MIRA INFORM REPORT

Report No. :	484889
Report Date :	12.01.2018

IDENTIFICATION DETAILS

Name :	SONG HO INDUSTRIAL CO., LTD.
Registered Office :	No.61, Nan-Kong 3 Road, Nan Tou City Nan Tou Hsien
Country :	Taiwan
Financials (as on) :	31.12.2016
Date of Incorporation :	1972-9-15
Com. Reg. No.:	85611896
Legal Form :	Joint Stock Company
Line of Business :	Manufacturing and Sale of Steel Products.
No. of Employees :	About 300 Employees

RATING & COMMENTS

(Mira Inform has adopted New Rating mechanism w.e.f. 23^rd January 2017)

MIRA’s Rating :

A

Credit Rating	Explanation	Rating Comments
A	Acceptable Risk	Business dealings permissible with moderate risk of default

Status :	Satisfactory
Payment Behaviour :	No Complaints
Litigation :	Clear

NOTES:

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List

Country Name	Previous Rating (30.06.2017)	Current Rating (30.09.2017)
Taiwan	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low Risk	A2
Moderately Low Risk	B1
Moderate Risk	B2
Moderately High Risk	C1
High Risk	C2
Very High Risk	D

TAIWAN - ECONOMIC OVERVIEW

Taiwan has a dynamic capitalist economy that is driven largely by industrial manufacturing, and especially exports of electronics, machinery, and petrochemicals. This heavy dependence on exports exposes the economy to fluctuations in global demand. Taiwan's diplomatic isolation, low birth rate, rapidly aging population, and increasing competition from China and other Asia Pacific markets are other major long-term challenges.

Following the landmark Economic Cooperation Framework Agreement (ECFA) signed with China in June 2010, Taiwan in July 2013 signed a free trade deal with New Zealand - Taipei’s first-ever with a country with which it does not maintain diplomatic relations - and, in November of that year, inked a trade pact with Singapore. However, follow-on components of the ECFA, including a signed agreement on trade in services and negotiations on trade in goods and dispute resolution, have stalled. In early 2014, the government bowed to public demand and proposed a new law governing the oversight of cross-Strait agreements, before any additional deals with China are implemented; the legislature has yet to vote on such legislation, leaving the future of ECFA uncertain. President TSAI since taking office in May 2016 has promoted greater economic integration with South and Southeast Asia through the New Southbound Policy initiative and has also expressed interest in Taiwan joining the Trans-Pacific Partnership as well as bilateral trade deals with partners such as the US.

Taiwan's total fertility rate of just over one child per woman is among the lowest in the world, raising the prospect of future labor shortages, falling domestic demand, and declining tax revenues. Taiwan's population is aging quickly, with the number of people over 65 expected to account for nearly 20% of the island's total population by 2025.

The island runs a trade surplus with many economies, including China and the US, and its foreign reserves are the world's fifth largest, behind those of China, Japan, Saudi Arabia, and Switzerland. In 2006, China overtook the US to become Taiwan's second-largest source of imports after Japan. China is also the island's number one destination for foreign direct investment. Taiwan since 2009 has gradually loosened rules governing Chinese investment and has also secured greater market access for its investors on the mainland. In August 2012, the Taiwan Central Bank signed a memorandum of understanding (MOU) on cross-Strait currency settlement with its Chinese counterpart. The MOU allows for the direct settlement of Chinese renminbi (RMB) and the New Taiwan dollar across the Strait, which has helped Taiwan develop into a local RMB hub.

Closer economic links with the mainland bring opportunities for Taiwan’s economy but also pose challenges as political differences remain unresolved and China’s economic growth is slowing. Domestic economic issues loomed large in public debate ahead of the January 2016 presidential and legislative elections, including concerns about stagnant wages, high housing prices, youth unemployment, job security, and financial security in retirement.

