Mr. Young Jun Lee


Dear Shareholders

First of all, I would like to take this opportunity to express profound gratitude to all shareholders attending 2017 Annual General Meeting of BJC Heavy Industries PCL.

As far as you concerned, BJCHI gained its gross profit margin above 20% over the past 3-4 years because of good commodity market situation.

However, last year, it was the challenging time for many steel fabricators due to the global economic downturn, the volatility of foreign exchange markets, intensified competitions from Chinese fabricators as well as fluctuation of oil prices. As a result, most of project developers have also reduced the capital budget for their project investment leading to the delay in large-scale project investment across various industries and regions. Nevertheless, the company was successfully awarded new FPSOs module project directly from Petrobras and its partners. In addition to increasing the project opportunities with Petrobras in the future, i strongly believes that executing FPSOs module was extensive experience and this experience will help BJCHI build its strong position in the market especially in large-scale projects.

Even though the difficult period across the industry and the downward trend of profit margin, BJCHI is well positioned in terms of financial status based on the continuous stream of cash flow with on-time payment from clients.  On the other hand, the Company’s strong financial position is evident in debt-to-equity ratio, which has been substantially below 1.00 times. 2016 debt-to-equity ratio was 0.09 times. Therefore, the Company does not need to use long-term loans from financial institutions even though in the difficult time in 2016 we can still pay attractive dividend to shareholders with payout ratio more than 350%.

Currently, there are many business potential opportunities for BJCHI around the world. Due to our excellent quality of products and services, the company is obviously invited from many energy and mining companies to enter into their bidding process.  At present, total bidding value is approximately 580 million USD resulting from many regions and industries.

Regarding 2017 business strategies, Firstly, BJCHI will make the earnest effort in deepening oversea markets as the existing market and the potential market as well as other regions such as Africa, Asia and Middle-East in certain industries composing of power plant, infrastructure investment, mining in addition to oil and gas industry.

Secondly, among the current business environment, BJCHI will continue to implement cost-saving program to compete with other steel fabricators by improving project management in more effective ways.

Thirdly, to diversify markets and client base, the company starts to consider potential business opportunities in local markets particularly in large-scale projects in petrochemical, power plant and infrastructure projects.

Lastly, we will continue prioritizing people development program by providing training program and enhancing employees’ capabilities to make improvement of operating results in the future.

On behalf of the Board of Directors, Executive members, all employees, I would like to take this opportunity to express my appreciation again to our shareholders for the confidence and continuous support to BJCHI. I reiterate that BJCHI shall operate our business with transparency, prudence and under good corporate governance practices to create the best outcome for all shareholders and achieve our future growth in a sustainable way. Thank You.

(Mr. Young Jun Lee)