Information Request

Online Q&A

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.

Rgds,
The Management Team
MegaChem Limited

1. Dear Jayster, you wrote:

Why are you buying a factory in Tuas? Don't you think the current property prices are too high?

Firstly I am not sure if industrial property is too high but transactions done after ours suggest prices have increased further. Secondly this JTC property is located just directly adjacent to our existing site which therefore enables us to merge our 2 sites together to ease operational flow and improve efficiency. Finally our decision to buy this factory is not driven by property investment objectives. Instead it is customer and market driven given an increasing trend in outsourcing non-core activities in the chemical industry. This purchase is in line with our long term strategy of building a more robust business model that will propel our business to a higher level.

2. Dear George Teo, you wrote:

Europe and US are having economic problems. Have it affected your business?

The chemical industry is quite closely co-related to the global economy. If the Europe and US debt issues dampen business confidence and adversely affect the global economy, it is a negative development for the chemical industry. However our fundamentals are strong as is evident in our performance even during crises. Our business is very diversified which provides resilience to our business. While we are confident of our long-term prospects, the cloudy economic outlook may cap our growth in the short term.

3. Dear Cindy Neo, you wrote:

Your inventory level has increased 18%. Do you think it is prudent to hold inventory when the economic outlook is uncertain and oil prices is likely to fall?

Though the inventory level increased by S$3.2 million or 17.6%, the inventory turnover has remained relatively unchanged which indicates that there is no deterioration in our ability to sell our inventory. Going forward given the uncertainty in the external environment, we will adopt a more prudent approach towards our purchasing strategy and inventory management.

4. Dear Jame Lui, you wrote:

Thanks for your interim dividend of 0.3 cents, a bit sad it was less than the 0.5 cents declared last year.

You have S$7.8 million in cash, what do you plan to do with it?

We have taken into consideration our current cash position and our future funding requirement and decided that given our plan to expand our manufacturing facilities, it will be prudent to pay less dividend. Cash conserved will be used to grow the manufacturing activities which will in turn generate better cashflow in the longer term to enable us to pay higher dividend going forward.

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.

Rgds,
The Management Team
MegaChem Limited

This announcement has been prepared by the Company and the contents have been reviewed by the Company's Sponsor, SAC Capital Private Limited, for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited ("Exchange").The Company's Sponsor has not independently verified the contents of this announcement.

This announcement has not been examined or approved by the Exchange and the Exchange assumes no responsibility for the contents of this announcement, including the correctness of any of the statements or opinions made or reports contained in this announcement.

The contact person for the Sponsor is Mr Bernard Lim (tel : (65) 6221 5590) at 79 Anson Road, #15-03 Singapore 079906.