1) The document discusses Athena Capital Management's investment philosophy and opportunities in Taiwan's stock market. 2) It argues that Taiwan is undervalued relative to its fundamentals and provides good cash dividends. Taiwan also has a large number of small and mid-cap companies with good liquidity. 3) Athena aims to discover under-researched "future stars" among Taiwan's roughly 1,000 publicly listed small and mid-cap companies and assist them in enhancing shareholder value.

1. Where is Value in Taiwan?
by
Frank A.Y. Wang
President
Athena Capital Management
May, 2012

2. Our Investment Philosophy

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

10. Our Approach – Find “Future Stars”
Marketcap QFII Marketcap QFII
QFII % P/B P/E EV/EBITDA Marketcap
($US mn) ($US mn) Marketcap
QFII % P/B P/E EV/EBITDA
1101 台泥 4,314 1,457 33.8 1.4 15.4 5.3
($US mn) ($US mn)
1102 亞泥 3,665 648 17.7 1.3 11.2 9.3
1216 統一 7,188 3,521 49.0 2.9 22.3 8.1 1580 新麥 156 13 8.1 3.7 10.6 6.0
1301 台塑 16,322 5,936 36.4 2.1 14.3 14.9 1709 和益 277 12 4.2 1.4 10.7 6.4
1303 南亞 15,809 4,017 25.4 1.8 20.6 11.6 4401 東隆興 113 1 0.9 1.7 7.0 4.9
1326 台化 15,668 5,614 35.8 1.9 14.6 10.6 1707 葡萄王 212 17 8.1 2.9 9.7 5.4
1402 遠東新 5,142 1,063 20.7 1.5 14.9 6.8 4105 東洋 630 25 4.0 7.1 22.3 23.2
1722 台肥 2,329 875 37.6 1.4 23.4 93.8 4104 佳醫 207 13 6.2 1.1 15.6 10.4
1802 台玻 2,242 169 7.6 1.4 27.5 14.5 5211 蒙恬 42 4 10.5 2.2 6.6 11.0
2002 中鋼 14,431 1,940 13.4 1.5 22.6 10.2 3060 銘異 392 25 6.3 3.0 14.3 6.0
2105 正新 6,099 861 14.1 3.5 21.4 9.9 9955 佳龍 102 2 2.1 NM NM NM
2201 裕隆汽車 2,648 337 12.7 1.2 22.4 9.8 9930 中聯資源 350 7 1.9 2.6 18.0 8.5
2207 和泰車 3,459 747 21.6 3.9 16.1 6.4 8390 金益鼎 91 1 1.2 1.8 9.6 12.4
2301 光寶科技 2,788 1,176 42.2 1.2 11.7 4.4 2913 農林 309 17 5.3 0.9 38.5 NM
2303 聯電 6,355 2,974 46.8 0.9 18.6 4.2 6184 大豐電 135 5 3.4 2.6 14.3 9.6
2308 台達電 7,579 5,247 69.2 3.0 20.9 8.9 9908 大台北 324 10 3.2 1.2 14.2 13.4
2311 日月光 6,539 4,619 70.6 1.9 14.3 5.6 8926 台汽電 409 19 4.8 1.5 12.9 NM
2317 鴻海 31,533 16,069 51.0 1.7 11.8 7.3 4927 KY泰鼎 142 73 51.2 2.1 10.3 4.7
2324 仁寶 5,027 2,964 59.0 1.5 14.0 6.4 1704 榮化 1,252 305 24.3 1.7 9.5 13.6
2325 矽品 3,563 1,981 55.6 1.8 22.2 5.3 2448 晶電 2,123 799 37.7 1.4 25.5 13.6
2330 台積電 72,923 56,122 77.0 3.6 16.9 7.5 3490 單井 25 0 0.1 1.0 12.6 6.0
