MIRA INFORM REPORT

Report No. :	486697
Report Date :	23.01.2018

IDENTIFICATION DETAILS

Name :	HOLY STONE ENTERPRISE CO., LTD.
Registered Office :	1F, No.62, Sec.2, Huang Shan Rd., Nei Hu Dist., Taipei Taiwan R.O.C.
Country :	Taiwan
Financials (as on) :	31.12.2016
Date of Incorporation :	01.06.1981
Com. Reg. No.:	20891326
Legal Form :	Joint Stock Company
Line of Business :	Manufacturing and sales of electronic components
No. of Employees :	800

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+	Low Risk	Business dealings permissible with low risk of default

Maximum Credit Limit :	USD 500,000
Status :	Good
Payment Behaviour :	Regular
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

COMPANY NAME AND ADDRESS

Company Name:	Holy Stone Enterprise Co., Ltd.
Supplied Name:	HOLY STONE ENTERPRISE CO. LTD.
Trading Address:	1F, No.62, Sec.2, Huang Shan Rd., Nei Hu Dist., Taipei Taiwan R.O.C.
Supplied Address:	Huang Shan Rd. Nei Hu Dist Taipei
Telephone Number:	+886-2-2627-0383
Fax Number:	+886-2-2658-9558
E-mail:	inquiry@holystone.com.tw

Notes: The exact name and address are as above.

Credit Summary

Credit Rating:	Maximum credit USD 500,000
Credit Opinion:	Business connections are permissible.

Company Identification Details

Registered Name:	Holy Stone Enterprise Co., Ltd.
Registered Address:	1F, No.62, Sec.2, Huang Shan Rd., Nei Hu Dist., Taipei Taiwan R.O.C.
Date of Foundation:	1981-06-01
Registration Number:	20891326
Registry:	Department of Commerce, Ministry of Economic Affairs, R.O.C.
Registered Capital:	NTD 4,500,000,000 (USD 148,500,000)
Paid-up Capital:	NTD 1,579,907,790 (USD 52,136,957)
Legal Representatives:	Jinrong Tang
Legal Form:	Joint Stock Company
Principal Activities:	Manufacturing and sales of electronic components, etc.
Staff:	About 800 Employees
Listed at Stock Exchange:	Yes; Stock Code: 3026
Date of Last Annual Return:	2018-01-02

History

Subject was incorporated on 1981-06-01 with registered number 20891326 as Joint Stock Company in Taiwan.

Subject listed on Taiwan Stock Exchange on 2002-08-26.

Corporate Structure

Factory

Name:	The First Longtan Factory
Address:	No.56, Ln. 90, Gong 5th Rd., Longtan Dist., Taoyuan City 32559, Taiwan (R.O.C.)
Date of Foundation:	1997-11-14
Date of Registration:	1999-07-05
Factory Registration Number:	99628069
Factory Manager:	Huibang Ye
Status:	In Production
Date of Last Annual Return:	2009-03-11
Major Products:	262 Passive electronic element
Tel:	+886-3-4995288
Fax:	+886-3-4995299

Branch

Name	Yilan Branch
Registration Number	28991642
Date of Registration	2010-02-26
Status	Live Company

Related Companies

1
Name:	Holy Stone International Trading (Shanghai)
Address:	16F, Metro Bank Plaza, 1160 YanAn (W) Road, Shanghai 200052, China
Tel:	+86-21-51875266
Fax:	+86-21-62825395
2
Name:	Infortech China (Shanghai)
Address:	16F, Metro Bank Plaza, 1160 YanAn (W) Road, Shanghai 200052, China
Tel:	+86-21-51087875
Fax:	+86-21-52588350
3
Name:	Holy Stone International Trading (Shanghai) - ShenZhen
Address:	Rm. A 703, World Trade Plaza, Fuhong Rd., FuTian District, ShenZhen 518031, China
Tel:	+86-755–83031903
Fax:	+86-755–83289091
4
Name:	Infortech China (Shanghai) - ShenZhen
Address:	Room 405, Talent Center, No.22 Shishan Road, New District, Suzhou City 215021, Jiang Su Province, China
Tel:	+86-512-82100058
Fax:	+86-512-68026968
5
Name:	Holy Stone Enterprise (Hong Kong)
Address:	Unit F, 2F, Yeung Yiu Chung (No.8) Industrial Building, No.20 Wang Hoi Road, Kowloon Bay, Hong Kong
Tel:	+852-23055141
Fax:	+852-23055789

