ENGTEX GROUP BERHAD. 3Q14 Results & Corporate Update

Transcription

1 ENGTEX GROUP BERHAD 3Q14 Results & Corporate Update Presented by : Dato Ng Hook, Group Managing Director Mr. Khoo Chong Keong, Chief Financial Officer 1

2 3Q14 Operations Review 3Q14 Financial Review Prospects Investment Merits Appendix Corporate profile 2 AGENDA

3 OPERATIONS REVIEW 3

4 Manufacturing segment saw uptrend in pipes and wire mesh sales and utilisation of capacity albeit affected by increased price competition in wire mesh Manufacturing sales increased 1.7% yoy (3Q14: RM399.1 mil vs 3Q13: RM392.7 mil) Wire mesh continued to be the biggest contributor to group revenue on the back of sustained infrastructure/ construction/ property development works locally MS Pipes surpasses yoy sales in 3Q14 as compared to 3Q13 on the back of improved market demand. Demand for DI Pipes improved in 3Q14 as compared to 3Q13, largely stemming from both private and public sectors in Selangor, Johor, Perak and East M sia % 50.0% 31.4% MS Pipes Revenue: +0.3% Sales Tonnage: +36.0% 54.8% 24% 11% DI Pipes Revenue: +7.0% Sales Tonnage: +6.7% 13% Utilisation Rate of Capacity 3Q13 3Q % 78.3% 66.4% Wire Mesh Revenue: +5.6% Sales Tonnage: +5.4% Others Revenue: -12.9% yoy 63.4% OPERATIONS REVIEW: MANUFACTURING DIVISION Operations Review 0.0% DI Pipes MS Pipes Wire mesh (Cap: 60k mt pa) (Cap: 36k mt pa) (Cap: 162k mt pa) 4

5 Expanding nationwide by ramping up capacities of wire mesh facilities to become one of the leading player in Malaysia. New wire mesh facility to cater for East Malaysian market Investing RM7.0 mil in new manufacturing plant in Kota Kinabalu, Sabah with capacity of 18,000 MT p.a.; production mainly catered for the East Malaysian market. Commissioning commenced and target commercial operation in Q New wire mesh facility completed in Peninsular Malaysia Investing an estimated RM14.5 mil for additional capacity of 18,000 MT p.a. in Johor and 12,000 MT p.a. in Penang. Commencement operations in Q Location Production Capacity (ton p.a.) Ijok (Kuala Selangor) 60,000 Seberang Perai (Penang) 12,000 Gebeng (Kuantan) 18,000 Johor Bahru (Johor) 18,000 Ijok (Kuala Selangor) 36,000 Gebeng (Kuantan) 18,000 New capacity expected in H ,000 Kota Kinabalu (Sabah) 18,000 Johor Bahru (Johor) 18,000 Bkt Minyak, (Penang) 12,000 48,000 Total 210,000 Kota Kinabalu plant, Sabah Johor Bahru plant, Johor Bkt Minyak, Penang 5 OPERATIONS REVIEW: MANUFACTURING DIVISION (con t) Operations Review

6 MS Plant upgrade in Serendah and new piling pipe plant taking shape in Gebeng Group is investing btwn RM4.0mil to RM5.0mil to increase the diameter size of MS pipe production from 2.6m to 3.0m. Upgrading completed recently. New piling pipe plant taking shape in Gebeng Investing RM25 mil in new piling pipe plant with capacity of 72,000 MT p.a. Target commencement in H year tax break granted by ECER Cater for infrastructure works such as offshore oil rig platform, land reclamation, seaport deepening, MRT 6

7 Wholesale & Distribution division continues to be a leading player in Malaysia and made up 49.5% of 3Q14 Group revenue Consistent positive growth of 16.9% in 3Q14, as compared to 3Q13 (+17% YoY 2Q2014) Group s trading products continued to be fuelled by steel trading activities and ongoing and new projects in the infrastructure, utilities, construction sectors and property sector. # Trading of products such for infrastructure, utilities and construction sectors such as pipes, valves, fittings, building materials, steel products, Valves & Fittings general hardware and plumbing products, and pre-stressed concrete products. * Revenue presented here excludes Engtex s own manufactured products sold through its distribution channel OPERATIONS REVIEW: WHOLESALE & DISTRIBUTION DIVISION Operations Review 7

