Business Overview

5. GENERAL INFORMATION ON OUR GROUP 5. GENERAL INFORMATION ON OUR GROUP 5.1 OUR HISTORY We are principally involved in the distribution of building materials and provision of logistics, the supply of ready-mixed concrete, manufacturing of MC and precast concrete products, wire mesh and metal roofing systems. Our Group’s history can be traced back to 1974 when our founder, Datuk Chiau Beng Teik took over his family’s hardware shop in Alor Setar, Kedah selling building materials to local renovators and walk-in customers, under the name Chop Chin Hin. In 1995, Datuk Chiau Beng Teik saw an opportunity to venture into the transportation business and established SPPCH to undertake this new business venture. Operating from an office in Alor Setar, Kedah, SPPCH started by providing transportation services to cement traders and manufacturers in the northern region of Malaysia, for instance, Cement Industries Malaysia Berhad and Perak-Hanjoong Simen Sdn Bhd (now part of YTL Cement Bhd). In 1996, SPPCH expanded into the distribution of building materials to contractors and developers operating in the northern region of Malaysia. With the expansion of SPPCH, the hardware shop business under Chop Chin Hin was gradually wound down. In 1998, having established its business in the northern region of Malaysia, SPPCH turned its attention to the construction activities in Kuala Lumpur and Selangor by setting up a branch office in Kuala Lumpur. This move was later followed by expansions into the eastern and southern regions of Malaysia with the setting up of branches in Kota Bharu, Kelantan and Johor Bahru, Johor in 2004 and 2005, respectively. As our business grew, our fleet of cement tankers and trucks expanded and proved to be not efficient for us to maintain them as it required tedious and time consuming administrative attention arising from the maintenance of these vehicles, managing large pool of drivers and complying with vehicle licensing requirements. As such, we undertook a strategic decision to dispose off our fleet of cement tankers and trucks and started to engage external contractors to provide logistic services to our customers instead of maintaining our own fleet of vehicles. Given that our Group had a long history in the transportation business especially for cement manufacturers, we continue to maintain our logistic business segment despite that the revenue earned from the logistic business segment is not as significant as our distribution of building materials segment. The provision of the logistic services is a value-add services to our customers in our business of distribution of building materials in in the sense that we can ensure prompt delivery of cement directly from the cement manufacturers to our customers. In 2006, we successfully obtained a money lending license from the Ministry of Local Government and Housing, Malaysia for the provision of hire purchase financing activity. When required, we also provide financing to these external contractors to purchase their own vehicles on the condition that they will provide transportation services to our Group. Such financing is provided as part of our hire purchase financing activities specifically to our contractors for our logistic business. In 2007, SPPCH transferred its transportation business to C&H Transport so that it can focus on its distribution business. 5. GENERAL INFORMATION ON OUR GROUP (Cont’d) In May 2008, our Group ventured into the ready-mixed concrete business segment through our subsidiary, Chin Hin Concrete (KL). This was also an upstream diversification move by our Group from our cement distribution and transportation business segment. In 2011, we successfully expanded our ready-mixed concrete business to the northern region through the acquisition of Chin Hin Concrete (North). As our ready-mixed concrete business expanded, we had to sub-contract a portion of approximately 30.0% of the manufacturing and operations of our batching plants to sub-contractors since 2012. Such arrangement was undertaken on a plant by plant basis to a few external sub-contractors. We found it to be more efficient to sub-contract certain plants as it will allow us to redeploy our resources from activities such as managing the labour and operations, repair and maintenance of the equipment and mixer trucks to more critical areas in the marketing and distribution functions. SPPCH subsequently changed its name to PP Chin Hin in December 2008. In 2009, our Group undertook an internal restructuring exercise to consolidate and streamline our distribution businesses and operations. As part of the reorganisation and efforts to centralise our business operations, we moved our head office from Alor Setar to Kuala Lumpur. We also made further steps to strengthen our presence in the east coast of Malaysia by setting up additional branches / warehouse in Mentakab (Pahang) and Kuala Terengganu (Terengganu) in 2009. In 2009, our Group expanded into Singapore with the establishment of PP Chin Hin (SG). Our expansion continued in 2010, with the setting up of branches in Muar (Johor) and Ipoh (Perak), followed by Melaka in 2011. PP Chin Hin’s branch office in Kuantan was also set up in October 2012. In 2013, PP Chin Hin opened a sales office cum warehouse in Jalan Ipoh, Kuala Lumpur to better serve its hardware and retail customers. Please refer to Section 6.14.2 of this Prospectus for a listing of our nationwide offices and warehouses. Towards the end of 2009, our current Group Managing Director, Chiau Haw Choon, joined his father Datuk Chiau Beng Teik in running the fast growing businesses under our Group, which at the time were mainly in transportation of cement, distribution of building materials and ready-mixed concrete. Under the leadership of our Group Managing Director, we undertook a strategic review of our businesses and decided that it was time to diversify and broaden our earnings base. Having reviewed and analysed various strategies, we decided on vertical integration by venturing into the manufacturing of the follOWing bUilding material products:­(a) Me products which have growth potential as a substitution for cement and clay bricks;
(b) precast concrete products which allow us to penetrate into the infrastructure sector; and
(c) wire mesh and metal roofing systems on the back of regular orders from PP Chin Hin’s customers.

In September 2010, Pintar Sinar was set up to acquire the land on which the manufacturing facilities owned by Starken MC and G-Cast Concrete are currently situated and in 2011, commenced construction of the abovesaid manufacturing facilities. The construction of our G-Cast Concrete factory was completed in 2012 and production of precast concrete pipes commenced soon after. In 2013 Starken AAC’s factory was completed and we commenced production of MC products in January 2014. In 2010, we also commenced construction of our manufacturing facilities for wire mesh and metal roofing systems in Mlai, Negeri Sembilan which was completed in October 2012 and began production of wire mesh and metal roofing systems immediately thereafter. In 2012, we acquired a factory in Prai, Pulau Pinang for the manufacturing of HDW and metal roofing systems to expand our market coverage in the northern region. 46 [ Company No.: 1097507iJ] 5. GENERAL INFORMATION ON OUR GROUP (,–C_o_n_t_~,—-_ Our Group experienced significant growth in revenue from 2007 to 2014 where our Group’s revenue grew from approximately RM392 million in FYE 2007 to RM1.22 billion for FYE 2014. Such growth in our revenue was mainly contributed by our distribution of building materials segment. Prior to FYE 2007, our Group’s distribution of building materials business only focussed on the distribution of cement. SUbsequently between FYE 2007 to FYE 2014, we expanded our product range into the distribution of steel bars and OBM to increase our Group’s revenue and profitability. Todate, we supply more than 1,000 types of bUilding materials as compared to only supplying cement to our customers. During the same period, we also expanded our presence and distribution networks all across Malaysia and into Singapore by setting up additional branches and warehouses to better serve our customers. We increased the strength of our sales and marketing team from only eight (8) personnels in 2007 to ninety six (96) people in 2014. We further diversified into the ready-mixed concrete business segment in 2008 which contributed to the improvement of our revenue to surpass the RM1.0 billion mark in 2011. We also ventured into the manufacturing of bUilding materials in 2010 so that we can enhance and improve our future earnings and profitability. The manufacturing segment started to contribute to our revenue in FYE 2012 and its contribution had gradually increased from FYE 2012 to FPE 2014. Over the years, our Deputy Group Executive Chairman together with our Group Managing Director and key management team have successfully transformed our business from the distribution of bUilding materials to an integrated bUilding materials provider. Our Group structure as at the LPD and prior to our IPO is diagrammatically summarised below:­
100% 100% 100%100% PP Chin Hin (SG) 100% C &H Transport I,I, -;J ‘:7 ‘-/r—————-.-_..————j t Distribution of i i building materials ! i & logistic i !IL.._.. .1
Chin Hin Concrete (KL) 100%
Chin Hin Concrete (North) i!jJr———————–··——-l ! Distribution of I ) ready-mixed I I concrete ! I,l ._~__. j

GwCast Concrete 100%
Green Cement 100%
Pintar Sinar (“””‘1 ,I -.;;;1 c”. :———————-:————,”

! Manufacturing of ! i Me &precast 1 ,! concrete products ,i IiL_•• • ._••• ••!
Metal Sphere 100% Comet Steel 100% Ace Logistic r—l ‘\” r-·——-··——-··——–..—-.,i Manufacturing j ) wire mesh & ,1″,,:1! metal roofing I systemL , • __••.• _~
5. GENERAL INFORMATION ON OUR GROUP (Cont’d) 5.2 SHARE CAPITAL Our authorised share capital is RM500,000,000.00 comprising 1,000,000,000 ordinary shares of RMO.50 each, of which RM221,345,050.00 comprising 442,690,100 Shares have been issued and fully paid-up as at the lPD. The movements in our issued and paid-up share capital since the date of our incorporation are set out below:­Cumulative  NO. of  issued and  \ Date of  Shares  Par  Consideration!  paid”up sha,.l”e!  allotment 12 June 2014 22 August 2014  allotted 2 98  value RM 0.50 0.50  Types of issue RM1/Subscribers’ shares RM49/Cash  4  5~  I  2 December 2014  442,690,000  0.50  RM221,345,000/  221,345,050  I  Acquisitions
As at the lPD, we do not have any outstanding warrants, options, convertible securities and uncalled capital. In addition, there are no discounts, special terms or instalment payment terms applicable to the payment of the consideration for the allotment. Upon completion of our IPO, our enlarged issued and paid-up share capital will be increased to RM252,944,000 comprising 505,888,000 Shares.
5.3 OUR RESTRUCTURING In preparation of our Listing, we have undertaken a restructuring exercise in relation to the companies under our Group and a rationalisation exercise to streamline our business. The restructuring comprises the Acquisitions and internal re-organisation which is summarised below. 5.3.1 AcqUisitions Our Company had entered into share sale agreements dated 19 November 2014 for the acquisitions of the entire 100% equity interests of PP Chin Hin, Chin Hin Concrete, Ace logistis, C&H Transport and PP Chin Hin (SG) for an aggregate consideration of RM221,345,000.00 satisfied via the issuance of 442,690,000 Shares to the Vendors in the proportions set out in the table below. The Acquisitions were undertaken in preparation of our Listing to formalise our listing group. The purchase consideration was arrived at willing-buyer willing-seller basis, after taking into consideration the then unaudited NA position of the respective companies as at 31 August 2014 as the audit for FPE 31 August 2014 was still ongoing at that point in time. The Acquisitions were completed on 2 December 2014. Thereafter, PP Chin Hin, Chin Hin Concrete, Ace logistic and C&H Transport became our direct wholly owned subsidiaries. PP Chin Hin (SG) became a wholly owned subsidiary of PP Chin Hin vide our renunciation cum nomination letter dated 2 December 2014 whereby we have renounced and nominated PP Chin Hin to receive the PP Chin Hin (SG) shares that we purchased from the Vendors. 48
I Company No.: 1097507-W] 5. GENERAL INFORMATION ON OUR GROUP <_C_on_t_’d)_<-_ A summary of the Acquisitions are as follows:­% ofequity  interest  UnauditedNAas at  Purchase  Company  acquired  31 August 2014  consideration  RM  RM  PP Chin Hin  100.0  170,623,685  170,624,000  PP Chin Hin (SG)  100.0  2,534,730  2,535,000  Chin Hin Concrete  100.0  26,278,253  26,279,000  Ace logistic  100.0  16,799,295  16,800,000  C&H Transport  100.0  ___c~..-5′”‘,1:”:0::J6,:_:4:o:13,~___cc___c—5!c’,1′:’:0c_7’=’0c:_00″_j  Total  221,342,376  221,345,lJlllL
A summary of the number of Shares received by the Vendors pursuant to the Acquisitions is set out in the table below:-
Datuk Chiau Beng Teik Chiau Haw Choon Datin Wong Mee leng Total 244,034,320  122,017,160  142,895,750  71,447,875  55759930  27879965  442690000  221345000

 

 

 

5.3.2 Internal reorganisation SUbsequent to the Acquisitions, our Company entered into a share sale agreement dated 23 January 2015 and letter of amendment dated 1 June 2015 with PP Chin Hin in relation to our acquisition of the entire 100% equity interests of Metex Steel and Starken MC for an aggregate cash consideration of RM54,836,895. This intercompany transaction was also completed on 23 January 2015 and resulted in Metex Steel and Starken MC being our direct wholly owned subsidiaries. Further to the above, our Company had in turn entered into share sale agreements dated 1 June 2015 respectively with:­(a) PP Chin Hin for the transfer of our entire 100% equity interest in C&H Transport to PP Chin Hin for an aggregate cash consideration of RM4,955,414; and
(b) Metex Steel for the transfer of our entire 100% equity interest in Ace Logistic to Metex Steel an aggregate cash consideration of RM16,800,296.

The purchase consideration for the internal reorganisation was based on the audited NA position of the respective companies as at 31 August 2014. The internal reorganisation was undertaken so that the eventual group structure clearly reflects the four (4) main business segments that our Group is involved in. With the completion of this subsequent intercompany transaction on 10 June 2015, our Group had completed its internal reorganisation resulting in our Group structure as illustrated in Section 5.1. 5. GENERAL INFORMATION ON OUR GROUP (Cont’d) The above intercompany transactions do not have any impact on our Group’s financial position and were undertaken to streamline our Group’s business operations. For your better understanding of our group’s business and history we have also set out beiow part of the rationalisation exercise undergone by our subsidiaries’ business in Section 5.3.3 below. 5.3.3 Rationalisation We have undertaken the following rationalisation exercise to streamline our businesses. Cessation of property development business segment In 2010, PP Chin Hin ventured into the development of twenty (20) units of three (3)-storey shop offices located in Kelantan and eight (8) units of semi-detached factories located in Alor Setar, Kedah on several pieces of its land. By the end of 2012, both projects were completed and fully sold except for three (3) semi-detached factories retained by PP Chin Hin for its own use. Subsequently, we decided to focus and concentrate on our core business in the building materials business segment and PP Chin Hin’s property development activities’ were discontinued. As both projects were completed in 2012 with all related revenue and costs fUlly recognised by FYE 2012, there is no further financial impact from the discontinuation of the property development activities. Despite the discontinuation of our property development actiVities, our Group is still maintaining the property investment activities inclUding letting of properties under PP Chin Hin and property investment under Ace Logistic and Pintar Sinar. We are maintaining our property investment activities in PP Chin Hin as the properties we invested in are mainly used as collaterals for our bank borrowings. We are involved in the distribution of building materials where strong working capital is required to finance the purchase of building materials from our suppliers and we have utilised bank borroWings to take advantage of the early repayment discounts given by certain suppliers. Nevertheless, we have over the years disposed off certain investment properties and are not actively looking to increase our pool of investment properties. Disposal of Chin Hin Concrete Sdn Bhd and Chin Hin Building Materials SupplV (JB) Sdn Bhd On 24 July 2013, PP Chin Hin disposed the entire 100% equity interest in Chin Hin Concrete Sdn Bhd, a dormant company, to Asthetik Property Group Sdn Bhd (involved in property development, property investment and property management), a Wholly owned subsidiary of PP Chin Hin Realty (involved in property management and investment holding in investment properties, property development and hotels business), for an aggregate cash consideration of RM100,000.00. On 30 December 2013, PP Chin Hin also disposed the entire 100% equity interest in Chin Hin Building Materials Supply (JB) Sdn Bhd, a dormant company, for the same cash consideration to Datuk Chiau Beng Teik and Chiau Haw Choon, our Promoters. The disposal consideration for Chin Hin Concrete Sdn Bhd and Chin Hin Building Materials Supply (JB) Sdn Bhd was arrived at after taking into consideration the issued and paid-up share capital of Chin Hin Concrete Sdn Bhd of RM250,000.00 and Chin Hin Building Materiais Supply (JB) Sdn Bhd of RM500,000.00. We have disposed the above two (2) companies as part of our move to streamline our businesses into the four (4) main business segments and to dispose dormant and non core subsidiaries. I Company No.: 1097507-W I

5. GENERAL INFORMATION ON OUR GROUP (Cont’d) Outsourcing of manufacturing of ready-mixed concrete We have since 2012 sUb-contracted part of the manufacturing and operations of our batching plants to sub-contractors on a plant by plant basis as it was chailenging to manage ail the operations of our batching plants. We then realised that such arrangement is more effective and efficient to manage our ready-mixed concrete business. To further enhance the efficiency in managing our ready-mixed concrete business, in 2014, we decided to fully outsource the manufacturing of ready-mixed concrete to an external party not related to our Group, CPM. CPM’s shareholders and directors are Lim Kian Hin and Ho Yau Kong, both holdin9 50.0% equity interest each in CPM. They are business associates of our Promoters. Ho Yao Kong was involved in the concrete batching system where Chin Hin’s batching plants were using such system whereas Lim Kian Hin on the other hand was involved in the logistic and transportation business especially cement transportation and was one of Chin Hin’s contractor for its logistic business. We disposed ail the assets, stocks and business of our manufacturing of ready-mixed concrete to CPM as further disclosed in the paragraphs below. Such outsourcing arrangement wiil relieve us from managing the manufacturing operations of ready-mixed concrete whilst we retain the quality control responsibilities and enable us to focus on the distribution of the ready-mixed concrete. By outsourcing the manufacturing operations, we will no longer be responsible for managing the overheads of the batching plants, repair and maintenance of the equipment and mixer trucks, managing the labour, licensing and operations of the batching plant. It is a more cost effective method to manage our business as it wiil reduce our administration work as we only concentrate on the sales and distribution of ready-mixed concrete instead of running the entire manufacturing operations where we wiil need to bear the operational risks. The most chailenging part of the ready-mixed concrete business is on-time delivery, as such we remain focused on managing the customers’ orders and delivery and the production scheduling part of the business. To ensure the continuity of our supply of ready-mixed concrete, we have entered into an exclusivity agreement with CPM whereby CPM wiil proVide ready-mixed concrete manufacturing services exclusively to our Group. Consequently Chin Hin Concrete (Kl) and Chin Hin Concrete (North) entered into an asset sale agreement and an exclusivity agreement both dated 28 March 2014 with CPM for the disposal of properties, plant and equipment and stocks to CPM for an aggregate consideration of RM9,570,938.87, after taking into account the net asset value of the properties, plant and equipment and stocks to be disposed as at 28 March 2014. In accordance with the exclusivity agreement, Chin Hin Concrete (Kl) and Chin Hin Concrete (North) shail supply the raw materials to CPM who shall in return continue to supply ready-mixed concrete to our Group. The ready-mixed concrete shail adhere to our Group’s quality control standard. The salient terms of the asset sale agreement and the exclusivity agreement are as foilows:­Asset sale agreement (a) Chin Hin Concrete (Kl) and Chin Hin Concrete (North) desire to sell and CPM intends to purchase ail the stocks and business to manufacture ready-mixed concrete of Chin Hin Concrete (Kl) and Chin Hin Concrete (North) for RM9,570,938.87;
(b) Conditions precedent

The sale and purchase is subject to the fulfiilment of the foilowing within the three (3) months from date of the asset sale agreement:­
(I) Chin Hin Concrete (Kl), Chin Hin Concrete (North) and CPM shail procure directors’ and shareholders’ approval approving the transaction;

