DIY fasteners and grill mesh to drive Chin Well’s growth

BUKIT MINYAK: The demand for do-it-yourself (DIY) fasteners and grill mesh is expected to drive Chin Well Holdings Bhd’s growth in 2017.

Group executive director Tsai Chia-ling told StarBiz that the group was now negotiating with a United States customer to conclude a 30-container-per-month deal to supply DIY fasteners for a 10-month period, which was renewable yearly.

“Given today’s selling price of fasteners, the 30 containers is worth about US$500,000.

“The demand for DIY fasteners has increased in the United Kingdom and Europe, as more people are undertaking renovation work for their homes.

“As unemployment has surged due to the Brexit announcement, more people now have the time at home to renovate their properties on their own,” she added.

Meanwhile, there is a plunge in the demand for construction-grade fasteners.

“In Europe, this construction slowdown occurred in the third quarter of 2015, while in Malaysia, since the fourth quarter of 2015.

“Due to this development, we will reduce the output of construction-grade fasteners, which are heavier, and raise the volume of the value-added DIY fasteners, which are lighter fasteners.

“We expect to produce less than 100,000 tonnes of fasteners for the financial year 2017 (FY17) ending next June, which means that the per quarter output of fasteners for FY17 would be less than 25,000 tonnes,” she said.

On its subsidiary Chin Herr’s business, Tsai said the group was now negotiating to conclude a major deal with a US customer to sell grill mesh by Chin Herr.

“The order book for fencing products is filled to the maximum till October 2016.

“Chin Herr’s contribution is expected to be over 30%,” she said.

On the group’s selling price for its fasteners, Tsai said the group would be revising the selling price very soon.

“Due to the shortage of wire-rods, which are an essential ingredient for fasteners, the price of wire-rods has increased by about 10%.

“Customers are expected to buy now to stock up their inventory before the selling price of wire-rods goes up some more,” she said.

For the nine months of FY16 ended March 31, the group posted RM47.6mil in net profit on the back of an RM374.7mil turnover, compared to the RM36.9mil and RM372.8mil achieved in the previous year’s corresponding period.

According to a report from Transparency Market Research on industrial fasteners, the global industrial fasteners market is progressing at a compounded annual growth rate of 5.4% between 2012 and 2018.

The global fastener market valued at US$65.5bil in 2011 is expected to reach US$94.6bil by 2018.

“Asia Pacific accounted for the largest share of revenues of the global industrial fasteners market in the year 2012.

“By 2018, this regional market is expected to have a hold of nearly 45% share of the market owing to rapid industrialisation, and the flourishing construction and automobiles industries in these regions,” the report added.