(Company No.: 7878-V)

Corporate Update

Presented by: Dato’ Sri Tai Hean Leng, Managing Director / CEO 21 January 2011

IR Adviser AQUILAS . Corporate Profile . Project Brief . Financial Highlights . Investment Merits Listed since 2005… 3

Malaysia Steel Works (KL) Bhd (MASTEEL) Listed Bursa Main Board (on 7 Feb 2005) Sector Industrial Products Stock Codes 5098 (Bursa); MSWK.KL (Reuters); MSW:MK (Bloomberg) Share Capital RM105.4 mil (210.8 mil shares of RM0.50 par) Market Capitalization RM299.3 mil (RM1.42 as at 19 Jan 2011)

MASTEEL Warrants 2010/2015 Warrant Codes MASTEEL-WA No. of Warrants 105.4mil at at 19 Jan 2011 Terms of Warrants Expires 26 October 2015; Exercise price of RM0.67 each Market Capitalization RM86.9 mil (RM0.825 as at 19 Jan 2011) Corporate Information

Corporate Profile Project Brief Financials Investment Merits … Corporate Profile

Pivotal Role in 40 years of Nation’s Growth 40-year track record in steel milling… 5

 Established in 1971, Masteel began operations in Petaling Jaya producing commercial mild steel round bars  Petaling Jaya rolling mill is a fully-continuous mill with reheating furnace; capacity of 350K MT/pa  Group expanded upstream in 1998 with Bukit Raja meltshop, which houses Malaysia’s first electric arc furnace billet plant; capacity of 500K MT/pa

 Today, Masteel is one of the top 5 integrated steel mills in Malaysia

 Masteel’s finished products adhere to SIRIM (MS 146), ISO 9001 and Australia Certification Authority for Reinforcing Steels Ltd (ACRS) standards

 Masteel distributes its products locally (via a wide network of >60 dealers nationwide) and direct exports  Group exports 20%-30% of its products, including to Australia, Singapore, New Zealand, Fiji, Vietnam, Philippines, Thailand and Bangladesh Steel billets Steel bars Corporate Profile

Corporate Profile Project Brief Financials Investment Merits … Integrated operations… 6

. MELTSHOP AT BUKIT RAJA . ROLLING MILL AT PETALING JAYA

ELETRIC CONTINUOUS SCRAP REHEAT ARC CASTING BILLETS ROLLING BAR METAL FURNACE FURNACE MACHINE

DELIVERY DELIVERY

Capacity: 500,000MT pa Capacity: 350,000MT pa

Operations

Corporate Profile Project Brief Financials Investment Merits … Leading player with entrenched capabilities, certifications and 7 reputation…

•Integrated business model allows for better control of input raw material Integrated operations for milling operations and therefore margin containment; improving production efficiency as a result of increased capacity utilization

Ability to produce •Compliance to stringent quality standards opens up markets for Masteel high-quality products locally and abroad

Established •40-year track record in supplying high-quality products enables Masteel track record to retain and expand customer base

Wide dealership •>60 dealers nationwide provide gateway to local construction market; network established relationships with overseas dealers to facilitate export sales

Hands-on •Experienced and prudent management team equipped with industry management know-how Core Competencies

Corporate Profile Project Brief Financials Investment Merits … Project Brief

The Group’s Next Locomotive for Growth Constructing and operating a world class intercity rail transit network 9 in Iskandar Malaysia, with connection to MRT line in Singapore

 Masteel and KUB M’sia Bhd to form a JV company (Metropolitan Commuter Network Sdn Bhd) to supply and operate a world class rail transit network in Iskandar Malaysia and Woodlands, Singapore, spanning approximately 106.5km  JV Company to “Build-Transfer” the rail transit infrastructure  JV Company to “Own-Operate” the intercity train system  Key features of the Project are:  To develop an integrated railway network in Iskandar Malaysia linking: • Nusajaya – • – Bahru Sentral – Woodlands • Airport – Senai Junction • PTP – (freight cargo only)  Commuter train to run at high frequency of 15-minute intervals  To utilize the existing Keretapi Tanah Melayu Berhad’s (“KTMB”) railway track and land reserve, therefore no land acquisition is expected  JV company to work with reputable international consortium with Chinese expertise in system network and supply of trains  Project to cost RM1.35 billion ClickProject to Summaryedit Master title style