I Company No.: 1097507-W I
5. GENERAL INFORMATION ON OUR GROUP (Cont’d) (ii) Within seven (7) days from the execution of the asset sale agreement, Chin Hin Concrete (KL) and Chin Hin Concrete (North) shall provide to CPM a list of Its existing employees and their employment terms; (iii) Within seven (7) days from the execution of the asset sale agreement, Chin Hin Concrete (KL) and Chin Hin Concrete (North) shall prOVide to CPM a list of existing stocks and allOWing the purchaser during the conditional period or extended conditional period to conduct initial stock take; (Iv) Satisfactory legal and operation due diligence on the assets and business by CPM; and (v) Chin Hin Concrete (North) and Chin Hln Concrete (KL)’s company secretary confirming that there is no debenture or negative pledge created by Chin Hin Concrete (North) and Chin Hin Concrete (KL), failing which, the parties shall extend the conditional period by one (1) month or such period the parties mutually agreed. In the event that all the conditions precedents are not fulfilled with, the purchaser shall terminate the asset sale agreement and be deemed null and void. The conditions precedent had been fulfilled. (c) Exclusivity Agreement
Within seven (7) days from the date of the asset sale agreement, Chin Hin Concrete (KL) and Chin Hin Concrete (North) had entered into an exclusivity agreement dated 28 March 2014 and subsequently on 16 November 2015 entered into a supplementary agreement with CPM to supply mixture of ready mixed concrete to Chin Hin Concrete (North) and Chin Hin Concrete (KL). The supplementary agreement was entered into to amend the error made in the name of CPM in the exclusiVity agreement dated 28 March 2014.
(d) Completion

The legal possession of the sites and assets were delivered to CPM on 18 April 2014 and CPM shall be solely and exclusively entitled to utilise the assets and business to manufacture ready-mix concrete. CPM is responsible on the taxation payable on income of the manufacturing and supplying of ready-mix concrete. ExclusiVity agreement (a) Chin Hin Concrete (KL) and Chin Hin Concrete (North) have engaged the contract manufacturing services of CPM for the following services:­(i) To manage the operations of the plant in the production and manufacture of product in compliance with the production schedules for supply to Chin Hin Concrete (KL) and Chin Hin Concrete (North);
(ii) To repair and maintain Chin Hin Concrete (KL)’s and Chin Hin Concrete (North)’s cement mixer trucks; and

(iii) To do all such other things necessary or ancillary to (i) and (ii) above. I Company No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d) (b) Responsibilities of CPM:­(i) CPM shall be responsible for any costs related to the rental of the land for the plant operation;
(ii) CPM shall maintain the plant at its own costs and expense (Including statutory contribution) as well as recruit and employ a competent and experienced workforce to carry out necessary work relating to the services provided under the exclusivity agreement. These workmen shall be the employees of CP~1 who has sole responsibility to ensure that its workmen are competent and hold the appropriate permits to operate the relevant equipment (where applicable);

(iii) All raw materials required for the production and manufacture at the plant of ready-mixed concrete shall be purchased or procured directly by Chin Hin Concrete (KL) and Chin Hin Concrete (North) for supply to CPM. CPM shall be liable for any raw material stock variances and Chin Hin Concrete (KL) and Chin Hin Concrete (North) shall back charge the raw material stock variances to CPM with the allowance of variances as follows:­(a) Cement -1%
(b) Aggregates -3%
(c) Sand -3%

(iv) CPM is reqUired to cast internal cubes for the purpose of monitoring the cure strength performance and to ensure compliance with product quality and specification set by Chin Hin COncrete (KL) and Chin Hin Concrete (North) and to carry out workability test on fresh product in manner in accordance with the standard methods BS 1881:1983/ MS26:1991 at the direction of Chin Hin Concrete (KL)’s and Chin Hin Concrete (North)’s customers. CPM shall also assist Chin Hin COncrete (KL) and Chin Hin Concrete (North)’s quality assurance /quality control personnel to carry out related works with regards to quality assurance /quality control;
(v) CPM shall maintain at its own cost the plant and all other necessary and/or ancillary equipment in good and serviceable conditions; and

(Vi) CPM shall comply and all persons employed by CPM shall comply in all respects with all acts, statutes, rules, regulations or other guidelines made by government authority pertaining to the safety, health and welfare of persons working in the plant. Chin Hin Concrete (KL) and Chin Hin Concrete (North) undertakes to pay CPM the service charge subject always that CPM shall produce minimum on guaranteed production volume of 1,500 m3 for each plant. If the agreed rate is RMlO per m3 for volume up to 4,000 m3, Chin Hin COncrete (KL) and Chin Hin Concrete (North) will pay a minimum of RM15,000.OO per month for each plant. The following acquisitions and/or disposals of shares from and/or to our Promoters and/or their related companies were undertaken as part of our exercise to streamline our business segments:­5. GENERAL INFORMATION ON OUR GROUP (Cont’d) PP Chin Hin (a) acquired 5,000,000 ordinary shares of RM1.00 each in Metex Steel on 27 June 2014, being the remaining 17% equity interest not held by it for an aggregate cash consideration of RM5 million. The purchase consideration was arrived at on a willing­buyer willing-seller basis, after taking into consideration the issued and paid-up share capital of Metex Steel of RM30 million;
(b) disposed its entire 100% equity interest comprlsmg 550,000 ordinary shares of RM1.00 each in Landmark Grace Development Sdn Bhd, a dormant company on 10 February 2014, for a nominal consideration of RM2.00. The disposai consideration was based on a nominal amount as the company was dormant and had no assets in

it; (c) disposed its entire 99.3% equity interest comprising 29,800,000 ordinary shares of RM1.00 each in PP Chin Hin Realty on 1 July 2014 for an aggregate consideration of RM29.80 million which was satisfied by way of contra with the dividend payable to the directors of PP Chin Hin. The disposal consideration was arrived at willing-buyer willing-seller basis, after taking into consideration the issued and paid-up share capital of PP Chin Hin Realty of RM29.80 milion; Chin Hin Concrete (a) Disposed its entire 100% equity interest comprising 1,000,000 ordinary shares of RM1.00 each in Chin Hin Concrete Mix Sdn Bhd on 27 March 2014 (ceased operations since May 2013) for an aggregate consideration of RM1 million. The disposal consideration was arrived at on a willing-buyer willing-seller basis, after taking into consideration the issued and paid-up share capital of Chin Hin Concrete Mix Sdn Bhd of RM1 million;
(b) Chin Hin Concrete had on 9 December 2011 acquired 1,400,000 ordinary shares of RM1.00 each in Chin Hin Concrete (North), representing 70% equity interest in Chin Hin Concrete (North) for an aggregate cash consideration of RM2,800,000.00 from Datuk Chiau Beng Teik and Chiau Haw Choon. The purchase consideration was arrived at on a Willing-buyer willing-seller basis, after taking into consideration the net assets of Chin Hin Concrete (North). Furthermore, Chin Hin Concrete had on 31 March 2014 acqUired 600,000 ordinary shares of RM1.00 each in Chin Hin Concrete (North), being the remaining 30% equity interest not held by it for an aggregate cash consideration of RM600,000.00 from Daveen Neoh Sun Jie and Wan Qi Xin who are unrelated parties. The purchase consideration was arrived at Willing-buyer willing­seller basis, after taking into consideration the issued and paid-Up share capital of Chin Hin Concrete (North) of RM2 million; and
(c) Chin Hin Concrete had also on 29 January 2012 acqUired 3,000,000 ordinary shares of RM 1.00 each in Chin Hin Concrete (KL), being the entire 100% equity interest of Chin Hin Concrete (KL) for an aggregate cash consideration of RM7,700,000.00 from Datuk Chiau Beng Teik, Chiau Haw Choon, Ng Poh Choon and Kua Kong Chuan. The purchase consideration was arrived at on a willing-buyer willing-seller basis, after taking into consideration the NA of Chin Hin Concrete (KL).

54
I Company No.: 109750iWJ

5. GENERAL INFORMATION ON OUR GROUP (Cont’d) Metex Steel Ca) Acquired entire 100% equity interests of Comet Steel on 27 June 2014 for nominal consideration of RM2.00. Metex Steel invested RM1.00 in Metal Sphere and acquired the balance of 50% equity interest in Metal Sphere on 2 March 2014 for RM1.00. The purchase acquisition was arrived at on a willing-buyer willing-seller basis, after taking into consideration the issued and paid-up share capital of Metal Sphere and Comet Steel of RM2.00 each; Starken AAC Ca) Acquired entire 100% equity interests of Green Cement on 27 June 2014 for nominal consideration of RM2.00. The purchase acquisition was arrived at on a willing-buyer willing-seller basis, after taking into consideration the issued and paid-up share capital of Green Cement of RM2.00; The above rationalisation exercises were intended to streamline the businesses of our Group through the disposal I cessation of non core subsidiaries I businesses and consolidating the equity ownership of our core subsidiaries. As such, the purchase I disposal considerations for the above rationalisation exercises were arrived at after taking into consideration the net asset or the issued and paid-up share capital of the respective companies. The above rationalisation exercises do not have any impact on our Group’s existing business activities including the provision of hire purchase financing to our Group’s contractors for the logistic business segment. [The rest of this page is intentionally left blank 1 I Company No.: l097507-WJ 5. GENERAL INFORMATION ON OUR GROUP (Cont’d) Our Group structure immediately before the Acquisitions and the Group internal re-organisation (but post rationalisation) is as follows:­100% PP Chin Hin  100% Chin Hin Concrete  Vendors 100% Ace Logistic  100% PP Chin Hin (SG)  100% [ C&H Transport  I  100%  —I  Starken AAC 100% 100% -{ G-Cast Concrete 100% –I Pintar Sinar 100%  1–1 Chin Hin Concrete (KL) YChin Hin Concrete (North)  100% –I 100% –I Metex Steel  Green Cement  100% 100%  H Metal Sphere y Comet steel
56
I Company No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d) Our Group structure as at the LPD (after our Group’s restructuring comprising the Acquisitions and internal reorganisation) but prior to our IPO is diagrammatically summarized below:­
100% 100% 100% PP Chin Hin (SG)
Chin Hin Concrete
G-Cast Concrete
Melal Sphere (KL) 100% 100% 100%100% C &H Transport
Chin Hin Concrete Green Cement ComelSleel (North) ‘-“, 100% 100% ! I,, Pintar Sinar Ace Logistici 1-·· ,-‘ /’7 ~: ~, ‘<,—————————1 j—————————-i I—————————~ f——M-~-~-~f~:ct~~i-~~——-i! Distribution of i Distribution of i i Manufacturing of ‘ i building materials I ready-mixed i ; Me & precast ; ! wire mesh & i
i & logistic ! concrete i i metal roofing ii i ,
, ! system i

 

l ~ j l__~~~~::~p~~~~:j L. -.JL__. 1 57 I Company No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d) 5.4 SUBSIDIARIES All of our subsidiaries are wholly-owned by our Company. As at the LPD, we do not have any associate companies. Details of our subsidiaries are summarised as follows:-
PrinCipal activities Held by Chin Hin  PP Chin Hin (334885-H)  25 February 1995/Malaysia  March 1995  50,000,000  50,000,000  100.0  Distribution of building materials, properties and hire purchase financing  letting  of  Chin Hin Concrete (969862-P)  29 November 2011/Malaysia  December 2011  25,000,000  12,001,000  100.0  Investment holding  Starken MC (752003-D)  2 November 2006/Malaysia  January 2014  50,000,000  30,000,000  100.0  Manufacturing and sales of MC products  Metex Steel (957930-X)  22 August 2011/Malaysia  October 2012  50,000,000  30,000,000  100.0  Manufacturing and sales of wire mesh and metal roofing systems  Held by PP Chin Hin  PP Chin Hin (SG) (200908657H)  16 May 2009/ Singapore  June 2009  SGD1,000  SGD1,000  100.0  Trading and Singapore  distribution  of  bUilding  materials  in
58
PrinCipal. activities C&H Transport 6 March 2008/ April 2008 5,000,000 1,250,000 100.0 Transportation of cement (808916-H) Malaysia Held by Chin Hin Concrete Chin Hin 18 May 2008/ June 2008 5,000,000 4,000,000 100 Distribution of ready-mixed concrete Concrete (KL) Malaysia (818159-D) Chin Hin 21 January February 2008 5,000,000 2,000,000 100 Distribution of ready-mixed concrete Concrete (North) 2008/ (803784-W) Malaysia Held bv Starken MC G-Cast Concrete 11 December August 2012 5,000,000 5,000,000 100 Manufacturing and sales of precast concrete (971228-X) 2011/ Malaysia products Green Cement 4 July 2012/ (iON/A 100,000 2 100 Currently dormant, the intended principal activity is (100861O-A) Malaysia to produce concrete products Pintar 5inar 30 September (‘)March 2012 100,000 2 100 Property investment holding (916505-X) 201O/Malaysia 59 ~pany No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d)
Metal Sphere  2 March 2014/  February 2015  25,000,000  15,000,002  (1082934-A)  Malaysia  Comet Steel  12 July 2012/  (ii)N/A  100,000  2  (1009789-M)  Malaysia  Ace Logistic  18 February  O)November 2009  25,000,000  11,000,000  (642802-M)  2004/Malaysia
100 Manufacturing of metal roofing profiles and trusses 100 Currently dormant, the intended principal activity is sales and trading of steel wire mesh, wire rods and other steei products 100 Property investment holding Notes:­(i) These dates refer to the dates in which these companies commenced their investing activities.
(ii) Not applicable as these companies are presently dormant and have not commenced operations since their incorporation.

 

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5. GENERAL INFORMATION ON OUR GROUP (Cont’cI) 5.4.1 PP Chin Hin (a) History and business PP Chin Hin was incorporated in Malaysia under the Act on 25 February 1995 as a private limited company under the name Syarikat Perniagaan dan Pengangkutan Chin Hin Sdn Bhd. It subsequently changed to its current name on 16 December 2008. PP Chin Hin is currently involved in the distribution of building materials, letting of properties and hire purchase financing. Save for the cessation of its property development business in 2012, there have been no material changes in the manner in which PP Chin Hin conducts its business or activities since the last three (3) years prior to the LPD. (b) Share capital PP Chin Hin’s present authorised share capital is RM50,000,000 compnsmg 50,000,000 ordinary shares of RM1.00 each, of which 50,000,000 ordinary shares of RM1.00 each have been issued and fUlly paid-up. The movements in issued and paid­up share capital of PP Chin Hin since its incorporation are as follows:­
25 February 1995 2 May 1995 1 November 1995 2 May 2001 15 May 2002 27 September 2004 3D November 2009 22 August 2010 31 December 2012 31 July 2014 4 499,996 500,000 1,000,000 2,000,000 2,000,000 3,000,000 11,000,000 10,000,000 20,000,000 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Subscribers’ shares Cash Cash cash Cash Cash Cash Cash (‘lOthers (i)Others 4 500,000 1,000,000 2,000,000 4,000,000 6,000,000 9,000,000 20,000,000 30,000,000 50,000,000 Note:­(i) Represents debt capitalisation of shareholders / directors advances for the amount of RM30.0 miffion. Such advances from directors / shareholders were provided from December 2011 to December 2013 in various tranches, and were utilised as working capital expenditure to support PP Chin Hin’s busIness growth over the years. The debt capitalisation was undertaken to eliminate all amount owing to directors / shareholders in preparation for our Listing. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in PP Chin Hin. (c) Substantial shareholders and Directors PP Chin Hin is our wholly-owned subsidiary and the Directors are Datuk Chiau Beng Teik and Chiau Haw Choon. 61 I Company No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d) (d) Subsidiaries and associate companies As at the LPD, PP Chin Hin has two (2) subsidiaries, namely PP Chin Hin (SG) and C&H Transport. PP Chin Hin does not have any associate company as at the LPD.

5.4.2 PP Chin Hin (SG) (a) History and business PP Chin Hin (SG) was incorporated in Sin9apore under the Singapore Companies Act, Chapter 50 on 16 May 2009 as a private limited company under its present name. PP Chin Hin (SG) is currently principally engaged in the trading and distribution of building materials in Singapore. There have been no material changes in the manner in which PP Chin Hin (SG) conducts its business or activities since the last three (3) years prior to the LPD. (b) Share capital PP Chin Hin (SG)’s present issued and fully paid-up capital is SGD1,000 comprising 1,000 ordinary shares. There has been no movement in issued and paid-up share capital of PP Chin Hin (SG) since its incorporation. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in PP Chin Hin (SG). (c) Substantial shareholders and Directors PP Chin Hin (SG) is a wholly-owned subsidiary of PP Chin Hin and the Directors are Datuk Chiau Beng Teik, Datin Wong Mee Leng and Ong It Teong. (d) Subsidiaries and associate companies As at the LPD, PP Chin Hin (SG) does not have any subsidiary and/or associate company.
5.4.3 C&H Transport (a) History and business C&H Transport was incorporated in Malaysia under the Act on 6 March 2008 as a private limited company under its present name. C&H Transport is currently principally involved in the transportation of cement.

