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
MOVING UP
THE VALUE CHAIN
Mr Wee Piew
Chief Executive Officer
HG Metal Manufacturing Limited
We Custom Manufacture to your Satisfaction
GROWTH PATH
2000
1998
1984
1973
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
1971
Established partnership HGC small retailer of steel products
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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 Satisfaction
THE STEEL VALUE CHAIN
Increased Profit Margin
Major Stockist
Retailer
Small Stockist
Enlarged
Manufacturing
Capabilities
Custom
Manufacturer
Post-IPO
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TRADING
Our Wide Range of Products
Hollow Sections
Reinforcement Bars
Flat Bars
Angle Bars
I Beams
Pipes
Ship Plates
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TRADING
A One-Stop Supermarket for Steel Products
Mild Steel Lip Channels
Pipes
H-Beams
Hollow Channels
Steel Plates
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MANUFACTURING-Growth Driver
The Manufacturing Process
Slitted Steel Coils
Slitting
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$50million per year)
Production Capacity
i)
600 MT/month for MSLC currently
ii) Can easily increase to 1000 MT/month
We Custom Manufacture to your Satisfaction
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
COMPETITIVE
STRENGTHS
We Custom Manufacture to your Satisfaction
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
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
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
COMPETITIVE STRENGTHS
Our Suppliers
Other eastern
European countries
Russia
Ukraine
Turkey
Sri Lanka
Malaysia
Indonesia
Myanmar
Thailand
Brunei
Singapore
Our Sales Network (Mainly South East Asia)
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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
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
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FINANCIAL HIGHLIGHTS
We Custom Manufacture to your Satisfaction
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
2001
2002
1H2003
For the financial year ended 31 October
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FINANCIAL HIGHLIGHTS
S$ millions
Profit Before Taxation
Trading and others
Manufacturing
3.7
3.1
1.6
0.7
2.6
1.9
0.8
2.6
2001
2.4
2001
2.1
2002
1.1
1H2003
For the financial year ended 31 October
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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
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FINANCIAL HIGHLIGHTS
Who We Sell To
Stockist and
retailers
80.0%
Update??
Engineering
10.4%
Shipping
Construction
5.0%
4.6%
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FINANCIAL HIGHLIGHTS
Breakdown by Geographical Region
Singapore
43.9%
Others
5.3%
Update??
Indonesia
22.9%
Other countries include Thailand, Brunei, Myanmar,
Sri Lanka and South Korea
Malaysia
28.0%
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GROWTH PROSPECTS
and FUTURE PLANS
We Custom Manufacture to your Satisfaction
GROWTH PROSPECTS
800
Steel Consumption
World
Million metric tons
700
600
500
400
Asia
300
200
100
1994 1995 1996 1997 1998 1999 2000 2001(F) 2002(F)
Source: International Iron and
Steel Institute, Oct 2001
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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
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 Satisfaction
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
INDUSTRY COMPARISON
Company
Revenue
(S$’000)
HG Metal
90,291
2,792
22.2
6x
Lee Metal
119,950
2,072
39.6
19.6x
Nam Lee
Metal
48,876
1,406
80.2
26.5x
Hup Seng
Huat
48,826
1,910
51.1
26.6x
--
--
--
19.7x
Average
Net Earnings Market Cap*
(S$’000)
(S$’ million)
PE Ratio*
Results are extracted from Company Annual Reports
* source: Business Times 15 August 2003
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HG METAL Vs ANN AIK
Company
HG METAL
ANNAIK*
1H2003 Results
FY2002 Results
Revenue (S$’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.
Manufacture stainless steel
flanges and distribute
stainless steel products, which
are used mainly in piping
systems.
Distribution business in
stainless steel products.
Business
Distribution business in steel
products.
NTA
25.55 cents
12.21 cents
* source: AnnAik Prospectus on Opera, MAS
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HG METAL MFG LIMITED
Moving up the Steel Value Chain…
Manufacturing towards Customer Satisfaction and Higher Profits
We Custom Manufacture to your Satisfaction