Cheng Loong Corporation

1
 Agenda

Introduction of Cheng Loong

Global Recovered Paper Trend

Conclusion

2
A Leading Paper Company in Greater China

Founded : 1959

Publicly listed: 1971

Revenue: USD630.15 million (2004)

Total Assets: USD813.8 million

Capital: USD339.3 million

Employees: 2,850 in Taiwan

A world’s top 100 paper company

3
Major Products
Paper Board Paper Container

Container Board Corrugated Sheetboard Corrugated Container

Core Board White Board Paper Pallet Display Corrugated RFID Carton
Carton

Paper Household Product

Bathroom Paper
Facial Tissue
Paper Towels
Kitchen Towels
Printing/Writing/ ----etc
Business Form 4
Coated Paper
 Paper Industry’s Flow Chart

Up-Stream Middle-Stream Down-Stream Customers

Printing & Writing Paper Printing, Advertisement,

Paper Publishing
Household Products Family
Pulp Wrapping Paper Food, Construction
Specialty Paper Painting
Kraft/
Waste Paper Corrugated
Jute Liner Container
Containerboard
Corrugating Paper
Electronics, Fruit,
Paper Pallet
Core Board Shoes, Toys, Textile,
Board Core/Tube Transportation,
Food & Beverage…
Coated Folding
White Board
Uncoated Carton

Products
Products we
we produced
produced 5
 Our Management Concept
Core Ideologies

Sincerity and Trustworthiness

VISION

Caring about life, efficient use of resources, contributing to

society and becoming a
leading diversified paper packaging company
6
Financial Performance
Sales Net Profit
NT$ Billion NT$ Billion

25.00 20.00

20.04
20.00 18.76
15.00
16.33
14.54
15.00

10.00

10.00

5.00
5.00

0.91 1.27 1.10

0.41

0.00 0.00
2001 2002 2003 2004
Sales (NT$ Billion) 14.54 16.33 18.76 20.04
Net Profit (NT$ Billion) 0.41 0.91 1.27 1.10

7
 Our Objectives

To molt successfully from a traditional manufacturing
company to a service-oriented one

To maintain the No.1 in the containerboard/converting
market in Taiwan.

To strengthen our presence in China and become the
biggest containerboard/converting company in China

Focus on value-added and niche products.

8
 Our Competitive Strategies

Enhance our integration capability by establishing waste paper
sourcing subsidiaries worldwide.

Expand paper mills and converting plants with centralized and coastal
region-oriented strategies in China.

Add value to customers by serving a total packaging solution with our
collaborative design ability.

Create CLC brand awareness with environmental consciousness to
gain and solidify global customers.

Remain Taiwan’s leadership through continuous improvement on
quality, efficiency, technology and equipment.

Rapidly and continuously enlarge our presence in China and
Southeast Asia.
9
 CLC: An Integrated Paper Manufacturer

Raw Material Paper Mills Paper Converting Plants End Users

Suppliers

Local Customers:
We are the Leader in this 2 product markets
Asus, Foxconn,
Panasonic, Quanta,
Pulp 10% Sampo, Tatung
over
1000 companies
Container Board Paper
Paper Container
Container Global Customers:

Waste Paper Apple

HP-Compaq
90% IBM
Nike
Target
etc.…………….
*60% local supply * 40% self use *service including :
*40% import (mainly * 30% local customers packaging design vo lve
from USA, Europe, * 30% export worldwide & Printing we in
ss
Tokyo. ) u sine
B 10
 Core Competencies

Competitive Product Quality Total Packaging Global Customer

Solution
Cost Advantage and Reliability Network
Capability

Better control of
>40 years
Collaborative
Environmental

worldwide raw operational packaging design conscious image
materials: experience & ability
International
-cost control know-how
Unique printing qualification:
-sources reliability
Continuous ability -ISO 9001

Manufacturing improvement on
Experienced
integration from production process -ISO 14001/14064
personnel
paperboard to and efficiency -OHSAS 18001
converting
Vertical integration

International of pre-press
Local supply ability

Regional standard
manufacturing capabilities
Total packaging
requirement solution service
distribution:

Modern equipment
-cost efficiency
& advanced
-time-to-market technology

Global ERP system

Valued-Added
Valued-Added Solution
Solution Services
Services for
for Customers
Customers
11
Awards and Recognition

Pulp & Paper International Magazine ranked CLC as one of the Million
Tonners’ Club.

The largest user of waste paper in Taiwan, making a significant
contribution to resource recovery.

All corrugated products and household paper acquired Green Mark
certificate.

Received the first Certification of Greenhouse Gas Inventory Management
System in Taiwan after Kyoto Protocol effective Feb.16, 2005.

