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20 August 2003

HG METAL MANUFACTURING LIMITED. PLANT TOUR. 20 August 2003. PRESENTATION OUTLINE. Moving Up the Value Chain Competitive Strengths Financial Highlights Growth Prospects and Future Plans Industry Comparison Comparison between HG Metal & AnnAik. We Custom Manufacture to your Satisfaction.

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20 August 2003

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  1. HG METAL MANUFACTURING LIMITED PLANT TOUR 20 August 2003

  2. PRESENTATION OUTLINE • Moving Up the Value Chain • Competitive Strengths • Financial Highlights • Growth Prospects and Future Plans • Industry Comparison • Comparison between HG Metal & AnnAik We Custom Manufacture to your Satisfaction

  3. MOVING UP THE VALUE CHAIN Mr Wee Piew Chief Executive Officer HG Metal Manufacturing Limited We Custom Manufacture to your Satisfaction

  4. 2000 Acquired OMP Commenced steel product mfg New 3 storey factory plus w/house Acquired JHL 1998 Moved to current premise 30 Jalan Buroh 1988 HG Metal incorporated Expanded warehouse storage area 1984 Acquired Almech 1973 Became a stockist for steel products 1971 Established partnership HGC - small retailer of steel products GROWTH PATH We Custom Manufacture to your Satisfaction

  5. CURRENT GROUP STRUCTURE HG METAL 100% 59.2% Oriental Metals Pte Ltd (S’pore) Jin Heng Li Hardware Sdn Bhd (Malaysia) (Our Manufacturing Arm) We Custom Manufacture to your Satisfaction

  6. Enlarged Manufacturing Capabilities Custom Manufacturer Major Stockist RetailerSmall Stockist Post-IPO THE STEEL VALUE CHAIN Increased Profit Margin We Custom Manufacture to your Satisfaction

  7. Hollow Sections Reinforcement Bars Flat Bars Angle Bars I Beams Pipes Ship Plates TRADING Our Wide Range of Products We Custom Manufacture to your Satisfaction

  8. Mild Steel Lip Channels Pipes H-Beams Hollow Channels Steel Plates TRADING A One-Stop Supermarket for Steel Products We Custom Manufacture to your Satisfaction

  9. Slitted Steel Coils Slitting Slitting Machine Forming Line Final Manufactured Products Raw Materials – Mother Hot Rolled Coil Forming Rolls MANUFACTURING-Growth Driver The Manufacturing Process

  10. MANUFACTURING-Growth Driver Tailor According to Customers’ Specific Requirement • Core Products • Mild Steel Lip Channels (Local Market Size: Estimated S$ 10 million) • Flat Bars • Steel Pipes (Local Market Size: S$50million per year) • Production Capacity • 600 MT/month for MSLC currently • Can easily increase to 1000 MT/month We Custom Manufacture to your Satisfaction

  11. APPLICATIONS OF STEEL Diversified Industry Applications End-users • Ship Building / Ship Repair • Industrial and Steel Fabrication • Oil and Gas • Construction (Building, etc) • Engineering • Major Infrastructure • and more… We are NOT dependent on any single industry! We Custom Manufacture to your Satisfaction

  12. COMPETITIVE STRENGTHS We Custom Manufacture to your Satisfaction

  13. COMPETITIVE STRENGTHS Custom Manufacturing Capability • First Mover Advantage • - Stock availability • - Short delivery time • Better Customer Fulfillment- ability to manufacture according to clients’ strict requirements or commercially unavailable (vs competitors- NO manufacturing facility ) • One-stop service provider • Enhanced Profit Margins Dominant Market Share in Mild Steel Lip Channels We Custom Manufacture to your Satisfaction

  14. COMPETITIVE STRENGTHS High Barriers to Entry It’s Not Easy to duplicate our Business Model nor acquire our Manufacturing Capabilities • First mover competitive advantage • Heavy initial investment • Large working capital • Established brand name and reputation • Skilled management and staff – difficult to find • Strong knowledge and understanding of the industry We Custom Manufacture to your Satisfaction

  15. COMPETITIVE STRENGTHS Reliable and Established Suppliers • Long term relationships with established steel mills or their representatives and/or agents • Diversified supplier base = Best quality steel at the most competitive price We are NOT reliant on any single supplier! Established Customer Base • > 400 customers = Diversified customer base • Solid and long working relationships We are NOT dependent on any single customer / industry! We Custom Manufacture to your Satisfaction