2347 聯強 3,673 1,888 51.4 2.5 15.0 23.7 1590 Airtac 865 692 80.0 4.9 14.2 9.8
2353 宏碁 3,214 1,177 36.6 1.3 NM NM 6153 嘉聯益 477 49 10.2 2.0 9.9 5.6
2354 鴻準 4,085 1,070 26.2 2.3 15.7 9.1 3293 鈊象 334 29 8.8 3.0 8.9 11.1
2357 華碩 8,155 4,326 53.1 2.1 14.4 6.7 8044 網路家庭 432 146 33.8 9.7 24.8 19.1
2382 廣達 10,498 3,999 38.1 2.8 14.4 11.0 8255 朋程 204 2 1.1 2.7 13.4 8.9
2409 友達 3,928 1,410 35.9 0.6 NM 9.0 6116 彩晶 572 66 11.5 0.6 NM 34.0
2412 中華電 23,557 3,835 16.3 1.9 15.1 8.1 Simple Avg 407 93 13.1 2.6 14.5 11.1
2454 聯發科 10,136 3,428 33.8 2.7 22.8 15.9
2474 可成 4,880 2,117 43.4 2.7 14.2 5.6 3044 健鼎 1,559 980 62.8 2.1 10.7 3.8
2498 宏達電 12,782 6,861 53.7 4.0 6.5 4.8 6153 嘉聯益 477 49 10.2 2.0 9.9 5.6
2801 彰銀 3,644 376 10.3 1.2 12.4 89.5 8072 陞泰 326 11 3.4 2.2 11.4 5.3
2880 華南金 4,518 492 10.9 1.1 16.1 81.4 2107 厚生 323 28 8.8 1.1 4.2 5.8
2881 富邦金 9,084 1,964 21.6 1.2 9.1 29.7 1337 F-亞塑 434 312 71.9 2.3 9.4 3.8
2882 國泰金 10,737 1,805 16.8 1.5 29.5 NM 3030 德律 278 19 6.7 1.9 9.6 3.8
2883 開發金 2,869 445 15.5 0.7 53.8 381.2 6146 耕興 184 56 30.3 3.0 12.6 6.4
2885 元大金 4,557 1,444 31.7 0.9 10.6 84.5
1707 葡萄王 212 17 8.1 2.9 9.7 5.4
2886 兆豐金 8,404 2,025 24.1 1.2 14.3 NM
8210 勤誠 144 14 10.0 2.1 9.0 5.3
2890 永豐金控 2,485 777 31.3 0.9 25.4 54.7
2114 鑫永銓 126 1 1.2 2.4 8.6 5.9
2891 中信金 7,561 3,435 45.4 1.3 12.6 79.1
2420 新巨 123 1 1.2 1.6 7.5 5.0
2892 第一金 4,420 750 17.0 1.1 17.9 96.2
3527 聚積 154 3 2.2 3.0 15.4 5.2
2912 統一超 5,527 2,225 40.3 8.2 26.8 12.3
3213 茂訊 102 4 4.1 2.7 9.8 6.8
3008 大立光 2,117 546 25.8 3.2 12.4 11.7
3611 鼎翰 102 1 0.8 3.0 8.9 6.0
3045 台灣大 10,639 3,566 33.5 6.6 23.9 12.2
8114 振樺電 114 8 6.7 2.8 9.5 5.3
3231 緯創 3,109 1,869 60.1 1.5 10.5 5.1
5490 同亨 96 11 11.9 1.8 8.7 4.7
3481 奇美電子 3,047 622 20.4 0.5 NM 8.0
8103 瀚荃 108 8 7.1 1.9 9.0 3.2
3673 F-TPK 2,926 1,844 63.0 3.1 8.0 6.6
3332 幸康 74 0 0.1 1.7 8.5 6.5
4904 遠傳 7,027 2,855 40.6 2.9 23.8 7.8
8091 翔名 96 1 0.9 2.9 9.8 5.0
5880 合庫金 3,903 452 11.6 1.0 459.8 NM
3526 凡甲 74 0 0.2 1.9 10.6 3.4
6505 台塑化 27,689 1,944 7.0 3.9 38.3 21.3
5439 高技 63 0 0.1 1.5 6.5 3.4
6218 豪勉科技 56 0 0.1 1.7 13.0 6.9
TWSE 50 Sum 444,795 177,884 40.0 2.0 19.3 8.9
3390 旭軟 62 0 0.2 1.9 6.9 3.9
TWSE 688,337 226,463 32.9 1.5 15.3 13.2
3563 牧德 58 2 4.2 3.2 9.0 5.9
4429 聚紡 46 2 3.3 1.3 13.2 4.6
Simple Avg 216 61 10.3 2.2 9.6 5.1
Note: 1) 05/07/2012 stock price and 2012 consensus forecast
Source: Cmoney, TWSE