Awarded “the National Environment Protection Enterprise” prizes for
continuous five years (1998-2002)

Awarded “2004 Taiwan Corporate Sustainable Development” prize.

Up to date, obtained 26 trophies of “WorldStar” from World Packaging
Organization.

Over 30 inventions and improvement patents. 12
 Manufacturing

Global Operation Trading office

China

Germany Japan

New York Taiwan

(HQ)

Hong Kong

Vietnam
Los Angles
Thailand Australia

Manufacturing facilities in Asia to provide time-to-market and cost advantages

Overseas trading subsidiaries secure our raw material supply and provide up-to-dated market info.
13
14
Manufacturing Sites Introduction
Paper Mills in Taiwan

15
Tayuan mill

Start-up : 1987

Products: Industrial Paper

Capacity: 480,000 tons/y

Raw Materials: OCC-90%, UKP-10%

16
Chubei mill

Start-up : 1973

Products: Household Paper/Fine Paper

Capacity: 100,000 tons/y

Raw Materials: CPO/WL-20%, KP-80%

17
Hsinchu mill

Start-up : 1978

Products: Industrial Paper

Capacity: 67,000 tons/y

Raw Materials: OCC -70%，，CPO/WL-
，
20%， KP-10%

18
Houli mill

Start-up : 1971

Products: Industrial Paper, Fine Paper

Capacity: 640,000 tons/y

Raw Materials: OCC-85%, KP-15%

19
Manufacturing Sites Introduction
Non-Taiwan Asia

20
Shanghai Chung Loong Paper Co., Ltd

Start-up : 2000.4

Products: Test Liner/Medium

Capacity: 400,000 tons/y

Raw Material: OCC

China & Southeast Asia

21
Shanghai Chung Loong Paper Co., Ltd

：Felt side + wire side

Screen Type：

：1300 M/min (MAX)
Machinery Speed：

Max. Roll Width ：6300MM

：500~1200 M/min
Operational Speed：

Paper Machine

Coal-powered 130T/Hr boiler capable

of generating 24,000KW

With static anti-pollutant system
capable of removing 99% of the
pollutants

MgO absorbent utilization
Co-Generation system 22
Crystalyte (Dongguan) Co., Ltd.

Start-up : 2002.9

Products: Corrugated Container

Capacity: 96 Million M2/y

China & Southeast Asia

23
Shanghai Chung Hao Paper Co., Ltd.

Start-up : 2002.11

Products: Corrugated Container

Capacity: 120 Million M2 /y

China & Southeast Asia

24
Shanfu Paper (Kunshan) Co., Ltd.

Start-up : 2004.6

Products: Corrugated Container

Capacity: 72 Million M2 /y

China & Southeast Asia

25
Suzhou Cheng Loong Paper Co., Ltd.

Start-up : 2006 Q1

Products: Corrugated Container, Business Form

Capacity: 72 Million M2 /y
China & Southeast Asia

26
Tawana Container Co., Ltd.

Start-up : 1991.4

Products: Corrugated Container

Capacity: 120 Million M2 /y

China & Southeast Asia

27
Vina Tawana Container Co., Ltd.

Start-up : 2005.4

Products: Corrugated Container

Capacity: 72 Million M2 /y

China & Southeast Asia

28
Capacity & Production-CLC Group

Year : 2005 Taiwan China Thailand Vietnam Total

Mill 4 1 - - 5
Paper &
Paperboard
Capacity 1,300 400 - - 1,700
Product
(1,000 tons)
Production 1,283 308 - - 1,591

Plant 6 4 1 1 12
Paper
Container Capacity 606,000 360,000 120,000 72,000 1,086,000
2
(1,000 M )
Production 483,000 232,000 88,000 60,000 863,000

29
CLC Group-Production Growth

Paper & Paperboard

1,000 tons
1,800 1,700
1,591
1,600
China 400
1,400 308
Taiwan 1,172
1,200 1,081 25
1,000
800
600 1,283 1,300
1,081 1,147
400
200
0
2003 2004 2005 e 2006 e

30
CLC Group-Production Growth

Paper Container
1000 M2
1,200,000
Vietnam
990,000
1,000,000 Thailand
863,000 70,000
China 100,000
800,000 60,000
Taiwan 719,196 88,000
647,331 76,628 320,000
600,000 80,331 232,000
154,240
97,000
400,000

470,000 488,328 483,000 500,000

200,000

0
2003 2004 2005 e 2006e
31
Conclusion

CLC is the 2nd largest containerboard maker and No.1

corrugated converting maker in Chinese region (China+Taiwan).

Suzhou Cheng Loong Paper Co., Ltd. is scheduled to start
commercial run in 2006 Q1, which will boost Cheng Loong’s
production and integrated capability .