8 Slow down in Group s property segment balance Bumi units of completed project still pending release Project Name (Ongoing) Type Land Area (acres) GDV (RM mil) No. of Units Takeup Rate (%) Unbilled Sales (RM mil) (As at 30 Sept 2014) Unsold stock (RM mil) (As at 30 Sept 2014) Project Duration Tiara Residence 4-S Link Houses (Completed) Emerald Avenue SOHO 3 & 4-Storey Shop Offices Duplex Total In Q3 14, the Group s property division did not record any new property sales from Emerald Avenue project and consequently Q3 14 revenue decrease by 34.9% QoQ to RM16.9mil. In Q3 14, Tiara Residence which was completed in March 2013 sold 1 unit. Balance of 13 units unsold, of which 10 units pending Bumi release. Consequently the Q3 14 revenue increase by 22.3% QoQ to RM4.1mil. Unbilled sales stood at RM25.0 mil as at 30 Sept REVENUE (RM 000) , Q13 3Q14 OPERATIONS REVIEW: PROPERTY DEVELOPMENT Operations Review 8

9 FINANCIAL HIGHLIGHTS 9

10 1Q12 2Q12 3Q12 4Q Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q Gravy in the pipeline 3Q14 performance contributed from distribution, manufacturing and property development Qtrly Revenue (RM'mil) Qtrly EBITDA (RM'mil) Qtrly PATMI (RM'mil) 3Q14 INCOME STATEMENT Financials Comments 3Q14 3Q13 Change RM'000 FY % Revenue 1, Q14 topline improved from Distribution, Manufacturing and Property divisions Improved margin due to contribution from Distribution division which offset increased price competition of Group's Manufacturing division Higher EBITDA due to contribution from Distribution division which outweigh higher OPEX in the Group's Property division and increased price competition of Group's Manufacturing division 3Q14 saw higher interest expenses due to increased borrowings Effective tax rate at slightly higher than 25% % Gross Profit % 14.3% 0.1pt Gross Margin 14.3% % EBITDA % 9.6% (1.5pt) EBITDA margin 9.2% % PBT % 6.9% (1.7pt) PBT margin 6.5% % PATMI % 4.7% (0.4 pt) Net margin 4.7% (1.3%) Basic EPS (sen)

11 Gravy in the pipeline 3Q14 performance impacted by both distribution and manufacturing division FY13 Revenue: RM1,090.4 mil (+18.5% yoy) 3Q14 Revenue: RM893.4 mil (+10.0% yoy) 6.6% yoy Revenue (RM mil) Manufacturing 47.5% 1.7% yoy % 34.6% yoy 47.1% Revenue (RM mil) Wholesale & Distribution 5.4% Revenue (RM mil) Property Development 10.5% yoy 16.9% yoy 49.5% 49.1% 5.8% +25.9% yoy REVENUE SEGMENTATION Financials 11

12 Gravy in the pipeline MS Pipes sales in 3Q14 matched strong performance in 3Q13 wire mesh performed moderately in 3Q14 FY13 Manufacturing Revenue: RM518.1 mil (+6.6% yoy) 3Q14 Manufacturing Revenue: RM399.1 mil (+1.7% yoy) Revenue (RM'mil) Others 17.5% yoy Revenue (RM'mil) Wire Mesh 12.9% yoy % yoy 24.7% yoy 17.9% 51.9% 51.8% 15.7% yoy Revenue (RM'mil) Mild Steel Pipes 18.6% 11.6% Revenue (RM'mil) Ductile Iron Pipes 23.7% 0.3% yoy 11.4% 19.0% yoy 7.0% yoy REVENUE SEGMENTATION (Manufacturing Division) Financials