5. GENERAL INFORMATION ON OUR GROUP (Cont’d) (b) Share capital C&H Transport’s present authorised share capital is RM5,000,000 comprising 5,000,000 ordinary shares of RM1.00 each, of which 1,250,000 ordinary shares of RM1.00 each have been issued and fully paid-up. The movements in issued and paid­up share capital of C&H Transport since its incorporation are as follows:­
6 March 2008  2  1.00  Subscribers’ shares  2  19 March 2008  99,998  1.00  cash  100,000  17 May 2008  150,000  1.00  Cash  250,000  2 January 2011  1,000,000  1.00  cash  1,250,000
As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in C&H Transport. (c) Substantial shareholders and Directors C&H Transport is a wholly-owned subsidiary of PP Chin Hin and the Directors are Datuk Chiau Beng Teik, Datin Wong Mee Leng and Chiau Haw Choon. (d) Subsidiaries and associate companies As at the LPD, C&H Transport does not have any subsidiary and/or associate company. 5.4.4 Chin Hin Concrete (a) History and business Chin Hin Concrete was incorporated in Malaysia under the Act on 29 November 2011 as a private limited company under the name of Chin Hin Mix Holding Sdn Bhd. It subsequently changed to its current name on 17 January 2012. Chin Hin Concrete is currently principally an investment holding company. (b) Share capital Chin Hin Concrete’s present authorised share capital is RM25,000,000 comprising 25,000,000 ordinary shares of RM1.00 each, of which 12,001,000 ordinary shares of RM1.00 each have been issued and fully paid-up. The movements in issued and paid­up share capital of Chin Hin Concrete since its incorporation are as follows:­5. GENERAL INFORMATION ON OUR GROUP (Cont’d)
29 November 2011 1,000 1.00 Subscribers’ shares 1,000 31 July 2014 12,000,000 1.00 WOther 12,001,000 Note:­(i) Represents debt capitalisation ofshareholders / directors advances for the total amount of RM12,00~000. Such advances from directors / shareholders were provided in January 2012 to support Chin Hin Concrete’s acquisition of Chin Hin Concrete (KL) and Chin Hin Concrete (North) in year 2011, 2012 and 2014. The debt capitalisation was undertaken to eliminate all amount owing to directors / Shareholders in preparation for our Listing. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Chin Hin Concrete. (c) Substantial shareholders and Directors Chin Hin Concrete is our wholly-owned subsidiary and the Directors are Datuk Chiau Beng Teik, Datin Wong Mee Leng and Chiau Haw Choon. (d) Subsidiaries and associate companies As at the LPD, Chin Hin Concrete has two (2) subsidiaries, namely Chin Hin Concrete (KL) and Chin Hin Concrete (North). Chin Hin Concrete does not have any associate company as at the LPD. 5.4.5 Chin Hin Concrete (KL) (a) History and business Chin Hin Concrete (KL) was incorporated in Malaysia under the Act on 18 May 2008 as a private limited company under its present name. Chin Hin Concrete (KL) is currently principally involved in the distribution of ready-mixed concrete. (b) Share capital Chin Hin Concrete (KL)’s present authorised share capital is RM5,000,000 comprising 5,000,000 ordinary shares of RM1.oo each, of which 4,000,000 ordinary shares of RM1.o0 each have been issued and fUlly paid-up. The movements in issued and paid­up share capital of Chin Hin Concrete (KL) since its incorporation are as follows:­~any No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d)
18 May 2008  2  1.00  Subscribers’ shares  2  8 June 2008  499,998  1.00  Cash  500,000  21 July 2009  500,000  1.00  Cash  1,000,000  6 May 2010  1,000,000  1.00  Cash  2,000,000  18 June 2011  1,000,000  1.00  Cash  3,000,000  28 April 2012  1,000,000  1.00  cash  4,000,000
As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Chin Hin Concrete (KL). (c) Substantial shareholders and Directors Chin Hin Concrete (KL) is a wholly-owned subsidiary of Chin Hin Concrete and the Directors are Datuk Chiau Beng Teik and Chiau Haw Choon. (d) Subsidiaries and associate companies As at the LPD, Chin Hin Concrete (KL) does not have any subsidiary and/or associate company. 5.4.6 Chin Hin Concrete (North) (a) History and business Chin Hin Concrete (North) was incorporated in Maiaysia under the Act on 21 January 2008 as a private limited company under the name Large Version Sdn Bhd. It then changed its name to L.V. Mix Sdn Bhd on 4 August 2008 and subsequently changed its name to LV Mix Sdn Bhd on 10 February 2010. On 8 November 2011, it changed its name to Chin Hin Mix Sdn Bhd and subsequently adopted its current name on 27 December 2011. Chin Hin Concrete (North) is currently principally involved in the distribution of ready-mix concrete. (b) Share capital Chin Hin Concrete (North)’s present authorised share capital is RMS,OOO,OOO comprising 5,000,000 ordinary shares of RM1.00 each, of which 2,000,000 ordinary shares of RM1.00 each have been issued and fully paid-up. The movements in issued and paid-up share capital of Chin Hin Concrete (North) since its incorporation are as follows:­I Company No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d)
21 January 2008 2 1.00 Subscribers’ shares 2 12 June 2008 249,998 1.00 Cash 250,000 30 september 2009 750,000 1.00 Cash 1,000,000 23 July 2010 500,000 1.00 Cash 1,500,000 20 October 2010 500,000 1.00 Cash 2,000,000 I As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Chin Hin Concrete (North). (c) Substantial shareholders and Directors Chin Hin Concrete (North) is a wholly-owned subsidiary of Chin Hin Concrete. Its Directors are Datuk Chiau Beng Teik and Chiau Haw Choon. (d) Subsidiaries and associate companies As at the LPD, Chin Hin Concrete (North) does not have any subsidiaries and/or associate company. 5.4.7 Starken AAC (a) History and business Starken MC was incorporated in Malaysia under the Act on 2 November 2006 as a private limited company under the name Chin Hin Cement Brick Sdn Bhd. It then changed its name to Chin Hin Industries Sdn Bhd on 25 April 2011. It sUbsequently changed to its current name on 13 September 2011. It is currently principally involved in the manufacturing and sales of MC products. (b) Share capital Starken Me’s present authorised share capital is RM50,000,000 compnslng 50,000,000 ordinary shares of RM1.00 each, of which 30,000,000 ordinary shares of RM1.00 each have been issued and fully paid-up. The movements in issued and paid­up share capital of Starken MC since its incorporation are as follows:­I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d)
2 November 2006 2 1.00 Subscribers’ 2 shares 26 December 2006 99,998 1.00 Cash 100,000 11 October 2007 150,000 1.00 cash 250,000 9 January 2012 7,750,000 1.00 (;)Other 8,000,000 26 July 2012 2,000,000 1.00 mOther 10,000,000 31 July 2013 10,000,000 1.00 (°Other 20,000,000 26 December 2013 10,000,000 1.00 mOther 30,000,000 Note:­(i) Represents debt capitalisation of shareholders advances for the total amount of RM29,750,000. Such advances from shareholders were provided from December 2011 to December 2013 in various tranches, and were utilised as working capital expenditure to support Starken MC~ capital expenditure over the years. The debt capitalisation was undertaken to eliminate all amount owing to directors / shareholders in preparation for our Listing. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Starken Me. (c) Substantial shareholders and Directors Starken MC is our Wholly-owned subsidiary and the Directors are Datuk Chiau Beng Teik, Datin Wong Mee Leng and Chiau Haw Choon. (d) Subsidiaries and associate companies As at the LPD, Starken MC has three subsidiaries, namely G-cast Concrete, Green Cement and Pintar Sinar. Starken MC does not have any associate company as at the LPD.
5.4.8 G-Cast Concrete (a) History and business G-Cast Concrete was incorporated in Malaysia under the Act on 11 December 2011 as a private limited company under its present name. It is currently principally involved in the manufacturing and sales of precast concrete products. (b) Share capital G-Cast Concrete’s present authorised share capital is RM5,000,000 compnslng 5,000,000 ordinary shares of RM1.00 each, of which 5,000,000 ordinary shares of RM1.00 each have been issued and fully paid-up. The movements in issued and paid­up share capital of G-Cast Concrete since its incorporation are as follows:­5. GENERAL INFORMATION ON OUR GROUP (Cont’d)
11 December 2011  2  1.00  Subscribers’ shares  2  10 August 2012  99,998  1.00  Cash  100,000  8 January 2013  2,400,000  1.00  Cash  2,500,000  19 July 2013  2,500,000  1.00  cash  5,000,000
As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in G-Cast Concrete. (c) Substantial shareholders and Directors G-cast Concrete is a wholly-owned subsidiary of Starken MC and the Directors are Datuk Chiau Beng Teik and Chiau Haw Choon. (d) SUbsidiaries and associate companies As at the LPD, G-Cast Concrete does not have any subsidiary and/or associate company. 5.4.9 Green Cement (a) History and business Green Cement was incorporated in Malaysia under the Act on 4 July 2012 as a private limited company under its present name. Green Cement is currently dormant and its intended principal activities are investments into the production of industrialised building system (IBS) concrete products which we expect to materialise within two (2) years from the date of our Listing. (b) Share capital Green Cement’s present authorised share capital is RMI00,000 comprising 100,000 ordinary shares of RM1.00 each, of which two (2) ordinary shares of RM1.00 each have been issued and fully paid-up. There has been no movement in issued and paid­up share capital of Green Cement since its incorporation. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Green Cement. (c) Substantial shareholders and Directors Green Cement is a wholly-owned subsidiary of Starken MC and the Directors are Datuk Chiau Beng Teik and Chiau Haw Choon. (d) Subsidiaries and associate companies As at the LPD, Green Cement does not have any subsidiary and/or associate company. I Company No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d) 5.4.10 Pintar Sinar (a) History and business Pintar Sinar was incorporated in Malaysia under the Act on 30 September 2010 as a private limited company under its present name. Pintar Sinar is currently principally involved in property investment holding. (b) Share capital Pintar Sinar’s present authorised share capital is RM 100,000 compnslng 100,000 ordinary shares of RM1.00 each, of which two (2) ordinary shares of RM1.00 each have been issued and fully paid-up. There has been no movement in issued and paid­up share capital of Pintar Sinar since its incorporation. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Pintar Sinar. (c) Substantial Shareholders and Directors Pintar Sinar is a wholly-owned subsidiary of Starken MC and the Directors are Datuk Chiau Beng Teik and Chiau Haw Choon. (d) Subsidiaries and associate companies As at the LPD, Pintar Sinar does not have any subsidiary and/or associate company. 5.4.11 Metex Steel (a) History and business Metex Steel was incorporated in Malaysia under the Act on 22 August 2011 as a private limited company under its present name. It is currently principally involved in the manufacturing and sales of wire mesh and metal roofing systems. (b) Share capital Metex Steel’s present authorised share capital is RM50,000,000 comprising 50,000,000 ordinary shares of RM1.00 each, of which 30,000,000 ordinary shares of RM1.00 each have been issued and fully paid-up. The movements in issued and paid­up share capital of Metex Steel since its incorporation are as follows:­I Company No.: 1097S07-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d)
22 August 2011  2  1.00  Subscribers’ shares  2  22 May 2012  6,000,000  1.00  (ilothers  6,000,002  26 July 2012  3,999,998  1.00  (i)others  10,000,000  23 January 2013  5,000,000  1.00  Cash  15,000,000  4 December 2013  15,000,000  1.00  Cash  30,000,000
Note:­(i) Represents debt capitalisation of shareholders advances for the amount of RM9,999,998. Such advances from shareholders were provided from September 2011 to July 2012 in various tranches, and were utilised as working capital expenditure to support Metex Steel’s capital expenditure over the years. The debt capitalisation was undertaken to eliminate all amount owing to directorsI shareholders in preparation for our Listing. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Metex Steel. (c) Substantial shareholders and Directors Metex Steel is our wholly-owned subsidiary. Its Directors are Datuk Chiau Beng Teik and Chiau Haw Choon. (d) Subsidiaries and associate companies As at the LPD, Metex Steel has three (3) subsidiaries, namely Metal Sphere, Comet Steel and Ace Logistic. Metex Steel does not have any associate company as at the LPD. 5.4.12 Metal Sphere (a) History and business Metal Sphere was incorporated in Malaysia under the Act on 2 March 2014 as a private limited company under its present name. The metal roofing business undertaken by Metex Steel has been transferred to Metal Sphere and has commenced operations on 2 February 2015. (b) Share capital Metal Sphere’s present authorised share capital is RM2s,000,000 comprising 25,000,000 ordinary shares of RM1.00 each, of which 15,000,002 ordinary shares of RM1.00 each have been issued and fuliy paid-up. The movements in the issued and paid-up share capital of Metal Sphere since its incorporation are as follows:­5. GENERAL INFORMATION ON OUR GROUP (Cont’d)
2 March 2014 2 1.00 Subscribers’ shares 2 10 June 2015 15,000,000 1.00 (ilathers 15,000,002 Note:­(!) Represents debt capitalisation of shareholders advances for the amount of RM15,000,000. Such advances from shareholders were provided in June 2015 and were utilised as working capital expenditure to support Metal Sphere’s capital expenditure over the year. The debt capitalisation was undertaken to eliminate all amount owing to shareholders in preparation for Our Listing. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Metal Sphere. (c) Substantial shareholders and Directors Metal Sphere is a wholly-owned subsidiary of Metex Steei and the Directors are Datuk Chiau Beng Teik and Chiau Haw Choon. (d) Subsidiaries and associate companies As at the LPD, Metal Sphere does not have any subsidiary and/or associate company. 5.4.13 Comet Steel (a) History and business Comet Steel was incorporated in Malaysia under the Act on 12 july 2012 as a private limited company under its present name. Comet Steel is currently dormant and its intended principal activities are sales and trading of steel wire mesh, wire rods and other steel products. We expect Comet Steel to commence operations in 2016 and to focus on the sales and trading of steel wire mesh, wire rods and other steel products. Comet Steel will undertake sales and trading of both steel products produced by our Group and also steel products sourced from external suppliers. Although Comet Steel will be involved in the trading business, it will not compete with PP Chin Hin directly as Comet Steel will mainly service the customers of Metex Steel and will focus on steel products. (b) Share capital Comet Steel’s present authorised share capital is RM 100,000 comprising 100,000 ordinary shares of RM1.00 each, of which two (2) ordinary shares of RM1.00 each have been issued and fully paid-up. There has been no movement in issued and paid­up share capital of Comet Steel since its incorporation. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Comet Steel. 71 5. GENERAL INFORMATION ON OUR GROUP (Cont’d) (c) Substantial shareholders and Directors Comet Steel is a wholly-owned subsidiary of Metex Steel and the Directors are Datuk Chiau Beng Teik and Chiau Haw Choon. (d) Subsidiaries and associate companies As at the LPD, Comet Steel does not have any subsidiary and/or associate company. 5.4.14 Ace Logistic (a) History and business Ace Logistic was incorporated in Malaysia under the Act on 18 February 2004 as a private limited company under Chin Hin BUilding Material Supply Sdn Bhd. It then changed its name to Ace Tiles Sdn Bhd on 7 January 2010 and subsequently changed to its current name on 9 May 2010. Ace Logistic is currently a property investment holding company. (b) Share capital Ace Logistic’s present authorised share capital is RM25,000,000 comprising 25,000,000 ordinary shares of RM1.00 each, of which 11,000,000 ordinary shares of RM 1.00 each have been issued and fUlly paid-up. The movements in issued and paid­up share capital of Ace Logistic since its incorporation are as follows:­
23 February 2004 2 1.00 2 26 February 2004 99,998 1.00 100,000 12 September 2006 400,000 1.00 500,000 31 July 2014 10,500,000 1.00 11,000,000 Subscribers’ shares Cash Cash (ilather Note:­(i) Represents debt capitalisation of shareholders I directors advances for the total amountofRM10,SOO,000.Suchadvancesfromdirectors I shareholderswereprovided from November 2010 to July 2014 in various tranches, and were utilised as working capital expenditure to support Ace Logistic’s capital expenditure. The debt capitalisation was undertaken to eliminate all amount owing to directors I shareholders in preparation for our Listing. As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Ace Logistic. 72 5. GENERAL INFORMATION ON OUR GROUP (Cont’dJ (c) Substantial shareholders and Directors Ace Logistic is a wholly-owned subsidiary of Metex Steel. Its Directors are Datuk Chiau Beng Teik, Datin Wong Mee Leng and Chiau Haw Choon. (d) Subsidiaries and associate companies As at the LPD, Ace Logistic does not have any subsidiary and/or associate company. [The rest of this page is intentionally left blank] I Company No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d) 5.5 MAJOR APPROVALS, PERMITS AND LICENSES The major approvals, permits and licenses issuedjobtained by our Group to enable us to operate our business as at LPD are summarised below:­
1.  Starken AAC  Manufacturing license  Mm  License No:-A018464 Serial No:-A0312.82  20 December 2011  NjA(;)  – NjA  2.  Metex Steel  Manufacturing license  Mm  License No:-A018629 Serial No:-A031550  19 April 2012  NjA(;)  – NjA  3.  Metex Steel  Manufacturing license  Mm  License No:-A018889 Serial No:-A031981  22 October 2012  NjA(;)  NjA  4.  G-Cast Concrete  Manufacturing license  Mm  License No:-A019732 Serial No:-A033410  6 August 2014  NjAO)  NjA  5.  Metex Steel  Iron works license  Majlis Perbandaran Seberang Perai  License No:­35j13055Aj17104  22 January 2015  3 March 2016  NjA  6.  PP Chin Hin  Trading license  Ministry of Domestic Trade, Malaysia  License No:­BB05322W Serial No:-A088315  24 July 2014  13 July 2017  NjA
74 I Company No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d)
7.  PP Chin Hin  Trading license  Ministry of  License No:­ 23 June  2.2. June  Complied  Domestic  SB05915U  2014  2019  Trade,  Serial No:-A 088285  Malaysia  8.  Starken AAC  Pioneer Status  MlDA  Approval Letter  7 April 2015  30 June  The conditions are as  Complied(O  approval Jetter  Reference: ­ 2019  follows:­ 020/B18/002280/3/PS  (i) the value added for the  production of  lightweight autoclaved  aerated concrete blocks  and panels must reach  at least 67% as  proposed;  (ii) the total staffs in  management, technical  and supervisory level  must reach at least 54%  of the total employment  as proposed;  (iii) the company must use  local oil palm ash as raw  material in the finished  products of lightweight  autoclaved aerated
75 I Company No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d)
concrete biocks and  panels;  (iv) the company must use  at least 10% oil palm  ash; and  (v) the company must keep  a separate account for  the encou raged  products.  9.  G-cast  Environmental  Environmental  Approval Letter  24 April  N/A(ii)  Conditions are as follow:­ Complied  Concrete  Impact  Department  Reference:­ 2013  (i) Maximum monthly  Assessment  Selangor  B91/110/621  production of 1400 mt  endorsement  of concrete pipes and  700 mt of concrete  products;  (ii) to acquire written  approval for all fuel­ burning equipment;  (iii) to maintain noise level  <70 A-weighted decibels  (“dB(A)”)from 7.00 a.m.  to 10.00 p.m. and  <60dB(A) from 10.00  p.m. to 7.00 a.m.; and  (iv) to prohibit all open  burninQ.
76 I Company No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d)
10.  Starken AAC  Endorsement  Environmental  Approval Letter  26 April  N/A(;;)  Conditions are as follow:­ Complied  Letter In  Department  Reference:­ 2014  (i) Maximum monthly  Relation to  Selangor  (6)636/921/000/053  production of 12,500 mt  Environmental  of autoclaved aerated  Impact  light weight concrete  Assessment  blocks  (Ii) to acquire written  approval for all fuel- burning equipment;  (iii) to maintain noise level  <70d6(A) from 7.00  a.m. to 10.00 p.m. and  <60d6(A) from 10.00  p.m. to 7.00 a.m.; and  (iv) to prohibit all open  burning  11.  Starken AAC  Certificate In  Environmental  Certificate No:­ 3 June 2013  N/A(m)  N/A  Relation to  Department  AKUP/280/2013  Rules 36 and 38  Selangor  of Environment  Quality (Clean  Air) Regulation,  1978
77 I Company No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cant'(/)
12.  Starken MC  Design Approval  Department of  Approval Letter  2 October  N/A(;V)  N/A  for Autoclaves  Occupation  Reference:-JKKP IS  2013  (Pressurised  Health and  127/453/2­ Vessels)  Safety  2013238352(4)  13.  PP Chin Hin  Money lending  Ministry of  Approval Letter Ref:  6 February  23  The conditions are as  Complied  license  Housing and  WL3126/02/0 1­ 2014  November  follows:­ Local  6/231116  2016  (i) all money lending  Government  transaction must be  carried on the name of  PP Chin Hin Sdn Bhd  and at its registered  address;  (i1) the license is not  transferable or allowed  or caused others to use  the right under license  without prior approval of  the registrar of Money  Lending of Ministry of  Urban Wellbeing,  Housing and Local  Government;  (iii) the license is not  allowed to be used for  pawn business; and
78 I Company No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d)