CLC group consumes nearly 1.5 million tons waste paper
every year.

CLC will continue to expand manufacturing sites and
strengthen its presence in China and southeast Asia through
establishing new facilities or strategic alliance.
32
 Agenda

Introduction of Cheng Loong

Global Recovered Paper Trend

Conclusion

33
 Global Recovered paper Trade Balances
Net Exports/Imports (1000 mts)

CANADA
1990 2002 2006 2010 E. EUROPE
-290k -1,637k -1,425k -1,329k 1990 2002 2006 2010
-1 -245 -615 -935

W. EUROPE
U.S.A. 1990 2002 2006 2010
1990 2002 2006 2010 -846k 2,658k 3,429k 4,616k
6,388k 11,054k 17,024k 19,839k
FAR EAST
1990 2002 2006 2010
-4.618k -11,583k -17,367k -18,918k

LATIN AMERICA AFRICA

1990 2002 2006 2010 1990 2002 2006 2010
-1,216k -1,510k -1,784k -2,376k -61k -73k - 31k -3k
AUSTRALIA
1990 2002 2006 2010
94k 264k 482k 789k

Source: EU Consulting, Germany and Moore & Associates, U.S.A

34
Global Recovered Paper Trade Flows

Recovered paper is mainly a domestic commodity. However, Asia,
especially China, is a key destination of international trade flows.
Million tons

Source: The Importance of Improving RCP Collection in China, Dali Zhang, Jaakko Pöyry Consulting ,
The CIPPD Seminar, October 15, 2003 35
Global Paper & Board Consumption

The global consumption of paper and paperboard will continue to grow.

Consumption growth will provide more paper for recycling.

Source: The Importance of Improving RCP Collection in China, Dali Zhang, Jaakko Pöyry Consulting , 36
The CIPPD Seminar, October 15, 2003
Recovered Paper Consumption

Consumption of recovered paper has increased most rapidly in Asia,
growing at an even faster rate than paper and board production

Source: The Importance of Improving RCP Collection in China, Dali Zhang, Jaakko Pöyry Consulting ,
The CIPPD Seminar, October 15, 2003 37
Paper and Board Fibre Furnish

Use of recovered paper has significantly increased its share of the fibre
furnish, displacing mechanical fibre and unbleached kraft pulp.

Source: The Importance of Improving RCP Collection in China, Dali Zhang, Jaakko Pöyry Consulting ,
The CIPPD Seminar, October 15, 2003 38
Future Global PCR Consumption

More OCC and mixed paper will be available for consumption, due to the
increased consumption of paperboard. Consumption of ONP/OMG will also
grow, but slower than other RCP grades

Source: The Importance of Improving RCP Collection in China, Dali Zhang, Jaakko Pöyry Consulting ,
The CIPPD Seminar, October 15, 2003 39
China Will Use More Recycled Fiber

Recovered paper is forecast to become increasingly important source of fibre due to
the limited availability of wood and problems in non-wood pulping before 2010.

Source: The Importance of Improving RCP Collection in China, Dali Zhang, Jaakko Pöyry Consulting ,
The CIPPD Seminar, October 15, 2003 40
Worldwide Recovered Paper Consumption Trends
Unit:1,000mt
2000 2001 2002 2006e 2010e
China 15,929 19,137 20,662 32,021 42,616

India 1,599 2,343 2,600 3,646 4,685

Korea 7,743 7,366 7,538 8,937 9,837

Latin 8,248 8,654 8,946 11,158 13,627

America
Source: EU Consulting, Germany and Moore & Associates, U.S.A
41
China Recovered Paper Grade Consumption

Unit:1,000mt

2002 2006e 2010e

ONP/OMG 4,234 6,798 9,427
OCC & Kraft 9,505 14,947 19,839
High Grades 875 1,444 1,987
Mixed P&B 6,048 8,832 11,363
Total 20,662 32,021 42,616
Source: E.U. Consulting, Germany and Moore & Associates U.S.A.

42
 Agenda

Introduction of Cheng Loong

Global Recovered Paper Trend

Conclusion

43
Conclusion

Asia is major importer and the world’s largest net importer of
recovered paper.

Global paper and board consumption continues to grow
(avg:+3.1%/y) , especially in non-Japan Asia. Recovered paper
has become one of the main sources of papermaking fibre and
increasing paper & board production will increase demand for
recovered paper.

China’s recovered paper consumption and collection are
unbalanced. As a result, China is the world’s largest single
importer of recovered paper.

The USA will continue to be the largest overseas recovered
paper supplier for China, but Japan is rapidly increasing its
share. 44
Thank You!

45