Source : CIA

Contact Points

Company Name:	Song Ho Industrial Co., Ltd.
Supplied Name:	SONG HO INDUSTRIAL CO., LTD
Trading Address:	No.61, Nan-Kong 3 Road, Nan Tou City Nan Tou Hsien
Supplied Address:	HEAD OFFICE # 61, NAN-KONG 1 ROAD, NAN TOU CITY NAN TOU HSIEN 540, TAIWAN
Telephone Number:	+886-49-225-3551/2252746-7/2256891-3
Fax Number:	+886-49-225-3395
E-mail:	sales@songho.com mis.songho@msa.hinet.net

Notes: The exact name and address are as above.

Company Identification Details

Registered Name:	Song Ho Industrial Co., Ltd.
Registered Address:	No.61, Nan-Kong 3 Road, Nan Tou City Nan Tou Hsien
Date of Foundation:	1972-9-15
Registration Number:	85611896
Registry:	MOEA Central Office
Registered Capital:	NTD 500,000,000 (USD 17,000,000) (As of 2018.1, 1 NTD = 0.0340 USD)
Paid-up Capital:	NTD 496,220,760 (USD 16,871,506)
Legal Representatives:	Minshun Lin
egal Form:	Joint Stock Company
Principal Activities:	Manufacturing and sale of steel products.
Staff:	About 300 Employees
Listed at Stock Exchange:	Yes; Stock Code: 5016
Date of Last Annual Return:	2017-6-19

History

Subject was incorporated on 1972-9-15 with registered number 85611896 as Joint Stock Company in Taiwan.

Subject listed on Taiwan Over-The-Counter Securities Exchange on 2001-3-5.

Corporate Structure

Factories

1
Address:	No.61, Nan-Kong 3 Road, Nan Tou City, Nan Tou Hsien
Date of Foundation:	1969-1-1
Factory Registration Number:	99652224
Factory Manager:	Minshun Lin
Status:	In Production
Date of Last Annual Return:	2017-10-17
Major Products:	241 steels 249 other basic metals 254 metal processing 259 other metal products 291 metal processing machinery 293 general machinery
2
Name:	The Second Factory
Address:	No. 328, Zhonghua Rd., Yongfeng Li, Nan Tou City, Nan Tou Hsien, Taiwan
Date of Foundation:	2000-5-5
Date of Registration:	2000-7-6
Factory Registration Number:	99652292
Factory Manager:	Tingfang Lin
Status:	In Production
Date of Last Annual Return:	2017-6-28
Major Products:	293 general machinery
3
ame:	The Third Factory
Address:	No. 321, Zhonghua Rd., Yongfeng Li, Nan Tou City, Nan Tou Hsien, Taiwan
Date of Foundation:	2017-4-19
Date of Registration:	2017-6-28
Factory Registration Number:	08000228
Factory Manager:	Tingfang Lin
Status:	In Production
Date of Last Annual Return:	2017-6-28
Major Products:	241 steels 254 metal processing 291 metal processing machinery 293 general machinery

Shareholders

Major Shareholders

Name	Subscription Shares
Tingfang Lin
6,551,030
Minshun Lin	4,626,300
Jinnan Li	515,000
Huiyou Xu	20,000
Yanyu Liu	2,502,715
Xingui Hong	233,340

Management Information

Core Management

Directors

1
Name		Tingfang Lin
Position		Board Chairman
2
Name	Minshun Lin
Position		Director
3
Name	Jinnan Li
Position		Director
4
Name	Huiyou Xu
Position		Independent Director
5
Name	Chognxi Huang
Position		Independent Director
6
Name	Yanyu Liu
Position		Supervisor
7
Name	Xingui Hong
Position		Supervisor

Personnel Structure

Total Employees

About 300 Employees

Operation Information

Offices & Factories

	Headquarters
Add	No.61, Nan-Kong 3 Road, Nan Tou City Nan Tou Hsien

Production Information

Subject is engaged in manufacturing of steel products, etc.

Subject has factories in Taiwan for production.

It is introduced that subject’s factory area is about 56,147m square meters.

Subject obtained the certifications of ISO 9002 and ISO 14001.