13 -725 1,118 7,451 1,591 3,211 2, Gravy in the pipeline Moderately higher EBITDA in 2014 as a result of positive contribution by distribution division which outweighed increased price competition from manufacturing and higher OPEX from property division FY13 EBITDA: RM103.3 mil* (+47.8% yoy) 3Q14 EBITDA: RM81.9 mil* (+4.5% yoy) EBITDA (RM'mil) Wholesale & Distribution EBITDA (RM'mil) Manufacturing 74.2% yoy 2.9% 18.5% yoy % 54.3% -28.1% yoy 37.3% yoy EBITDA (RM 000) Property Development 43.2% 2.5% 19.7% yoy 44.4% FY13 EBITDA margins: 9.3% (FY12: 7.3%) Wholesale & Distribution Manufacturing Property Development EBITDA SEGMENTATION *Not excluding EBITDA of RM0.86 mil from Investment Holdings and intersegment activities 13 Financials

14 Gearing sustained at less than 1x (RM 000) As at 30 Sept 2014 As at 31 Dec 2013 Comments Non-Current Assets 267, ,589 Mainly due to CAPEX for acquisition of industrial land and building, machineries, and construction of hotel buildings. Current Assets 814, ,941 Largely due to increase in inventories ($30.3m), cash at bank ($27.2m) and trade receivables ($22.2m) Current Liabilities 529, ,506 Higher as a result of increased bills payable ($74.0m) Non-Current Liabilities 119,092 93,497 Term loans increased mainly due to new drawdown of bridging loan ($14.5m), industrial land and building financing ($13.3 m), hotel lands ($4.7m) and machineries ($4.0 m). Shareholders Equity 414, ,627 Due to higher retained earnings and treasury shares sold ($19.1m) Minority Interest 18,857 16,900 - Borrowings (ST + LT) 489, ,676 Higher borrowing stemming from increase in trade lines ($82.2m) and term loan ($35.7m) Cash & Bank Balances 59,320 32,131 Largely as a result of selling treasury shares Net Debt/Total Equity (x) 0.99x 0.94x Net Tangible Assets / Share (RM) 2.11 (1) 2.02 (2) Adjusted NTA/Share after bonus issue (1) Based on million shares, net of million treasury shares (2) Based on million shares, net of million treasury shares BALANCE SHEET Financials 14

15 Fundamentals set to improve FY2010 FY2011 FY2012 FY2013 1Q14 2Q14 3Q14 Current Ratio Collection Period (Days) Payment Period (Days) Inventory Processing Period (Days) Cash Conversion Cycle (Days) Net Debt/Total Equity Total Debt/Total Equity Interest Coverage Effective Finance Cost 3.9% 4.9% 4.3% 4.4% 4.2% 4.5% 4.7% % 4.7% KEY FINANCIAL RATIOS Average ROE & ROA ROE ROA Financials 14.1% 12.8% 6.6% 5.5% 9.7% 3.9% 15.2% 11.3% 15.7% 14.3% 6.0% 4.4% 6.0% FY2009 FY2010 FY2011 FY2012 FY2013 1Q14 2Q14 3Q14 5.5% 15

16 , Gravy in the pipeline Profitable since incorporation Group Revenue (RM'mil) and Gross Margin (%) Revenue Gross margin 1,200 1, % 14.4% 14.6% 11.4% 12.5% 13.1% 13.0%13.4% 15.1% 14.0% 12.6% 14.3% 14.9% 14.4% REVENUE & PROFIT TREND Financials 13.7% 14.5% 13.8% Q13 2Q13 3Q13 1Q14 2Q14 3Q14 EBITDA and PAT margins 10.1% 9.3% 10.1% 9.9% 8.9% 10.2% 9.4% 6.3% 7.3% 8.0% 8.3% 9.0% 8.7% 8.0% 8.6% 8.9% 9.4% 7.3% 5.7% 5.6% 5.4% 4.5% 4.7% 5.2% 4.4% 4.8% 4.3% 4.3% 4.8% 4.7% 5.1% 3.4% 4.0% 3.4% 1.6% 1.9% Q13 2Q13 3Q13 1Q14 2Q14 3Q14 PAT Tax Finance cost & depreciation EBITDA Margin PAT Margin 14.9% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 16