Status  Equity and/or.major  of  conditions imposed  Compliance
(iv) Renewal fees of RM2,OOO.OO Is payable Notes:­(i} (H) (iii} (iv)  License does not require renewai and shaH remain valid unless it has been revoked under the Industrial Co-ordination Act 1975. The department reserves the right to retract the endorsement in the event offailure to implement appropriate poHution control measures during operation ofplant. This approval can be retracted or cancelled shouid installation ofthe multi cydone does not compiy with drawing/plan approved. Approval is valid up and until:-(a) any amendment to the current design code that differs from the specifications andpractice when approval was granted which requires alteration and/or changes in the existing design; or (b) withdrawal or cancellation ofsuch approvai by the department.  [The rest of this page is intentionally left blank]
79 I Company No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’dJ 5.6 PROPERTIES OF OUR GROUP 5.6.1 Properties occupied and owned by our Group Kindly refer to Appendix I of this Prospectus for further details of the properties occupied and owned by our Group. 5.6.2 Properties occupied which are rented by our Group The details of properties rented by us as at the LPD are set out below:­
1.  A-2-5, Pusat Perdagangan Kuchai, Jalan 1/127, Off Jalan Kuchai Lama, 58200 Kuala Lumpur  Wan Foong Realty Sdn Bhd/ Starken AAC  One storey of a 3­storey shop house/ Office premises of Starken AAC  (;;)133.5/ 400.1  1 January 2016 to 31 December 2018/ RM19,200  6 July 2010  2.  PT 1493, Kawasan Perindustrian Pengkalan Chepa II, Jalan Chepa II, 16100 Pengkalan Chepa, Kota Bharu, Kelantan  Laksana Saujana Bhd/ PP Chin Hin  Sdn  Single storey open Sided factory/ Warehouse and office unit of PP Chin Hin  5,616/ 10,189  1 November 2014 to 30 October 2016/ RM60,000  31 January 2013  3.  No. 88-1, Jalan PPM 4, Plaza Pandan Malim Business Park, Balai Panjang, 75250 Melaka  Texland Sdn Bhd/ PP Chin Hin  One storey of a 3­storey shop house/ Office premises of PP Chin Hin  0;)144.8/ 434.4  1 September 2015 to 31 August 2018/ RM10,200  4 October 2007
80 I Company No.: 1097507-W I S. GENERAL INFORMATION ON OUR GROUP (Cont’d)
4.  No. 27, Jalan Industri 3/6, Taman Temerloh, 28400 Mentakab, Pahang  Perindustrian  Kong Yen Transport & Trading Sdn Bhd/ PP Chin Hin  Single storey fUlly dosed factory unit/ Warehouse and office premises of PP Chin Hin  668.0/ 1,888.0  1 June 2013 to 31 May 2016/ RM66,000  28 October 2011  5.  Lot 2975, Kawasan Perindustrian Cendering,21080 Kuala Terengganu, Terengganu  JH Agency 5dn Bhd/ PP Chin Hin  Single storey detached factory/Warehouse and office premises of PP Chin Hin  3,025.6/ 3,546.48  1 October 2014 to 30 September 2016/ RM120,000  31 July 2006  6.  Lot 1178, Mukim Batu, NVS 2, Jalan Ipoh, Kuala Lumpur  East & Orient Enterprise Sdn Bhd/ PP Chin Hin  Single storey fully dosed factory unit! Warehouse and office premises of PP Chin Hin  556/ 3,100  1 March 2013 to 29 February 2016/ RM144,OOO  17 August 1994  7.  No. A-l-11, Pusat Perdagangan Kuchai, No. 2 Jalan 1/127, Off Jalan Kuchai Lama, 58200 Kuala Lumpur  PP Chin Hin Realty Sdn Bhd/Chin Hin Group Berhad  One storey of a 3­storey shop house/ Office premises of Chin Hin Group Berhad  136/ IS3  1 May 2015 to 30 April 2017/ RM25,440  6 July 2010
81 ~any No.: 1097507-W I 5. GENERAL INFORMATION ON OUR GROUP (Cont’d)
8. No. A-2-11, Pusat Perdagangan Kuchai, No. 2 PP Chin Hin Realty Sdn Jalan 1/127, Off Jalan Kuchai Lama, 58200 Kuala Bhd/ Lumpur Chin Hin Concrete (KL) Sdn Bhd 1No. 22-01, Jalan Kempas Utama 3/1, Taman Lou Feng Leong/19.L Kempas Utama, 81200 Kempas, Johor Starken AAC Sdn Bhd One storey of a 3­storey shop house/ Office premises of Chin Hin (KL) Concrete Sdn Bhd One unit of 2&1/2 storey shop office (1st f1oor)/ Office premises of Starken AAC 136/ 153 143.1/ 143.1 15 May 2015 to 14 May 2017/ RM20,352 1 February 2015 to 31 January 2016/ RM15.600 6 July 2010 6 August 2013 Notes:­(i) Save for Laksana Saujana Sdn Bhd where Datuk Chiau Beng Teik and Chiau Haw Choon are directors and substantial shareholders, there are no other relationships between the owner ofourrentedpropertiesand ourGroup.
(ii) We occupy only one (1) storey of the three (3) storey shop house unit As such, the built-up area disclosed for these properties represents only the built up area of one (1) storey currently occupied whilst the land area represents the total area occupied by the respective properties.

[The rest of this page is intentionally left blank] 82 5. GENERAL INFORMATION ON OUR GROUP (Cont’d) In addition to the above, our Group has also rented several properties for the purpose of accommodatin9 our production workers. There is no non-compliance with current statutory requirements, relevant land rules or building regulations in respect of the above properties leased by our Group. In addition, none of the properties disclosed above are in breach of any land use conditions and/or is in non-compliance with current statutory requirements, land rules or building regulations or is subject to any environmental issues that would have a material adverse impact on our Group’s business operations and/or our financial position. 5.6.3 Regulatory requirements and environmental issues Save for the major approvals, permits and licenses disclosed in Section 5.5 of this Prospectus, there are no regulatory requirements and/or major environmental issues which may affect our Company’s operations arising from the utilisation of our assets. 5.6.4 Material capital expenditures and divestitures Save as disclosed below, there were no other material capital expenditures (including interests in other corporations) made by us for the past four (4) financial years and the FPE 2015:­
Chin Hin Group  Investment in subsidiaries  (i)1800,  (ii)29,000  (iii)5600,  Freehold land and shop offices/building  12,027  17,739  516  1,828  Freehold bUilding  2,200  1,097  Leasehold land  2,179  Building  1,225  1,631  1,894  896  813  Building under construction  4,699  17,272  Investment property  12,336  Plant and machineries  1,521  23,107  13,962  2,903  1,248  Plant and machineries under construction  509  19,015  28,506  Cabin  1,198  687  2,516  Capital work-In-progress  3,252  5,162  Factory equipments  1,368  1,222  1,560  845  Factory equipments under construction  4,682  Mould  1,636  1,015  603  Electrical installations  2,477  1,192  Motor vehicles  5,501  (i’)9,126  Renovations  1008  Total  23,711  117,952  71,098  20,495  17317
83 5. GENERAL INFORMATION ON OUR GROUP (Cont’d)
Analysed by:­ Distribution of building materials &  provision of logistics  Investment in subsidiaries  1,800  28,000  5,000  Freehold land and shop offices/building  9,404  6,449  Freehold building  2,200  1,097  Building  1,225  Building under construction  8,225  Motor vehicles  800  6,064  Renovations  535  12,429  37,184  9,322  5800  6064  Ready-mixed concrete  Investment in subsidiaries  1,000  600  Freehold land and shop offices/building  2,623  Plant and machineries  1,521  877  628  116  Plant and machineries under construction  509  325  Cabin  1,198  678  2,504  Factory equipments  105  36  9  Motor vehicles  3,916  1,824  Renovations  77  5,851  3,062  3,168  4,641  1824  Manufacturing of AAe and precast  concrete products  Leasehold land  2,179  Freehold land and building  1,072  Building  1,631  210  896  813  Building under construction  4,699  9,047  Investment property  12,336  Plant and machineries  869  344  1,601  983  Plant and machineries under construction  18,690  28,506  cabin  8  12  Factory equipments  1,263  1,186  1,551  845  Factory equipments under construction  602  Mould  1,636  1,015  603  Motor vehicles  264  1,238  Electrical installations  2,477  1192  2,179  39,496  43,418  7591  5,084
84 5. GENERAL INFORMATION ON OUR GROUP (Cont’d)
Manufacturing of wire mesh and  metal roofing system  Investment in subsidiaries  Freehold land and shop offices/building  11,290  516  756  Building  1,684  Plant and machineries  21,362  12,990  1,186  265  Factory equipment  3,252  5,162  Factory equipment under construction  4,080  Motor vehicles  521  Renovations  396  _~3,252  38,210  15,190  2,463  4345
Notes:­(i) This involves the increase in share capital in PP Chin Hin Realty, previously subsidiary ofPP Chin Hin.
(ii) This involves the increase in share capital in PP Chin Hin Realty and Chin Hin Concrete Mix Sdn Bhd, previouslysubsidiaries ofPPChinHinand ChinHinConcreterespectively.

(iii) This involves the purchase of the remaining equity interests in Metex Steel and Chin Hin (Nolth), which was previously held by other minority shareholders. (iv) During FYE 2014 and FPE 2015, we had purchased new motor vehides for the following purposes:­(a) Additional lorries were purchased to increase our fleet of lorries as well as to replace several units of old lorries for use by our distribution of building materials business segment. With the new lorries, we can improve the efficiency of the transpoltation of building materials to our customers and provide more suppolt for our warehouses located nationwide;
(b) Additional mixer trucks were purchased to add and replace several old fleets ofmixer trucks used for the distribution of ready-mixed concrete business segment With the new mixer trucks, we can Improve efficiency in the delivery of ready-mixed concrete from the batching plants to our customer’s construction locations; and
(c) In line with the increase in order books received by both Starken AAC and G-Cast Concrete, more units of trailer cranes were purchased in order to suppolt the business growth ofthe manufacturing ofMCandprecastconcrete productsbusinesssegment This would improve our efficiency in delivery ofMC and precast concrete products to

our customers. The above material capital expenditures were made within Malaysia and primarily financed by a combination of bank borrowings and internally generated funds. [company No.: 1097507:w] 5. GENERAL INFORMATION ON OUR GROUP (Cont’d) Save as disclosed below, there are no other material capital divestitures (including interests in other corporations) made by us for the past four (4) financial years and the FPE 2015:­
Investment in subsidiaries OJ31,350 Freehold land and shop office 4,125 3,458 3,702 Freehold land and shop office -under
2,023 4,635assets held for sale Leasehold land 2,179 Plant and machineries 1,194 1,264 617 10,851 Motor vehicles 475O 423 Total __1,194 7,568 4,075 52676 5,058 Analysed by: Distribution of bUilding materials &. provision of logistics
Investment in subsidiaries 30,350 Freehold land and shop office 4,125 3,458 3,702 Freehold land and shop office -under
2,023 4,635assets held for sale Plant and machineries 1,194 Motor vehicles 60
1,194 4,125 3,458 36,135 4,635 Ready-mixed concrete I Investment in subsidiaries 1,000 Plant and machineries 131 10,318 : I Motor vehicles 4,690 423 \ 131 16,008 423 Manufacturing of AAC and precast I concrete products Leasehold land 2,179 Plant and machineries 1,264
3,443 Manufacturing of wire mesh and metal roofing system
Plant and machineries 486 533 L —­486 533 5. GENERAL INFORMATION ON OUR GROUP (Cont’d) Note:­(i) This inciudes the disposai of the following companies pursuant to the rationalisation undertaken by our Company in 2014:­No.
(a) (b) (c)
Company RM At cost PP Chin Hin Realty 29,800,000 Landmark Grace Development Sdn Bhd 550,000 Chin Hin Concrete Mix Sdn Bhd 1,000,000 Total 31,350LOOO The disposal of both PP Chin Hin Realty and Chin Hin Concrete Mix Sdn Bhd was satisfied by way of contra with the dividend payable to the shareholders of PP Chin Hin and Chin Hin Concrete, respectively. 5.6.5 Material plans to construct, expand or improve facilities. Save as disclosed below, we do not have immediate plans to construct, expand or improve our existing facilities as at the LPD:­(a) utilisation of the IPO proceeds for the expansion of our existing manufacturing facility and purchase of new equipment and machineries as set out in Section 3.10 of this Prospectus; and
(b) the capital commitment of RM5.032 million for the purchase of solar system (such as panel, inverter, array junction box, main switch board, vacuum circuit breaker and transformer) to be installed at our Group’s existing factories pursuant to the separate renewable energy power purchase agreements entered into between TNB with Starken MC and Metex Steel, both dated 19 June 2015, whereby Starken MC and Metex Steel shall sell and deliver, and TNB shall purchase and accept the metered renewable energy which is generated and delivered from the renewable energy installation and metered by TNB at the respective connection points. The purchase of solar system shall be funded via bank borrowings.

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6. BUSINESS OVERVIEW
6.1 PRINCIPAL ACTIVITIES AND PRODUCTS This section outlines our principal activities as well as the range of building materials products distributed and manufactured by us. 6.1.1 Principal business activities We are principally involved in the distribution of building materiais and provision of logistics, supply of ready-mixed concrete and manufacturing of AAC and precast concrete products, wire mesh and metal roofing systems. The following diagram depicts our Group’s principal activities, the products that we distribute and manufacture as well as the distribution channel of our products to our customers:­
Our Group has grown over the years from a small hardware shop to an integrated building materials provider with the ability to supply a comprehensive range of bUilding materials including in-house manufactured products. 88
6. BUSINESS OVERVIEW (Cont~’d)~ __ The diagram below illustrates our in-house manufactured products used in a typical building project:­
Note:­Our Group also offers ready-mix concrete to various construction/building projects.
6. BUSINESS OVERVIEW (Cant’d) 6.1.1.1 Distribution -Building materials and logistics Building materials Building materials that we distribute can be categorised under three (3) main product categories namely cement, steel reinforcement bars and OBM, as shown in the following table. Product . .”-, ‘” . ;:.No. Cate Usage 1. Steel Standard lengths and cut-to­All sub-and super-structure reinforcement length/bent mild steel or, high tensile works in a reinforced concrete bars bars bUilding or structure
2. Cement Various types of bag and bulk cement, All sub-and super-structure ordinary Portland cement, blended and works in a reinforced concrete specialty cement building
3. OBM

(a) Piles Timber/concrete piles, spun piles, Foundation and substructure sheet piles. works
(b) Ready mixed­Various grades as required by All reinforced concrete works concrete customer
(c) Wire mesh Standard, engineering and cut-to-size All reinforced concrete works sheets
(d) Plywood Various grades and types: Normal, Used for formwork and/ or waterproof, special coated and etc. permanent finishing
(e) Sawn timber Various sizes Used for formwork and/ or permanent finishing
(f) Bricks/Blocks Common clay bricks, cement sand Used for walls and partitions. bricks, facing bricks, hollow bricks, MC product
(g) Dry mix Skim Coat, tiles adhesives Plastering of walls, tiling
(h) Precast concrete Culverts, pipes, wall panels, Drainage and sewerage products industrialised building system works, bUildings (columns/
elements, pavers beams), pedestrian walkways/ car parks
(i) Roof Concrete roof tiles, clay roof tiles, Commercial and residential tiles/decking metal roofing bUildings

OJ Trusses, Timber or lightweight steel trusses Roofing systems and roof aluminium foil plus insulation (single or double sided) insulation and rockwool [ Company No.: 1097507-W I 6. BUSINESS OVERVIEW (Cont’d)
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(0) (p)
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Gutter, rainwater down pipe Ceiling boards Pipes Water tank Water proofing chemicals compounds Fencing Road furniture Door (and frames) Ironmongery Wall and floor tiles Sanitary wares and fittings Paints Made of un-plasticised polyvinyl chloride CUPVC”) or galvanlsed iron C’GI”) -Various types of cast Iron, galvanized steel, PVC or vinyl materials Various types made from fibre cement board, calcium silicate or plasterboard Concrete pipes, UPVC pipes, GI pipes, sewerage pipes Metal, fibreglass, stainless steel Specialty chemicals Poly vinyl coated galvanised iron fencing, PVC coated galvanised barbed wire, galvanized steel wire, BRC fencing hot dip galvanized wire, chain link fencing Concrete or metal, road kerbs, cone/divider, signage Solid decorative timber door, plywood flush door, engineered door, PVC door, fire rated door Locksets and door hinges Ceramic tiles, mosaic tiles, glass mosaic, terrazzo, stones­marble/granite, timber parquet, solid timber strip, laminate floor, Vinyl tiles, carpet tiles Water closets, basin/sinks, bathes and shower trays, urinal, taps and fitting, accessories -paper/soap, holder, towel rails and others Various kinds of paints Roof gutters and rainwater down pipes Internal ceiling Drainage, plumbing works, sewerage works Water Storage Waterproofing of roofs, siabs/ tanks Security fencing Road works Internal finishes Security Internal bathroom finishes Internal finishes Internal and external finishes 6. BUSINESS OVERVIEW (Cant’d) Our business model for the distribution of building materials is depicted as follows:-UBuilding Materials Distributionn Busi_Model
We source for our building materials from external suppliers as well as our manufacturing operations and supply it to our customers. We could either supply it directly to our customers from the manufacturer or the customers could purchase it from our warehouse. Todate, there had been no changes to our business model for the distribution of building materials. Logistics Our current business model for OUr logistic business is depicted as follows: ULoglStics Dlstrlbutlonn Business Mode’
I Company No.: 1097507-W I 6. BUSINESS OVERccV=IE=W~(=C=on”,t=’d~r; _ This business segment is carried out by C&H Transport, and involves the provision of logistics services to transport bulk and bag cement for local cement manufacturers (e.g. Cement Industries of Malaysia Berhad and TIL cement Berhad) to their respective customers nationwide. In this regard, C&H Transport engages the services of external contractors to undertake the transportation of the bulk and bag cement. As set out in Section 5.1 of this Prospectus, our Group started by providing transportation services to cement traders and manufacturers in the northern region of Malaysia. As our business grew, our fleet of vehicles expanded and proved to be not efficient for us to maintain as it reqUired tedious and time consuming administrative attention arising from the maintenance of the vehicles, managing large pool of drivers and dealing with vehicle licensing issues. As such, we disposed off our fleet of vehicles and started to engage external contractors to provide logistic services to our customers instead of maintaining our own fleet of vehicles. We believe that it is more effective for our Group to fully engage the services of external contractors for this business segment so that we can focus on just managing the orders from our customers. The key external contractors engaged by C&H Transport to provide logistic services for this business segment are CH Hardware & Transport Sdn Bhd, CHL Logistics Sdn Bhd, Chip Hin Trading, who are our related parties. Notwithstanding, we also engage the services of other third party external transporters (approximately 50 in total). The above related party contractors (together with AS Chin Sdn Bhd, who is also a related party) constitute approximately 32.0%, 37.2%, 36.2%, and 46.6% of our total cost of sales for the logistics business segment for FYE 2011, FYE 2012, FYE 2013 and FYE 2014, respectively. We have consistently engaged the services of our related parties as they have the required financial strengths and larger fleet of vehicles to support our transportation requirements. CH Hardware & Transport Sdn Bhd, CHL Logistics Sdn Bhd and Chip Hin Trading have in total 46, 34 and 19 cement tankers and road trucks respectively. The other external contractors do not have such large fleet of vehicles to support our logistics business. External transportations companies who have large fleet of vehicles can negotiate and be engaged by the cement manufacturers directly and may not be willing to work with us. The services prOVided by our related party contractors have proven to be reliable thus far and their iarge fleet of vehicles enables wide coverage across Malaysia which is an advantage for our business. Nonetheless, to reduce dependency on our related party contractors, we have over the years increased the number of external contractors that work with us. We have added 31 and 21 new external contractors in 2014 and 2015 respectively. We select our contractors based on the location of their trucks and their track record with the cement manufacturers. All business transactions carried out between our Group and our contractors, whether related parties or otherwise, are carried out at arm’s length and on similar terms. Please refer to Section 10.1.2 of this Prospectus for further details of our recurrent related party transactions which includes the logistics services provided by our related parties. 6. BUSINESS OVERVIEW (Cant’d) There are no formal agreements signed between our Group and our contractors. Our contractors will claim for their services based on the delivery orders duly signed by the recipient of the cement as evidence of the transportation services provided to our customers. We will then invoice our customers based on the acknowledged delivery orders. Fees payable by our customers for the transportation services is based on an agreed rate of RMlO to RM70 per tonne depending on the location of the delivery. We will retain between 4.0% to 6.0% of these fees, and the balance will be paid to our contractors. The allocation of work to our contractors is dependent on the availability and location of their trucks or cement tankers as well as the delivery location. The bulk cement is transported by specialised cement tankers, whereas bag cement is transported by normal road trucks. These vehicles are owned and operated by our contractors. When required, we also provide financing to these contractors to purchase their own vehicles on the condition that they will provide transportation services to our Group. Such financing is provided as part of our hire purchase financing activities specifically to our contractors for our logistic business. As at the LPD, we have not extended any financing to our related parties under our hire purchase financing to our Group’s logistic providers. A hire purchase agreement is signed between our Group and these third party transporters to formalise the terms and conditions of the hire purchase loan given, and an interest rate of 8.0% to 18.0% per annum is charged, depending on the terms and conditions of the hire purchase loan as well as the condition of the vehicles involved. Prior to giving out such financing, we will conduct reference check of the borrower through CTOS Data Systems Sdn Bhd, a registered credit reporting agency under the Credit Reporting Agencies Act 2010, and we will retain the registration cards of those vehicles financed by us. For certain cases, we are able to deduct the hire purchase instalments due from the transporter from our payment to them for the transportation services rendered. Our money lending license is renewed every two (2) years. Since we obtained our money lending license in 2006, the highest outstanding balance under our hire purchase financing to our Group’s logistic providers amounted to about RM4 million. However, as at the LPD, the outstanding balance had reduced to RMO.94 million. Our entire outstanding balance under our hire purchase financing for our Group’s logistic providers as at LPD relates only to hire purchase financing extended to 22 third party transporters for the financing of 24 trucks. Since the commencement of our hire purchase financing activities, there have been no disputes between our Group and the borrowers. As this is not our core business, moving forward, we will put less emphasis on this business segment. 94