11. Our Approach – Find “Future Stars”
Marketcap QFII Marketcap QFII
QFII % P/B P/E EV/EBITDA Marketcap
($US mn) ($US mn) Marketcap
QFII % P/B P/E EV/EBITDA
1101 台泥 4,548 1,609 35.4 1.4 16.7 7.4 ($US mn) ($US mn)
1102 亞泥 3,754 683 18.2 1.4 14.3 11.3
1216 統一 6,476 3,012 46.5 3.0 19.0 9.0 1580 新麥 139 11 8.0 3.6 10.2 7.0
1709 和益 270 11 4.2 1.4 9.1 6.4
1301 台塑 17,853 6,747 37.8 2.0 11.4 14.3
4401 東隆興 112 0 0.4 1.4 6.0 4.3
1303 南亞 16,437 4,325 26.3 1.8 12.1 11.5
1707 葡萄王 194 13 6.5 2.4 11.2 5.3
1326 台化 16,427 6,068 36.9 1.7 9.9 10.1
4105 東洋 647 29 4.5 5.9 11.1 19.4
1402 遠東新 6,032 1,335 22.1 1.8 13.9 7.7
4104 佳醫 237 18 7.4 1.3 11.0 9.5
1722 台肥 2,558 1,014 39.7 1.4 41.2 91.5
5211 蒙恬 47 5 10.5 2.1 17.9 12.2
1802 台玻 2,602 194 7.5 1.6 14.1 9.7
3060 銘異 347 22 6.2 2.1 12.1 6.5
2002 中鋼 14,909 1,889 12.7 1.6 11.6 10.2 9955 佳龍 111 2 1.8 1.2 NM 21.8
2105 正新 5,613 808 14.4 3.7 16.3 9.3 9930 中聯資源 302 5 1.7 2.3 13.8 9.3
2201 裕隆汽車 3,214 450 14.0 1.4 21.1 13.5 8390 金益鼎 84 1 1.2 1.5 9.8 11.3
2301 光寶科技 2,781 1,166 41.9 1.2 9.2 3.0 2913 農林 308 14 4.6 0.7 38.9 NM
2303 聯電 6,673 2,933 44.0 0.9 7.8 4.0 6184 大豐電 123 4 3.0 2.4 12.7 10.1
2308 台達電 6,329 4,251 67.2 2.5 12.2 16.1 9908 大台北 314 9 3.0 1.1 15.1 12.7
2311 日月光 6,318 4,390 69.5 2.1 10.2 5.8 8926 台汽電 401 17 4.2 1.4 10.6 NM
2317 鴻海 34,027 16,581 48.7 2.0 12.2 9.8 4927 KY泰鼎 123 61 49.3 1.6 7.1 5.0
2324 仁寶 4,998 2,822 56.5 1.2 6.0 6.6 1704 榮化 1,529 369 24.2 1.8 11.1 11.6
2325 矽品 3,361 1,897 56.5 1.6 17.0 6.9 2448 晶電 2,139 837 39.1 1.3 8.1 10.5
2330 台積電 66,084 49,972 75.6 3.5 12.3 6.8 3490 單井 25 0 0 0.9 12.1 6.0
2347 聯強 3,808 2,112 55.5 3.3 21.7 26.8 1590 Airtac 805 618 76.8 3.8 10.0 9.0
2353 宏碁 3,790 1,370 36.2 1.1 6.8 171.3 6153 嘉聯益 541 116 21.5 2.2 12.1 5.3
2354 鴻準 4,769 1,350 28.3 2.4 15.6 9.4 3293 鈊象 490 39 8.0 4.8 12.7 12.2
2357 華碩 6,098 2,798 45.9 1.6 10.5 6.8 8044 網路家庭 408 133 32.7 8.8 14.7 20.5
2382 廣達 8,706 3,017 34.7 2.2 13.5 13.6 8255 朋程 258 3 1.1 3.0 16.5 9.7
2409 友達 4,914 1,810 36.8 0.5 19.5 9.5 6116 彩晶 482 59 12.2 0.4 NM 8.0