Overseas Offices

1
Address:	41700 Ivy Street, Suite D, Murrieta, CA 92562, USA
Tel:	+1-951-696-4300
Fax:	+1-951-696-4301
2
Address:	Henderson Business Centre, Unit 32/33, Ivy Road, Norwich, Norfolk, NR5 8BF, UK
Tel:	+44-1603-251780
Fax:	+44-1603-251785
3
Address:	Blk. 7 Kallang Place #03-04, Singapore 339153
Tel:	+65-6513-2343
Fax:	+65-6563-6705

Shareholders

Major Shareholders

Name	Subscription Shares
Jinrong Tang
5,680,348
Lingtian Investment Co., Ltd. (Literal translation)	7,206,735
Shiyun Shen	2,178,327
Shaoguo Huang	1,103,952
Tangming Wu	536,043
Zhongyi Yang	412,041

Management Information

Core Management

Directors

1
Name		Jinrong Tang
Position		Board Chairman & Manager
Date of Appointment for Manager		2006-06-09
2
Name	Qiang Luo
Position		Director
3
Name	Yumin Wu
Position		Director
4
Name	Shiyun Shen
Position		Director
5
Name	Shaoguo Huang
Position		Director
6
Name	Gengyi Zheng
Position		Independent Director
7
Name	Naihua Wu
Position		Independent Director
8
Name	Tangming Wu
Position		Supervisor
9
Name	Zhongyi Yang
Position		Supervisor

Personnel Structure

Total Employees

About 800 Employees

Operation Information

Offices & Factories

	Headquarters
Add	1F, No.62, Sec.2, Huang Shan Rd., Nei Hu Dist., Taipei Taiwan R.O.C.

Production Information

Subject is engaged in manufacturing of electronic components, etc.

Subject has a factory in Taiwan for production.

Subject obtained the certification of ISO9001, ISO14001, QS9000 and ISO/TS16949.

Purchase Information

The registered activities of subject:

Business Code	Details
C901010	Ceramics and ceramic products manufacturing
CC01080	Electronic components manufacturing
CC01110	Computers and peripherals equipment manufacturing
CC01990	Other electrical machinery and electronic equipment manufacturing
F106010	Hardware wholesale
F113020	Electrical appliance wholesale
F113050	Computer and transactional machine equipment wholesale
F113070	Telecommunications equipment wholesale
F118010	Information software wholesale
F119010	Electronic materials wholesale
F206010	Hardware wholesale
F213010	Electrical appliance retail
F213030	Computer and transactional machine equipment retail
F213040	Precise instrument retail
F213060	Telecommunications equipment retail
F218010	Information software retail
F219010	Electronic materials retail
F299990	Other retail
F399990	Other compressive retail
F401010	International trade
F401021	Input of Telecommunications control r-f equipment
ZZ99999	Besides licensed business, all other business items those are not banned or restricted.

The components and raw materials for production are purchased both home and abroad.

Sales Information

Subject is engaged in sales of electronic components, etc.

The major products are thick film ceramic substrate metallization, thin film ceramic substrate metallization, DISC ceramic capacitor and MLCC ceramic capacitor, ETC.

The products are mainly applied for PoE circuit, switching power supply, battery, automotive, LCD module and LED lighting, etc.

The brand of the products is HEC.

Subject’s sales regions include domestic market, Southeast Asia and Europe, etc.

Subject’s major customers are manufacturers of electronic products, etc.

Import and export right:

Import right	Yes
Export right	Yes

Settlements

Purchase

Domestic Purchase

Products	Components and raw materials, etc.
Payment Terms	T/T, Cash, etc.

Import

Products	Components and raw materials, etc.
Payment Terms	L/C, T/T, etc.

Sales

Domestic Markets

Product	Electronic components, etc.
Selling Terms	T/T, Cash, etc.

Export

Product	Electronic components, etc.
Selling Terms	L/C, T/T, etc.

