3. Managing Partner’s Background
• Columbia University, 1996 – Completed both his MS and BS degrees in four years from Columbia University
(BS in Electrical Engineering and MS in Operations Research).
• Morgan Stanley, 2004-2011 – Executive Director. Top ranked Taiwan Country Strategist and Asian Software
Technology Analyst (#2 2011 institutional investor survey). Coordinate global TFT LCD supply/demand
model among global Morgan Stanley analysts. Lead research in regional TFT LCD, semiconductor backend
foundry, DRAM, software, and China consumer electronics industries. Lead analyst on global equity
offerings of Himax, Inotera, Chi Mei Optoelectronics, LG Display, Innolux, Wintek, iSoftstone.
• Credit Suisse, 2002-2004 – Vice President. Member of top ranked Asian Equity Research team (#2
institutional investor survey 2002/2003). Coordinated global DRAM semiconductor supply/demand model
with CSFB analysts in the US, Japan, Europe, Korea. Lead research on semiconductor backend foundry, TFT
LCD, and DRAM companies. Lead and co-lead investment banking deals for HannStar, Macronix, ProMOS.
• Grand Capital Group, 2000-2002 – Executive Vice President. Co-Founder of Venture Capital firm in Asia.
Reviewed business plans around the world in sectors of
Communications, Software, Biotechnology, Hardware, Semiconductors, Internet, Components, and New
Businesses. Structure innovative business models and build investment management teams. Board member
of late stage technology companies in the US and Asia and advise management.
• Citigroup, 1999-2000 – Vice President. Pioneered Asian Technology Investment Research in Citigroup Global
Assets Management including China, India, Korea, Taiwan, Singapore, Hong Kong, etc.
• Goldman Sachs, 1996-1999 – Financial Analyst. Member of the #1 ranked (1997 Greenwich survey)
semiconductor investment research team covered Global Semiconductor and Semiconductor Capital
Equipment sectors. Co-published semiconductor industry trends and company reports. Member of lead
investment banking deals on TSMC, Micron, Anadigics, SanDisk, Photronics. Interacted with leading global
semiconductor company management.
4. Our Mission
1) Value Creation – Out of ~1,500 public companies in Taiwan, only ~100 companies
are actively covered by foreign institutions and ~300 are actively researched by
domestic institutions.
Athena aims to discover under-researched “future stars” from ~1,000 over-looked
publicly listed companies and be a “friendly shareholder activist” to assist
corporate management enhancing shareholder value through successful investor
relations strategy and investor capital introduction.
2) Differentiation – Taiwan is over-looked by foreign investors despite improved
corporate governance and shareholder friendliness include high cash dividend yield
and pay out ratio.
Rooted in Taiwan, Athena aims to be the “gate keeper” for foreign investors in
improving global awareness on good under-researched Taiwan companies.
3) Integrity/Partnership – Credit is virtue. Trust is everything. Collaboration is key.
Athena operates based on trust. Athena aims for positive market influence in Taiwan
financial community for societal contribution.
