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MegaChem Limited

Management Online Q&A With Investors

Dear Investors,

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 Ken Tan, you wrote:

Having made full impairment to your Venezuela debts, will you still be doing business in this country?

We have significantly cut back on sales to customers in Venezuela and are monitoring the political and economic situations there closely. Until we see an improvement in the country risk, we do not foresee any pick up in sales in FY 2018.

2. Dear Jeremy Teo, you wrote:

Your manufacturing activity seems to be stagnate. Any plans to make it grow?

For the past couple of years, some customers served by our manufacturing activity have faced challenges in their own marketspace which resulted in them reducing their businesses to us. Even though we have made gains in a couple of new areas, these were not sufficient to cover for the reduced business in the other markets, resulting in our manufacturing business appearing to be stagnant. Nevertheless, we will review our sales strategy for our manufacturing activity with a view to accelerate its growth.

In addition, most of our manufacturing facility, following our expansion in 2012, have been fully depreciated. The lower depreciation going forward, coupled with an intensified sales effort, should lend some support to the performance of our manufacturing operation going forward.

3. Dear Tony Lim, you wrote:

With the tax cuts in America becoming a reality, will the company establish a physical presence in the US?

US has many well-established chemical producers, from whom we source our products. With the tax cuts, products from US may become more competitive. We should therefore be looking at opportunities to expand our sources of products from US.

As for your question of whether we will establish a physical presence in US, it is an option which cannot be ruled out though the decision will not be based purely on tax consideration. We currently have an extensive geographic network spanning over 11 countries with sales reaching more than 30 countries. However the US market is a market that remains relatively untapped.

4. Dear Faith Ng, you wrote:

Your profit doubled. Why is the dividend still the same as last year?

The decision of how much dividend to pay is not based purely on the payout ratio as we need to also take into consideration other factors such as our cash position, future cash needs and capital structure. Looking our past dividend payment record, one can see that we generally reward our shareholders consistently well.

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