Message from Chief Executive Officer

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2016 was a positive year for Thai Wah Public Company Limited, as it marked the first full year operation as a newly merged entity with both our food and starch operations under one umbrella platform. Since the merger on October 1, 2015 the Company continues its renewed vision to be a regional leader in starch and starch-related products. In 2016 we focused on the main merits of the merger: greater synergies in management expertise, R&D development and financial capital to allow us to build a stronger and more sustainable platform across the region.

Despite volatility of the global macro market in 2016, the Company witnessed strong growth both in terms of revenue sales as well as net income. Demand for tapioca starch and food products continues to be steady, given the secular rise in middle class consumption and demand for consumer staples. The Company’s focus and platform as a branded export and domestic food player is well positioned to grow as we continue to offer differentiated and branded quality products to our customers.

Total sales of the Company across all products in the year under review increased from Baht 5,525 million or 12 percent over the previous year to Baht 6,163 million. This positive result is achieved largely on the back of exceptionally favourable raw material root price for Cassava, strong capacity expansion for our Thai and Vietnam factories and continuous growth of our rice noodle business across Thailand. We continue to build our business in 2016 with a significant improvement in operating margins and cash flow generation.

For our Starch Business the Company managed to record 13% growth mainly due to strong sales in our Vietnam business and consistent performance in our Thai export business. The export price of cassava starch in 2016 declined by 15% mainly due to a slower global macro environment. However the root price declined more which enabled the Company to benefit from exceptionally positive raw material root price. We have successfully set up Thai Wah China as a platform to drive our ‘Rose’ brand directly with key accounts and customers, in particular China, Taiwan, and Southeast Asia; the same time develop and continue to develop higher value-added products such as Glucose, Tapioca Pearl and Coarse Flour in the medium term as a point of differentiation and margin-expansion.

For our Food Business, revenue in the vermicelli business remains flat compared with last year mainly due to relatively slower demand in Q4 with more sluggish domestic sentiment. However our rice noodle business grew 37% and we remain focused on this product category to scale our market leadership. Over the last 12 months the Company has been able to strengthen our direct distribution business, with van sales that can penetrate across 9 branches in Thailand, thus improving our access to food operators and key trade channels. Export growth is still consistently strong with 32% growth with demand for Asian food globally, and we remain focused on continuing to invest and develop our sales and marketing capabilities across Thailand.

The Company remains as committed as ever to our core three-pillar strategy of pursuing Regionalization, Innovation and Operational Excellence. Over the past year in 2016 - we have successfully completed the formation of Thai Wah Vietnam, Thai Wah Cambodia and Thai Wah Bio-Power. With these new platforms we will be able to strengthen our operating model in order to scale regionally, and we are continuing to build on management expertise and deepened know-how to be a regional leader.

Given the strong operating cash flow in 2016 and strengthening of our balance sheet, the Company takes a prudent and strict approach towards investing new capital both for organic growth, capacity expansion and entering new markets. We instil a disciplined view towards all new investments by measuring Returns on Invested Capital: in line with generating strong equity returns for shareholders in the long run. As a result, we continue to retain and grow a strong net cash position, in line with our long term strategy to increase absolute dividend pay-out over the next few years.

Increasingly, technology plays a pivotal role in the way to do business and engage with stakeholders such as farmers, distributors, food operators and consumers. As a brick-and-mortar food and starch business, the Company is ramping up our efforts to embrace technology as a sustainable business enabler across all aspects of our value chain. Some notable examples this year include piloting a new mobile platform to work with our farmers and food operators, and continuing small scale pilot workshops with farmers both in Thailand and the broader ASEAN region.

All-in-all, the Company’s net profit for the period from 1 January to 31 December 2016 based on its consolidated financial statements amounted to Baht 669 million (Baht 0.76/share).

On this note, the Board of Directors has resolved to recommend a dividend payment of THB 0.30 per share in respect of the full financial year ended December 31, 2016 which is subject to shareholders’ approval at the Company’s Annual General Meeting on 20 April 2017.

We would like to take this opportunity to express our deep appreciation to our fellow Directors for their invaluable counsel and guidance which has greatly contributed to the success of the Company in 2016. We would also thank all our associates for their diligence and dedication, and our shareholders, customers and business partners for their continuing support.

As we celebrate our 70th Anniversary this year, we thank all pioneers, stewards and members of the Thai Wah family who have made this Company possible.

It is in dedication to their spirit and contributions that we strive to build this special company for the long term, with Pride, Integrity and Consistency.

Mr. Ho Ren Hua
Chief Executive Officer