5. Opportunities –
1. Taiwan is Under-valued
Low end of historical valuation…
100% 60.0
3.0 16%
14% 80%
2.5 40.0
12% 60% 26.6
2.0 9% 10% 40% 20.0
1.8 19.6
1.5 8% 20%
1.7 5% 0.0
6% 15%
1.0 0%
4%
-20% (20.0)
0.5
2% -22%
-40%
0.0 0% (40.0)
-60%
-80% (60.0)
EPS Growth(LHS) P/E(RHS)
P/B(LHS) ROE(RHS)
Note: 1) 2012 book value based on 1Q12 data. 2) 05/0/2012 market value. 3) Current TWSE listed companies for retrospective valuation and financials. 4) TWSE data excludes TDRs listing
Source: Cmoney; Bloomberg;
6. 2. Good Cash Dividend Support
High Cash Dividend Yield…
80% 6.0%
70%
5.0%
60% 4.1% 3.6%
4.0%
50%
55% 55%
40% 3.0%
30%
2.0%
20%
1.0%
10%
0% 0.0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E
Cash Dividend Payout Ratio(LHS) Cash Dividend Yield(RHS)
Note: 1) 2001-2011 based on average cash dividend yield. 2) 05/07/2012 Market value
Source: Cmoney
7. 3. Small & mid Cap Heaven in Greater China
Good Liquidity for Small & Mid Cap stocks…
Average
Total Marketcap
# Companies Marketcap Daily Turnover
($US bn)
($US mn)
Taiwan Stock Exchange
703 824 756 0.6%
Taiwan OTC
50 611 81 1.1%
Taiwan Emerging Stock Board
18 276 65 0.1%
Shanghai A Stock
2,451 919 2,667 0.6%
Hong Kong Stock Exchange
2,005 1,491 1,345 0.3%
Note: 1) TWSE 12/30/2011 listing includes 33 TDRs
Source: Cmoney, TWSE, Shanghai Stock Exchange, HKEX
8. 3. Small & mid Cap Heaven in Greater China
Good Liquidity for Small & Mid Cap stocks…
Average
Total Marketcap
# Companies Marketcap Daily Turnover
($US bn)
($US mn)
Taiwan Stock Exchange
702 828 848 0.4%
Taiwan OTC
58 607 95 0.6%
Taiwan Emerging Stock Board
21 277 77 0.1%
Shanghai A Stock
2,671 930 2,872 0.7%
Hong Kong Stock Exchange
1505 1342 1122 0.02%
Note: 1) TWSE 05/07/2012 listing includes 33 TDRs
Source: Cmoney, TWSE, Shanghai Stock Exchange, HKEX
9. Catalyst - Best Investment Timing in 10 Years
Come out ahead in 7 years horizon
10186
10116 9809
9145
7124
10 years average 6700
6000~7000
5800
4566
4089
3135 3446
3.2x in 7 years 2.8x in 6 years
TWSE Index
Source: Cmoney
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
12. Value Creation
– Institutionalizing New Markets for Best Return
Bridging Foreign investors
Market Institutionalizing an for sustainable long term gain
Value Under-research market
Foreign Partnering with
Investor Venture Capitalists
Research Foreign Investor
coverage for Early Understanding
Research
Domestic Coverage
Research
coverage
Domestic Low risk;
Public Low return
Listing Research
High risk; Coverage
Not sure high return Under Research
Emerging
Stock Board Low risk; Medium risk
Listing Good return Medium return
Venture Capital
EM Stock Public 2 years Sufficient Time
Corporation formation
Board Listing Listing Track record
21. 3. Where is Confidence?
Foreign investors put on Taiwan despite up in the US…
1.2
3,500 40,000
1.1 3,000 35,000
1.09 30,000
1.0 2,500
25,000
2,000
0.9 20,000
1,500
0.8 0.86 15,000
1,000 10,000
0.7 500 5,000
0.6 0 0
May-11
May-12
Dec-11
Aug-11
Jan-11
Feb-11
Apr-11
Sep-11
Oct-11
Jan-12
Feb-12
Apr-12
Mar-11
Jul-11
Mar-12
Jun-11
Nov-11
NASDAQ Index TWSE Index NASDAQ Index(LHS) QFII NET SHORT POSITION IN FUTURES(RHS)
1.1 9,500 35,000
1.1 9,000 30,000
1.0 8,500
1.0 25,000
8,000
0.9 0.86 20,000
7,500
0.9
7,000 15,000
0.8
6,500
0.8 10,000
0.7 6,000
5,500 5,000
0.7
0.6 5,000 0
May-11
May-12
Dec-11
Aug-11
Jan-11
Feb-11
Apr-11
Sep-11
Oct-11
Jan-12
Feb-12
Apr-12
Mar-11
Jul-11
Mar-12
Jun-11
Nov-11
Shanghai A Index TWSE Index TWSE(LHS) QFII NET SHORT POSITION IN FUTURES(RHS)
Note: 05/07/2012 stock price.
Source: Cmoney ;
22. 3. Where is Confidence?