2412 中華電 24,746 5,454 22.0 2.0 15.6 7.1 Simple Avg 417 96 13.8 2.4 12.8 10.2
2454 聯發科 11,169 4,044 36.2 2.7 9.7 22.6
2474 可成 4,654 2,083 44.8 3.8 28.4 5.2 3044 健鼎 1,489 837 56.2 1.9 8.3 3.8
2498 宏達電 16,502 9,040 54.8 5.6 10.5 8.9 6153 嘉聯益 541 116 21.5 2.2 12.1 5.3
8072 陞泰 322 9 2.7 2.1 10.4 5.9
2801 彰銀 4,095 433 10.6 1.2 13.8 152.1
2107 厚生 344 26 7.6 1.1 7.4 5.8
2880 華南金 4,792 491 10.3 1.3 21.9 121.6
1337 F-亞塑 338 244 72.2 1.8 8.5 3.7
2881 富邦金 10,621 2,455 23.1 1.3 14.0 79.7
3030 德律 268 14 5.2 1.6 5.9 3.7
2882 國泰金 12,066 2,079 17.2 1.5 72.4 NM
6146 耕興 173 49 28.2 2.7 9.8 6.1
2883 開發金 3,769 584 15.5 0.7 10.7 629.9
1707 葡萄王 194 13 6.5 2.4 11.2 5.3
2885 元大金 5,910 2,058 34.8 1.3 19.2 141.8
8210 勤誠 139 14 10.0 1.9 7.8 4.0
2886 兆豐金 8,329 1,907 22.9 1.1 14.2 NM 2114 鑫永銓 124 1 1.2 2.2 8.5 6.1
2888 新光金 2,691 646 24.0 0.8 28.3 NM 2420 新巨 118 1 1.0 1.4 6.8 4.0
2890 永豐金控 2,458 757 30.8 0.7 12.6 96.5 3527 聚積 127 1 1.1 2.4 9.7 6.0
2891 中信金 7,956 3,730 46.9 1.3 14.4 87.7 3213 茂訊 108 4 3.7 2.9 9.4 6.7
2892 第一金 4,957 807 16.3 1.2 18.7 154.8 3611 鼎翰 106 1 1.0 3.1 9.2 5.7
2912 統一超 5,614 2,278 40.6 8.3 29.4 10.6 8114 振樺電 102 7 6.6 2.5 8.6 5.9
3008 大立光 3,116 1,092 35.1 4.8 19.5 14.2 5490 同亨 102 13 12.3 1.8 9.0 4.3
3045 台灣大 10,148 3,270 32.2 6.2 22.7 10.2 8103 瀚荃 92 3 3.6 1.5 6.2 3.7
3231 緯創 3,127 1,759 56.3 1.5 7.3 7.0 3332 幸康 74 0 0.1 1.7 10.8 6.5
3481 奇美電子 3,827 798 20.9 0.4 NM 13.7 8091 翔名 88 2 2.1 2.5 8.2 5.2
3673 TPK 3,733 2,676 71.7 6.1 19.1 8.4 3526 凡甲 83 0 0.1 1.9 10.4 3.8
4904 遠傳 6,159 2,098 34.1 2.5 20.4 5.8 5439 高技 62 0 0.2 1.4 6.8 3.6
5880 合庫金 4,233 474 11.2 NM NM NM 6218 豪勉科技 62 0 0.5 1.6 6.3 4.8
6505 台塑化 28,387 1,947 6.9 3.5 21.2 16.0 3390 旭軟 63 0 0.1 1.9 7.4 4.3
TWSE 50 Sum 456,133 177,564 38.9 1.9 13.8 10.1 3563 牧德 53 2 3.5 2.3 7.2 5.2
TWSE 703,607 225,576 32.1 1.4 14.7 16.5 4429 聚紡 46 1 2.8 1.7 8.6 4.9
Simple Avg 209 54 10.0 2.0 8.6 5.0
Note: 1) 02/04/2012 stock price and 2012 consensus forecast
Source: Cmoney, TWSE

