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Dear Shareholders,

 

The global economy was generally severely affected by the impact of the US-China trade war in 2019. Only the United States still had a strong economic performance; the deflation situation in Japan has not improved significantly; Partial emerging countries are forced to come under pressure due to the strong appreciation of the US dollar; the impacts of Britain’s successful Brexit and the confrontation between Italy and the EU in the euro zone, the crisis has slowly emerged. In 2020, although the US-China trade war tends to ease and the central bank's monetary policy in major countries continues to be easing, the global economy has been affected by the spread of the coronavirus pneumonia epidemic and had lowered their GDP targets. Even though the current economic situation still has many unfavorable factors and impacts that are causing relative danger, we continue to strive to break through the industry competition situation and finally return to the starting point of growth in 2019. For the company, the dormancy of the past few years will have a good turnaround and growth this year.

1、Consolidated revenue and net profit : Unit:NT$1,000
  2019 2018 Increase (Decrease)Amount Change Rate%
Net Revenue 8,430,970 8,156,268 274,702 3.37%
Gross Profit 2,007,091 1,827,626 179,465 9.82%
Net Profit 671,782 644,350 27,432 4.26%

Consolidated statement of income and profitability:

  Year 2019 2018
Financial Structure (%) Debt/Assets Ratio 34.94 30.34
Long-term Capital/Fixed Assets Ratio 260.78 254.77
Debt-Paying Ability (%) Current Ratio 284,10 340.73
Quick Ratio 205.84 250.96
Profitability(%) Return on Assets(%) 5.32 5.09
Return on Equity(%) 7.70 7.19
Earnings per Share(NT$) 2.17 2.08

2、Budget Execution:

The internal budget target set by the company each year does not disclose financial forecasts to the outside world. The overall revenue and profit will be affected by industry changes and product structure. The combined operating income and profit of 2019 are reached 100.79% and 99.42% of the budget target.

3、Research and development:

The company continuously enhancing Temperature Compensating Control Quartz Oscillator (TCXO)、Temperature Sensing Quartz Crystal (TSX)、Miniature Constant Temperature Control Quartz Crystal Oscillator (OCXO), Miniature Quartz Crystal (XO)、Miniature Mobile Device Crystal(Crystal) 、Light sensors…etc., and actively deploy the relevant customers of the 5G industry and the Internet of Things application, laying the foundation for the subsequent market growth momentum.

4、Results from execution of other projects:

(1) Green enterprise: In addition to ongoing promotion of green enterprise certification and other activities including the Greenhouse Gas Inventory (ISO14064-1) and routine Carbon Footprint checks, TXC was given the EPA’s Product Carbon Footprint Emission Factor Database Establishment Award and earned low carbon marks. TXC has also been promoting kitchen waste and plastic bag use reduction activities. The company hands out environmentally-friendly bags to further reduce the use of environmentally hazardous plastic bags.
(2) Occupational safety and health: TXC has continued to promote Occupational Health and Safety Assessment Series certification to uphold labor safety under the guidance of the Occupational Safety & Health Committee and Labor-Management Conference. A number of health promotion activities such as Getting to Know Metabolic Syndrome health lecture, pap smear testing, HPV virus awareness lecture, CPR and Heimlick maneuver instruction, workplace quit smoking activity, oral cancer screening activity, individual weight reduction activity, stress relief activity, blood pressure monitoring activity and flu vaccine inoculation activity were held by TXC to help employees take positive steps towards a healthy lifestyle. TXC will continue on working to create of a safe work environment to provide maximum safety to our employees.
(3) System certification: With regard to the maintenance of various operating systems, TXC has received the following certifications: Quality Management System (ISO9001), Automotive Industry Quality Management System (ISO/TS16949), Environmental Management System (ISO14001), Taiwan Occupational Safety and Health Management System (CNS15506), Information Safety Management System (ISO/IEC27001), Hazardous Substance Process Management System (IECQ QC 080000:2012), Occupational Safety and Health Management System (ISO45001). The Ministry of Finance's Customs and Excise Department issues high-quality enterprises with safety certification, the Ministry of Economic Affairs and Industry Bureau issues the Taiwan Intellectual Property Management Specification (TIPS) Verification Level A, and the Ministry of Health and Welfare issues a healthy workplace certification-health promotion mark. As well as ISO 14064-1:2006 Greenhouse Gas Inventory, Product Carbon Footprint Verification (PAS 2050:2011) and Material Flow Cost Accounting Verification (ISO 14051:2011). TXC will continue to update its management systems to satisfy and surpass customer requirements
(4) Corporate governance and responsibility: TXC’s was ranked among the top 20% of all listed companies for corporate governance ratings and the company continues to strive forward by embracing the spirit of open mindedness, dedication, honesty and happiness. Due to the long-term services provided by our company to neighboring disadvantaged families and orphanages. In addition, the company participation in a number of volunteer activities to show concern for local neighborhoods was included the CSR report. TXC Foundation was established to provide variously kind of support.

1、Strengthening industrial deployment and increasing market share:

(1)Consolidate existing markets to enhance competitiveness and maintain market share.

(2)Actively develop new markets, new industries, new applications, and new products, deepen China and strengthen the European, American and Japanese markets.

(3)Accelerate new product development, take root in high-end technology, and develop a blueprint for complete product technology.

(4)Embrace future application products, actively deploy industries such as automobiles, IoT, 5G, etc. to grasp business opportunities.

2、Optimize product mix and increase profitability:

(1)Improve product mix: combine production cost advantages to provide the best product mix and drive high-end, high-margin product sales.

(2)Strengthen the advantages of each plant: through the integration of MES (Manufacturing Execution System) to improve production efficiency, cross-factory cooperation, leverage the advantages of each plant and keep flexibility.

(3)Smart production and management: Through intelligent technology and big data analysis to integrate the information of each plant in real time to improve production yield and reduce COPQ (Cost of Poor Quality)

(4)Reduce manufacturing costs: Value chain resource integration, optimized cost analysis, and improved process improvement capabilities

3、Strategic alliances and integration:

In the future competitive environment, the market and product life cycle are shortened, the transfer and learning speed of technology is increasingly fast. With strategic alliances and integration, we can accelerate the transfer of key technologies or capabilities and speed up the development of new products and processes to effectively enter new markets and actively seek potential cooperation opportunities. To strengthen the company's competitive advantage and expand the use of existing technologies or products to further create synergy.

 

Uncertainty has impacted the global economy, and the industrial competition environment is still severe. At the moment of the 5G commercial timing, we are faced with rapid response and grasping opportunities, but only rooted in technology, breakthrough innovation, and accelerated construction of intelligent platforms to improve business effectiveness to return to the growth track. We keep strengthening the competitiveness to achieve the goal of continuous growth and profit improvement and gain growth momentum to create new results.

 

Yours Sincerely