17 PROSPECTS 17

18 Group s outlook still positive on the back of robust activities in both public and private sectors in Malaysia To benefit from numerous upcoming projects from both private and public sectors nationwide Major new pipe laying projects PAAB projects in 6 states (Perlis, Perak, Penang, Johor, N9 and Melaka), Langat 2 Selangor, MCKIP, RAPID Pengerang and other state authorities, etc. Tremendous potential for pipe replacement nationwide; enormous demand for DI and MS pipes Estimated 43,890 km AC pipes (>4.27 bil litre of treated water a day leaked out) need to be replaced nationwide for approx. RM10 bil (abt 3 mil mt). MWA put a figure of >RM20 bil to replace AC pipes or RM500k per km of pipe which includes laying work. (Source: The Star 4/9/14) Malaysia sees strong growth in new pipelines (estimated to be 4,000 km to 5,000 km per annum worth approx. RM1 bil (abt 300k mt). About 6,423 km pipes needing to be replaced in Selangor for approx. RM1.0 bil (350k mt); compounded by the State being one of the worst in NRW pipeline 18 OUTLOOK Prospects

19 Group s outlook still intact on the back of robust activities in both public and private sectors in Malaysia Pahang-Selangor Raw Water Transfer project costing RM3.93 bil is 96.7% complete and operational by 2017 with ability to channel 1.89 mil cubic metres of raw water a day to meet demand for Selangor, Kuala Lumpur and Putrajaya up to New national policy for non-revenue water ( NRW ) to tackle water loss to be tabled by year end (Source: The Star 4/9/14) Three states with high New NRWs national Perlis, policy Kedah for non-revenue and Kelantan water is trying ( NRW ) to contain to the problem Discussions with Federal tackle underway high water to receive loss due special to be tabled allocation by year to replace end pipes, meters etc. Kelantan plan to reduce the NRW to 38% by next year and spent $5 mil engaging Ranhill Water Services to curb water loss through 6,000km of water pipes statewide. 19 OUTLOOK Prospects

20 Group s outlook still intact on the back of robust activities in both public and private sectors in Malaysia In 2013, NRW stood at 36.6% (2012: 36.4%) of all water pumped out from treatment plants or abt 5.69 bil litre a day, and >75% of NRW due to pipe leakages of AC pipes and infrastructure problems. 20 OUTLOOK Prospects

21 Industry Growth Potential Gravy in the pipeline Growth strategies in place to broaden revenue base Uncharterd Waters High Flyers 1. Building future recurring income from hospitality business 2. Earnings from property dev to mitigate cyclical risk of core businesses Property & Hospitality 1. Expanding market channel nationwide with more dealerships 2. Widening product range for 1-stop service New Biz D&W 1. Investing in more capacity to tap construction demand 2. Increasing market share via nationwide presence Wire Mesh Fortresses MS MS DI 1. Tapping into opportunities from govt investment in pipeline infrastructure 2. Investing in more capacity if needed 3. Widening product application to piling pipes DI 1. Tapping into opportunites from govt investment in pipeline infrastructure 2. Increasing overseas sales GROWTH STRATEGIES Prospects Market Share 21

22 INVESTMENT MERITS Valuation, room to grow 22

23 One of the best proxies to the water sector growth story single digit earnings multiple an affordable entry Share Price (5 Dec 2014) RM1.30 Market Cap (5 Dec 2014) ('mil) RM386.1 Trailing PE Ratio (x) 7.35 Trailing EV/EBITDA (x) 8.06 Price to Book Ratio (x) Net Dividend Yield (FY14) 2 1.3% 1 Based on adjusted NTA per share of RM1.39 as at Based on FY13 s Dividend of 1.75 sen per share VALUATION Investment Merits 23

