Letter To Shareholders

Dear shareholders,

Last year was an abundant year for the Everlight Chemical. First of all, to celebrate the 100th anniversary of China’s dye manufacturing, the China Dyestuff Industry Association especially recognized companies and individuals with significant influence and outstanding contributions to China’s dye industry at the dyes exhibition in Shanghai last April. Everlight Chemical is one of the few companies to receive a grand slam that included all four awards. Among which, our honorary chairman Chen, Ding-Chuan won the highest honor of the “Centennial Merit Award,” and the Product Responsibility Office Director Huang, Hui-Cing received the “Science and Technology Contribution Award.”

In addition, the Specialty Chemical Business Unit’s formulated product developed for eco-friendly coating material “light stabilizer for the special use of the water-based light curing coating” won the highest honor in the Cross-Strait last year. The Awards were the “2018 Ringier Technology Innovation Awards-Coatings Industry” from China and the “2018 Chemical Technology Industry Elite Award and Product Innovation Award” from Taiwan, respectively. It means that the Specialty Chemical Business Unit has stepped out of the limitation to product imitation product (Me Too), and now has the capability to develop green products to meet customer needs by the patented technology of independent innovation.

More importantly, the Everlight Chemical’s sales revenue in 2018 ended its three consecutive years of decline, reaching NTD 9,620 million, up by 5% from the previous year. The net profit after tax exceeded NTD 400 million, an increase of 10% over the previous year, with the earnings per share of NTD 0.73, an annual increase of 10%.

The results of operation are analyzed as below:
The sales revenue of the Color Chemical Business is NTD 4,520 million, accounting for 47%, an annual increase of 8.7%. According to the classification of the industries served, Everlight Chemical’s sales revenue of dyes in the four industries of traditional textiles, digital ink, leather and pulp all saw growth last year. Among these, the digital ink industry (including two major areas of digital textile and commercial printing) had more growth. This year, we will continue to introduce the advantages of new products in various fields and expand the digital ink production line on both sides of the strait. We will also strengthen the technological service capacities and seek more rapidly growing market opportunities Although the unstable supply of upstream raw materials in China caused by strict controls on environmental protection, work safety accidents and other factors recently, we will continue to increase our resources in traditional textile, leather, pulp, aluminum anodes, industrial textiles and other applications as well as functional textile auxiliaries and spare no effort in seizing the market to expand the scale of business as the direction of our efforts.

The sales revenue of the specialty chemical business is NTD 2,160 million, accounting for 22.5%, an annual increase of 13%. As the global industrial economy thrived during the first three quarters of last year, the specialty chemical business followed with its aggressive expansion strategy, which worked well. Looking ahead to this year, the global economy has significantly slowed down, with automobile production estimates in major economies lower than last year. Furthermore, the Chinese government continues to strengthen environmental protection and safety inspection, resulting in higher costs of upstream raw materials and instability in the supply of raw materials. The specialty chemical business will continue to expand the sales areas and domains to maintain growth momentum, and actively improve the raw materials supply chain to ensure a stable supply. Meanwhile, the business will introduce new information tools to improve management effectiveness.

The sales revenue of the Toner business is NTD 1,630 million, accounting for 17%, an annual increase of 11%. Under many suppliers in China emerging and uniting to compete to put into production, the supply of Toner (particularly the black bulk products) has still exceeded the demand, and Toner prices continue to dip into red territory. We’ve not only sped up the development of color toners and high-speed copy machine toners, but also introduced the products to save the market with high cost-performance ratio in order to maintain a certain market share of bulk products. In addition, we’ve made a technology transfer from famous Toner firms in Japan and the U.S. to expand the production line. We will add a markup to the development of the high-end market in Europe and the U.S. and grasp more business opportunities accordingly.

The sales revenue of the Electronic Chemical business is NTD 1,080 million, accounting for 11%, an annual increase of 3%. Last year we have seen growth in both private brands and OEM products. We’ve also had a breakthrough in the Chinese market. We’ve shortened product development time and improved the effectiveness of order taking in business by introducing key raw materials suppliers and production and manufacturing partners. This year, the global semiconductor and optoelectronics industry experienced a slowdown due to the decline in the growth demand for end products. At the end of last year, domestic panel manufacturers claiming for reorganization and shutdowns has an impact on the orders placed with us. Other than continuing to expand the scale of supply chain localization in China, we will also actively strive to enter the supply chain of semiconductor plants in China. At the same time, we will accelerate the development of new type of displays and the materials required for the Fifth Generation (5G) mobile communications technology processes to prepare for the next phase of demand.

The sales revenue of the Pharmaceuticals business is NTD 224 million, accounting for 2.3%, an annual increase of 10%. In early March last year, after receiving the case closure notice from FDA for our GMP improvements, we actively made contact with our customers and they’ve gradually made purchases from Everlight Chemical again. Last year, there were also ophthalmic drug customers getting their U.S. generic drug listing applications (ANDA) approved, so they will be expected to be increasing their orders this year. Apart from continuing to increase the sales of existing products, we will complete the expansion of animal use medicine manufacturing firms, introduce the production facilities in line with international GMP standards and increase the sales of animal use medicine.

Compared with our peer competitors, the size of the Everlight Chemical’s business product line is not big, and the market share is still quite small Each of our units has to transform into a customer-oriented, dynamic, globally competitive combat force and “become an invisible champion” in every field of operations as the goal of our efforts. We will proceed with “pro-active caution and steady climb” in response to the 2019 annual policy of the Everlight Chemical.

Thank you for your loyalty and support.

Chairman Chen, Chien-Hsin 2019/3/30