MegaChem Limited

Management Online Q&A With Investors

Dear Investors & Stakeholders

Thank you very much for your questions and the opportunities to respond to them.

We hope you have a better understanding of our business through this online exchange.

Your questions are reposted in blue followed by our replies in black.

Best Regards,
The Management Team
MegaChem Limited

1. Dear Stephan Kwek, you wrote:

How did you manage to recover the bad debt from your Venezuela customers?

Following relaxation of the exchange control in Venezuela, we appointed a legal firm to assist us in the recovery of debts owing by our customers there. The amount recovered in FY2019 is not the full amount of the debt owing from our customers in Venezuela. Although the collectability of these debts depends on several factors such as financial stability of the country and availability of US dollar in Venezuela, we will try to collect the rest of the debt owing to us.

2. Dear Hai Kuan, you wrote:

The company provided some indication regarding the potential growth of the semiconductor industry in the years ahead and expressed that his could be beneficial to Megachem. Are you referring to the fact that Megachem would gain from a growing semicon industry pie or and that the company is growing relationships with particular players in the industry? Also, would the company still be able to benefit if these manufacturing plants relocate out of Singapore?

Chemical industry is sometimes referred to as the industry of industries because of its wide usage in the manufacturing of other products such as electronics, construction materials, automotive, coatings, flavours and pharmaceuticals.

The electronics industry uses a broad range of specialty chemicals such as in the manufacture of silicon wafers, integrated circuits (IC), printed circuit boards (PCBs), semiconductors and optoelectronics.

The advent of smart manufacturing, Industrial Revolution 4.0 and autonomous vehicles will drive demand for electronic components such as silicon wafers and semi-conductors, which will in turn increase demand for electronic chemicals.

As our products are sold to a wide spectrum of industries including electronics, we will stand to gain from the growth of this industry.

On your question of relocation of how it will affect us if these semi-conductor manufacturers relocate, we believe, given our extensive network in Asia, we are able to service our customers in many locations if they choose to relocate.

I have been a long time shareholder of the company and had previously lamented about the illiquid nature of the company's shares. Are there any plans to widen the investor base?

We are pleased to note that some investors are long-term shareholders in our Company and are thankful for your support and confidence in us. With regard to the illiquid nature of the Company's shares, it reflects, to some extent, the broader illiquidity of the market in particular the Catalist stocks. Nevertheless, we believe in providing long-term return to our shareholders. Hence, we have maintained a fairly consistent dividend payment record since our listing in 2003. We hope our shareholders are satisfied with the return so far.

3. Dear Bennett Lim, you wrote:

Is your ethanol distribution business in Thailand, Megachem Plus Limited benefiting from the surge in demand in hand sanitiser?

Indeed the price of ethanol has surged following the COVID-19 outbreak. It has benefitted us initially but there is now a shortage of products for us to meet the increase in demand. We believe this is transitory as producers will step up production to catch up with demand.

4. Dear Yvonne Yeo, you wrote:

Your Chairman keep buying back the shares, he want to privatise the Company?

Our Managing Director's buying of the Company's shares shows his commitment and confidence in the long-term prospects of the Company. There is no plan to privatise the Company at this point in time.

Dear Investors,

Thank you for all your questions and your interest in MegaChem Limited. We have come to the end of this Q&A session.

We have enjoyed the session and have learnt much from your questions. We hope that through this Q&A, you have gained better insights to our Company and our operations.

Best Regards,
The Management Team
MegaChem Limited