  16. Other eastern European countries Russia Ukraine Myanmar Turkey Thailand Sri Lanka Brunei Malaysia Singapore Indonesia COMPETITIVE STRENGTHS Our Suppliers Our Sales Network (Mainly South East Asia) We Custom Manufacture to your Satisfaction

  17. COMPETITIVE STRENGTHS Extensive Range of Steel Products • We carry > 2,000 different steel products • Customised or commercially available products • All dimensions available “You name it, we have it!” We Custom Manufacture to your Satisfaction

  18. COMPETITIVE STRENGTHS Hands On & Passionate Mgmt Team • Most of our executive directors have > 20 years experience in the steel industry • Supported by professional management team Our Men of Steel We Custom Manufacture to your Satisfaction

  19. FINANCIAL HIGHLIGHTS We Custom Manufacture to your Satisfaction

  20. FINANCIAL HIGHLIGHTS Group Turnover Trading and others Manufacturing 90.3 82.4 S$ millions 8.4 77.2 7.1 45.6 2.8 5.4 74.4 75.3 81.9 40.2 2001 2001 2002 1H2003 For the financial year ended 31 October We Custom Manufacture to your Satisfaction

  21. FINANCIAL HIGHLIGHTS Profit Before Taxation Trading and others Manufacturing 3.7 3.1 S$ millions 1.6 0.7 2.6 1.9 0.8 2.6 2.4 2.1 1.1 2001 2001 2002 1H2003 For the financial year ended 31 October We Custom Manufacture to your Satisfaction

  22. Trading Manufacturing 19 Overall 4.1 FINANCIAL HIGHLIGHTS PBT Margin: Manufacturing vs Trading percent 9.5 3.7 2.6 2.4 2001 2002 For the financial year ended 31 October We Custom Manufacture to your Satisfaction

  23. FINANCIAL HIGHLIGHTS Who We Sell To Update?? We Custom Manufacture to your Satisfaction

  24. FINANCIAL HIGHLIGHTS Breakdown by Geographical Region Update?? Other countries include Thailand, Brunei, Myanmar, Sri Lanka and South Korea We Custom Manufacture to your Satisfaction

  25. GROWTH PROSPECTS and FUTURE PLANS We Custom Manufacture to your Satisfaction

  26. GROWTH PROSPECTS Steel Consumption 800 World 700 600 500 Million metric tons 400 Asia 300 200 100 1994 1996 1997 1998 1999 2000 1995 2001(F) 2002(F) Source: International Iron and Steel Institute, Oct 2001 We Custom Manufacture to your Satisfaction

  27. GROWTH PROSPECTS - MFG Steel Product Manufacturing Business • Expand manufacturing product range to include steel pipes • Current demand for steel pipes approx. 5 times more than mild steel lip channels • Higher margins derived from manufacturing Versatile manufacturing capability We Custom Manufacture to your Satisfaction

  28. New Steel pipes (rectangular, round, etc) Current MSLC, flat bars GROWTH PROSPECTS - MFG Enhancement of our Return on Invested Capital (“ROIC”) Expected increase in utilisation rate will reduce our production cost and enhance our ROIC We Custom Manufacture to your Satisfaction

  29. FUTURE PLANS - MFG Expand Manufacturing Operation Broaden Product Mix • Steel pipes (round and rectangular pipes) • Enlarge market share in steel pipes (Estimated 35% of market share) • Fully operational in 2003 Material impact in FY04 Broaden Product Market • Leverage on established trading network in region to distribute manufactured steel products We Custom Manufacture to your Satisfaction

  30. INDUSTRY COMPARISON  Results are extracted from Company Annual Reports  * source: Business Times 15 August 2003 We Custom Manufacture to your Satisfaction

  31. HG METAL Vs ANN AIK  * source: AnnAik Prospectus on Opera, MAS We Custom Manufacture to your Satisfaction

  32. HG METAL MFG LIMITED Moving up the Steel Value Chain… Manufacturing towards Customer Satisfaction and Higher Profits Men of Steel We Custom Manufacture to your Satisfaction

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