HG METAL MANUFACTURING LIMITED PLANT TOUR 20 August

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 & Ann. Aik We Custom Manufacture to your Satisfacti

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

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

CURRENT GROUP STRUCTURE HG METAL 100% 59. 2% Oriental Metals Pte Ltd Jin Heng Li Hardware Sdn Bhd (S’pore) (Malaysia) (Our Manufacturing Arm) We Custom Manufacture to your Satisfacti

THE STEEL VALUE CHAIN Increased Profit Margin Major Stockist Retailer Small Stockist Enlarged Manufacturing Capabilities Custom Manufacturer Post-IPO We Custom Manufacture to your Satisfacti

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

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

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

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

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

COMPETITIVE STRENGTHS We Custom Manufacture to your Satisfacti

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

COMPETITIVE STRENGTHS High Barriers to Entry It’s Not Easy to duplicate our Business Model nor acquire our Manufacturing Capabilities Ø Ø Ø 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 Satisfacti

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

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

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

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

FINANCIAL HIGHLIGHTS We Custom Manufacture to your Satisfacti

FINANCIAL HIGHLIGHTS S$ millions Group Turnover Trading and others Manufacturing 90. 3 82. 4 77. 2 8. 4 7. 1 45. 6 2. 8 5. 4 74. 4 75. 3 81. 9 40. 2 2001 2002 1 H 2003 For the financial year ended 31 October We Custom Manufacture to your Satisfacti

FINANCIAL HIGHLIGHTS S$ millions Profit Before Taxation Trading and others Manufacturing 3. 7 3. 1 2. 6 1. 6 0. 7 1. 9 0. 8 2. 6 2001 2. 4 2001 2. 1 2002 1. 1 1 H 2003 For the financial year ended 31 October We Custom Manufacture to your Satisfacti

FINANCIAL HIGHLIGHTS PBT Margin: Manufacturing vs Trading percent Trading Manufacturing Overall 19 9. 5 3. 7 2. 4 4. 1 2. 6 2001 2002 For the financial year ended 31 October We Custom Manufacture to your Satisfacti

FINANCIAL HIGHLIGHTS Who We Sell To Update? ? We Custom Manufacture to your Satisfacti

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

GROWTH PROSPECTS and FUTURE PLANS We Custom Manufacture to your Satisfacti

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

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

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

FUTURE PLANS - MFG Expand Manufacturing Operation Broaden Product Mix Ø Steel pipes (round and rectangular pipes) Ø Enlarge market share in steel pipes (Estimated 35% of market share) Ø Fully operational in 2003 Material impact in FY 04 Broaden Product Market Ø Leverage on established trading network in region to distribute manufactured steel products We Custom Manufacture to your Satisfacti

INDUSTRY COMPARISON Company Revenue (S$’ 000) HG Metal 90, 291 2, 792 22. 2 6 x Lee Metal 119, 950 2, 072 39. 6 19. 6 x Nam Lee Metal 48, 876 1, 406 80. 2 26. 5 x Hup Seng Huat 48, 826 1, 910 51. 1 26. 6 x -- -- -- 19. 7 x Average Net Earnings Market Cap* (S$’ 000) (S$’ million) PE Ratio* Results are extracted from Company Annual Reports * source: Business Times 15 August 2003 We Custom Manufacture to your Satisfacti

HG METAL Vs ANN AIK Company HG METAL ANNAIK* 1 H 2003 Results FY 2002 Results Revenue (S$’ 000) 45, 615 26, 843 PBT (S$’ 000) 1, 928 2, 836 Net Earnings (S$’ 000) 1, 314 2, 018 Manufacture customized steel products like flat steel bars, mild lip channels and steel pipes. Distribution business in steel products. Manufacture stainless steel flanges and distribute stainless steel products, which are used mainly in piping systems. Distribution business in stainless steel products. 25. 55 cents 12. 21 cents Business NTA * source: Ann. Aik Prospectus on Opera, MAS We Custom Manufacture to your Satisfacti

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