24 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 ^FY Gravy in the pipeline Consistently paying dividends since listing Dividend Payout Adjusted Net Dividend Per Share RM mil % 20% % % % 0.5 4% 6% 6% 8% 10% 6% 25% 20% 15% 10% 5% 2 1 Sen 0.0 0% 0 Dividend Payout Payout Ratio DIVIDEND HISTORY Investment Merits 24

25 Bloomberg: ENGT MK Reuters: ETEX.KL THANK YOU IR Contacts: Mr. Khoo Chong Keong Mr. Chong Thian Fook

26 CORPORATE PROFILE Leading one-stop pipeline systems provider in Malaysia 26

27 Strong growth catalyst from long-overdue pipeline replacement project Engtex set to be key beneficiary Founded in 1983, Engtex Group Berhad (Engtex) is a leading one-stop pipeline system provider in Malaysia Well-established backbone of manufacturing and distribution arms Mainly catering for the water & sewerage, infrastructure, and construction sectors Ductile Iron ( DI ) Pipes One of few players in the country with ability to manufacture large diameter pipes; also a leading wire mesh producer The bigger player in duopolistic Ductile Iron ( DI ) pipe sector in Malaysia Able to produce up to 3000mm diameter Mild Steel ( MS ) pipes Top 3 manufacturers of wire mesh and hard drawn wire Integrated wholesale and distribution channel with nationwide network Largest player of non-oil & gas Pipes, Valves & Fittings ( PVF ), plumbing materials, building materials & general hardware products Growth catalysts from imminent pipe replacement initiatives (particularly in Selangor), and growing preference for DI pipes Mild Steel ( MS ) Pipes Wire Mesh Single-digit valuation not yet reflecting upcoming pipe replacement projects, dividend paying since listing EXECUTIVE SUMMARY Valves & Fittings Corporate Profile 27

28 Total market capitalisation of more than RM400 million Engtex Group Berhad Stock Exchange Sector Market Capitalisation RM386.1 mil (RM1.30 per 5 December 2014) Engtex Group Warrants 2007/2017 Warrant Code ENGTEX WA Balance No. of Warrants 5 December 2014 Terms of Warrants Main Market, Bursa Malaysia - since 30 July IPO price: RM0.54 (Adjusted for 1-for-4 Bonus Issue, 1-to-2 share split and 1-for-5 Rights Issue and 1- for-2 Bonus Issue) Trading / Services Codes Bursa: 5056 / ENGTEX Bloomberg: ENGT MK Reuters: ETEX.KL Share Capital RM mil ( mil shares of RM0.50 par) Expiry: 25 October 2017; Exercise price: RM0.83 each; Conversion: 1-for-1 Market Capitalisation RM78.7 mil (RM0.53 per 5 December 2014) 28 EXECUTIVE SUMMARY (cont) Corporate Profile

29 Committed to superior quality for customers towards achieving sustainable returns for stakeholders Vision Mission To be a leading integrated manufacturer and one-stop distribution center for pipes, valves, fittings, plumbing and steel products that provides total supply chain solution to our customers in water supply, sewerage system, fire fighting and construction industries To deliver sustainably good financial returns through the impeccable commitment on setting high standards, innovation, productivity and competency, to provide products and services of the world class quality and value focused to meet the needs for customers Values Customer Satisfaction Safety & Environment Shareholder Value Integrity & Professionalism Quality Management CORPORATE CREDO Corporate Profile 29

30 30 years of business expansion 1983 Formed Engtex Sdn Bhd as a hardware retail shop, involved in wholesale and distribution of PVF, plumbing materials and general hardware products 1995 Ventured into manufacturing of steel pipes, fittings and other metal-related products. Commenced operations at end 1996 Involved in the manufacturing of welded wire mesh, hard-drawn wire and operating of a steel service centre 2002 Ventured into manufacture of DI pipes, supplying mainly to water, infrastructure, and construction sectors Listed on Main Board of Bursa Securities Malaysia 2004 Completed 1:4 bonus issue of 16.5 million new ordinary shares Completed private placement of 6 million new ordinary shares 2007 Completed 1-to-2 share split Completed listing of 1:5 rights shares of 33 million new ordinary shares with 99 million free Warrants on the basis of 3 for Proposed 1:2 bonus issue of up to million new ordinary shares Proposed adjustment to exercise price and outstanding warrants pursuant to bonus issue Proposed increase in authorised share capital CORPORATE MILESTONES Corporate Profile 30