6. BUSINESS OVERVIEW (Cant’d) The picture below depicts our arrangement with our contractors under the logistics business:­

 

6.1.1.2 Distribution -Ready-mixed concrete Our ready-mixed concrete business is carried out by Chin Hin Concrete (KL) and Chin Hin Concrete (North). Our current business model for our ready-mixed concrete business is depicted as follows:­”Ready-mixed Concrete” BuBJnea Hodel

 

ManulPcturi”s. of….OOy…..”””” (;omrete Provision of logistics services <!=====
r—————————, Hire purchase financing provided to certain external contractors Provision of logistics services 95
6. BUSINESS OVERVIEW (Cant’d) We ventured into the ready-mixed concrete business in 2008. As our ready-mixed concrete business expanded, we had to sub-contract a portion of approximately 30.0% of the manufacturing and operations of our batching plants to sub­contractors since 2012 on a plant by plant basis as it was too challenging to manage all the operations of our batching plants. We then realised that such arrangement is a more effective and efficient manner to manage our ready-mixed concrete business. To further enhance the efficiency in managing our ready-mixed concrete business, in 2014, we disposed all the assets and stocks related to the manufacturing of ready-mixed concrete and outsourced all the production of ready-mixed concrete to CPM, while we retain the delivery and quality control aspects of the ready-mixed concrete business. Such outsourcing arrangement will relieve us from having to manage the manufacturing aspects of the ready-mixed concrete business (we will no longer be responsible for managing the overheads of the concrete batching plants, repair and maintenance of the equipment and mixer trucks, managing the labour, licensing and operations of the batching plants) and instead enable us to focus on the distribution aspects of the ready­mixed concrete business. The operations and productivity of the concrete batching plants will be managed by CPM. Pursuant to our arrangement with CPM, CPM is required to produce a minimum guaranteed production volume of 1,500 m3 for each plant per month which will enable the concrete batching plants to operate at a level that is able to generate sufficient revenue to at least cover its fixed operating costs. Please refer to Section 5.3.3 for the salient terms of the exclusivity agreement with CPM. It is a common practice within the ready-mixed concrete manufacturing segment to outsource the plant’s operations to third party plant operators. By outsourcing the operations, these third party plant operators will be responsible for any operational and quality issues that may arise. (Source: IMR report) Having evaluated the cost and benefits of the outsourcing arrangement, we have disposed of our stocks and business to manufacture ready-mixed concrete to external party, CPM via an asset sale agreement executed with CPM on 28 March 2014. Prior to the execution of the asset sale agreement with CPM, we have negotiated with various parties for the sale and purchase of our stocks and business to manufacture ready-mixed concrete. Our negotiations were however hindered by our pre-requisite that the purchaser of our business shall enter into an exclusivity agreement for the supply of ready-mixed concrete to us, which was not widely acceptable. Consequently, we had executed an asset sale agreement with CPM and correspondingly also entered into an exclusivity agreement with CPM, whereby CPM shall be responsible for:­• Providing ready-mixed concrete manufacturing services exclusively to Chin Hin Concrete (KL) and Chin Hin (North) whereby all the required raw materials shall be procured by Chin Hin Concrete (KL) and Chin Hin Concrete (North);
• Managing the operations of the batching plant in the production of ready­mixed concrete on an ex-plant basis;
• Maintaining the batching plant and all other necessary and/ or ancillary equipment in good and serviceable conditions;

6. BUSINESS OVERVIEW (Cont’d) • Repairing and maintaining Chin Hin Concrete (KL)’s and Chin Hin Concrete (North)’s cement mixer trucks; and
• Producing a minimum guaranteed production volume of 1,500 m3 for each plant per month. If the agreed rate is RM10 per m3 for volume up to 4,000 m3, Chin Hin Concrete (KL) and Chin Hin Concrete (North) will pay a minimum of RM15,000.00 per month for each plant based on the guaranteed minimum volume of 1,500 m3 for each plant per month. The rate per m3 is to be agreed upon by both parties depending on the prevailing market rate for ready-mixed concrete. Based on the 25 batching plants owned by CPM as at the LPD and assuming the agreed

3rate is RM10 per m3 for guaranteed minimum volume of 1,500 mfor each plant per month, our minimum guaranteed payment to CPM per annum is about RM4.50 million. The assumed rate of RM10 per m3 was based on the average rate per m3 paid to CPM from the commencement of the exclusivity arrangement in April 2014 up till FPE 2015. Please refer to Section 5.3.3 for the salient terms of the asset sale agreement and the exclusivity agreement with CPM. Our arrangement with CPM is depicted as follows:
Asset sale agreement, sale of business of manufacture of ready-mixed concrete Exclusivity agreement ­supply of ready­mixed concrete exclusively to Chin Hin Group
The delivery of ready-mixed concrete is carried out using our in-house mixer trucks (approximately 160 mixer trucks) as well as engaging the services of third party contractors. Our ready-mixed concrete business however is solely dependent on CPM for the production and mixing of ready-mixed concrete through an exclusivity agreement with them. Our management is of the view that in the event that the exclusivity agreement with CPM is terminated, they can be easily replaced as there are other such contractors in the market. We do not foresee any difficulty in appointing new producer of ready-mixed concrete should the need arises as there are other alternative producers readily available in the market. Prior to our exclusiVity arrangement with CPM, we have in the past sub-contracted part of our manufacturing and operations of our batching plants to other sub-contractors such as Apex Connection Sdn Bhd and Stanwell Engineering & Hardware Sdn Bhd. Such alternative producers are able to cater to our demands, both in terms of quantity and quality. In addition, we can also source for ready-mixed concrete from our customers who purchase cement from us and other suppliers of ready­mixed concrete in the market. 97
6. BUSINESS OVERVIEW (Cont’d) Ready-mixed concrete are produced at concrete batching plants, usually situated outside the construction site to reduce on-site congestion, and delivered to the site using special cement-mixer trucks. It can be produced with consistency in qualities, such as strength, workability and slump, and can be produced in large batches. Depending on projects, our ready-mixed concrete is designed to suit the specifications of our customers (e.g. strength, water proofing and/or setting times).
6.1.1.3 Manufacturing AAC and precast concrete products Starken MC and G-Cast Concrete are involved in the manufacturing of MC and precast concrete products, respectively. AAC products Our current business model for our manufacturing of MC products is depicted below:­
MC products is a type of concrete that is lighter in weight and yet provides better insulation and fire resistance compared to regular concrete. Starken MC specialises in the manufacturing of MC products as an alternative to cement bricks, clay bricks and/or masonry concrete blocks. 98 6. BUSINESS OVERVIEW (Cont’d) Our MC products are certified as a green product eco-friendly bUilding material by the Singapore Environment Council and we are currently applying from SIRIM QAS International Sdn Bhd for eco-Iabelling certification of our MC products, the approval of which is still pending. Our MC products are offered as our initiatives to support the Malaysian Government’s initiatives to promote the use of green bUildings in the country. Walis built with MC products do not need to be plastered because they are inherently smoother. Instead of plastering, a layer of skimcoat which is much easier to apply is used, thereby reducing construction costs and time. It is also much lighter than conventional cement or clay bricks thus saving foundation costs by redUcing the dead weight of a building. Unreinforced, it is normally used in non-load bearing applications such as infill walls. AAC can also be reinforced and used for load-bearing applications. At present, Starken AAC only produces reinforced MC Iinteis which are used at wall openings such as doors and windows. The table below shows a price comparison between AAC products and two (2) other commonly used types of bricks, namely clay bricks and cement sand bricks, which are used in the building of one (1) m’ of internal wall structure:­
Material price per m’  29  18 to 20(i)  11 to 13  Labour and instaliation per m'(ii)  10 to 13  10 to 13  10 to 13  Skim coating per m’  11 to 15  Plastering per m’c;i)  30 to 36  30 to 36  Total price per m2  50 to 57  58 to 69  51 to 62
Notes:­(i) AssUlmng the use of ten (10) Me standard biocks and sixty (60) pieces of day bricks per rr?
(ii) Price shown varies depending on iocation and site of project. The assumptions above are based on average prices in Klang Valley.

As shown in the table above, the use of AAC blocks is more cost effective compared to clay bricks and cement sand bricks, mainly due to the savings in plastering costs. Even though MC blocks are more costly in terms of price per piece compared to c1aybricks and cement sand bricks, the size of MC blocks are, on average, approximately six (6) times bigger than clay bricks and cement sand bricks, making it more cost effective on a per square meter basis. Other than its higher costs per piece which is largely offset by other factors (ease of application, lower labour input, lighter weight) and also the need for more careful handling (breaks easier than common bricks), there are no other drawbacks in the utilisation of AAC blocks. 99
I Company No.: 1097507-W] 6. BUSINESS OVERVIEW (Cant’d) Key advantages of MC products and its descriptions are detailed below:­
Lightweight Fire resistant Sound resistant Durable Dimensional accuracy I I Eco-friendly MC products weigh approximately one-fifth of the weight of concrete blocks of the same size due to its porosity The main materials used to produce MC products, namely sand, gypsum, lime and cement, creates a product that is inorganic and incombustible and is therefore, sUited for fire­rated applications AAC products have high sound absorption characteristic due to its porous structure The porous structure of MC products reduces the mass of the MC products, therefore decreasing the impact that it absorbs, making it particularly durable in the event of earthquakes Comes in standard block sizes. Due to its lightweight nature, it  can  be  easily  cut,  drilled  and  grooved  to  fit  bUilding  designs  Made with  natural  raw  materials,  MC products  are  eco­
friendly and does not emit polluting gases during its manufacturing process 6. BUSINESS OVERVIEW (Cont’d)
Water resistant  Contains miilions of closed microscopic cells in a standard block due to its porous structure, which strongly resist moisture from seeping through  Good workability  It can be easily sawn, cut, carved, hand tools to fit design requirements  nailed  using ordinary  Impact resistant  Its design withstand usage  and porous structure enables MC products to impact ioads potentially resulting from rough  Cost effective  The larger sizes of MC products help reduce the number of joints in wall masonry, resulting in faster construction and ultimately, lower costs  Thermal comfort energy saving  and  MC products contain millions of tiny pores that are filled with air, provide excellent thermai insulation, thus reducing heating and air conditioning costs of a building
MC products are availabie in various shapes and sizes as illustrated below:-
Starken MC currently only produces blocks, lintels and floor and wall panels which are marketed under our in-house brand, “Starken” and sold to customers in Malaysia, Indonesia, Australia, New Zealand, Hong Kong and Taiwan. Our MC products, according to types are listed below:­101
6. BUSINESS OVERVIEW (Cont’d)
S3 Standard Blocks Available in 600 mm by 200 mm and 625 S5 Standard Blocks mm by 200 mm, it can be used as a general internal and external wall, or as party, compartment and separating walls.
S3 Jumbo Block S3 Jumbo Block EZ S5 Jumbo Block S5 Jumbo Block EZ Available in sizes of 600 mm by 400 mm, 600 mm by 600 mm, 625 mm by 400 mm and 625 mm by 600 mm, it is used as general internal and external wall, or as party, compartment and separating walls.

Interlocking Block Available in sizes 600 mm by 200 mm and 625 mm by 200 mm, interlocking blocks have profiled tongue and interlocking joint system that eases wall construction. Lintels Available in both standard and custom sizes, lintels are reinforced elements similar to panels and are used as support over windows, doorways and other openings in a building.
102 6. BUSINESS OVERVIEW (Cont’d)
Floor Panels

Used for residential and non-residential buildings, our floor panels are available in various lengths from 600mm to 6,OOOmm, with width of 600mm and thickness ranging from 100mm to 200mm. Available in various sizes ranging from 600mm to 6,OOOmm in iength with height of 300mm to 600mm and thickness of 75mm to 200mm. Our wall panels are suitable to be used in residential and non­residential buildings, and are available in various edge profiles such as standard square, chamfered, tongue and groove or combination of these profiles. In addition, Starken MC also sells adhesives, render and skimcoats used for laying and finishing of MC products under the “Starken” brand. [ The rest of this page is intentionally left blank 1 6. BUSINESS OVERVIEW (Cant’d) Precast concrete products Our current business model for our manufacturing of precast concrete products is depicted below:­UManufac:turIng ofPrec:ast Conc:rete Produc:tsU BusIness Model

Precastlialia Concr-eteQ;lmQf’lt A~rnSCltg!i Raw Materials Products lialia

$<:”Jnd Chipping

G-Cast Concrete specialises in the manufacturing of various types of precast concrete pipe products, such as pipe culverts, precast jacking pipes, sewerage pipes and precast concrete manholes. Precast concrete manholes are easier and require less time to install compared to the conventional method of excavating and building up the manhole with bricks and mortar on site. As it comes in modular segments and jointed on site, the depth of the manhole can also be increased by adding additional segments. Precast jacking pipes are used for installing larger diameter pipes underground (especially under roadways) without open excavation. It facilitates the installation of such pipes by allowing simultaneous excavating or tunnelling at one end of the pipe while hydraulically jacking from the other end. Additional pipes are then inserted and the process is repeated until the required length of pipe is in place. These jacking pipes are specially made using additional reinforcement and thicker concrete to withstand the jacking forces. [ The rest of this page is intentionally left blank 1 6. BUSINESS OVERVIEW (Cant’d) The pictures are examples of our precast concrete products:­

 

6.1.1.4 Manufacturing of wire mesh and metal roofing systems Metex Steel and Metal Sphere is primarily engaged in the production of wire mesh and metal roofing systems. Wire mesh Our business model for our manufacturing of wire mesh is depicted below:-NManufacfuring ofWire Mesh” Business Model
Customer • Segments .. ,..,-.-…-. ..~-. ~ ..
Distributors
105 6. BUSINESS OVERVIEW (Cont’d) Wire mesh is made up of a series of parallel longitudinal high strength steel wires electrically weided to similar cross wires together in a square or rectangular grid. This mesh is used as reinforcements in concrete structures, especially floor slabs and walls. The spacing and sizes of the steel wires can be selected to suit the loading on the reinforced concrete element it is used for. Picture below shows an example of wire mesh.
Metex Steel manufactures and supplies two (2) types of wire mesh, namely Metex Standard Fabric and Metex Special Fabric, which are detailed below:­(a) Metex Steel’s standard fabric Metex Steel produces four (4) types of Standard Fabric welded wire mesh as shown in the table below:­
A Square fabric Mesh “A” Type
B Rectangular fabric Available in wire spacing of 200 mm (main) by 200 mm (cross), the Type A is available in 10 different sizes and nominal mass strength, according to the wire diameter. Available in wire spacing of 100 mm (main) by 200 mm (cross), the Type B is available in nine (9) different specifications and nominal mass strength, according to the wire diameter 106 I Company No.: 1097507-W I 6. BUSINESS OVERVIEW (Cont’d)
Mesh “8” Type 100 H 200Main Wire -_>–1–1_ 1i Cross Wire C Long Fabric Mesh “C” Type 10a H Main Wire
i Cross Wire DA Small Square Fabric Mesh “DA” Type lOCI 1-1 “,i”Wi” -‘1100 Cross Wire Available in wire spacing of 100 mm (main) by 400 mm (cross), the Type C is available in seven (7) different specifications and nominal mass strength, according to the wire diameter. Available in wire spacing of 100 mm (main) by 100 mm (cross), the type DA is available in nine (9) different sizes and nominal mass strength, according to the wire diameter. _I
rc;mpany No.: 1097S07-W 6. BUSINESS OVERVIEW (Cont’d) (b) Metex Steel’s special fabric Metex Steel’s special fabric refers to a range of mesh fabric, which uses various combinations of wire spacing and diameter for the main and cross wires. Available in three (3) types of fabric (square fabric, rectangular fabric and small square fabric), these special fabrics are made to specific design requirements to avoid over provision of steel. Both standard and special fabrics are available in either standard sheets (dimension 6.0 metre x 2.2 metre) or cut-to-size (dimensions are tailored to suit the shape and size of the intended concrete structure). Metex Steel also prOVides technical advice, site material management, coordination and solution for the site application and installation work. Metal roofing systems Our business model for our manufacturing of metal roofing system is depicted below:­NMctltufac:turing ofMetal Roofing SystfllJIs” Business Model

