ENGTEX GROUP BERHAD 3Q14...3Q14 topline improved from Distribution, Manufacturing and Property divisions 893.4 812.2 10.0% Revenue 1,090.4 128.6 116.4 10.5% Gross Profit 155.5 14.4%

1

Operations Review Financial Review Prospects Investment Merits Appendix Corporate Profile

Gravy in the pipeline…

ENGTEX GROUP BERHAD

3Q14 Results & Corporate Update

Presented by :Dato’ Ng Hook, Group Managing DirectorMr. Khoo Chong Keong, Chief Financial Officer

2



AGENDA

3Q14 Operations Review

3Q14 Financial Review

Prospects

Investment Merits

Appendix

Corporate profile

3



OPERATIONS REVIEW

4



Manufacturing segment saw uptrend in pipes and wire mesh sales and utilisation of capacity albeit affected by increased price competition in wire mesh

OPERATIONS REVIEW: MANUFACTURING DIVISIONOperations Review

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.

Wire Mesh

Revenue: +5.6%

Sales Tonnage: +5.4%

MS Pipes

Revenue: +0.3%


Others

Revenue: -12.9% yoyDI Pipes

Revenue: +7.0%


11%

24%

13%

31.4%

54.8%66.4%

38.3%

78.3%63.4%

0.0%

50.0%

100.0%

DI Pipes MS Pipes Wire mesh

Utilisation Rate of Capacity 3Q13 3Q14

(Cap: 36k mt pa)(Cap: 60k mt pa) (Cap: 162k mt pa)

5



Expanding nationwide by ramping up capacities of wire mesh facilities …to become one of the leading player in Malaysia.

OPERATIONS REVIEW: MANUFACTURING DIVISION (con’t)Operations Review

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


Gebeng (Kuantan) 18,000

162,000

New capacity expected in

H2 2014

Kota Kinabalu (Sabah) 18,000

Johor Bahru (Johor) 18,000

Bkt Minyak, (Penang) 12,000

48,000

Total 210,000

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 Q1 2015.

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 Q4 2014.

Johor Bahru plant, Johor

Bkt Minyak, Penang

Kota Kinabalu plant, Sabah

6



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 H2 2015.

• 10 year tax break granted by ECER

• Cater for infrastructure works such as offshore oil rig

platform, land reclamation, seaport deepening, MRT

MS Plant upgrade in Serendah and new piling pipe plant taking shape in Gebeng …

7



Wholesale & Distribution division continues to be a leading player in Malaysia…and made up 49.5% of 3Q14 Group revenue

OPERATIONS REVIEW: WHOLESALE & DISTRIBUTION DIVISIONOperations Review

# Trading of products such for infrastructure, utilities and construction

sectors such as pipes, valves, fittings, building materials, steel products,

general hardware and plumbing products, and pre-stressed concrete products.

* Revenue presented here excludes Engtex’s own manufactured products sold through its distribution channel

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.

Valves & Fittings

8



Slow down in Group’s property segment…balance Bumi units of completed project still pending release

OPERATIONS REVIEW: PROPERTY DEVELOPMENTOperations Review

Project Name

(Ongoing)

Type Land

Area

(acres)

GDV

(RM’mil)

No. of

Units

Take-

up 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 3.87 84.0 46 70 0 25 2011-2013

(Completed)

Emerald

Avenue

SOHO

3 & 4-Storey Shop

Offices

Duplex

3.59 70.0

110.0

41.0

188

120

71

94

80

63

18

4

3

5

43

16

2011-2014

Total 7.46 305.0 425 25 89

• 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 2014

69715891

36587

164640

52968 58511

41,059 51703

0

20000

40000

60000

80000

2008 2009 2010 2011 2008 2012 2013 3Q13 3Q14

REVENUE (RM’000)

9



FINANCIAL HIGHLIGHTS

10



3Q14 performance contributed from distribution, manufacturing and property development…

3Q14 INCOME STATEMENTFinancials

Comments 3Q14 3Q13 Change RM'000 FY133Q14 topline improved from

Distribution, Manufacturing and

Property divisions

893.4 812.2 10.0% Revenue 1,090.4

128.6 116.4 10.5% Gross Profit 155.5

14.4% 14.3% 0.1pt Gross

Margin

14.3%

81.1 78.0 4.0% EBITDA 100.4

9.1% 9.6% (1.5pt) EBITDA

margin

9.2%

56.2 55.9 0.5% PBT 71.3

6.3% 6.9% (1.7pt) PBT margin 6.5%

39.2 38.5 1.8% PATMI 51.2

4.4% 4.7% (0.4 pt) Net margin 4.7%

20.29 20.55 (1.3%) Basic EPS

(sen)

