and Pulse Bel Fuse has the most advanced technology UDE is the largest scale producer and the low-cost leader

12

• A high-volume/low-cost leader also offering highly customized products

13

Optimizing automation + customization

Differentiated product focus

Keeping up with the cloud

Targeting market share gain

The UDE strategy

New world to conquer

14

UDE’s 2013 global market share is 9.1%

* Additional addressable market refers to devices that do not currently have RJ45 connections but are expected to incorporate them in the future.

Source: Brokers and UDE estimates

61% 46% 45% 35% 29%

16%

31% 30% 31%

33%

23%

23% 25%

34%

38%

0

1,000

2,000

3,000

4,000

5,000

2009 2010 2011 2012 2013

PC Consumer Networking

Networking driving LT revenue growth

NT$M

15

Source: company.

16

Optimizing automation + customization

Differentiated product focus

Keeping up with the cloud

Targeting market share gain

The UDE strategy

Stamping

Plastic injection

Shell

Twisting & wiring

PCB SMT

Moduling Filter

PCB

Automated by UDPS Subcontract

• UDPS automation has significantly lifted productivity at twisting & wiring and assembly. • Subcontract focuses on moduling, which represents further efficiency with automation.

UDPS automated process flow

Plating Contact pins

Case

Coil wires

Housing

17

Assembly

Source: company.

Assembly－UDPS implementation ~2008 2008~09 2010~12 2013~14

Linear line 70~130 OPs

U line implementation 25~30 OPs

Small U line 8~12 OPs

Advanced U line 3~5 OPs

18

OP Production line PPH Capacity/hr

Linear line 80 1 10 pcs 800 pcs

U line 80 10 (8 P/line) 80 pcs 6,400 pcs

Source: company.

Manual winding vs. auto winding

Twisting Winding Assembly Process Complete

Hourly output Defect Rate

Manual winding 50 pcs 2-4%

Auto winding 650 pcs Below 0.2%

19

A pictorial illustration of the manual winding process

Source: company.

Cost savings from automation (UDPS)

20

More efficient production and higher profitability

39%

62%

-7%

5%

-6%

16%

-2%

16%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

Growth in number ofoperators

Growth in unit production

2010 v 2009 2011 v 20102012 v 2011 2013 v 2012

0 34

408 483

662

1,078

19%

28% 27% 26%

27% 27%

19%

26%

13% 12%

10%

4% 0%

5%

10%

15%

20%

25%

30%

0

200

400

600

800

1,000

1,200

1,400

2008 2009 2010 2011 2012 2013

NT$ million

Estimated Gross Margin Improvement from TPSReported Gross Margin (includes effects of TPS implementation)Estimated Gross Margin (without TPS implementation)

Source: company.

21

Optimizing automation + customization

Differentiated product focus

Keeping up with the cloud

Targeting market share gain

The UDE strategy

The concept of cloud

22

• Growth in cloud computing means increased market potential for UDE

UDE’s target addressable

market

Source: company.

The concept of IoT

23

• Internet of things (IoT) appears to be the next big thing, driving new devices used in our daily lives to create new data flows (anywhere, everywhere).

Source: company.

Cloud and IoT to drive potential growth

24

Conventional 3C devices

Data flow

transmission

Computer

Consumer

Networking & communication

Internet of things (IoT)

Potential expansion in data flow

Cloud computing

Ethernet

jack market

Potential expansion in jack demand enabled

by IoT that UDE can capture

Source: company.

Digital home appliances Wearable devices

Connected vehicles POS …

25

UDE Goals

UDE’s market share and revenue targets

26

Penetrate the high-end networking market

Claim share in the mass market consumer segment

Raise global market share to 15% in next 3-5 years

Grow annual revenues to NT$10B in next 3-5 years

• How to get there?

– Share gain. Leveraging our core competency – optimizing process automation and product customization, UDE aims to structurally grow share in the global Ethernet market.

– Margin expansion. We aim to lift our margins structurally through: 1) continued cost cutting from automation, 2) product remix towards higher-margin networking applications.

– Sustainable ROE. Upon completion of our capital raise in 2011-13, we are ready for expansion to capture the growth, structurally maintaining our ROE at 20%+ per annum.

27

UDE Goals – A new phase of growth

We aim to achieve over 15% CAGR for our top-line in the next 3-5 years with even faster bottom-line growth. We strike for a structural ROE of 20%+.

28

Commitment to Shareholders

• We pledge that our primary focus

will be the maximization of returns to our shareholders via the profitable long-term growth of our core business

• We aim to sustain revenue and earnings growth superior to that of our peers

• We intend to maintain a cash dividend payout in excess of 50%

Our commitment to shareholders

29

2011-13 dividend payout

( NT$ Million ) 2011 2012 2013

Net income 353 444 514

Cash dividend 215 257 306

Dividend p/s (NT$) 3.5 3.8 4.5

Cash yield (%) 6.7*1 5.3*2 4.2*3

Payout ratio (%) 61% 58% 60%

30

Notes: 1. 2011 yield is based on UDE’s closing share price on July 23, 2012, the day before ex-dividend day. 2. 2012 yield is based on UDE’s closing share price on July 5, 2013, the day before ex-dividend day. 3. 2013 yield is based on UDE’s closing share price on July 11, 2014, the day before ex-dividend day.

Source: company.