Purchase Information

The registered activities of subject:

Business Code	Details
CA01020	Steel Rolling and Extruding
CA01050	Secondary processing of steel materials
CA01060	Steel Wires and Cables Manufacturing
CA02090	Metal Wire Products Manufacturing
CA03010	Metal Heat Treating
CA04010	Surface treatment
CB01010	Machinery and Equipment Manufacturing
CB01990	Other mechanical equipment manufacturing
CC01010	Power Generation, Transmission and Distribution Machinery Manufacturing
CI01010	Rope, Cable and Net Manufacturing
E604010	Installation of l Machinery and Equipment
F401010	International Trading Business
F113990	Manufacturing of other mechanical appliances
F213990	Retailing of other mechanical appliance
C801060	Manufacturing of synthetic rubber
C804020	Manufacturing of industrial rubber products
C804990	Manufacturing of other rubber products
ZZ99999	Besides licensed business, all other business items those are not banned or restricted.

The raw materials for production are mostly purchased in domestic market.

Sales Information

Subject is mainly engaged in sale of steel products, etc.

The major products sold by the subject include steel wire, steel bar, wire rope, galvanized steel strand and inner cable, etc.

The major sales regions include Taiwan, Japan, Korea, India, Southeast Asia, Europe and America, etc.

One of the subject’s major customers is WCJ Pilgrim Wire Llc.

Import and export right:

Import right	Yes
Export right	Yes

Settlements

Purchase

Domestic Purchase

Products	Raw materials
Payment Terms	Cash, T/T, etc

Import

Subject has little import.

Sales

Domestic Markets

Product	Steel products
Selling Terms	Cash, T/T, etc

Export

Product	Steel products
Selling Terms	L/C, T/T, etc

Balance Sheet

Unit: NTD/000

Consolidated	2016-12-31	2015-12-31
Assets
Current assets
Cash and cash equivalents
Total cash and cash equivalents	386,225	227,473
Current held-to-maturity financial assets
Current held-to-maturity financial assets, net	9,153	0
Notes receivable, net
Notes receivable, net	207,174	161,467
Accounts receivable, net
Accounts receivable, net	334,868	299,244
Other receivables
Other receivables, net	9,363	11,174
Current tax assets
Total current tax assets	6,800	0
Inventories
Total inventories	610,704	640,143
Prepayments
Total prepayments	6,920	13,870
Other current assets
Total other current assets	4,031	9,175
Total current assets	1,575,238	1,362,546
Non-current assets
Non-current financial assets at cost
Non-current financial assets at cost, net	63,649	63,649
Property, plant and equipment
Total property, plant and equipment	1,019,567	1,040,593
Investment property, net
Investment property, net	668	668
Intangible assets
Total intangible assets	142	102
Deferred tax assets	26,639	40,417
Other non-current assets
Total other non-current assets	21,319	30,373
Total non-current assets	1,131,984	1,175,802
Total assets	2,707,222	2,538,348
Liabilities and equity
Liabilities
Current liabilities
Short-term borrowings
Total short-term borrowings	81,963	82,633
Short-term notes and bills payable
Total short-term notes and bills payable	89,955	79,880
Notes payable
Total notes payable	190,163	128,067
Accounts payable
Total accounts payable	29,097	33,373
Other payables
Total other payables	82,486	71,311
Current tax liabilities	21,747	8,314
Other current liabilities
Long-term liabilities, current portion
Total long-term liabilities, current portion	163,228	176,878
Other current liabilities, others	6,525	9,332
Total other current liabilities	169,753	186,210
Total current liabilities	665,164	589,788
Non-current liabilities
Long-term borrowings
Total long-term borrowings	652,008	635,819
Deferred tax liabilities
Total deferred tax liabilities	167,871	168,052
Other non-current liabilities
Net defined benefit liability, non-current	0	41,413
Other non-current liabilities, others	14	55
Total other non-current liabilities	14	41,468
Total non-current liabilities	819,893	845,339
Total liabilities	1,485,057	1,435,127
Equity
Equity attributable to owners of parent
Share capital
Ordinary share	496,221	496,221
Total capital stock	496,221	496,221
Capital surplus
Total capital surplus	8,000	8,000
Retained earnings
Legal reserve	189,573	181,157
Special reserve	738	738
Unappropriated retained earnings (accumulated deficit)
Total unappropriated retained earnings (accumulated deficit)	513,500	399,130
Total retained earnings	703,811	581,025
Other equity interest
Total other equity interest	5,528	9,576
Treasury shares	0	0
Total equity attributable to owners of parent	1,213,560	1,094,822
Non-controlling interests	8,605	8,399
Total equity	1,222,165	1,103,221
Total liabilities and equity	2,707,222	2,538,348