31 Primarily involved in manufacturing and distribution of water- and steel-related products Manufacturing 47.5% of FY13 revenue Distribution & Wholesale 47.1% of FY13 revenue Ductile iron ( DI ) pipes Mild steel ( MS ) pipes and fittings Wire mesh, hard drawn wire and steel service center DI Valves, hydrants, fittings and manhole covers Pipe asphalt/coatings & bitumen products Piling pipes (future) PVF and general hardware Building materials and steel products Pre-stressed concrete products Property Development 5% of FY13 revenue Hospitality (future) PRINCIPAL ACTIVITIES Ongoing Projects: Emerald Avenue New launching: Amanja Ongoing hotel development: Mercure Emerald Avenue Ibis Bandar Sri D sara Boutique Lebuh Pasar KL Corporate Profile 31

32 Manufacturing facilities complemented by wide and established distribution channel Manufactured Product Location(s) Contribution to FY13 revenue DI Pipes Gebeng (Kuantan) 5.5% MS Pipes Serendah (Selangor) 8.8% Wire Mesh Ijok (Kuala Selangor), Gebeng (Kuantan), Seberang Perai (Penang), Johor Bahru (Johor), Kota Kinabalu (Sabah) 24.7% Valves, Fittings, Bitumen & Steel Products Sg Buloh (Selangor) MANUFACTURING FACILITIES & DISTRIBUTION NETWORK 8.5% (incl. others) Corporate Profile 32

33 DI pipe business profitable even at 30% utilisation operating leverage to manifest when pipe replacements take off Ventured into DI pipe manufacturing in 2002 The larger of 2 DI pipe manufacturers in Malaysia; able to produce DI pipes of up to 800mm diameter Mainly catering for the water & sewerage sectors Scrap metal (main raw mat) sourced locally Product Brands: Manufacturing plant in Gebeng, Kuantan built on 17.5-acre land Production capacity: 60K ton p.a. Capacity utilisation: 19.5K ton / 33% in FY13 25 Accredited with ISO 9001: SIRIM, 20 OHSAS18001:2007 (occupational 15 safety & health) & ISO14001: (Environmental Management) Local & regional product compliance 0 Peninsular Malaysia: IQCI (IKRAM), SPAN East Malaysia: State water authorities of Sabah, Sarawak Singapore: PSB 5 Production Output & Utilisation Rate Output ('000 ton p.a.) Utilisation Rate 32% 27% 30% 33% 33% 33% % 25% 10% -5% -20% MANUFACTURING: DUCTILE PIPE Cost Breakdown: DI Pipe 56% 19% 8% 4% 13% Scrap Metal Consumables/Chemical Utilities Direct Labour Overheads/Others 33 Corporate Profile

34 DI pipe vs PVCO (molecularly oriented polyvinyl chloride) pipe DI has >10 times the tensile strength of PVCO (73,947psi vs 6,729psi). Therefore less susceptible to fatigue failures. Thermal coefficient of PVCO is approx. 5 times that of DI pipe- therefore variation in operating or installation temperature will affect tensile strength of PVCO more than DI and will experience undesirable structural movements such as joint buckling or disengagement due to expansion or contraction. DI pipe resists up to 5.6 times the hydrostatic burst pressure of PVCO pipe. (3,900psi vs 697 psi) The strength of DI pipe not compromised by time of failure. DI pipe resists up to 41 times the short term crushing load of PVCO pipe and more for longterm crushing load (3,959psi vs 96 psi on 6 in pipe) DI pipe has up to 55 times more impact strength than PVCO (22.55lb/in vs 0.41lb/in) Direct-tapping DI is easier, less expensive and faster than tapping PVCO- the latter requires the use of tapping saddle. Energy savings inside diameter of both DI and PVCO are very comparable, if not greater, to allow flow capacity and lower head loss. PVCO is highly permeable when exposed to hydrocarbons or contaminated soil. PVCO require proper bedding to control deflection Joint deflection for gasketed PVCO is abt 2% vs up to 5% for push-on-joint DI Others tracer wire, nearby excavation, buoyancy, sun exposure, scratches and performance track record. (Source: Ductile Iron Pipe Research Association, USA ( DIPRA ) MANUFACTURING: DUCTILE PIPE Corporate Profile 34