FINANCIALS

Balance Sheet

Unit: NTD/000

Consolidated	2016-12-31	2015-12-31
Assets
Current assets
Cash and cash equivalents
Total cash and cash equivalents	3,406,289	2,905,532
Current financial assets at fair value through other comprehensive income
Total current financial assets at fair value through other comprehensive income	92,368	618,567
Accounts receivable, net
Accounts receivable, net	3,398,021	3,046,660
Other receivables
Other receivables, net	152,948	54,669
Inventories
Total inventories	1,805,964	1,705,637
Prepayments
Total prepayments	43,226	37,327
Total current assets	8,898,816	8,368,392
Non-current assets
Non-current available-for-sale financial assets
Non-current available-for-sale financial assets, net	381,162	320,671
Non-current financial assets at cost
Non-current financial assets at cost, net	317,987	420,855
Property, plant and equipment
Total property, plant and equipment	2,406,685	2,629,430
Intangible assets
Total intangible assets	254,298	314,614
Deferred tax assets	32,265	29,079
Other non-current assets
Prepayments for business facilities	10,051	18,057
Other non-current assets, others
Total other non-current assets, others	23,220	74,140
Total other non-current assets	33,271	92,197
Total non-current assets	3,425,668	3,806,846
Total assets	12,324,484	12,175,238
Liabilities and equity
Liabilities
Current liabilities
Short-term borrowings
Total short-term borrowings	1,663,059	1,300,187
Accounts payable
Total accounts payable	1,064,785	1,052,056
Accounts payable to related parties
Total accounts payable to related parties	26,411	19,701
Other payables
Other payables, others	581,749	599,627
Total other payables	581,749	599,627
Current tax liabilities	45,301	75,485
Other current liabilities
Long-term liabilities, current portion
Long-term borrowings, current portion	2,171	2,122
Total long-term liabilities, current portion	2,171	2,122
Total other current liabilities	2,171	2,122
Total current liabilities	3,383,476	3,049,178
Non-current liabilities
Long-term borrowings
Total long-term borrowings	17,058	19,240
Deferred tax liabilities
Total deferred tax liabilities	28,464	45,752
Other non-current liabilities
Net defined benefit liability, non-current	59,738	56,774
Other non-current liabilities, others	2,868	2,301
Total other non-current liabilities	62,606	59,075
Total non-current liabilities	108,128	124,067
Total liabilities	3,491,604	3,173,245
Equity
Equity attributable to owners of parent
Share capital
Ordinary share	2,242,154	2,242,154
Total capital stock	2,242,154	2,242,154
Capital surplus
Total capital surplus	3,567,070	3,608,244
Retained earnings
Legal reserve	1,221,549	1,161,732
Unappropriated retained earnings (accumulated deficit)
Total unappropriated retained earnings (accumulated deficit)	1,032,179	1,150,743
Total retained earnings	2,253,728	2,312,475
Other equity interest
Exchange differences on translation of foreign financial statements
Total exchange differences on translation of foreign financial statements	13,280	45,807
Unrealized gains (losses) on available-for-sale financial assets
Total unrealized gains (losses) on available-for-sale financial assets	163,345	156,047
Total other equity interest	176,625	201,854
Total equity attributable to owners of parent	8,239,577	8,364,727
Non-controlling interests	593,303	637,266
Total equity	8,832,880	9,001,993
Total liabilities and equity	12,324,484	12,175,238
Equivalent issue shares of advance receipts for ordinary share	0	0
Number of shares in entity held by entity and by its subsidiaries	0	0

Profit and Loss Account

Unit: NTD/000

Consolidated	2016	2015
Operating revenue
Net sales revenue
Net sales revenue	13,166,572	13,595,819
Total operating revenue	13,166,572	13,595,819
Operating costs
Cost of sales
Total cost of sales	11,261,662	11,629,937
Total operating costs	11,261,662	11,629,937
Gross profit (loss) from operations	1,904,910	1,965,882
Gross profit (loss) from operations	1,904,910	1,965,882
Operating expenses
Selling expenses
Total selling expenses	1,158,620	1,091,260
Research and development expenses
Total research and development expenses	304,832	240,128
Total operating expenses	1,463,452	1,331,388
Net operating income (loss)	441,458	634,494
Non-operating income and expenses
Other income
Interest income
Total interest income	17,668	24,344
Total other income	17,668	24,344
Other gains and losses
Other gains and losses, net	11,940	-28,341
Finance costs
Finance costs, net	16,143	15,859
Total non-operating income and expenses	13,465	-19,856
Profit (loss) from continuing operations before tax	454,923	614,638
Tax expense (income)
Total tax expense (income)	116,802	142,852
Profit (loss) from continuing operations	338,121	471,786
Profit (loss)	338,121	471,786
Other comprehensive income
Components of other comprehensive income that will not be reclassified to profit or loss
Gains (losses) on re-measurements of defined benefit plans	-4,310	-1,911
Components of other comprehensive income that will not be reclassified to profit or loss	-4,310	-1,911
Components of other comprehensive income that will be reclassified to profit or loss
Exchange differences on translation	-45,687	27,819
Unrealized gains (losses) on valuation of available-for-sale financial assets	9,117	-83,558
Income tax related to components of other comprehensive income that will be reclassified to profit or loss	-6,101	2,824
Components of other comprehensive income that will be reclassified to profit or loss	-30,469	-58,563
Other comprehensive income, net	-34,779	-60,474
Total comprehensive income	303,342	411,312
Profit (loss), attributable to:
Profit (loss), attributable to owners of parent	506,101	598,178
Profit (loss), attributable to non-controlling interests	-167,980	-126,392
Comprehensive income attributable to:
Comprehensive income, attributable to owners of parent	476,562	566,976
Comprehensive income, attributable to non-controlling interests	-173,220	-155,664
Basic earnings per share
Total basic earnings per share	2.26	2.67
Diluted earnings per share
Total diluted earnings per share	2.23	2.61