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

13. Where is Value in Taiwan?

14. EXAMPLE 1 – HANNSTAR 彩晶 (6116 TT)
Private Equity Put?
HANNSTAR VALUATION
Marketcap ($US mn) 518
Net Debt ($US mn) 117
Enterprise Value ($US mn) 635
2011(E) Sales ($US mn) 1,390
Book Value ($US mn) 1,280
2011(E) Operating Cash Flow ($US mn) 132
Net PP&E ($US mn) 1,179
Short Term Investments ($US mn) 51
P/B 0.4x
EV/Book 0.5x
EV/Operating Cash Flow 4.8x
Note: 1) 2011(E) Operating Cash Flow uses Annualized 1Q-3Q11 OPCF. 2) 02/04/2012 stock price. 3) 3Q11 Balance Sheet Data.
Source: Cmoney;

15. EXAMPLE 2 – GRAPE KING 葡萄王 (1707 TT)
1) Healthcare Food for Aging Population Trend;
2) Largest Home-Made Direct-Sales Network in Taiwan;
3) Only Listed Company in Taiwan with Direct Sales Business Model
GRAPEKING VALUATION
Marketcap ($US mn) 191 Cash
Marketcap
Net Debt ($US mn) (17) P/E Dividend
($US bn)
Yield
Enterprise Value ($US mn) 174
2011(E) Sales ($US mn) 123
2011(E) Sales Growth 14% Herbal
6.4 18x 2%
2011(E) Direct Sales ($US mn) 100 Life
2011(E) Direct Sales Growth 20%
2005-2010 Sales CAGR 17%
Nu Skin 3.0 22x 1%
2005-2010 EPS CAGR 24%
2012(E) P/E 12.8x
2012(E) PEG 0.8x Grape
0.17 10x 7%
King
EV/EBITDA 6.45x
Note: 1) 2011(E) Sales based on annualized 1Q-3Q11 sales. 2) 2011 Sales growth based on Jan-Oct 2011 sales growth. 3) 02/04/2012 stock price. 4)
3Q11 Balance Sheet Data.
Source: Cmoney; Company; Google Finance

16. EXAMPLE 3 – JYD 金益鼎 (8390 TT)
Recycling – Alchemist Turns Electronics Wastes into Precious Metals
JYD VALUATION EPS
Marketcap ($US mn) 83 1Q08 2Q08 3Q08 4Q08 2008
Net Debt ($US mn) 25 0.61 0.7 0.78 (0.7) 1.4
1Q09 2Q09 3Q09 4Q09 2009
Enterprise Value ($US mn) 108
0.1 0.43 0.5 0.53 1.6
2011(E) Sales ($US mn) 124
1Q10 2Q10 3Q10 4Q10 2010
Book Value ($US mn) 50
0.42 0.69 0.55 0.4 2.1
P/B 1.5x
1Q11 2Q11 3Q11 4Q11(E) 2011(E)
EV/Book 2x
0.73 0.94 0.92 0.4 3.0
EV/EBITDA 11x
1Q12(F) 2Q12(F) 3Q12(F) 4Q12(F) 2012(F)
2011 ROE(E) 15%
0.5 0.6 1 1.5 3.6
2.50
Low Gold High Gold
2.00
Price Price
1.50
1.00 High Factory
OK BEST
0.50 Utilization
0.00
2008/5 2008/11 2009/5 2009/11 2010/5 2010/11 2011/5 2011/11 Low Factory
X GOOD
Utilization
JYD (8390 TT) TWSE INDEX GOLD
Note: 1) 02/04/2012 stock price. 2) 3Q11 Balance Sheet Data. 3) EV/EBITDA is based on annualized 1Q-3Q11 data
Source: Cmoney, JYD