Corporate Profile Project Brief Financials Investment Merits … Johor to enjoy long-term socio-economic benefits…infrastructure 10 enabling scalability and multiple linkages for greater impact

Maximisation of Economic Potential . Backbone infra linking major logistic hubs via road, air & marine ports; allows linking with proposed monorail, LRT, & Singapore MRT . Vastly improving speed and capacity of transit population between JB-Singapore . Developing Senai Airport as regional hub with rail Improvement of Traffic connection to main line Job Creation & Employment Conditions . Easing traffic congestion in . Creating job opportunities & improving (est. to grow 4.2% pa till 2025), and reducing standards of living towards attaining road accidents linked with population Socio- high- income target growth, economic development & vehicle Economic ownership Benefits

Reduction of Air Pollution Domestic & International Acclaim

. Providing a viable alternative to efficient . Positioning Johor as a model of excellence and convenient transport; alleviating rising for advanced town planning with integrated vehicle ownership in Johor Enhancement of Tourism public transport system

. Providing efficient and convenient mode of transport in line with proposed wellness township & eco-tourism developments Project Feasibility

Corporate Profile Project Brief Financials Investment Merits … Facilitating population movement in Iskandar Malaysia and JB-S’pore 11 in initial stage…eyeing freight, cargo, and express markets next

No. Description Expected Riders Train Ridership Per Day Per Year 1. Ridership within Iskandar Malaysia 72,000 26,280,000 2. Ridership from JB Sentral to Woodlands, 60,255 21,993,017 Singapore Total Ridership 132,255 48,273,017

 Commuter train will complement the proposed Bus Rapid Transit (BRT) system along -JB Sentral route

 Freight cargo service (approx 40K TEUs pa) plying the Pelabuhan Tanjung Pelepas - Pasir Gudang route and vice versa

ClickProject to Feasibilityedit Master (con’t title) style

Corporate Profile Project Brief Financials Investment Merits … Project entailing construction of Senai Spur track & commuter stations,12 installation of electrical and signal system, & investing in EMU & DMU…

Salient Features of Project 2 Pasir Gudang Line  Route Proposed Schematic Track Layout

To Pasir a) Kulai – JB Mainline 32km Gudang Port No of Stations: 11 b) Pasir Gudang – PTP 65km Pelentong Seri Alam Masai Pasir Gudang Limit of Work 3 Senai Airport Branch Line KM 757.00 Station Halt Halt Terminal Station KM 10.50 KM 16.25 KM 23.0 KM 29.20 No of Stations: 13 2 P/O H/P H/P P/O/F

c) Senai Spur 8km Johor Jaya Senai Freight Halt Yard KM 9.0 F/O H/P No of Stations: 2 Senai Airport Terminal Station KM 7.60 Mount Austin d) JB Sentral – Woodlands 1.5km P/O Halt KM 7.25 No of Stations: 1 ______H/P Trainset Washng Plant Palm Integrated Halt Maintenance Depot Total 106.5km Halt KM 4.50 KM 3.0 H/P H/P Limit of Work KM 757.00 To Tg. Pagar, Workshop & Limit of Work Singapore Trainset Depot  Development 1

From Kuala 1 Maintenance & Operation Centers utilizing Lumpur / Layang- existing KTMB land at Kempas layang Station

Kulai Senai Halt Senai Junction Taman Belati Kempas Baharu Tampoi Larkin Perdana Kebun Teh Danga JB Sentral 1  Systems Station Halt (JB Sentral 2) Station Halt Station Halt Halt Halt Halt Station KM 726.40 KM 730.25 KM 734.25 KM 737.7 KM 742.25 KM 747.320 KM 750.50 KM 753.50 KM 755.75 KM 756.75 KM 757.90  Modern signaling & communication P/F/O H/P H/P P/F/O H/P P/F/O H/P H/P H/P H/P P/O

