Chin Well Holdings Bhd sees its US$15mil investment in Vietnam bearing fruit in 2008, said corporate affairs senior manager Richard Yeap.
“The plant, on 49 acres, should commence operations next May with an initial production capacity of 3,000 tonnes per month,” he said during a company briefing in Kuala Lumpur yesterday.
“Over the next three to four years, its production capacity would be increased to 10,000 tonnes per month, making it bigger than our existing plant in Penang, at 8,000 tonnes per month,” he added.
Chin Well could expect “significant” contribution from this new plant three years after venturing into Vietnam, he added.
Yeap said 20% of the plant's output would be sold in Vietnam and the balance exported, mainly to Do-It-Yourself (DIY) markets where the fasteners would be ready-packed to end users.
On the rationale of choosing Vietnam as its first overseas platform, he said the country offered attractive tax incentives, cheaper operation costs and good infrastructure network.
“The offer of tax exemption in the first four years of our operations showing a profit will help tremendously in our return on investment,” Yeap said.
Following its foray into Vietnam, Chin Well is poised to expand its distribution network to other Asean countries like Myanmar, Thailand and Indonesia that are currently net importers of nuts and bolts mainly from China and Taiwan.
For the nine months ended Feb 29, Chin Well's exports to Asean countries surged 192% to RM35.9mil from RM12.3mil in the previous corresponding period.
For the quarter to Feb 29, it registered 125% higher net profit to RM7.7mil on the back of a 66% hike in revenue to RM71.3mil.
Yeap said the average selling prices of fasteners had improved by 15% since last year and Chin Well's 6-month stockpile of steel bought at a lower price also contributed towards the company's profitability.
The company is also investing RM5mil to expand the monthly production of galvanised iron wires in its Penang plant to 4,000 tonnes next month from 2,000 now.
Chin Well products are sold to a well-diversified customer base, such as the infrastructure and construction sector, automobile industry, electrical and electronics industry, and furniture makers. At present, 48% of its products are exported.
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