17. EXAMPLE 6 – Wahlee 華立 (3010 TT)
200 3
2.5
WAHLEE VALUATION 150 2
1.5
100 1
Marketcap ($US mn) 319 0.5
50 0
-0.5
Net Debt ($US mn) 132 0 -1
Enterprise Value ($US mn) 451
Stock Price Quaterly EPS(RHS)
2011(E) Sales ($US mn) 1,042 Linear (Quaterly EPS(RHS))
160 20.0%
Book Value ($US mn) 253 140
120 15.0%
100
P/E 7.8x 80 10.0%
60
40 5.0%
P/B 1.2x 20
0 0.0%
EV/Book 1.6x
2011 ROE(E) 16% Stock Price(LHS) Cash Dividend Yield(RHS)
Linear (Cash Dividend Yield(RHS))
Note: 1) 02/04/2012 stock price. 2) 3Q11 Balance Sheet Data. 3) Assume same payout ratio in 2012.
Source: Cmoney;

18. What’s the Risk?

19. 1. Where are Foreign Investors?
QFII holding is plateauing…
300 40% 60 90%
TWSE TSMC
77% 80%
33% 35%
250 $US bn 50 $US bn
70%
30%
200 40 60%
25%
50%
150 20% 30
40%
15%
100 20 30%
10%
20%
50 10
5% 10%
0 0% 0 0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
QFII Amount(LHS) QFII Holding of TWSE(RHS) QFII Amount(LHS) QFII Holding of TSMC(RHS)
Note: 1) 2001~2011 Year end positions. 2) 05/07/2012 stock price.
Source: Cmoney

20. 2. Where is Trading Volume?
Lowest turnover ever…
$US bn
5.0 1.0%
4.5
4.5 0.9%
0.9% 0.9% 4.0
4.0 3.8 0.8% 3.8 3.8 0.8%
0.8% 3.6 3.6
0.7%
3.5 3.2 0.7% 3.3 0.7%
2.9 0.6%
3.0 2.7 0.6% 0.6% 0.6%
2.5 2.6 0.6% 0.6%
0.5%
2.5 0.5% 0.5%
2.0 0.4%
1.5 0.3%
1.0 0.2%
0.5 0.1%
0.0 0.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Average Trading Volume(LHS) Average Turnover Rate(RHS)
Note: 1) 2012 data is based on Jan12. 2) 05/07/2012 stock price.
Source: Cmoney

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.

24. Case Study - HannStar

25. What’s the Future?
A Lost Decade? HannStar Stock Price since IPO…
40
35
30
25
20
15
10
5 05/07/2012
Stock price: 2.95
0
8/17/2001 8/17/2002 8/17/2003 8/17/2004 8/17/2005 8/17/2006 8/17/2007 8/17/2008 8/17/2009 8/17/2010 8/17/2011
Source: Cmoney