Impian Emas (CTC, PIS, on-line ticketing) Halt KM 1.0 To Tg.  Catenary Electrical System H/P Pelepas Port Sector Station Halt Depot / Yard Note : 1 3 7 1 (Kempas) Integrate with future MRT / LRT /  Rolling Stock Monorail Station 2 2 5 - P Passenger 3 1 1 1 (Senai Airport) Skudai Sutera Utama Nusa Bestari Nusajaya Tg. Pelepas Limit of Work KM 757.00 F Freight Station Halt Halt Halt Station Station 4 3 4 - O Operation KM 2.605 KM 5.5 KM 9.0 KM 19.0 KM 22.230 KM 29.710  12 modern electric multiple units 4 P/O H/P H/P H/P P/O P/O (EMUs) & diesel multiple units (DMUs) 1 Kulai – Johor Bahru Main Line Total 9 17 2  2 units of freight locomotive 4 PTP Line  Track Works  Single line track for Senai Spur (Senai Airport link) Project Details

Corporate Profile Project Brief Financials Investment Merits … Incorporating user-friendly features… 13

 Train would incorporate:  Wi-fi coverage  Integrated ticketing system with feeder bus  Onboard digital signage system providing information, entertainment & advertisements  Disabled-friendly facilities

ClickSalient to Features edit Master title style

Corporate Profile Project Brief Financials Investment Merits … Price tag of RM1.35billion to be mainly funded by PPP and long term 14 bond…

Estimated Construction & Supply Price RM’mil Rolling Stock & Infrastructure 320 Track Works – Senai Spur Line 180 Ticketing, electrification, Signalling & Kempas Maintenance Yard 850 ______Total 1,350 Project Funding: RM’mil 1. Funding by JV Promoters 70 2. Facilitation Fund by PPP* 1,030 3. Proposed Bond Issuance 250 ______Total 1,350 * PPP – Public Private Partnership Project Costing

Corporate Profile Project Brief Financials Investment Merits … Build-Transfer’ to yield approx RM80mil profit, while ‘Own-Operate’ 15 estimated to contribute RM4.5bil sales over 25 years

Financial Analysis: Build-Transfer Own-Operate

RM’mil 2 years 25 years concession

Construction & System Costs (1,030)

Rolling Stock – DMU & EMU - (320) Depreciation – 25 years Financing 250 8% 2 + 8 yrs Transfer (via PPP) 1,030 Ridership Sales (ave pa) - 166 Incl 10% yearly increment on fares for every 3 years Ridership volume (ave pa) - 45mil Incl 2% yearly increment on ridership

Freight sales (ave pa) 13 Freight volume (ave pa) 64k Lease (over 25 years) (515) For over25 years Profit margin 8% 10% Equity 70 60% Masteel : 40% KUB

Financial Impact

Corporate Profile Project Brief Financials Investment Merits … Financial Highlights

Regaining Momentum Unfazed by FY2009 blip, the Group is regaining momentum… 17

RM’mil Group Revenue 1,000 Quantum leaps in FY2007 and FY2008 from improvements in operational efficiency through new 800 processes & technology upgrades

600

400

200

306.4 362.2 548.0 881.2 687.3 712.8 0 FY2005 FY2006 FY2007 FY2008 FY2009 9m10 ClickRevenue to edit Trend Master title style

Corporate Profile Project Brief Financials Investment Merits … Unabated regional demand reflected in increasing overseas sales… 18 domestic market back on the uptrend

Revenue Segmentation: Geographical Location 100% Overseas 21.1% 21.1% 14.9% 13.1% 18.5% 19.8% 80% Local 60%