35 MS pipe segment complementary to DI for comprehensive product range One of the largest MS pipe manufacturers in Malaysia Upgraded to produce MS pipes up to 3,000mm diameter Mainly catering for the water & sewerage sectors Hot rolled coil / Steel plates (main raw mat) sourced locally Product Brand: Manufacturing plant in Serendah, Selangor built on 20-acre land Production capacity: 42K ton p.a. Capacity utilisation: 19.9K ton / 55% in FY13 25 Accredited with ISO 9001: SIRIM Products compliant nationwide Malaysia: IQCI (IKRAM), SPAN, and water authorities in all states Production Output & Utilisation Rate Output ('000 ton p.a.) Utilisation Rate 36% 31% 35% 42% 53% 55% % 55% 40% 25% 10% -5% -20% Cost Breakdown: MS Pipe 76% 7% 1% 3% 14% HRC/Steel Plate Consumables/Chemical Utilities Direct Labour Overheads/Others MANUFACTURING: MILD STEEL PIPES Corporate Profile 35

36 Wire mesh segment aiming to be the largest player in Malaysia One of top 3 wire mesh manufacturers in Malaysia Mainly catering for construction and infrastructure sectors Product Brand: Strategically-located manufacturing plants catering to specific regions Location Production Capacity (ton p.a.) Ijok (Kuala Selangor) 96,000 Seberang Perai (Penang) 12,000 Gebeng (Kuantan)* 36,000 Johor Bahru (Johor)* 18,000 Total 162, Production Output & Utilisation Rate Output ('000 ton p.a.) Utilisation Rate 67% 56% 73% 67% 80% 60% 70% 49% Currently building 18K MT wire mesh plant in Kota Kinabalu (Sabah); targeted for completion by end-2014, and adding 30K MT in Peninsular Malaysia Accredited with ISO 9001:SIRIM 60% 50% 40% 30% 20% 10% 0% Products compliant with Malaysia quality standards MS 145:2006 MANUFACTURING: WIRE MESH Corporate Profile 36

37 Undisputed cost leader in PVF distribution The top PVF distributor in Malaysia Large revenue base and wide distribution channels allow for cost leadership Diverse product range of 150 product categories with >5K SKUs In-house brands make up about 40% of product range Others are sourced from >300 local and foreign suppliers >4K customers in Malaysia and overseas Products compliant with Malaysia and International standards Peninsular Malaysia: IKRAM, SPAN, JKR Standard East Malaysia: State water authority of Sarawak Singapore: PSB Product Brand: Other brands distributed by Engtex: (Valves, Fittings, Steel Products, Construction Materials, etc) DISTRIBUTION: VALVES & FITTINGS Corporate Profile 37

38 Key management possess many years experience Gravy in the pipeline Dato Ng Hook Group Managing Director Group founder with 40 years hands-on experience in the hardware and PVF industry Provides the Group s strategic direction Ng Chooi Guan Executive Director 30 years experience in hardware industry Instrumental in business development, procurement of new distributorships and developing in-house brand products Datin Yap Seng Kuan Executive Director Held administrative positions and managed own business prior to joining Engtex In charge of monitoring daily credit control and cashflow, monitoring debtors collections and treasury functions Ng Yik Soon Executive Director Been with Engtex since 1985 Currently responsible for sales and marketing of a manufacturing subsidiary Khoo Chong Keong Chief Financial Officer Been with Engtex since 2001 Overall in charge of the accounting affairs of the Group Joint company secretary KEY MANAGEMENT Corporate Profile 38