Cash Flows

Unit: NTD/000

Consolidated	2016	2015
Cash flows from (used in) operating activities, indirect method
Profit (loss) from continuing operations before tax	454,923	614,638
Profit (loss) before tax	454,923	614,638
Adjustments
Adjustments to reconcile profit (loss)
Depreciation expense	285,733	307,786
Amortization expense	3,310	3,418
Provision (reversal of provision) for bad debt expense	-368	-6,293
Net loss (gain) on financial assets or liabilities at fair value through profit or loss	0	-36,167
Interest expense	16,143	15,859
Interest income	-17,668	-24,344
Dividend income	-23,787	-29,183
Loss (gain) on disposal of property, plant and equipment	-7,642	2,335
Loss (gain) on disposal of investments	0	-11,986
Impairment loss on non-financial assets	56,535	175,192
Total adjustments to reconcile profit (loss)	312,256	396,617
Changes in operating assets and liabilities
Changes in operating assets
Decrease (increase) in financial assets held for trading	526,199	284,355
Decrease (increase) in accounts receivable	-350,199	377,074
Decrease (increase) in other receivable	-98,385	13,410
Decrease (increase) in inventories	-100,327	347,539
Decrease (increase) in other current assets	-5,899	11,312
Total changes in operating assets	-28,611	1,033,690
Changes in operating liabilities
Increase (decrease) in accounts payable	12,729	-35,333
Increase (decrease) in accounts payable to related parties	6,710	-8,635
Increase (decrease) in other payable	-18,675	-47,039
Increase (decrease) in net defined benefit liability	-1,346	-900
Total changes in operating liabilities	-582	-91,907
Total changes in operating assets and liabilities	-29,193	941,783
Total adjustments	283,063	1,338,400
Cash inflow (outflow) generated from operations	737,986	1,953,038
Interest received	17,774	25,319
Dividends received	23,787	29,183
Interest paid	-15,346	-14,882
Income taxes refund (paid)	-161,359	-229,672
Net cash flows from (used in) operating activities	602,842	1,762,986
Cash flows from (used in) investing activities
Proceeds from disposal of available-for-sale financial assets	0	9,422
Acquisition of financial assets at cost	-5,991	-53,953
Proceeds from disposal of financial assets at cost	15,000	22,407
Proceeds from capital reduction of financial assets at cost	42,340	0
Acquisition of property, plant and equipment	-66,544	-104,192
Proceeds from disposal of property, plant and equipment	8,209	2,425
Acquisition of intangible assets	-541	-771
Decrease in other non-current assets	49,573	30,180
Net cash flows from (used in) investing activities	42,046	-94,482
Cash flows from (used in) financing activities
Increase in short-term loans	362,872	0
Decrease in short-term loans	0	-516,687
Repayments of bonds	0	-75,699
Repayments of long-term debt	-2,133	-2,081
Increase in other non-current liabilities	567	0
Decrease in other non-current liabilities	0	-82
Cash dividends paid	-560,538	-737,709
Change in non-controlling interests	78,702	-13,386
Net cash flows from (used in) financing activities	-120,530	-1,345,644
Effect of exchange rate changes on cash and cash equivalents	-23,601	14,840
Net increase (decrease) in cash and cash equivalents	500,757	337,700
Cash and cash equivalents at beginning of period	2,905,532	2,567,832
Cash and cash equivalents at end of period	3,406,289	2,905,532
Cash and cash equivalents reported in the statement of financial position	3,406,289	2,905,532

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

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

Bankers

Name	Hong Kong and Shanghai Banking Corporation.

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	Mr. Wu
Department	Sales Department
E-mail	berniewu@holystone.com.tw

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	INR 63.89
UK Pound	1	INR 88.60
Euro	1	INR 78.12
TWD	1	INR 2.18

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

INFORMATION DETAILS

Analysis Done by :	PRA
Report Prepared by :	SYL

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)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

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