Metal roofing systems are made from cold-formed metal roof sheets supported by lightweight steel trusses. Metal roofs are widely used due to its quality, attractive appearance and ease of installation. Metal Sphere manufactures both the metal roofs and lightweight galvanised steel trusses used in roofing systems. We also undertake supply and installation contracts as part of our value added service to prOVide technical proposals, design calculation and shop draWings for the installation work at site. 6. BUSINESS OVERVIEW (Cant’d) The metal roofs manufactured by Metal Sphere are as follows:­(a) Metex Tex-Roof A common type of roof used in metal roofing industries and has five (5) ribs, each with height of 25 mm. It is suitable for residential and commercial bUilding as well as wall hoarding and cladding. An example of Tex-Roof system is shown below.
(b) Metex Ural! Modern roofing system used in various bUildings such as condominiums, bungalows, shop offices and school buildings. An example of Uroll roofing system is shown below.
[ The rest of this page is intentionally left blank 1 109 Company No.: 1097507-W I 6. BUSINESS OVERVIEW (Cont’d) (c) Metex Clip Lock 710 This is a premium profile roll formed from high tensile steel substrate protected with corrosion inhibitive treatment. Its wide pans and high ribs enable excellent water discharge capacity. This product is suitable for roofs of bigger buildings/ structures, for example exhibition halls, convention centres, warehouses and shop offices.
One of the advantages of Metal Sphere’s roofs is the ability to supply extra-long roofing sheets for projects with large roofing area. This is made possible with our mobile on-site rolling equipment which avoids problems and costs of transporting long lengths of roof from factory to site. In addition, rolling on site also means optimum material usage (less wastage) and faster installation. Metal steel trusses and battens are cold-rolled sections manufactured from galvanised steel or galvanised zinc coated cold rolled coils. Roof truss refers to the structural framework designed to bridge the space above a building to prOVide support for a roof. Roof batten on the other hand, are the horizontal members which form the fixing points for roofing tiles. Metal Sphere supplies its trusses and battens in various thickness ranging from 0.40 mm to 1.00 mm. Trusses are tailor made in accordance with the configurations and loading on the roof. Picture below shows an example of lightweight metal steel truss.
6. BUSINESS OVERVIEW (Cont’d) 6.1.2 Manufacturing processes 6.1.2.1 Manufacturing of AAC products and precast concrete products AAC products AAC products are produced using fine sand, expanding agent (such as aluminium powder), lime, cement and water. Aluminium powder is then added at a prescribed rate (depending on the pre-specified density). After these raw materials are mixed, aluminium powder is added which reacts with the wet mix producing hydrogen. The hydrogen gas foams and doubles the volume of the raw mix by creating gas bubbles. At the end of the foaming process, the hydrogen escapes into the atmosphere and is replaced by air and it is this entrained air that gives AAC products its lightweight (20% of the weight of concrete) and thermal properties. The manufacturing of AAC products involves four (4) major steps to turn a mixture of cement, lime, sand, expanding agents and water into final AAC products and takes approximately thirteen (13) hours (including twelve (12) hours of curing time), as illustrated in the diagram below.
~ ,cUllitl~~l.~gtn..

 

… ~:~~Ir;g;’

(‘/’=’idi’~””””~
‘. .. •….. ‘ ‘ .’ . ‘.. _.'””,••,=.,’=”===,=.,~,
111
Company No.: 1097507-W I 6. BUSINESS OVERVIEW (Cont’d) (a) Mixing and batching Raw materials such as cement, lime, sand and expanding agent (i.e. aluminium powder) are weighed and fed into the main mixer where it will be mixed with predetermined proportion of water. After mixing, the mixture is discharged into oiled moulds. (b) Pre-curing and cutting The filled mould is transferred to a pre-curing chamber for the expansion process. In the pre-curing chamber, the mix in the moulds expands (rise like bread dough) through chemical reaction and hardens into a cake. For panel productions, reinforcement mesh is inserted into the mould together with the wet mix. After two to three hours in the pre-curing chamber, the fresh MC cake is then transferred to the cutting machines to be cut into final precise block dimensions. (c) Autoc’aving/Pressurised steam curing After cutting, the MC products are cured in the autoclaves which are maintained at specific temperature and pressure with steam for about twelve (12) hours. (d) Packaging Finally, the cured MC products are shrink-wrapped, palletised and stored prior to delivery to the customers. Precast concrete products G-Cast Concrete’s precast concrete products are manufactured using two (2) types of processing methods, namely conventional casting (Vibration method) and spinning (centrifugal method). Both processing method uses the same raw materials and similar production processes, except in the compaction of the wet concrete mixture while in the mould. The whole process takes approximately one (1) hour, from concrete mixing to concrete pouring, as reinforcement cages used in the production are prepared prior to the process. In the conventional casting method, the concrete is compacted by vibrating pokers while in the spinning process; the compacting process is done via centrifugal forces in a spinning machine. 6. BUSINESS OVERVIEW (Cont’d) The manufacturing process for both types of precast concrete products is illustrated in the diagram below.
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., .,,I ‘1, T-,I
I i,.,,, X j,L
1., I, ‘i·, }
i I I Step 1: Concrete weighing/mixing Cement, sand and aggregates in predetermined proportions are fed into weighing bins and then discharged into the mixer with water to produce ready mix concrete. It is then supplied to the production floor via concrete truck or travelling hopper.
113
6. BUSINESS OVERVIEW (Cant’d) Step 2: Reinforcement cage preparation A reinforcement cage is made up of cut, rolled and bent steel reinforcement bars or welded mesh wires. This cage works together with the concrete and gives the finished product its designed strength while the concrete gives the compression strength. In the manufacturing process, the cage is fitted into the mould for concrete pouring to take place. Step 3: Concrete pouring/feeding (a) Proceeding with Step 1, the ready-mixed concrete is then poured into the mould and the concrete is compacted using immersion vibrating pokers or mould vibrators.
(b) Proceeding with Step 1, the ready-mixed concrete is similarly poured using the concrete feeder machine into the spinning pipe mould. Compaction of the concrete is through centrifugal forces generated when the mould is spun at high speeds on the spinning machine.

Step 4: Demoulding and curing As soon as the concrete product is formed, the initial curing process begins. Before de-moulding takes place, the concrete product is allowed to cure in the mould for at least four (4) hours when adopting the conventional method and one (1) hour when adopting the spinning method. Once de-moulded, the concrete product will be cured for a period of up to seven (7) days. After the product is lifted from the mould, the mould is cleaned, oiled and ready for the next casting. 6.1.2.2 Manufacturing of wire mesh and metal roofing Metal roofing system The diagram below depicts the entire production flow of metal roofing. Metal Roof URDU Manufatturing Process Metal Root Clip Lock 71 0 & TexRoot ManUfacturing Proc””s

6. BUSINESS OVERVIEW (Cont’d) Raw materials used in the production of metal roofs are coloured and non­coloured coils. Approved raw materials are then stored at the plant’s coil bank storage before being processed. The production process takes between one (1) to five (5) working days, depending on the sizes and shapes of the products. During the manufacturing process, metal sheets from the coils are first formed using moulds before going through a bending process. Metal sheets that have been bent are then sheared according to desired sizes. Once sheared, the products are labelled and categorised according to specifications and delivery details. In the storage area, our Group’s quality control team will conduct random final inspection on the stored products where the details of the shapes, sizes and shearing are scrutinised. Those products that do not meet the requirements and standards are rejected. Wire mesh The diagram below depicts the production flow of our wire mesh products:-MetexStee\Cold Rolling Pr0C:flSS
Hard Drawn Wire in toil
The first step of the process involves the drawing and cold rolling of metal coils. Semi-finished coils are first uncoiled and then subjected to a descaling process which facilitates the drawing process. During the rolling process, descaled wire rods are passed through a series of cassette rollers to produce ribbed wires. Ribbed wires are then coiled again into required sizes. The recoiled wires are then tagged with specification of the wires which includes the date of production, diameter as well as weight of the wire. Depending of subsequent production process, the rolled wires may be directly fed to the fully automatic mesh welder machine to be welded or subjected to further straightening and cutting process. Metex Steel Wire Straightening & Cuttin!l Process UncoHing Safety Guide Feeding Straightening Cutting
Company No.: 1097507-W ] 6. BUSINESS OVERVIEW (Cont’d) In the case of straightening and cutting process, the rolled wires are uncoiled again and fed through a straightening machine consisting of feeder and straightening rollers, which will straighten the wires and cut it according to specific lengths. The intermediate product is called a straightened bar which can be welded into wire mesh. These straightened bars can also be sold as reinforcement bars. MetexSteel Wire Mesh Welding Process Wire.Fe.edTng “Welding Finished tJle;oh
Ttaqs’fer forWeld!ng Sta”kiog The cut wires from the previous station are then placed into a weiding machine to be welded according to their specific sizes (crosses and mains). Once placed, the welding machine takes over and welds intersection points of the Wires, in accordance with the pre-determined spacing. When completed, the welded wire mesh will be of standard production sizes and will then be bended and cut into smaller sizes before being stored prior to delivery. The production time for the above processes depends the type of wire mesh produced. The production cycle for standard fabric normally takes around one (1) to three (3) days, while special fabric takes four (4) to seven (7) days. 6.2 PRINCIPAL MARKETS The principal market for our building materials is Malaysia. For FPE 2.015, 97.3% of our Group’s revenue was generated locally while 2..7% was generated overseas. For FYE 2.014, FYE 2.013, FYE 2.012 and FYE 2011, 98.4%, 98.4%, 98.3% and 98.6% of our Group’s revenue was generated locally while 1.6%, 1.6%, 1.7% and 1.4% was generated overseas, respectively. Our foreign customers are mainly customers based in Singapore. We also have some customers from Indonesia, Australia, Hong Kong, Taiwan and the Philippines. Our customers can be categorised into four (4) segments, namely retailers, dealers, projects and industrial users, as illustrated in the diagram below. 6. BUSINESS OVERVIEW (Cont’d)
Our Group currently distributes building materials products to more than 2,300 active customers in Malaysia. Active customers refer to customers who make regular purchases from us. Generally, there are no sharp seasonal fluctuations as the construction industry operates consistently throughout the year provided there are projects available. As such, our building materials business is not tied to any seasonality factors. 6.3 SALES AND MARKETING STRATEGIES AND DISTRIBUTION NETWORK 6.3.1 Marketing strategies Our Group’s sales and marketing teams comprise 36 managers which are supported by 60 sales executives as at the LPD. They are led by our business unit heads, each of whom has more than ten (10) years of experience in their respective capacities. The sales and marketing strategies adopted by our Group include the following:-Ca) Customer loyalty and retention Our Group values the long and well-established working relationship that we have fostered and established with most of our key customers as they are the main reason for our continuity in the industry. Most of our key customers have been with us for at least five (5) years. Keeping close and frequent touch with them gives us the ability to serve them whenever our services or products are needed, and this drives our sales and marketing strategies. These customers are also the first to be informed whenever there are any new developments in the bUilding materials market, be it fluctuations of prices or supplies. And similarly, whenever we have any new products, they are also the first to be visited by our marketing teams. 117
6. BUSINESS OVERVIEW (Cont’d) (b) Creating strong presence Since we embarked on the manufacturing of AAC products, we have participated in trade shows and exhibitions both locally and overseas, such as the annual Archidex Exhibition, an international trade show which is held annually showcasing and introducing new products relating to the architecture, design and building industry and foreign trade shows organised by the Malaysia External Trade Development Corporation (MATRADE), to increase our Group’s presence and brand name awareness. We have participated in a foreign trade miSSIon to New Zealand, “Specialised Marketing Mission for Building Materials to Christchurch, New Zealand” which was organised by MATRADE in December 2013 as part of the reconstruction of Christchurch which was greatiy affected by the Canterbury earthquake in February 2011. In 2015, we participated in the foreign trade mission to Mauritius, Myanmar and Australia organised by MATRADE. In addition, we are also working members of industrial associations in Malaysia, as detailed in the table below:­
PP Chin Hin Starken AAC Metex Steel Chin Hin Concrete • Building Materials Distributor Association of Malaysia
• Master Builders Association of Malaysia
• Building Materials Distributors Association of Malaysia
• Malaysian Iron and Steel Industry Federation
• Steel Wire Association of Malaysia
• National Ready Mix Concrete Association

Participation in the aforementioned associations is an industry norm among our peers and industry players, serving as a piatform that gives us an insight in latest market trends and changes in the industry as well as creating networking opportunities. (c) Broad customer mix Our Group always ensures a broad customer mix, in terms of size and segment. By diversifying our customer base to consist of customers of various sizes and segments, we are able to reduce the dependency of certain customers. This requires keeping track of our customer mix at all times so that our marketing and sales efforts can be properly planned and executed. Our recent foray into the manufacturing segment has also allowed us to further spread our customer mix to include other distributors as well. In addition, we have a large customer base of more than 4,000 customers with 2,300 active customers, which is supported by our nationwide network. Active customers refer to customers who make regular purchases from us. 6. BUSINESS OVERVIEW (Cont’d) (d) Leveraging on common customer base Our customers comprise retailers, dealers, industrial users, developers and contractors mainly involved in the building and construction industries. This customer base is also common for all our business units. Arising from this we are able to cross sell our bUilding material products and increase the revenue per customer. (e) Well trained and informed sales teams To ensure our sales personnel possess the required skillsets to perform their tasks, our Group has taken steps to educate and equip them with sufficient knowledge about both trading and in-house products so that they can better serve customers. Training is carried out both in-house and also through educational visits to suppliers’ factories for our sales and marketing teams to gain better product knowledge. 6.3.2 Distribution network The distribution network required for the business units differs depending on the nature of the business. As a result, we adopt a combination of direct and indirect distribution strategy, as depicted in the diagram below:­-Retallers
(a) Direct distribution channel We utilise a direct distribution strategy, performed through our sales and marketing team where our products are sold directly to end-users. Our retail segment focuses on walk-in customers who consist mainly of small-scale renovators who purchase small quantities. Our project customers consist of contractors who are involved in the construction of housing projects, high-rise buildings, and infrastructures. We also sell raw material directly to industrial users, who are mainly manufacturers. (b) Indirect distribution channel Our indirect distribution strategy involves leveraging our distributors and/or dealers distribution network to reach customers that are not covered by our sales and marketing teams. Similarly, our foreign sales are achieved via the local distributors of the target countries. 6. BUSINESS OVERVIEW (Cont’d) 6.4 KEY ACHIEVEMENTS AND MILESTONES
1995 • SPPCH began operations as a cement transportation company 1996 • SPPCH expanded into distribution of building materials 2008 • Ventured into the ready-mixed concrete segment 2009 • centralised nationwide operations in Kuala Lumpur • Established market presence in Singapore 2011 • Achieved RM1.0 billion revenue • Commenced construction of Starken MC, G-Cast Concrete and Metex Steel’s factories 2012 • Metex Steel acquired a factory in Prai, Pulau Pinang to produce metal roofing and HDW • Metex Steel commenced operations in Nilai, Negeri Sembilan for manufacturing of wire mesh and metal roofing systems
• G-Cast Concrete commenced production of precast concrete products in Serendah, Selangor

2013 • G-Cast Concrete obtained SIRIM Product Certification License and SPAN Certification 2014 • Commenced operations of Starken MC factory at Serendah, Selangor [ The rest of this page is intentionally left blank 1 6. BUSINESS OVERVIEW (Cont’d) 6.5 PRODUCTION AND WAREHOUSING CAPACITY The following table lists our Group’s production capacity and its utilisation during the financial years under review:­Company  .  Products  Number of linesl Number of machineries  I Total production 1:apacitv . (mt/annum)  FYE 2011  Utilisation Rates % FYE ~012 FYE 2013 FYE 2014  FPE 2015  Starken AAC(“)  AAC products  1  375,000(ii)  nja  nja  nja  60  G-Cast Concrete (,)  Precast concrete products  7  45,000  nja  17  67  95  100  Metex Steel (Prai)  Straightened bars(i) Metal roofing  8 wire drawing machines 5 wire straightening machines  18,000 12.,000  nja nja  nja nja  40 45  50 50  53 53  I  1 metal roofing machine  400  nja  nja  2.5  45  80  Metex Steel (Nilai)  Wire Mesh Metal roofing  3 wire drawing machines 5 wire straightening machines  60,000 31,2.00  nja nja  40 60  50 70  70 70  75 90  4 wire welding machines  60,000  nja  40  50  70  81  1 metal roofing machine  1,000  nja  nja  2.5  47  49
Notes:­n/a Not applicable as productions have not commenced at the respective manufacturing facilities. (i) Straightened bars can be welded into wire mesh and can be sold as reinforcement bars.
(ii) 5tarken MCs production capacity is measured in nr. 5tarkens MC production commenced in January 2014. The plants capacity can be increased to 600,000 nr as there is sufficient space and ancillary services already built in to cater for this expansion.