27.39

Effective tax rate at slightly

higher than 25%

Improved margin due to

contribution from Distribution

division which offset increased

price competition of Group's

Manufacturing division

3Q14 saw higher interest

expenses due to increased

borrowings

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

19

7.2 2

48

.8

23

1.4

24

3.2

26

9.4

27

9.3

26

3.5

27

8.2

26

0.3

33

1.3

30

1.8

0

50

100

150

200

250

300

350

1Q

12

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

Qtrly Revenue (RM'mil)

16

.5

25

.8

16

.6

8.5

27

.1

27

.5

22

.8

23

.0

22

.4

29

.4

29

.3

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

1Q

12

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

Qtrly EBITDA (RM'mil)

7.9

14

.7

7.7

-1.2

13

.9

14

.1

10

.4 13

.3

10

.5 14

.9

13

.9

-5.0

0.0

5.0

10.0

15.0

20.0

1Q

12

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

Qtrly PATMI (RM'mil)

11



47.1%

47.5%

5.4%34.6%

yoy

6.6% yoy

10.5%

yoy

3Q14 performance impacted by both distribution and manufacturing division…

REVENUE SEGMENTATION

FY13 Revenue: RM1,090.4 mil (+18.5% yoy)

Financials

43

1

29

5

36

2

43

3

48

6

51

8

2008 2009 2010 2011 2012 2013

Revenue (RM’mil)Manufacturing

1 16

37

16

53

59

2008 2009 2010 2011 2012 2013

Revenue (RM’mil)Property Development

3Q14 Revenue: RM893.4 mil (+10.0% yoy)

49.1%

320

289

282

344

382

514

2008 2009 2010 2011 2012 2013

Revenue (RM’mil)Wholesale & Distribution

49.5%

44.7%

5.8%

1.7% yoy

16.9%

yoy+25.9%

yoy

12



MS Pipes sales in 3Q14 matched strong performance in 3Q13…wire mesh performed moderately in 3Q14

REVENUE SEGMENTATION (Manufacturing Division)

FY13 Manufacturing Revenue: RM518.1 mil (+6.6% yoy)

11.6%

18.6%

17.9%51.9%24.7%

yoy

17.5%

yoy

19.0%

yoy

15.7%

yoy

Financials

84

61

60

64

83

96

2008 2009 2010 2011 2012 2013

Revenue (RM'mil)Mild Steel Pipes

20

7

13

4

17

1

22

0

22

9

269

2008 2009 2010 2011 2012 2013

Revenue (RM'mil)Wire Mesh

67

47

57

60

50

60

2008 2009 2010 2011 2012 2013

Revenue (RM'mil)Ductile Iron Pipes

73

53

73

90

12

3

93

2008 2009 2010 2011 2012 2013

Revenue (RM'mil) Others

3Q14 Manufacturing Revenue:

RM399.1 mil (+1.7% yoy)

11.4%

23.7%

51.8%

5.6% yoy

0.3% yoy

12.9% yoy

7.0% yoy

13



43.2%

54.3%

2.5%

Wholesale & Distribution Manufacturing Property Development

29.5%

74.2%

yoy

yoy

yoy19.7%

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…

EBITDA SEGMENTATION

3Q14 EBITDA: RM81.9 mil* (+4.5% yoy)FY13 EBITDA: RM103.3 mil* (+47.8% yoy)

Financials

FY13 EBITDA margins: 9.3% (FY12: 7.3%)*Not excluding EBITDA of RM0.86 mil from Investment

Holdings and intersegment activities

30

24

23

36

35

45

2008 2009 2010 2011 2012 2013

EBITDA (RM'mil)Wholesale & Distribution

34

24

35

36

32 56

2008 2009 2010 2011 2012 2013

EBITDA (RM'mil)Manufacturing

-725

1,1

18

7,4

51

1,5

91

3,2

11

2,5

78

2008 2009 2010 2011 2012 2013

EBITDA (RM‘000)Property Development

37.3%

2.9%

44.4%

18.5%

yoy

-28.1%yoy

14



(RM’000) As at 30 Sept 2014

As at 31 Dec 2013

Comments

Non-Current Assets 267,120 236,589 Mainly due to CAPEX for acquisition of industrial land andbuilding, machineries, and construction of hotelbuildings.