Profit and Loss Account

Unit: NTD/000

Consolidated	2016	2015
Operating revenue
Total operating revenue	2,300,188	2,238,314
Operating costs
Total operating costs	1,932,463	1,975,332
Gross profit (loss) from operations	367,725	262,982
Gross profit (loss) from operations	367,725	262,982
Operating expenses
Selling expenses
Total selling expenses	69,373	80,043
Administrative expenses
Total administrative expenses	73,156	63,718
Research and development expenses
Total research and development expenses	6,408	5,441
Total operating expenses	148,937	149,202
Net operating income (loss)	218,788	113,780
Non-operating income and expenses
Other income
Total other income	15,089	2,668
Other gains and losses
Other gains and losses, net	1,167	6,411
Finance costs
Finance costs, net	13,741	16,448
Total non-operating income and expenses	2,515	-7,369
Profit (loss) from continuing operations before tax	221,303	106,411
Tax expense (income)
Total tax expense (income)	40,069	22,007
Profit (loss) from continuing operations	181,234	84,404
Profit (loss)	181,234	84,404
Other comprehensive income
Components of other comprehensive income that will not be reclassified to profit or loss
Gains (losses) on remeasurements of defined benefit plans	1,835	229
Income tax related to components of other comprehensive income that will not be reclassified to profit or loss	312	39
Components of other comprehensive income that will not be reclassified to profit or loss	1,523	190
Components of other comprehensive income that will be reclassified to profit or loss
Exchange differences on translation	-5,096	-1,940
Income tax related to components of other comprehensive income that will be reclassified to profit or loss	-829	-316
Components of other comprehensive income that will be reclassified to profit or loss	-4,267	-1,624
Other comprehensive income, net	-2,744	-1,434
Total comprehensive income	178,490	82,970
Profit (loss), attributable to:
Profit (loss), attributable to owners of parent	180,809	84,161
Profit (loss), attributable to non-controlling interests	425	243
Comprehensive income attributable to:
Comprehensive income, attributable to owners of parent	178,284	82,811
Comprehensive income, attributable to non-controlling interests	206	159
Basic earnings per share
Total basic earnings per share	3.64	1.70
Diluted earnings per share
Total diluted earnings per share	3.64	1.69

