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IPO Launch Presentationby Philip Lim

Megachem Limited

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Our Vision

A Leading One-Stop Specialty Chemicals Solutions Provider

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Presentation Outline

• The Specialty Chemicals Industry • Our Business• Investment Proposition• Prospects and Growth Strategies• Financial Highlights• Summary

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Specialty ChemicalsA Brief Sector Overview

They’re Everywhere, Everyday

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Sector Overview

• Specialty Chemicals are used in everyday products- Industrial products such as:

- coatings, polymerisation, electronics, water treatment, metal finishing, petrochemicals

- Consumer products such as:- food and beverage, flavour and fragrance, pharmaceutical

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Sector Overview

INDUSTRY POSITIONINGValue and Profitability

Volume

CommodityChemicals

Benefits:

Higher value than commodity chemicals

• Relatively inelastic demand

• Relatively stable prices

Specialty Chemicals

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Sector Overview

• In the specialty chemicals segment, buying decision based on:- Quality- Technical support- Delivery lead time- Level of customer service

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Our Business

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A One-Stop Specialty Chemicals Solutions Provider

• Established since 1987

• A network of 8 distribution and warehousing points in 7 countries- Singapore, Malaysia, Indonesia, Thailand, Philippines, China (Shanghai and Guangzhou)

and the United Kingdom

• Large base of reputable and reliable suppliers

• In-house manufacturing capabilities

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Key Milestones

1987 1989 1992 1993 1999 2000 2001

FoundedIn

Singapore

MalaysiaOperations

ThailandOperations

IndonesiaOperations

PhilippinesOperations

ContractManufacturing

ShanghaiOperations

UKOperations

GuangzhouOperations

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Our Business – Distribution and Stocking of Specialty Chemicals

• Distribute and sell over 800 types and grades of specialty chemicals- Extensive list of reputable, quality suppliers

• Established and diversified base of about 1,200 industrial customers- Approximately 450 customers are MNCs- Accounted for approximately 70% of our Group’s sales in FY2002

• Primary Markets – direct presence :Singapore, Malaysia, Indonesia, Thailand, Philippines, United Kingdom and China- Accounted for over 80% of FY2002 sales

• Secondary Markets – direct sales / local sales agents :South Asia, Middle East, South Korea and Australia

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• Contract Manufacturing- Manufacture of specialty chemicals to fulfil customer specifications

- Provision of value-added service

• Manufacture of our own Specialty Chemicals- Production of specialty chemicals using formulations developed

in-house

- e.g. wetting agents and emulsifiers for the rubber and plastics,polymerisation and the metal finishing industries

Our Business – Manufacturing

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Investment Proposition

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Investment Proposition

• Reputable Market Player

• Established Customer Base

• Extensive Regional Distribution Network

• Strong Relationships with Suppliers

• Established Infrastructure - Laboratory- E-Commerce- Logistics

• Experienced and Dedicated Team

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Investment Proposition

• Reputable Market Player- Well regarded as a reliable distributor

- Quality products at competitive prices

- Timely delivery

- Understand customers’ needs

- Strong market and product knowledge

- Strong technical support

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Investment Proposition

• Awards & Achievements

Responsible Care

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Investment Proposition

• Established Customer Base- Long and established customer relationships

- Spread across different industries including Polymerisation, Paint & Ink Coatings, Electronics, Food & Beverage, Water Treatment, Metal Finishing etc

- Strong repeat business- 57% of existing customers accounted for approximately 89% of sales in FY2002

- MNCs accounted for approximately 70% of Group’s sales in FY2002

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Investment Proposition

Some of Our Key Customers:• The Shell Group• Hitachi Chemical Asia-Pacific• Fuji Hunt Photographic

Chemicals Private Limited• STAHL Asia Pte Ltd• MTK Chemicals Pte Ltd• PT Latexia Indonesia• Revertex (M) Sdn Bhd• The Sicpa Group

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Investment Proposition

• Extensive Regional Distribution Network- Wide geographical coverage through our network of 8 distribution and

warehousing points in 7 countries

- Direct presence- Close proximity to customers enables quick response

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Investment Proposition

• Strong Relationships with Suppliers- Large base of approximately 200 reliable suppliers

- Source only from reputable suppliers- MNCs and specialty chemical manufacturers from Japan, Europe and the US

- Channel for up-to-date information on new products / latest technologies

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Investment Proposition

Some of Our Key Suppliers• Bayer (South East Asia) Pte Ltd• Nippon Polyurethane Industry Co., Ltd• Shell Eastern Chemicals (S)• Sumitomo Seika Chemicals Co., Ltd.• Mitsui Chemicals Asia Ltd• Lyondell South Asia Pte Ltd• Dupont Textiles and Interiors (S) Pte Ltd • Dow Corning Singapore Pte Ltd• Asahi Denka Co. Ltd

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Investment Proposition

• Established Infrastructure- Fully Integrated ERP system

- Semi-automated warehousing- increase efficiency

- E-commerce website- provides convenience to customers in conducting business with us

- Strong technical support provides value-added services- qualified chemists- well-equipped laboratory

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Investment Proposition

• Experienced and Dedicated Team- Our 3 founders are actively involved in the business

- Combined experience of more than 50 years in the chemical industry

- Supported by a strong team of professionals

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Prospects and Growth Strategies

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Prospects Growth Strategies

Manufacturing and industrial sectors continue to be keyeconomic drivers

Regional customers largelydependent on specialiseddistributors

Opening up of China marketpost WTO

Broaden geographical coverage to other parts of Asia

Establish direct presence in other parts of China

• Enlarge market share - explore opportunities in new industries- build product leadership- source for leading products

• Seek strategic alliances• Make inroads into specialty chemicals

manufacturing

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Financial Highlights

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Sales

Financial Year ended December

Steady sales turnover despite global economic downturn

S$M 57.2 54.458.6

5.0

15.0

25.0

35.0

45.0

55.0

65.0

FY2000 FY2001 FY2002

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64%

31%5% 27%

11%

51%

3% 8%

Singapore Malaysia Indonesia UK Others

FY2000

FY2002

Increasing sales contribution from Indonesia, UK, Philippines and China

Sales (Geographical)

“Others” include China and Philippines

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Gross Profit

Financial Year ended December

S$M

22.6% 22.7%

20.8%

0

2

4

6

8

10

12

14

FY2000 FY2001 FY200210%

15%

20%

25%

Gross Profit Gross Profit Margin

11.912.3

13.3

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Net Profit

Financial Year ended December

S$M

3.6

1.9

3.1

0.0

1.0

2.0

3.0

4.0

5.0

FY2000 FY2001 FY2002

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Key Financial Data

0.6Gearing ratio

83Debtors Turnover (days)

92Inventory Turnover (days)

14.7%ROA (PBIT/Total Assets)

17.1%ROE (NP/Shareholders equity)

FY2002FINANCIAL INDICATORS

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Summary

• A One-Stop Specialty Chemicals Solutions Provider• Established Supply and Distribution Infrastructure• Large and Established Customer Base• Experienced and Dedicated Team• Strong Financial Position• Industry shows Good Growth Prospects

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Thank YouQ&A