(iii) The utilisation rate for 5tarken MC represents the utilisation for the month of August 2015. Although production commenced in January 2014, production was low in the initial months as 5tarkenMCjustcommencedoperations.As such, theutilisationrate forAugust2015ismore reflective oftheactualutilisation rate of5tarkenMCsplant. 12.1 Company No.: 1097507-W] 6. BUSINESS OVERVIEW (Cont’d) (iv) As part of our future plans, we plan to install and/or upgrade new machineries onto our existing production facilities in Starken MC which will result in an increase of our MC products production capacity from 375,000 m’ to 600,000 m’ per annum. It is estimated that the expansion will cost approximately RM10.0 million and will be financed by the proceeds of the exercise. (v) As part of our future plans, we have earmarked RM5.0 million for the expansion of G-Cast Concrete’s manufacturing faCility. The expansion will inciude installation of additional equipment and machineries. The expansion of our manufacturing floor space is undertaken to expand our existing manufacturing line pursuant to the purchase of the new plant, equipment and machineries. The estimated cost of expansion will be financed by the proceeds ofthe exercise. The following table lists the machinery and equipment that we currently own for our manufacturing activities:-Starke” AAe
(a)  Factory equipment  Forklift and wheel loader  35  656  (b)  Plant and machinery  Chiller  1  110  Cement Silo  6  253  Pre curing mould  31  2,414  Autoclave  5  11,682  Cutting line machine  2  6,769  Packing  1  1,459  Ball Mill  2  2,313  Boiler  1  2,567  Steel structure & piping systems  1  5,310  Sand, PFA, Anhydrite system  1  746  Doxing & mixing system  1  2,277  Electric control system  1  2,124  Other plant & machinery  7,438  Total  88  46,118  I  [The rest of this page is intentionally left blank J
6. BUSINESS OVERVIEW (Cont’d) G-Cast Concrete
(a)  Factory equipment  Gantry crane, external vibrator, wheel loader, generator, overhead crane, forklift and others  174  1,998  (b)  Plant & machinery  Spinning machinery Caging machinery Batching plant Others  6 1 1  470 95 262 123  (c)  Mould  Manholes mould Spinning mould Total  377 17 576  3,031 95 6,074  Metex Steel (Prai)

(a) (b)  Straightened bars Metal Roofing  Wire drawing machines Wire straightening machines Metal roofing machine Total  6 5 1 12  194 99 736 1029  Metex Steel (Nilai)

(a)  Wire Mesh  Wire drawing machines Wire straightening machines Wire welding machines  5 5 4  3,268 918 19,302  (b)  Metal roofing  Metal roofing machine Total  1 15  3239 26727
123 [ Company No.: 1097507-W I 6. BUSINESS OVERVIEW (Cont’d) As at the LPD, Starken MC has a secured order book with purchase orders amounting to approximately RM37.0 million to be fulfilled within 2016. The orders comprise mainly MC products which will be used in the construction of condominiums, low-rise residential homes, high-rise commercial buildings as well as shopping complexes. As at the LPD, G-Cast Concrete has also secured purchase orders for various precast concrete pipe products amounting to approximately RMI00.73 million, to be fulfilled by 2018. Metex Steel and Metal Sphere have also secured purchase orders of RM40.0 million for “cut to size” wire mesh products and RM3.90 miilion for metal roofing system products respectively as at the LPD which are to be fulfilled within 2016. Our Group operates a number of warehouses under PP Chin Hin located throughout Peninsular Malaysia. The table below details our warehouses located in various states in the Peninsular Malaysia.
1.  PP Chin Hin  Owned  400 & 401 Jalan Perusahaan 5 Taman Bandar Baru  Storage of building materials  1,189  Not applicable  Mergong Lebuhraya Sultanah Bahiyah 05150 Alor Setar  Kedah  2.  PP Chin Hin  Rented  Lot 1178 Jalan Ampat Tin Batu 4 1/2, Off Jalan Ipoh 51200 Kuala Lumpur  Storage of bUilding materials  556  East & Orient Enterprise Sdn Bhd  3.  PP Chin Hin  Rented  No 27, Jalan Industri 3/4 Taman Perindustrian Temerloh  Storage of building materials  668  Kong Yen Transport & Trading Sdn Bhd  28400 Mentakab  Pahang  4.  PP Chin Hin  Rented  Lot 2975 Kawasan Perindustrian  Storage of building materials  3,276  JH Agency Sdn Bhd  Cendering 2.1080 Kuala  Terengganu, Terengganu  ———–­
6.  BUSINESS OVERVIEW (Cont’d)  S.  PP Chin Hin Rented Lot PT 1493, Kawasan Perniagaan Pengkalan Chepa 11, Seksyen 44 Mukim Panchor Daerah Kemumin 16100 Kota Bharu Kelantan  Storage of building materials  84.S  Laksana Saujana Sdn Bhd (a company where Datuk Chiau Beng Teik and Chiau Haw Choon are the directors and substantial shareholders)
Please refer to Section S.6.2 for further details on the properties rented by us. 6.6 QUALITY ASSURANCE POLICY As a distributor of bUilding materials, our Group relies on our suppliers to ensure that their products meet the required quality standards. In addition, we conduct periodical visits to our suppliers’ premises/factories to better understand their products and quality standard. On the other hand, all of our manufacturing units have stringent quality control and assurance programmes to ensure our products are manufactured to the required specifications and standards. Our manufactured products are SIRIM certified for quality assurance. Our AAC products are also fire rated products endorsed by the fire service department of Malaysia and SETSCO Pte Ltd of Singapore, a testing and inspection company accredited by the Singapore Accreditation Council. In terms of our Group’s manufactured products, we prOVide product warranties of ten (10) years for our MC products from the date of purchase and metal roofing systems from the date of compietion and installation, respectively. Should there be any defects on our AAC products or metal roofing systems, we will exchange / replace it for our customers depending on the customers’ requirement. If our customer returns the product to us and does not wish to seek for a replacement, we will issue credit notes to our customers. All returned products will be expensed out in our income statements, where we will record it as sales return and our revenue shall be reduced accordingly. For exchange of defected products, the costs of the defected products will be expensed out in our income statements. We have to date not experienced any claim against our products warranties for our manufacturing segments. We firmly believe that with the experience and expertise of our Group and by working closely with our manufacturers, suppliers and distributors to ensure that the quality of our range of bUilding material products are met, any defects in these products supplied is minimised. 12S
6. BUSINESS OVERVIEW (Cont’d) In terms of third party bUilding material products that we seli and distribute, a product warranty is given to our customers provided that warranty is obtained on a back-to-back basis from our suppliers. Such back-to-back arrangement is an industry practice within the distribution of bUilding materials industry. We provide our customers with exchange/return policies (should the products are of inferior quality or do not meet their specifications) that allow them to replace or return the defective or flawed products. We will issue credit notes to our customers for any returned goods. Such returned products wili be expensed out in our income statements, where we record it as sales return and our revenue will be reduced accordingly. We will also issue debit notes to our suppliers and charged it to our income statements where our cost of sales wili be reduced accordingly. For replacement / exchange of products which are defective, we will also exchange / obtain replacements of such defective products from our suppliers and no book entry is made into the accounting system. Our Group has recourse to claim (in lieu of replacements / exchanges) from the manufacturers and suppliers of the building material products that we seli and distribute, should there be any defects in their products. Todate, we have not experienced any difficulties in claiming the defect products from our suppliers. As such, the impact to our Group arising from any of these warranty claims is minimal. For the years/period under review, the amount of sales return recorded for our distribution of bUilding materials and ready-mixed concrete segment is as foliows:
Sales return 542 764 794 805 883 % of revenue 0.1 0.1 0.1 0.1 0.1 As shown in the table above, the sales return over the years/period under review represents approximately 0.1% of our total revenue for the respective years/period under review. Todate, we have not provided for warranty and sales return claims in our financial statements. We will only make provision for warranty claims and sales return when it is probable that we will be required to settle the warranty claims or sales return and when a reliable estimate can be made of the amount of the warranty claims or sales return. For our manufacturing segment, we have not experienced any claim against our products warranties and for our distribution of bUilding materials and ready-mixed concrete segment, the sales return experienced is minimal as shown above. Nevertheiess, there can be no assurance that there will not be any substantial claims relating to our products in the future which could have a material adverse impact on our financial performance. 126
6. BUSINESS OVERVIEW (Cant’d) 6.7 TECHNOLOGY USED The following describes the technology used in our MC and wire mesh production. Our pre­cast concrete and metal roofing products are produced with conventional methods, utilising moulds, forming and cutting as described in Section 6.1.2 of this Prospectus. AAC manufacturing Starken MC utilises modern manufacturing equipment sourced at a one-off fee from Wehrhahn GmbH, a German company that is principally involved in the design, manufacture and suppiy of machines for the building materials industry. It offers industrial plants for the production of construction materials, such as autoclaved aerated concrete blocks and panels, fibre cement flat and corrugated boards, calcium silicate boards, and dry mix mortars. Wehrhahn GmbH does not provide warranty for the technology and performance of its manufacturing equipment. The Wehrhahn plant was chosen specifically for its efficient and highly automated production capabilities with fully computerised controls, which means high volumes, lower costs and consistent quality. In addition, Wehrhahn production systems are modular in design, which allows for additional capacities when the need arises. The plant’s built-in recycling features also allow all rejected materials to be re-processed and used as raw materials with almost zero production wastes from the factory resulting in minimal impact on the environment. Wire mesh manufacturing Our wire mesh plant is equipped with Entwicklungs-und Verwertungs-Gesellschaft m.b.H (“EVG”) machinery from Austria, which is sourced at a one-off fee. EVG does not provide warranty for the technology and performance of its machinery. The machinery is capabie of producing full cut-to-size wire mesh. The produced meshes are easily discharged from the machine and stacked automatically to allow for continuous production without interruption. This process reduces the production time giving added advantage to both Metex Steel and its customers. To meet increasing demand on quality and from the competitive construction environment, Metex Steel has also installed an integrated enterprise resources planning system to meet customers’ quality expectation as well as timely delivery. [ The rest of this page is intentionally left blank 1 I Company No.: 1097S07-W I 6. BUSINESS OVERVIEW (Cont’d) 6.8 PRODUCT DEVELOPMENT AND ENHANCEMENT Our Group’s product development and enhancement activities are depicted in the table below:­
Chin Hin Concrete  The product development activities include the use of alternative sources of raw materials and development of mix designs to suit different needs of our customers’ projects.  Starken MC  Activities are being carried out to identify alternative raw materials which can be used instead of those used at present. In addition, Starken is developing alternative applications for products made with reinforced MC blocks.  Metex Steel  Product development activities under this segment are divided into the wire mesh development and roofing products. In terms wire mesh development, efforts are focused on a fencing system and engineering mesh such as twin wire mesh, staggered mesh and curtailment mesh.  On the roofing front, efforts are being made towards enhancement of high-rib profile, wider sheet and S-curve roofing system. New product ranges will cover new application for the Poly-urethane sheet and multiple-tier comprehensive system form.  G-cast Concrete  Work to develop a more efficient joint system to connect precast concrete pipes has been completed, and the Industrial Design for it has been registered with the authorities. Submission for it to be patented has been also made and is now pending approval. Marketing of this new product has already begun since the second half of 2015. The new product is a jacking pipe with cast-in anti-slide steel collar that are designed with groove lines that provide improved traction between surfaces to prevent sliding as well as increased rigidity.
6.9 INTERRUPTIONS IN BUSINESS We have not experienced any interruption to our business, which has had significant effects on our operations for the past twelve (12) months preceding the LPD. [ The rest of this page is intentionally left blank 1 ‘I Company No.: 1097507-W I 6. BUSINESS OVERVIEW (Cont’d) 6.10 MAJOR CUSTOMERS Our Group is not dependent on any single customer as none of our customers contributed to more than 10% of our total revenue for the financial periods under review. It is an industry norm for the participants of the bUilding materials industry to have a large pool of customer base (Source: IMR Report). Our Group have a large customer base of more than 4,000 customers with 2,300 active customers, hence we do not enter into any supply contracts with our customers and all sales are conducted on purchase order basis. However, for information purposes only, we set below our Group’s top ten (10) customers, based on their revenue contributions to each business segment based on FPE 2015 and their level of revenue contribution for the past four (4) FYEs 2011 to 2014 as well as FPE 2015:­Distribution of building materials and logistics
1.  5amwoh Ready Mix  Singapore  Industrial  8,434  0.8  8,854  0.8  13,847  1.1  13,568  1.1  16,287  2.0  6  Pte Ltd  users  2.  Bluebros E & C Sdn  Malaysia  Contractors  12,086  1.5  1  Bhd  3.  Emix Industry (M)  Malaysia  Industrial  7,822  0.6  13,161  1.1  9,843  1.2  3  Sdn Bhd  users  4.  Evermix Concrete  Malaysia  Industrial  4,500  0.4  6,712  0.6  12,058  1.0  11,337  0.9  7,580  0.9  10  Sdn Bhd  users  5.  Durabie Mix Sdn  Malaysia  Industrial  1,711  0.2  2,363  0.2  8,382  0.7  11,789  1.0  7,257  0.9  10  Bhd  users  6.  Excel Ready-Mix  Malaysia  Industrial  7,700  0.8  22,200  2.1  18,750  1.5  13,682  1.1  6,384  0.8  7  Sdn Bhd  users  7.  S.G. Concrete  Malaysia  Industrial  2,944  0.3  3,027  0.3  3,566  0.3  6,880  0.6  5,860  0.7  5  Products (M) Sdn  users  Bhd  8.  Eka Bina  Malaysia  Contractors  1,517  0.2  1,505  0.1  4,458  0.4  1,548  0.1  5,003  0.6  5  Construction Sdn  Bhd  9.  Super Sterling Mix  Malaysia  Industrial  8,812  0.9  8,231  0.8  6,829  0.6  7,559  0.6  4,509  0.6  5  (M) Sdn Bhd  users  10.  Noah Ark Builders  Malaysia  Contractors  2,851  0.2  7,617  0.6  4,372  0.5  3  Sdn Bhd  Total  35,618  3.5  52,892  5.1  78,563  6.4  87,141  7.1  79,181  9.7
129 I Company No.: 1097507-W I 6. BUSINESS OVERVIEW (Cont’d) Distribution of ready-mixed concrete business segment
l.  Protasco Trading  Malaysia  Retailers  1,244  0.1  8,388  0.7  6,843  0.8  6  Sdn 8hd  2.  Corporate Alpine  Malaysia  Contractors  1,436  0.1  6,496  0.8  2  (M) Sdn Bhd  3.  Noah Ark Builders  Malaysia  Contractors  3,386  0.3  7,749  0.6  4,063  0.5  3  Sdn Bhd  4.  Zubicon Sdn Bhd  Malaysia  Contractors  464  neg  420  neg  4,030  0.5  3  5.  Dover Construction  Malaysia  Contractors  3  neg  3,321  0.3  3,719  0.5  3  Sdn Bhd  6.  SQA Builders Sdn  Malaysia  Contractors  5  neg  6  neg  4,024  0.3  1,810  0.1  3,614  0.4  5  Bhd  7.  B & G Concept  Malaysia  Contractors  3,210  0.3  1,969  0.2  3,249  0.3  6,398  0.5  2,790  0.3  5  Engineering Sdn  Bhd  8.  Borneo Geotechnic  Malaysia  Contractors  2,497  0.3  1  Sdn Bhd  9.  Hunza Trading Sdn  Malaysia  Retailers  1,224  0.1  1,453  0.1  1,956  0.2  2,380  0.3  5  Bhd  10.  Jin Sing Sdn Bhd  Malaysia  Ccntractors  288  neg  2,380  0.3  2  Total  4,459  0.4  3,199  0.3  12,579  1.0  31,766  2.5  38,812  4.7
Note:­neg Negligible 130
l£ompany No.: l097507-W I 6. BUSINESS OVERVIEW (Cont’d) Manufacturing of AAC products and precast concrete products business segment
PtE td:1’4′):;; . FPE 2015 Length of i.· Revenuerelationship.’ RM’6bll . 1.  Eiscon  Malaysia  Contractors  24  neg  1,485  0.1  9,257  0.8  6,546  0.8  4  Construction  Sdn Bhd  2.  Hume Marketing  Malaysia  Industrial  1,716  0.1  4,439  0.5  2  Sdn Bhd  users  3.  Rockwool Building  Singapore  Retailers  627  0.1  2,747  0.3  2  Materials (S) Pte  Ltd  4.  Lifomax  Malaysia  Retailers  76  neg  2,258  0.3  2  WoodbUild Sdn  Bhd  5.  Ban Hin Electricai  Malaysia  Contractors  45  neg  1,599  0.2  2  & Construction  Sdn Bhd  6.  Genbina Sdn Bhd  Malaysia  Contractors  1,527  0.2  1  7.  Hume Marketing  Malaysia  Retailers  136  neg  1,418  0.2  2  (EM) Sdn Bhd  8.  Mersing  Malaysia  Contractors  142  neg  2,051  0.2  1,344  0.2  3  Construction  and Engineering  Sdn Bhd  9.  Renique Sdn Bhd  Malaysia  Retailers  177  neg  1,227  0.2  2  10.  Diversified Ace (M)  Malaysia  Retailers  69  neg  1,124  0.1  2  Sdn Bhd  Total  24  neg  1,627  0.1  14,154  1.2  24,229  3.0
Note:­neg Negligible 131 [£ompany No.: l097507-W I 6. BUSINESS OVERVIEW (Cant’d) Manufacturing of wire mesh and metal roofing systems business segment
1.  Sun way Marketing  Malaysia  Retailers  1,929  0.2  4,544  0.4  4,629  0.6  3  Sdn Bhd  2.  Bnk Resources  Malaysia  Retailers  8  neg  174  neg  2,583  0.2  4,316  0.5  4  Sdn Bhd  3.  S P Setia  Malaysia  Retailers  37  neg  2,265  0.3  2  Marketing Sdn  Bhd  4.  VGM Marketing  Malaysia  Retailers  166  neg  1,314  0.1  3,272  0.3  1,888  0.2  4  Sdn Bhd  5.  Kenweaith Trading  Malaysia  Retailers  83  neg  2,079  0.2  1,821  0.1  1,288  0.2  4  Sdn Bhd  6.  Eng Meng Metal  Malaysia  Retailers  24  neg  339  neg  761  0.1  1,257  0.2  4  Sdn Bhd  7.  Acolia Sdn Bhd  Malaysia  Retailers  83  neg  1,250  0.2  2  8.  Tradego Sdn Bhd  Malaysia  Retailers  1,222  0.1  1  9.  Lifomax  Malaysia  Retailers  225  neg  1,186  0.1  2  Woodbuild Sdn  Bhd  10.  Jurihan Sdn Bhd  Malaysia  Retaiiers  127  neg  1,131  0.1  603  neg  1,172  0.1  4  Total  408  ne9  6,966  0.6  13,929  1.1  20,473  2.5  Note:­ neg Negligible
132
I Company No.: l097507-W I 6. BUSINESS OVERVIEW (Cont’d) 6.11 MAJOR SUPPLIERS Our Group’s major suppliers according to our four (4) business segments are as follows;­Distribution of building materials and logistics
1.  Pemasaran Simen  Malaysia  Distributor  248,302  26.0  189,371  19.1  148,179  12.9  200,562  17.7  157,771  21.0  21  Negara Sdn Bhd  2.  YTL Cement  Malaysia  Distributor  280,113  29.4  268,963  27.2  316,304  27.5  185,739  16.4  154,145  20.5  11  Marketing Sdn  Bhd  3.  Hume Cement Sdn  Malaysia  Manufacturer  8,003  0.8  88,874  7.7  139,792  12.4  94,606  12.6  3  Bhd  4.  Amstee’ Mills  Malaysia  Distributor  16,211  1.7  49,026  5.0  30,804  2.7  59,555  5.3  50,385  6.7  3  Marketing Sdn  Bhd  5.  Southern Steel  Malaysia  Manufacturer  23,576  2.5  34,773  3.5  41,538  3.6  32,414  2.9  23,235  3.1  6  Berhad  6.  Monier Malaysia  Malaysia  Manufacturer  6,293  0.7  10,285  1.0  12,240  1.1  12,425  1.1  8,214  1.1  6  Sdn Bhd  7.  Hume Cemboard  Malaysia  Distributor  3,561  0.4  5,287  0.5  7,442  0.6  10,128  0.9  6,264  0.8  6  Marketing Sdn  Bhd  8.  Malex Industrial  Malaysia  Manufacturer  3,495  0.4  6,070  0.6  5,370  0.5  5,282  0.5  3,204  0.4  6  Products Sdn Bhd  9.  Hume Roofing  Malaysia  Manufacturer  988  0.1  1,678  0.2  1,928  0.2  2,645  0.2  1,521  0.2  6  Products Sdn Bhd  10.  Kin Kee Marketing  Malaysia  Distributor  12,811  1.3  47,789  4.8  5,842  0.5  6,843  0.6  1,124  0.1  6  Sdn Bhd  Total  595,350  62.4  621,245  62.8  658,52~  57.3  655,385  57.9  500,469  66.7
133
[{:illnpany No.: 1097507-W I 6. BUSINESS OVERVIEW (Cont’d) Distribution of ready-mixed concrete business segment
1.  Negeri Sembilan  Malaysia  Distributor  53,124  4.7  47,399  6.3  2  Cement  Industries Sdn  8hd  2.  CHL Logistics Sdn  Maiaysia  Trading  1,347  0.1  4,201  0.4  6,456  0.9  3  8hd  company  3.  Prosful Trading Sdn  Malaysia  Trading  3,471  0.4  7,015  0.6  5,716  0.5  4,312  0.6  5  8hd  company  4.  Struccon  Malaysia  Trading  3  neg  2,454  0.2  4,562  0.4  1,839  0.2  5  Engineering Sdn  company  8hd  5.  Spring Energy Sdn  Malaysia  Quarry  3,352  0.3  2,220  0.2  1,622  0.2  3  8hd  6.  Kenwealth Trading  Malaysia  Trading  3,962  0.4  2,911  0.3  3,948  0.3  1,485  0.2  4  Sdn 8hd  company  7.  Sin Huat Hin  Malaysia  Trading  3  neg  554  neg  820  0.1  1,401  0.2  5  Logistics Sdn 8hd  company  8.  Kajang Rock Quarry  Malaysia  Quarry  1,635  0.2  2,121  0.2  2,924  0.3  1,361  0.2  5  Sdn 8hd  9.  Impress Logistics  Malaysia  Trading  2,426  0.3  601  0.1  – 996  0.1  1,338  0.2  5  Sdn 8hd  company  10.  Nanyang Enterprise  Malaysia  Trading  4,443  0.5  3,812  0.4  3,587  0.3  3,596  0.3  1,333  0.2  6  Sdn 8hd  company  Total  8,504  0.9  11,852  1.2  23,341  2.0  82,107  7.3  68,546  9.1
Note:­neg Negligible 134 I Company No.: 1097507-W I 6. BUSINESS OVERVIEW (Cont’d) Manufacturing of AAC products and precast concrete products business segment
1.  Negeri Sembilan Cement  Malaysia  Distributor  4,963  0.4  7,159  1.0  2  Industries Sdn Bhd  2.  LTP Engineering Sdn Bhd  Malaysia  Manufacturer  26  neg  546  neg  3,151  0.3  2,546  0.3  4  3.  NSL Chemicals (M) Sdn  Malaysia  Manufacturer  4  neg  1,838  0.2  2,052  0.3  4  Bhd  4.  EMIX Industry Sdn Bhd  Malaysia  Manufacturer  1,074  0.1  1,576  0.2  2  5.  AMS Maju Gemilang Sdn  Malaysia  Trading  120  neg  1,571  0.2  1  Bhd  company  6.  Schlenk Metallic Pigments  Germany  Manufacturer  1,843  0.2  1,482  0.2  2  GmbH  7.  Chin Hin Gypsum Sdn Bhd  Malaysia  Trading  1,040  0.1  1,001  0.1  2  company  8.  Sen Heng Trading  Maiaysia  Trading  8  neg  176  neg  668  0.1  3  company  9.  Sun way Quarry Industries  Malaysia  Quarry  71  neg  50  neg  579  0.1  3  Sdn Bhd  10.  Teik Joo Chan Sdn Bhd  Malaysia  Trading  518  neg  283  neg  2  company  Total  30  neg  625  0.1  14,773  1.3  18,917  2.5  Note:­ neg Negligible
13S
I Company No,: 1097507-W I 6. BUSINESS OVERVIEW (Cont’d) Manufacturing of wire mesh and metal roofing systems business segment
1.  Brother Steel Limited  Hong Kong  Trading  887  0,1  25,535  3.4  2  company  2,  FIW Steel Sdn Bhd  Malaysia  Manufacturer  4,35S  0.4  2,539  0.2  5,011  0.4  11,967  1.6  4  3.  Yuan Resources pte Ltd  Singapore  Trading  4,567  0,5  20,589  1.8  38,393  3.4  10,856  1.4  4  company  4,  NS Bluescope Malaysia  Malaysia  Manufacturer  1,385  0,1  3,400  0.3  5,556  0,5  7,186  1.0  4  Sdn Bhd  5,  Southern Steel Berhad  Malaysia  Manufacturer  13,997  1.2  3,388  0.3  7,146  La  3  6,  Smart TimingSteel  Hong Kong  Trading  6,845  0.9  1  Limited  company  7,  Amsteel Mills Marketing  Malaysia  Distributor  20,354  2,1  128,625  11.2  22,179  2,0  3,150  0.4  4  Sdn Bhd  8,  Stemcor (S,E.A) pte Ltd  Singapore  Trading  1,713  0.1  4,482  0.4  1,958  0.3  3  company  9,  NS Steel & Metal Sdn Bhd  Malaysia  Manufacturer  760  0,1  3,5S0  0.3  806  0,1  862  0.1  4  10.  NJ Ferrum Sdn Bhd  Malaysia  Manufacturer  698  0,1  728  0.1  2  Total  31,421  3.2  174,413  15.2  81,400  7.2  76,233  10.2
All our purchases with our suppliers are on purchase order basis and we do not enter into any purchase contracts with our suppliers. Prior to 2012, our top two (2) suppliers of cement are YTL Cement Marketing Sdn Bhd and Pemasaran Simen Negara Sdn Bhd which accounted for approximately 55.4% of our total cost of sales for the FYE 2011. As such we were dependent on these two (2) suppliers for our cement. However, we have taken steps to reduce this dependency from FYE 2012 onwards by also sourcing our cement from Hume Cement Sdn Bhd. Our Group usually make purchases from our approved list of local suppliers with whom we had long-term business relationships leveraging on their consistency and reliability in the supply of various types of building materials. We recognise the importance of not only relying on anyone supplier and will continue to maintain our policy of having multiple sources to diversify our supplier base. Other than our cement suppliers, we are not dependent on any other major suppliers for our other products and raw materials. 136 I Company No.: 1097507-W I 6. BUSINESS OVERVIEW (Cont’d) 6.12 TYPES, SOURCES AND AVAILABILITY OF RAW MATERIALS The major types of raw materials for our manufacturing of MC and precast concrete products are cement, sand, aggregate, steel reinforcement which are all sourced locally and are widely available. The prices of these raw materials have been generally stable for the financial years/periods under review. Meanwhile, the major types of raw material for our manufacturing of wire mesh and metal roofing systems are wire rods and steei coils. While the steel coils are sourced locally entirely, the wire rods are partially sourced from overseas suppliers i.e. China. Both raw materials are widely available. For the financial years/periods under review the prices of these raw materials have not been volatile with price fluctuations not exceeding 10.0%. Our distribution business (i.e. distribution of building materials and logistics and distribution of ready-mixed concrete) do not purchase raw materials as it is involved in the trading and distribution of finished goods. The table below shows the major types of raw materials purchased by our Group for our manufacturing segments (ie manufacturing of AAC and precast products and manufacturing of wire mesh and metal roofing) for the financial years / periods under review:­
Activities ‘M:t~~~::e:ateriaIS . ~~;~:: 2011 %. .R~C::,,~012 0/0  FYB2013 RM’OOO’, %  FYE 2014 RM’OOO %  FPE 2015 RM’OOO %
Manufacturing of AAC and precast  concrete product  -AAC product Sand, cement,  20,456 50.1  16,518 33.8  gypsum, lime and  aluminium powder  -precast concrete Cement, sand, coarse 358 52.8  5,227 54.3  6,904 16.8  7,311 14.9  aggregates and steel  reinforcement bar  Manufacturing of wire mesh and metal  roofing systems  -Wire mesh Wire rods 6,086 69.1  49,908 69.2  73,935 68.3  63,235 71.8  -Metal roofing Metal coils 545 6.2  13,763 19.1  21,969 20.3  13,954 15.8
137 IICompany No.: l097507-W 6. BUSINESS OVERVIEW (Cont’dJ 6.13 OUTLOOK OF THE BUILDING MATERIALS MARKET IN MALAYSIA The analysis of the building materials market in Malaysia including the market dynamism, competitive analysis, barriers to entry and outlook is set out in Section 7 of this Prospectus. 6.14 COMPETITIVE STRENGTHS 6.14.1 Integrated building materials provider One of the competitive strengths of our Group lies in the integrated nature of our businesses as we manufacture, distribute and deliver a wide range of building materials for the bUilding industry. We are an integrated building materials provider with the ability to supply a comprehensive range of building materials. Building materials manufactured by us include MC and precast concrete products, as well as wire mesh and metal roofing systems. As for our distribution business, we rely on external manufacturers supplying the entire range of products needed by our customers. All our products are distributed throughout our distribution channel located in various locations in Peninsular Malaysia and to various categories of customers. The diagram below shows the distribution of our products from our respective subsidiaries to the different categories of customers. ChinHinPPChinHin StarkenAAC MetexSteeLConcrete
Together with our in-house manufactured products and other products which we source from third-party suppliers, we are now able to supply the majority of products required by the bUilding industry, servicing our customers the majority of whom are retailers, contractors, industrial users and developers. Distribution activities of our products are supported by our strategically located warehouses and/or offices throughout Peninsular Malaysia to service and cater to the needs of our customers. I 6. BUSINESS OVERVIEW ( Cont’dJ Our logistics services business segment is involved in transporting bulk and bag cement for local cement manufacturers (e.g. YTL Cement Bhd and Permasaran Simen Negara Sdn Bhd) to their customers throughout the country. Bulk cement is transported by specialised cement tankers that are owned and operated by external parties, whereas bag cement is transported by normal road trucks which are also owned and operated by external parties. 6.14.2 Nationwide offices and warehouses Our Group has ten (10) branch offices located in cities and major towns of every state in Peninsular Malaysia except Perlis. In addition, we have five (5) warehouses located in Kuala Lumpur, Terengganu, Kelantan, Kedah and Pahang. This network of branches brings us close to our customers -allowing us to supply and service them efficiently. This wide network has also enabled us to build up a 4,000 strong customer base, half of which are active. Our strategically located and well-stocked warehouses are also equipped with our own fleet of lorries, enabling us to serve our customers quickly. These warehouses can also break up large consignments of goods delivered by the factories into smaller loads which are then sold to those customers that need them in smaller quantities. The location of our branches are set out below, please refer to Section 6.5 of this Prospectus for the location of our warehouses.
1. Kuala Lumpur No A-1-9, Pusat Perdagangan Kuchai No 2, Jalan 1/127 Off Jalan Kuchai Lama 58200 Kuala Lumpur
2. Johor Bahru Sutera Utama Biz Centre No 90A, Jalan Sutera Tanjung 8/4 Taman Sutera Utama, 81300 Skudai, Johor Bahru Johor
3. Muar No 16, 1st Floor Jalan Perdana 12 Taman Junid Perdana 84000 Muar Johor
4. Melaka No 88-1, Jalan PPM4 Plaza Pandan Malim Business Park Balai Panjang 75250 Melaka
5. Pulau Pinang No 468, Jalan Raja Uda Pusat Perniagaan Raja Uda 12300 Butterworth Pulau Pinang