31

Results Review and Outlook

3Q14 results review

• 3Q14 revenue reached a single quarter record high 3Q14 revenue grew by 14% YoY and 9% QoQ to NT$1.39 bn driven mainly by growth in the demand for RJ-45 ports in TV & Gaming applications

• Net profit of NT$174 mn up 30% YoY led by FX gain 3Q14 saw a NT$33.1 mn mark-to-market gain on RMB/USD hedge contract and FX gain.

• Gross margin remains stable at 26.9% 3Q14 gross margin was up slightly versus last quarter (26.5% in 2Q14)

• Operating expenses increased to 14.6% of sales in 3Q14 from 14.2% UDE increased our head count for development of advanced high-end products.

32

Sales increase on rising demand

33

• 3Q14 revenue was up 14% QoQ reaching a quarterly high at NT$1.39 bn, greater demand was seen in TV & Gaming applications along with third quarter seasonal strength in consumer products.

• Gross margins in 3Q14 went up slightly QoQ on increasing sales. Yet, operating margin maintained flat QoQ due to higher expense for the development of advanced high-end products.

Source: company.

18.3%

11.3%

34.7%

19.8%

15.9% 16.6% 15.0%

6.0%

14.0%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

-

200

400

600

800

1,000

1,200

1,400

1,600

3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

Quarterly revenue trend Revenue Growth(YoY)NT$mn

27.4% 27.6% 27.3%

28.5% 27.9% 25.7%

27.8% 26.5%

26.9%

15.3% 14.4% 15.0%

15.5% 14.3%

11.8%

15.2%

12.3% 12.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

Quarterly margin trend

Gross Margin Operating Margin

2014 revenue growth driver

• Consumer will likely outgrow networking this year due to new customer addition, but networking remains our long-term growth driver.

34

Source: company.

Application • PC • Networking • Consumer

Target growth for 2014 • -5-10% • 0-5% • 30-40%

35

Financial Performance

NT$ million 3Q14 % Sales 2Q14 3Q13 Growth (%, QoQ)

Growth (%, YoY)

Sales revenue 1,393 100.0 1,275 1,221 9.3 14.1

Gross profit 375 26.9 338 340 10.9 10.3

Operating profit 172 12.3 157 174 9.6 -0.01

Income before tax 206 14.8 155 181 32.9 13.8

Net income 174 12.5 128 134 35.9 29.9

EPS (NT$, wtd. avg) 2.51 1.86 2.00 34.9 25.5

3Q14 P&L (consolidated)

36

Source: company.

84

341 353

444

514

2009 2010 2011 2012 2013

1.65

6.45 6.08 7.08

7.69

EPS NT$ Net income NT$M

11.6

37.0

27.3 24.8

23.7

6.0

18.1

14.2 14.0 13.3

2009 2010 2011 2012 2013

ROE % ROA %

Five-year financial highlight

37

Note: 2009 net profit was biased by an NT$122M one time non-cash writedown of goodwill. Source: company.

2009 2010 2011 2012 2013

Sales revenue 1,993 3,094 3,486 3,876 4,692

Gross profit 553 820 890 1,063 1,284

OP profit 268 472 454 528 664

Income before tax 130 409 481 539 674

Net income 84 341 353 443 514

FD EPS (NT$) 1.60 6.41 5.76 6.56 7.31

Five-year P&L (consolidated)

NT$ million Growth YoY (%)

2009 2010 2011 2012 2013

27.2 55.2 12.7 11.2 21.1

84.0 48.3 8.5 19.5 20.8

114.0 76.1 -3.8 16.3 25.7

-9.0 215.4 17.7 12.0 25.1

-28.7 305.1 3.7 25.5 16.0

-34.7 301.3 -10.1 14.0 11.4

38

Source: company.

NT$ million 2009 2010 2011 2012 2013

TOTAL ASSETS 1,565 2,194 2,784 3,567 4,356

Cash 314 275 751 1,099 1,258

NR & AR 580 706 757 918 1,184

Inventory 255 413 435 715 881

Non-current assets 332 605 675 629 785

TOTAL LIABILITIES 774 1,142 1,248 1,526 1,977

Bank loans 178 237 426 419 417

NP & AP 233 352 303 433 476

Other payables 268 365 427 570 695

TOTAL EQUITY 791 1,052 1,537 2,041 2,340

Capital 527 532 614 676 676

Additional Paid-in capital 112 112 323 568 582

Retained earnings 149 426 600 828 1,091

Five-year balance sheet (consolidated)

39

A/R turnover days 86 76 77 79 82

Inventory turnover days 65 54 60 75 84

A/P turnover days 46 47 46 48 48

YOY (%)

2009 2010 2011 2012 2013

25.9 40.2 26.9 28.1 22.1

119.5 -12.5 173.3 46.3 14.4

60.1 21.6 7.4 21.2 28.9

-2.2 61.6 5.4 64.4 23.1

-9.4 82.3 11.6 -6.8 24.8

31.8 47.6 9.2 22.3 29.6

2.9 32.9 79.9 -1.7 -0.3

78.5 50.8 -13.7 42.6 10.1

49.1 36.1 16.9 33.4 22.0

20.6 32.9 46.1 32.9 14.6

9.2 0.9 15.4 10.1 －

154.0 0.8 187.4 75.8 2.4

21.4 186.6 40.6 38.2 31.7

Source: company.

Q&A

Thank you very much!

For more information regarding UDE www.ude-corp.com

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service@ude-corp.com