Sin Heng Heavy Machinery Limited

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Dear Shareholders,

On behalf of the Board of Directors, we are pleased to present to you the annual report of Sin Heng Heavy Machinery Limited and its subsidiaries (the "Group"), for the financial year ended 31 December 2023 ("FY2023").

Year in Review

In FY2023, the Group has recorded total revenue of S$66.2 million and gross profit of S$18.4 million, presenting a yearon-year increase of 28.4% and 43.6% respectively. Profit for the year was S$8.0 million, an increase of 119.0% as compared to FY2022. The significantly higher profit was due to the increase from both the trading and equipment rental businesses, as well as gain on sale of property, plant and equipment, and higher interest income earned in FY2023.

Despite the challenging construction environment, the improved performance demonstrates the Group's commitment, resilience and adaptability in navigating through such adversities.

For the Malaysian operation, the Group had proactively streamlined the rental business. Accordingly, we have rationalised and recycled our rental assets to be redirected towards the trading business. Additionally, the Group has also disposed one of its properties in Shah Alam Selangor, Malaysia. With the completion of the sale and realisation of the value of the property in December 2023, the Group has improved its liquidity and enhanced its working capital to prepare the Group for future investment opportunities.

On other matters, the Group has installed solar panels on one of the rooftops of the office premise, and the construction of a new workshop facility at 26 Gul Road, Singapore 629346 has been completed, with the temporary occupation permit granted by Building and Construction Authority (BCA) on 7 February 2024. This marks a significant milestone for the Group in conjunction to its extension of a 20-year lease from JTC Corporation.

Outlook

In the most recent media release by BCA dated 15 January 2024, it forecasted that the construction demand in Singapore for 2024 is anticipated to be in the range of S$32 billion to S$38 billion, surpassing the figures recorded in 2023. The public sector is expected to play a significant role, contributing approximately 60 percent to the total construction demand, amounting to a range of S$18 billion to S$21 billion. In FY2024, BCA expected the additional Cross Island MRT Line contracts (Phase 2), infrastructure works for the future Changi Airport Terminal 5 (T5) and Tuas Port developments and other major road enhancement and drainage improvement works will further drive the construction demand. Accordingly, this appears to present a favourable opportunity for the Group to capitalise its strengths in the Singapore operation.

In respect to the business operating environment in Malaysia, the Group remains cautious on its outlook and will be strategically shifting its focus towards to the trading business.

The Group continues to face challenges such as inflationary cost pressure, manpower crunch, foreign exchange volatility, and uncertainties resulting from the increasingly tense geopolitical landscape. In view of these challenges, the Group strives to remain vigilant and committed to closely monitor the market and economic conditions. While the Group intends to grow the business organically, it will continue to explore new business opportunities when presented.

Dividend

In view of the Group's strong performance and better profitability in FY2023, the Board of Directors is pleased to propose a dividend of 5.0 Singapore cents per ordinary share as an appreciation to our supportive shareholders. The proposed dividend comprises a first and final dividend of 1.0 Singapore cents and a special dividend of 4.0 Singapore cents respectively, totalling S$5.5 million, and approximately 68.6% of net profit of the Group for FY2023. The dividend payment is subject to shareholders' approval at the forthcoming Annual General Meeting.

Acknowledgement and Appreciation

On behalf of the Board and Management, we would like to thank all members of the Sin Heng Group for their dedication, perseverance, and fortitude in the past year. Your collective endeavours have been instrumental in Sin Heng's current success, and by persisting in our teamwork, we can achieve even greater accomplishments together.

In closing, we would like to extend our sincere appreciation and gratitude to our valued customers, suppliers, and business associates for their continued support and confidence in us. We remain committed to enhancing and delivering sustainable, positive values to all our stakeholders.