J 6. BUSINESS OVERVIEW (Cont’d)
6.  Ipoh  7.  Kuantan  8.  Kota Bharu  9.  Kuala  Terengganu  10.  Alor Setar
GA-C-lOC 3rd Floor, No. 10C Persiaran Greentown 4 Greentown Business Centre 30450 Ipoh Perak A-249, 2nd Floor Jalan Air Putih 25300 Kuantan Pahang Lot PT 1493, Kawasan Perniagaan Pengkalan Chepa 11, 5eksyen 44 Mukim Panchor, Daerah Kemumin 16100 Kota Bharu Kelantan Lot 2975, Kawasan Perindustrian Cendering 21080 Kuala Terengganu Terengganu 400 & 401, Jalan Perusahaan 5 Taman Bandar Baru Mergong Lebuhraya Sultanah Bahiyah 051S0 Alor Setar Kedah 6.14.3 Established market reputation and broad customer base Over the past twenty (20) years since its inception, our Group has established a reputation as a major distributor of building materials in Malaysia. This is evident as our customer base is 4,000 strong with 2,300 active customers. Active customers refer to customers who make regular purchases from us. This market reputation and large customer base has resulted in better purchasing terms from our suppliers compared to smaller players and has together with iong established track record enabled us to benefit from business referrals from our satisfied customers. 6.14.4 Strong and experienced management Our Group’s past success and future growth have been and will continue to be influenced by the leadership of our team of experienced directors and key management. Our founder and Deputy Group Executive Chairman, Datuk Chiau Beng Teik has forty (40) years of accumulated experience in the buiiding materials industry. He plays an instrumental role in steering our Group’s growth strategies and business directions and amongst his contributions was the rapid expansion of our Group’s business from a single outlet in Alor Setar to multiple branches throughout Peninsular Malaysia. I Company No.: 1097507-W I 6. BUSINESS OVERVIEW (Cont’d) Our Group has also benefited from the combined leadership and experience of our senior management such as Chiau Haw Choon (Group Managing Director) and Lee Hai Peng (Executive Director cum Chief Financial Officer) supported by the respective business unit heads namely Lok Boon Cheng (Metex Steel), Ng Wai Luen (Starken MC and G-Cast Concrete), Tan Cheak Joo (PP Chin Hin) and Tan Ming Hong (Chin Hin Concrete) who bring with them their experience and also network of business contacts built throughout their years in the industry. Our heads of business units are in turn supported by experienced managers and other technical personnel to ensure the smooth running of their respective operations. 6.14.5 Production efficiency and quality products Since the beginning of our venture into the manufacturing business, our management has adopted a strategy to produce quality products in an efficient manner. With this our management committed itself by selecting only technically advanced plants and equipment for our AAC products and wire mesh factories. This is most evident in Starken Me’s plant, which uses one of the latest machineries and technologies supplied by Wehrhahn GmbH of Germany, which was chosen specifically for its efficient and highly automated production capabilities which require far less labour input. Metex Steel on the other hand invested in EVG wire mesh machineries and equipment from Austria. EVG wire mesh machineries are fully automated and flexible, using latest technologies which mitigate potential hazards on the work floor without sacrificing efficiencies and quality end products. 6.15 FUTURE PLANS 6.15.1 Penetration into foreign markets and widening of customer base Our management intends to expand our foreign markets especially those in the Asia Pacific regions. The management of our Group believes that the Asia Pacific markets present vast potential for our own products such as wire mesh and MC products. Both products are ideally suited to developed countries where labour-saving materials are used extensively. This strategy to export our products overseas is expected to broaden our customer base geographically as well as ensure business sustainability by reducing our dependence on the local market. This will involve marketing and promotion of our in-house products overseas and we have allocated a total of RM2.08 million from our IPO proceeds for such marketing, promotion and branding activities. Any short fall will be funded via our internally generated funds. As at LPD, Starken MC has secured repeated purchase orders for its MC products from interested customers in Taiwan, Australia, Hong Kong, Singapore, Philippines and Indonesia. 6. BUSINESS OVERVIEW (Cont’d) 6.15.2 Expansion of G-Cast Concrete’s new manufacturing plant and Starken AAC’s production facilities As part of our efforts to grow the manufacturing segment of our business, we intend to expand G-Cast Concrete’s current manufacturing facility. The expansion will increase the number of spinning and caging machines used in production as well as the addition of a new concrete batching plant to supplement the existing one at the factory. With the expansion, it is expected that G-Cast’s production capacity will increase from 45,000 mt per annum to 67,500 mt per annum. Upon completion, the manufacturing floor space shali be expanded from 2,160 m’ to 3,660 m’. With the increase in production capacity, we will be able to cater to the anticipated increase in sales and order book of bUilding materials by our customers. Expansion has commenced in January 2016 and is estimated to complete by December 2016. In addition, we also plan to increase 5tarken AAe’s production capacity from the current 375,000 m’to 600,000 m’ of AAC products annually. For this purpose, our Group intends to utilise RM10.0 million from the IPQ proceeds to purchase additional plant, equipment and machineries, such as chiller, slurry tank, cement silo, autoclave, cutting machines as well as additional moulds. The expansion is expected to begin in the first half of 2016 and expected to be completed by end of 2016. With the increase in Starken Me’s production capacity, we will be able to cater to the anticipated increase in sales and order book of MC products by our customers. Starken MC currently has also secured order book with purchase orders amounting to approximately RM32.55 million which needs to be fuifilled within 2016. The orders comprise mainly MC products which will be used in the construction of condominiums, low-rise residential homes, high-rise commercial buildings as well as shopping complexes. The expansion of G-Cast’s Concrete’s manufacturing plant and Starken Me’s production facilities will be financed with proceeds from the IPQ. Further details on the expansion of G­Cast Concrete’s manufacturing plant and Starken Me’s production facilities as well as the breakdown the estimated costs are available in Section 3.10 of this Prospectus. 6.15.3 Widening and expansion of product range Qur Group plans to widen our range of products, especially our Group’s in-house manufactured products. We plan to expand our present range of wire mesh with a focus on fencing systems and engineering mesh such as twin wire mesh, staggered mesh and curtailment mesh. Similarly we aim to develop more AAC products which will include slabs as well as other precast structural elements such as walls, beams and columns/staircases. G-Cast Concrete, on the other hand, will focus on the industrialised building system precast products and jacking pipe with cast-in anti-slide steel collar that prevents sliding and increased rigidity. Chin Hin Concrete is also exploring the possibilities of using alternative types of raw materials and development of mix designs to suit different needs of our customers. We are unable to determine the total costs involved for these product developments as product development and enhancement are ongoing processes for our Group. Such product development and enhancement costs are funded through internally generated funds and/or bank borrOWings. Please refer to Section 6.8 of this Prospectus for further details on our Group’s product development and enhancement activities. 6. BUSINESS OVERVIEW (Cont’d) 6.16 PROSPECTS OF OUR GROUP Our Group’s prospect remains positive, in tandem with the construction industry. According to the IMR report, the construction industry grew by 11.8% to RM43.2 billion in 2014 from RM38.7 billion in 2013. In 2015, the construction industry in Malaysia is estimated to expand by 8.8%. The outlook for building materials industry in tandem with the construction industry remains positive for the immediate term, and steady growth is projected throughout the period of 2014 to 2019. According to the IMR report, the construction industry in Malaysia was valued at RM43.2 billion in 2014. In 2015, the construction industry is estimated to grow by 8.8% to RM47.0 billion. Moving forward, the construction industry is expected to continue growing and is estimated to reach RM64.9 billion in 2019 -representing a CAGR of 8.5% from the period of 2014 to 2019. The forecast expansion in the construction industry will underpin growth in demand for building materials and this augurs well for the overall development of the building materials industry. Factors priming growth in the bUilding materials industry in tandem with the expansion seen for construction industry are likely to come from the government-led initiatives and spending, a growing economy to sustain spending and investment in properties, and steady population growth. (Source: IMR Report) Following the awareness promoted after the initiatives by Greenbuildingindex Sdn Bhd and incentives for Green Building Index certified projects for the 2009 to 2014 period, the construction industry may anticipate greater adoption of green building practices moving forward. The proliferation in green bUilding design and construction along with the expected rise in usage of green building materials are expected to drive the building materials industry. Moving forward, we have in place a series of business plans that are focused in expanding our presence and market share both in the domestic and regional markets, expanding our range of building material products range that can be offered to our customers as well as expanding G-Cast Concrete’s new manufacturing plant and Starken AAC’s production facilities. These future plans will help us to sustain our business and prOVide growth opportunities for our Group. Our future plans set out in Section 6.15 above are expected to be implemented within two (2) years from the date of our Listing. [The rest of this page is intentionally left blank]

 

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