26. HannStar is Under-valued
HannStar HannStar AUO CMI CPT E ink
3Q11
(Parent Only) (Consolidated) (Consolidated) (Consolidated) (Consolidated) (Consolidated)
Marketcap ($US mn) 367 518 4,355 3,169 294 1,388
EV ($US mn) 267 484 8,853 12,347 1,163 1,541
Book value/share (TWD) 5.4 5.4 25.5 29.7 5.6 24.9
Cash ($US mn) 168 493 2,781 2,061 580 243
Debt ($US mn) 68 610 7,278 11,239 1,449 396
Net Debt ($US mn) (100) 117 4,498 9,178 869 153
Investments for sale ($US mn) 21 49 24 53 27 12
PP&E ($US mn) 627 1,179 11,986 14,097 2,246 311
Book ($US mn) 1,047 1,047 7,505 7,229 1,219 898
OPCF (1Q-3Q11) ($US mn) 70 99 236 118 32 147
Capex (1Q-3Q11) ($US mn) (61) (312) (1,469) (1,302) (79) (65)
FCF (1Q-3Q11) ($US mn) 9 (213) (1,233) (1,185) (47) 81
P/B 0.4 0.4 0.6 0.4 0.2 1.5
EV/Book 0.3 0.5 1.2 1.7 1.0 1.7
EV/OPCF 2.9 3.7 28.1 78.4 27.3 7.1
Net Debt/Equity % (10) 11 60 127 71 17
Net Debt/Marketcap % (40) 47 120 320 372 10
Note: 1) 3Q11 Consolidated data. 2) OPCF, Capex, and FCF based on 1Q-3Q11 accumulated Data. 3) 1/18/2012 stock price.
Source: Cmoney;

27. What’s Next? What to Do?
Management Buy Out – More Incentives! Partnership!
Core
Shareholders Core Shareholders Private
25% 25% Equity
40% Core
Debt Leverage Shareholders
50% Management + 50%
Employee
5%
Others Private Equity
75% 20%
Management
+ Employee
10%
Equity Valuation $US 500 mn $US 1 bn $US 500 mn
Net Debt $US 500 mn
Management Buy Out $US 1 bn Valuation
Corporate Structure Pre-MBO Equity Post-MBO Equity Capital
Holding % Holding %
Core Shareholder Base 25% 50%
Employee 2% 4% $US 20 mn (interest free loan ~$US100/mth - 3 years)
Management 3% 6% $US 30 mn (management bonus; 3 years lock up)
Private Equity Investor 20% 40% $US 200 mn
Debt Leverage 50% $US 500 mn
(4% interest = $US20 mn interest expense/year)
Source: Athena

28. Wealth Creation
Entry – Private Company Valuation Exit (3 years) – New Public Company Valuation (IPO)
(NT$5.5/share - De-Listing) (NT$22/share – Re-Listing)
Enterprise Value $US 1 bn Enterprise Value $US 2 bn
EBITDA $US 150 mn EBITDA $US 250 mn
EV/EBITDA 6.5x EV/EBITDA 8x
EV/Book 0.8x EV/Book 1.1x
Net DEBT $US 500 mn Net DEBT 0
EQUITY $US 500 mn EQUITY $US 2 bn
Wealth Creation
Corporate Structure Today Equity Post-MBO Equity Equity Wealth
Valuation Equity Valuation Valuation Creation
(Today) Holding % (Post MBO) (3 years)
Core Shareholder Base 25% $US125 mn 50% $US250 mn $US1 bn 8x
Employee 4% $US20 mn $US80 mn Very large
Management 6% $US30 mn $US120 mn Very large
Private Equity Investor 40% $US200 mn $US800 mn 4x
Total Equity Valuation $US500 mn $US500 mn $US2 bn 4x
Source: Athena

29. Conglomerate Risk?
$US mn Group Marketcap Lowest Ever…
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
華新 華邦電 華新科 瀚宇博德 彩晶
Mktcap Conglomerate
Ticker Name P/S P/B P/E EV/Book EV/EBITDA EV/OPCF
($US mn) Holdings
1605 TT 華新麗華 1,121 0.2x 0.5x 32x 1.1x 32x 221x ~20%
2344 TT 華邦電 517 0.4x 0.4x 34x 0.7x 2x 3x ~30%
2492 TT 華新科 181 0.2x 0.4x N.A. 0.6x 3x 8x ~35%
6116 TT 瀚宇彩晶 367 0.2x 0.4x N.A. 0.5x 8x 4x ~25%
5469 TT 瀚宇博德 185 0.1x 0.5x 12x 1.7x 5x 10x ~50%
Note: 1) Based on 1/18/2012 stock price. 2) 3Q11 Book value. 3) Annualized Jan-Oct11 sales for sales calculation. 4) Annualized 1Q-3Q11 EBITDA
Source: Cmoney;

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