Foreign investors put on Taiwan despite up in the US…
1.1
3,000 40,000
1.0 1.07 35,000
2,500
30,000
2,000
0.9 25,000
1,500 20,000
0.8 0.89
15,000
1,000
10,000
0.7
500
5,000
0.6 0 0
NASDAQ Index TWSE Index NASDAQ Index(LHS) QFII NET SHORT POSITION IN FUTURES(RHS)
9,500 35,000
1.2
9,000
30,000
1.1
8,500
25,000
1.0 8,000
7,500 20,000
0.9 0.89
7,000 15,000
0.8 6,500
0.84 10,000
6,000
0.7
5,000
5,500
0.6
5,000 0
Shanghai A Index TWSE Index
TWSE(LHS) QFII NET SHORT POSITION IN FUTURES(RHS)
Note: 02/10/2012 stock price.
Source: Cmoney ;
23. 2020 VISION
Taiwan is the cheapest “Greater China” play with value &
potentials.
1. Taiwan Will Transcend – The foreigner who understands
the best of China; The Chinese who understands the best of
the world.
2. Election Matters Less – 2 years cycle; 2014 next on local;
2016 next on President and Congress; Higher opportunity
cost for politicians to execute on plans.
3. Wealth Creation – Urban Renewal; More International
Visitors; Infrastructure Spending.
30. 瀚宇博德 Put in HK
Taking Advantage of Capital Market when Market is Insufficient
(47% Price Premium to De-List – 1x EV/Book)
HKD/USD 7.8
Buyout Stock Price ($HK) 1.25 (Price Premium 47%)
# of Shares (mn) 1,316
Marketcap ($US mn) 211
Net Debt ($US mn) 167
Enterprise Value ($US mn) 377
Book Value ($US mn) 376
Net Income ($US mn) (1)
Operating Cash Flow ($US mn) 41
P/E N.A.
P/B 0.6x
EV/Book 1x
EV/OPCF 9.3x
Note: 1) Annualized 1H11 Operating cash flow. 2) 1H11 Book value. 3) Annualized 1H11 earnings.
Source: Company
31. Shareholder Value?
Today’s Value is Well below any Time in History…
Make a Cornerstone Case! Re-set Benchmarks
% of current total % of 1/15/2012
Date Action Price Share(k) Amount(TWD mn)
shares Marketcap
2005/3/1 海外存託憑證 10.66 768,000 8,187 1.3% 75%
2008/8/22 Shares Buyback 7.13 255,000 1,818 0.4% 17%
2008/10/14 Shares Buyback 4.27 40,899 175 0.1% 2%
2011/1/27 私募 5 634,050 3,170 1.1% 29%
Source: Cmoney
32. Size no longer Matters…
Why Build Big Fabs? Why Sell Big Screens?
Small is Better than Large…
HTC 4.3” Sensation Sharp 42” 1080p 60Hz LCD TV
Viewing Angle 1x 100x
Price $US 435 $US 199 (Black Friday Price)
Source: Bestbuy; Amazon
33. Taiwan no longer has Cheap Capital…
Business Model has changed!
60% 京東方能源 stake
in exchange for 2.7 bn RMB cash
北京工業發展
1 billion tons coal mining right in exchange for 0.45 billion
5.5G AM-OLED line setup (22 bn RMB investments) tons coal mining right
京東方A(BOE)
內蒙古
控股子公司 京東方能源
鄂爾多斯
京東方光電
昊華能源
20% 京東方能源 stake
in exchange for 0.9 bn RMB cash
Source: BOE
34. Investing in Branding & Bottlenecks;
not in Factories Expansion…
Key Technology bottlenecks
QHD IPS, AMOLED, 3D, Flexible Display, 10 fingers Touch,
(high resolution, paper-like, multi-view)…
Capex is Commodity; no innovation
Don’t do capex unless 1) Monopoly
2) Can be TSMC or Samsung
Supply Chain
– Unforgiven Road
Factory
Capex R&D
R&D is Innovation
A chance to disrupt industry
for windfall profits
Branding (Customer Relationships)
Google, Microsoft, Apple, Amazon, SoftBank, Nintendo, Intel, IBM, …
China, India, Brazil, Russia, Middle East, North Africa, Eastern Europe…
Source: Athena