Current Assets 814,909 698,941 Largely due to increase in inventories ($30.3m), cash at bank ($27.2m) and trade receivables ($22.2m)

Current Liabilities 529,632 465,506 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 414,448 359,627 Due to higher retained earnings and treasury shares sold ($19.1m)

Minority Interest 18,857 16,900 -

Borrowings (ST + LT) 489,816 386,676 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)Adjusted NTA/Share after bonus issue

2.11 (1)1.40

2.02 (2)1.35

Gearing sustained at less than 1x…

BALANCE SHEET

(1) Based on 196.4 million shares, net of 1.600 million treasury shares(2) Based on 186.6 million shares, net of 11.410 million treasury shares

Financials

15



FY2010 FY2011 FY2012 FY2013 1Q14 2Q14 3Q14

Current Ratio 1.6 1.5 1.5 1.5 1.5 1.5 1.5

Collection Period (Days) 93.6 98.2 96.3 92.9 109.2 92.2 103.0

Payment Period (Days) 27.7 33.9 40.6 36.9 39.6 35.1 37.2

Inventory Processing Period (Days) 82.5 84.7 84.9 78.4 95.6 75.9 88.6

Cash Conversion Cycle (Days) 148.4 149.0 140.5 134.5 165.2 133.0 154.4

Net Debt/Total Equity 0.66 0.87 0.87 0.94 0.93 0.90 0.99

Total Debt/Total Equity 0.76 1.00 0.97 1.03 1.04 1.05 1.13

Interest Coverage 7.8 5.5 4.6 6.2 5.0 6.1 5.1

Effective Finance Cost 3.9% 4.9% 4.3% 4.4% 4.2% 4.5% 4.7%

Fundamentals set to improve…

KEY FINANCIAL RATIOSFinancials

10.6%

14.1% 12.8%

9.7%

15.2%

11.3%

15.7%

14.3%

4.7%6.6%

5.5%3.9%

6.0%

4.4% 6.0%5.5%

0

0.05

0.1

0.15

0.2

FY2009 FY2010 FY2011 FY2012 FY2013 1Q14 2Q14 3Q14

Average ROE & ROA ROE ROA

16



Profitable since incorporation…

REVENUE & PROFIT TRENDFinancials

14

6.7

29

6.0

35

2.3

35

5.3

45

2.2

56

6.4

75

1.8

59

9.8

68

0.1

79

3.6

92

0.5

1,0

90

.4

26

9.4

27

9.3

26

3.5

26

0.3

33

1.3

30

1.8

14.9% 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%

13.7%

14.5%

13.8%

14.9%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

0

200

400

600

800

1,000

1,200

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1Q13 2Q13 3Q13 1Q14 2Q14 3Q14

Group Revenue (RM'mil) and Gross Margin (%) Revenue Gross margin

8.1 13.4 16.5 5.7 8.7 19.3 33.2 24.0 35.5 37.9 30.9 55.0 15.1 15.2 11.4 11.3 15.9 14.3

10.1%8.9% 10.2%

6.3%7.3%

8.0% 8.3% 8.0%

9.4% 9.0%

7.3%

9.3% 10.1% 9.9%

8.7% 8.6%8.9% 9.4%

5.7%4.5% 4.7%

1.6%1.9%

3.4%

4.4%

4.0%

5.2%4.8%

3.4%5.1%

5.6% 5.4%4.3% 4.3%

4.8% 4.7%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0

50

100

150

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1Q13 2Q13 3Q13 1Q14 2Q14 3Q14

EBITDA and PAT margins

PAT Tax Finance cost & depreciation EBITDA Margin PAT Margin

17



PROSPECTS

18



• 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.

OUTLOOK

Prospects

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

• 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

Tremendous potential for pipe replacement nationwide;

enormous demand for DI and MS pipes

19



OUTLOOK

Prospects

Group’s outlook still intact on the back of robust activities in both public and private sectors in Malaysia…

New national policy for non-revenue water (“NRW”) to

tackle high water loss due to be tabled by year end

• Three states with high NRWs – Perlis, Kedah and Kelantan is trying to contain the problem

• Discussions with Federal underway to receive special allocation to replace 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.

New national policy for non-revenue water (“NRW”) to tackle water loss to be

tabled by year end (Source: The Star 4/9/14)

• 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 2025.

20



OUTLOOK

Prospects

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.

