The group could benefit from potentially securing contracts for the East Coast Rail Link project to supply galvanised fencing, TA Research said.
PETALING JAYA: Chin Well Holdings Bhd
’s sales volume is expected to remain subdued in the near future, primarily due to softer demand for fastener and wire products, according to TA Research.
“We attribute this to the sluggish recovery of the Chinese property sector. Despite the introduction of a one trillion yuan stimulus package aimed at alleviating deflationary pressures, the sector continues to face challenges in the absence of further clarity of the stimulus.
“Nonetheless, the company is anticipating that the headwinds will gradually ease from the second half of 2025 onwards,” the research house noted.
Chin Well is principally involved in the manufacturing and trading of fastening and wire products.
On top of the slowdown in export demand, the brokerage said the company’s wire division is facing intense competition from Chinese players, resulting in lower average selling price for galvanised wire products due to price wars.
Hence, the group is diversifying its wire division downstream to offer value-added services, the research house noted.
This includes the production of galvanised steel wire mesh and high-security fences with special features, which command higher profitability margins.
“While the division’s primary clients are predominantly local and from Saudi Arabia, the group could benefit from potentially securing contracts for the East Coast Rail Link project to supply galvanised fencing. This is supported by its competitive pricing, stemming from effective cost-optimisation measures,” TA Research said.
It is maintaining its “sell” call on the stock with an unchanged target price of RM1.11.