40% 78.9% 78.9% 85.1% 86.9% 81.5% 84.0%

20%

0% FY2005 FY2006 FY2007 FY2008 FY2009 9m10

RM ‘mil FY2005 FY2006 FY2007 FY2008 FY2009 9m10

Local 241.8 285.8 466.1 765.7 560.0 577.0

Overseas 64.7 76.4 81.9 115.5 127.3 135.8

Total 306.4 362.2 548.0 881.2 687.3 712.8 ClickRevenue to edit Segmentation: Master title Locationstyle

Corporate Profile Project Brief Financials Investment Merits … Earnings on a strong rebound…but 9m10 affected by RM9.7 mil write- 19 off due to diminished bond value and disposal of shares in associate

EBITDA & Net Profit RM’mil EBITDA Net Profit EBITDA Margin Net Margin Margins (%) 120 20% 14.6% 15.4% 100 13.8% 13.0% 15% 80 10% 6.3% 60 9.0% 7.6% 8.3% 8.1% 3.1% 5% 40 2.7% 0% 20 44.8 23.3 55.8 30.0 75.4 44.3 114.679.3 21.6-1.2% 44.8 19.2 0 -5% -8.1 FY2005 FY2006 FY2007 FY2008 FY2009 9m10 -20 -10%

ClickEBITDA to &edit Net Master Profit titleTrends style

Corporate Profile Project Brief Financials Investment Merits … Balance sheet has room for leveraged expansion…recently-announced 20 10% pte placement to increase shareholders’ funds by ~RM30 mil

Balance Sheet (‘mil) As at 30.9.2010 As at 31.12.2009 Property, Plant & 429.7 422.9 Equipment Current Assets 338.0 317.7 Current Liabilities 238.6 264.9 Non-Current Liabilities 90.5 67.4 Shareholders’ Equity 450.7 417.3

Borrowings (ST+LT) 260.5 264.8 Cash & Cash Equivalents 53.7 43.7 Gearing (net of cash) 0.46x 0.53x

ClickBalance to editSheet Master title style

Corporate Profile Project Brief Financials Investment Merits … Investment Merits

Strong Core Business with Future Catalyst Continued investment in CAPEX to increase production capacity & 22 revenue base…aiming to be the 2nd largest bar producer in Malaysia

Installed 2009 (A) 2010 (A) 2011 (F) 2012 (F) Capacity/ Q3 (Utilization Rate) Billet Plant 450,000 (60%) 500,000 (70%) 550,000 650,000

Rolling Mill 350,000 (65%) 350,000 (75%) 350,000 500,000

. CAPEX of RM50 million in FY10 for Billet Plant expansion . Further CAPEX of RM180 million to increase capacity of both billet plant and rolling mill over FY11 & FY12 . Rolling mill to be the 2nd largest in Malaysia by 2012 (currently 3rd)

ClickExpansion to edit Plan Master title style

Corporate Profile Project Brief Financials Investment Merits On track to record best-ever sales in FY2010…growth momentum to 23 continue in FY2011

Ending 31 Dec (RM‘mil) FY2010e FY2011f Turnover 1,000 1,135 PBT (before write-off) 45 - PBT 32 58 PAT 29 52 EPS (sen) 14 25

ClickEarnings to edit Guidance Master title style

Corporate Profile Project Brief Financials Investment Merits Upside potential from re-rating on core earnings from steel business 24 and growth catalyst from rail transit project…

Core business of steel milling to continue to provide Group’s baseline growth Local steel industry to be New business of Rail Transit to spurred by huge fiscal projects add new dimension to Group’s by the Government revenue model with recurring income

Currently trading at 5.8x FY11 earnings (excluding Strong competitive edge of construction profits from Rail Group’s mill due to more Project) stable inputs of scrap metal and energy (vs peers’ mills Dividend paying since listing in that uses iron ore, gas and 2005; to continue to pay in coking coal) respect of FY10

ClickInvestment to edit Merits Master title style

Corporate Profile Project Brief Financials Investment Merits Thank You http://www.masteel.com.my

IR Contacts: Tommy Sim E: [email protected] T: +603 - 7781 1611 Terence Loo E: [email protected] T: +6012 – 6295 618