21



Growth strategies in place to broaden revenue base…

GROWTH STRATEGIESProspects

Uncharterd Waters High Flyers

New Biz Fortresses

Wire

Mesh

MS

DI

Property & Hospitality

D&W

Market Share

Ind

us

try G

row

th P

ote

nti

al MS

DI

1. Tapping into

opportunites

from govt

investment in

pipeline

infrastructure

2. Increasing

overseas

sales

1. Tapping into

opportunities

from govt

investment in

pipeline

infrastructure

2. Investing in

more capacity

if needed

3. Widening

product

application to

piling pipes

1. Investing in more

capacity to tap

construction demand

2. Increasing market

share via nationwide

presence

1. Expanding market

channel nationwide

with more dealerships

2. Widening product

range for 1-stop

service

1. Building future

recurring income from

hospitality business

2. Earnings from

property dev to

mitigate cyclical risk of

core businesses

22



INVESTMENT MERITSValuation, room to grow…

23



One of the best proxies to the water sector growth story…single digit earnings multiple an affordable entry

VALUATION

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)1 0.93

Net Dividend Yield (FY14)2 1.3%

1Based on adjusted NTA per share of RM1.39 as at 30.9.20142Based on FY13’s Dividend of 1.75 sen per share

Investment Merits

24



Consistently paying dividends since listing…

DIVIDEND HISTORY

1.7

1.7

1.2

0.6

0.6

0.6

0.6

0.8

1.1

1.5

1.5

1.8

0

1

2

FY0

2

FY0

3

FY0

4

FY0

5

FY0

6

FY0

7

FY0

8

FY0

9

FY1

0

FY1

1

FY1

2

^FY1

3

Sen

Adjusted Net Dividend Per Share

3.0

3.0

1.2

1.2

1.1

1.1

1.5

2.1

2.8

2.8

3.3

22%

17%

20%

14%

6%

4%

6% 6%8%

10%

6%

0%

5%

10%

15%

20%

25%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

FY0

3

FY0

4

FY0

5

FY0

6

FY0

7

FY0

8

FY0

9

FY1

0

FY1

1

FY1

2

FY1

3

RM’ mil

Dividend Payout

Dividend Payout Payout Ratio

Investment Merits

25



THANK YOU

Bloomberg: ENGT MK | Reuters: ETEX.KL

IR Contacts:

Mr. Khoo Chong Keong +603-6140 1111 [email protected]

Mr. Chong Thian Fook +603-6140 1111 [email protected]

mailto:[email protected]

mailto:[email protected]

26



CORPORATE PROFILELeading one-stop pipeline systems provider in Malaysia…

27



Strong growth catalyst from long-overdue pipeline replacement project…Engtex set to be key beneficiary

EXECUTIVE SUMMARY

• 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

• 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

• Single-digit valuation not yet reflecting upcoming pipe replacement

projects, dividend paying since listing

Wire Mesh

Valves & Fittings

Ductile Iron (“DI”) Pipes

Mild Steel (“MS”) Pipes

Corporate Profile

28



Total market capitalisation of more than RM400 million…

EXECUTIVE SUMMARY (cont)

Engtex Group Warrants 2007/2017

Warrant Code ENGTEX–WA

Balance No. of Warrants 148,465,800 @ 5 December 2014

Terms of Warrants Expiry: 25 October 2017; Exercise price: RM0.83 each; Conversion: 1-for-1

Market Capitalisation RM78.7 mil (RM0.53 per warrant @ 5 December 2014)

Engtex Group Berhad

Stock Exchange Main Market, Bursa Malaysia- since 30 July 2002 - 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)

Sector Trading / Services

Codes Bursa: 5056 / ENGTEXBloomberg: ENGT MKReuters: ETEX.KL

Share Capital RM148.52 mil (297.034 mil shares of RM0.50 par)

Market Capitalisation RM386.1 mil (RM1.30 per share @ 5 December 2014)

Corporate Profile

29



Committed to superior quality for customers towards achieving sustainable returns for stakeholders…

CORPORATE CREDO

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

• Customer Satisfaction

• Safety & Environment

• Shareholder Value

• Integrity & Professionalism

• Quality Management

Vision

Values

Corporate Profile

30



30 years of business expansion…

CORPORATE MILESTONES

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 5

2014 • Proposed 1:2 bonus issue of up to 148.5 million new ordinary shares

• Proposed adjustment to exercise price and outstanding warrants pursuant to

bonus issue

• Proposed increase in authorised share capital

Corporate Profile

31



Primarily involved in manufacturing and distribution of water- and steel-related products…

PRINCIPAL ACTIVITIES

Hospitality

(future)

Distribution &

Wholesale

PVF and general hardware

Building materials and steel products

Pre-stressed concrete products

Property

Development

Ongoing Projects:

Emerald Avenue

New launching:

Amanja

Manufacturing

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)

47.5% of FY13 revenue

47.1% of FY13 revenue

5% of FY13 revenue

Corporate Profile

Ongoing hotel development:

Mercure Hotel @ Emerald Avenue

Ibis Hotel @ Bandar Sri D’sara

Boutique Hotel @ Lebuh Pasar KL

32



Manufacturing facilities complemented by wide and established distribution channel…

MANUFACTURING FACILITIES & DISTRIBUTION NETWORK

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) 8.5% (incl. others)

Corporate Profile

33



DI pipe business profitable even at 30% utilisation… operating leverage to manifest when pipe replacements take off

MANUFACTURING: DUCTILE PIPE

• 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

• 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

Accredited with ISO 9001: SIRIM,

OHSAS18001:2007 (occupational

safety & health) & ISO14001:2004

(Environmental Management)

• Local & regional product compliance Peninsular Malaysia: IQCI (IKRAM), SPAN

East Malaysia: State water authorities of Sabah, Sarawak

Singapore: PSB

56% 19% 8% 4% 13%

Cost Breakdown: DI Pipe

Scrap Metal Consumables/Chemical Utilities Direct Labour Overheads/Others

Product Brands:19 16 18 20 20 20

32%27%

30%33% 33% 33%

-20%

-5%

10%

25%

40%

0

5

10

15

20

25

2008 2009 2010 2011 2012 2013

Production Output & Utilisation Rate

Output ('000 ton p.a.) Utilisation Rate

Corporate Profile

34



DI pipe vs PVCO (molecularly oriented polyvinyl chloride) pipe

MANUFACTURING: DUCTILE 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 long-

term 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”)

Corporate Profile

35



MS pipe segment complementary to DI for comprehensive product range…

MANUFACTURING: MILD STEEL PIPES

• 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

• Manufacturing plant in Serendah, Selangor built on 20-acre land Production capacity: 42K ton p.a.

Capacity utilisation: 19.9K ton /

55% in FY13

Accredited with ISO 9001: SIRIM

• Products compliant nationwide Malaysia: IQCI (IKRAM), SPAN, and

water authorities in all states

Product Brand:

76% 7%

1% 3%

14%

Cost Breakdown: MS Pipe

HRC/Steel Plate Consumables/Chemical Utilities Direct Labour Overheads/Others

Corporate Profile

13 11 13 15 19 20

36%31% 35%

42%53% 55%

-20%

-5%

10%

25%

40%

55%

70%

0

5

10

15

20

25

2008 2009 2010 2011 2012 2013



36



Wire mesh segment aiming to be the largest player in Malaysia…

MANUFACTURING: WIRE MESH

Product Brand:

• One of top 3 wire mesh manufacturers in Malaysia Mainly catering for construction and infrastructure sectors

• Strategically-located manufacturing plants catering to specific regions

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

• Products compliant with Malaysia quality standards MS 145:2006

Location Production

Capacity

(ton p.a.)


Seberang Perai (Penang) 12,000

Gebeng (Kuantan)* 36,000

Johor Bahru (Johor)* 18,000

Total 162,000

48 43 50 60 79 109

67%60% 49%

56%73% 67%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0

20

40

60

80

100

120

2008 2009 2010 2011 2012 2013



Corporate Profile

37



Undisputed cost leader in PVF distribution…

DISTRIBUTION: VALVES & FITTINGS

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)

Corporate Profile

38



Key management possess many years’ experience…

KEY MANAGEMENT

• Group founder with 40 years’ hands-on experience in the hardware and PVF industry

• Provides the Group’s strategic direction

Dato’ Ng Hook

Group Managing Director

• 30 years’ experience in hardware industry

• Instrumental in business development, procurement of new distributorships and developing in-house brand products

Ng Chooi Guan

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

Datin Yap Seng Kuan

Executive Director

• Been with Engtex since 1985

• Currently responsible for sales and marketing of a manufacturing subsidiary

Ng Yik Soon

Executive Director

• Been with Engtex since 2001

• Overall in charge of the accounting affairs of the Group

• Joint company secretary

Khoo Chong Keong

Chief Financial Officer

Corporate Profile

Documents

ENGTEX GROUP BERHAD 3Q14...3Q14 topline improved from Distribution, Manufacturing and Property divisions 893.4 812.2 10.0% Revenue 1,090.4 128.6 116.4 10.5% Gross Profit 155.5 14.4%