Cash Flows

Unit: NTD/000

Consolidated	2016	2015
Cash flows from (used in) operating activities, indirect method
Profit (loss) from continuing operations before tax	221,303	106,411
Profit (loss) before tax	221,303	106,411
Adjustments
Adjustments to reconcile profit (loss)
Depreciation expense	85,012	91,798
Amortization expense	1,400	1,657
Provision (reversal of provision) for bad debt expense	5,591	16,484
Interest expense	13,741	16,448
Interest income	-614	-493
Dividend income	-1,079	-663
Loss (gain) on disposal of property, plan and equipment	99	295
Reversal of impairment loss on non-financial assets	-3,770	-1,691
Total adjustments to reconcile profit (loss)	100,380	123,835
Changes in operating assets and liabilities
Changes in operating assets
Decrease (increase) in notes receivable	-45,707	53,093
Decrease (increase) in accounts receivable	-41,215	58,526
Decrease (increase) in other receivable	1,816	-2,274
Decrease (increase) in inventories	33,209	34,737
Decrease (increase) in prepayments	6,950	3,380
Decrease (increase) in other current assets	5,144	1,585
Total changes in operating assets	-39,803	149,047
Changes in operating liabilities
Increase (decrease) in notes payable	62,096	-75,694
Increase (decrease) in accounts payable	-4,276	-210
Increase (decrease) in other payable	15,737	-2,939
Increase (decrease) in other current liabilities	-2,807	3,536
Increase (decrease) in net defined benefit liability	-39,578	-42,258
Total changes in operating liabilities	31,172	-117,565
Total changes in operating assets and liabilities	-8,631	31,482
Total adjustments	91,749	155,317
Cash inflow (outflow) generated from operations	313,052	261,728
Interest received	609	495
Dividends received	1,079	663
Interest paid	-13,808	-16,395
Income taxes refund (paid)	-19,322	-31,864
Net cash flows from (used in) operating activities	281,610	214,627
Cash flows from (used in) investing activities
Acquisition of held-to-maturity financial assets	-9,153	0
Acquisition of financial assets at cost	0	0
Acquisition of property, plant and equipment	-60,454	-26,494
Proceeds from disposal of property, plant and equipment	0	334
Acquisition of intangible assets	-119	0
Increase in other non-current assets	-2,445	-31,736
Net cash flows from (used in) investing activities	-72,171	-57,896
Cash flows from (used in) financing activities
Increase in short-term loans	928,153	1,005,592
Decrease in short-term loans	-928,823	-976,997
Increase in short-term notes and bills payable	369,482	459,229
Decrease in short-term notes and bills payable	-359,407	-499,264
Proceeds from long-term debt	250,000	350,000
Repayments of long-term debt	-247,461	-450,784
Increase in other non-current liabilities	-41	15
Cash dividends paid	-59,546	-99,244
Net cash flows from (used in) financing activities	-47,643	-211,453
Effect of exchange rate changes on cash and cash equivalents	-3,044	-1,233
Net increase (decrease) in cash and cash equivalents	158,752	-55,955
Cash and cash equivalents at beginning of period	227,473	283,428
Cash and cash equivalents at end of period	386,225	227,473
Cash and cash equivalents reported in the statement of financial position	386,225	227,473

Note: Subject didn’t submit its individual financial information; we obtained its consolidated financials as follows for reference.

The above financial figures are based on the IFRSs Accounting System.

Bankers

Subject declined to disclose its bank details; from other source we could not obtain the relevant information, either.

Public Record

Mortgage

No chattel mortgage record of subject has been found within the recent 3 months.

Lawsuit

Up to date of reporting, no existing or latent litigation of the subject has been found.

Special Note

Interview Details

Name	Ms. Liao
Department	Sales Department

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	INR 63.74
UK Pound	1	INR 86.01
Euro	1	INR 76.14
TWD	1	INR

Note: Above are approximate rates obtained from sources believed to be correct

INFORMATION DETAILS

Analysis Done by :	VIV
Report Prepared by :	NIT

RATING EXPLANATIONS

Credit Rating	Explanation	Rating Comments
A++	Minimum Risk	Business dealings permissible with minimum risk of default
A+	Low Risk	Business dealings permissible with low risk of default
A	Acceptable Risk	Business dealings permissible with moderate risk of default
B	Medium Risk	Business dealings permissible on a regular monitoring basis
C	Medium High Risk	Business dealings permissible preferably on secured basis
D	High Risk	Business dealing not recommended or on secured terms only
NB	New Business	No recommendation can be done due to business in infancy stage
NT	No Trace	No recommendation can be done as the business is not traceable

NB is stated where there is insufficient information to facilitate rating. However, it is not to be considered as unfavourable.

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors are as follows:

· Financial condition covering various ratios

· Company background and operations size

· Promoters / Management background

· Payment record

· Litigation against the subject

· Industry scenario / competitor analysis

· Supplier / Customer / Banker review (wherever available)

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This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.