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Wednesday, August 1, 2018

Chin Well increases industrial fastener production

Monday, 30 Jul 2018
by david tan

BUKIT MERTAJAM: Chin Well Holdings Bhd  is increasing its production capacity to meet worldwide industrial fastener demand which is projected to hit US$116.5bil by 2022, growing at a 5.4% compounded annual growth rate (CAGR).

In particular, Chin Well is raising the output of do-it-yourself (DIY) fasteners, reinforcing bar (known also as rebar) connectors, and wire mesh products, so that they will contribute 30% to 40% of the group’s revenue in four to five years, compared to about 11% currently.

Group executive director Tsai Chia-ling told StarBiz that by that time South Asia, South-East Asia and the US would also become key growing markets.

Tsai said the group was now working on an expansion plan for these products, which are made in Vietnam and Penang.

“Now, the bulk of our construction grade fasteners is sold to Europe, which contributes 40% to 50% of our revenue.

“The rest of the world and Malaysia contribute the remainder.

“However, the construction market is cyclical, while the margin is not attractive compared to the DIY segment.

“The group, therefore, needs new core products and untapped markets to grow,” she added.

According to Zion Market Research report, the global industrial fastener market is projected to reach US$116.5bil in 2022 from US$84.9bil in 2016, increasing at 5.4% CAGR 2017 and 2022.

“The global industrial fastener market is primarily driven by rapidly increasing demand from the end-use industries such as automotive, aerospace, and construction.

“Furthermore, strong recovery in the construction and automotive segments is sustaining growth in developed countries,” the report added.

For the 2019 financial year ending June 30, Chin Well will see its wire mesh products sales increasing due to large orders from the Middle East and South Asia region.

“We want to increase the production of new wire mesh products that could be used in the agriculture and infrastructure sectors,” she said.

The wire mesh products are produced by Chin Herr, a wholly owned subsidiary of Chin Well.

Chin Herr manufactured 30,314 tonnes of wire mesh products for the nine months of the 2018 fiscal year, or 28% of the group’s total output.

“We are seeing the US market, which has stayed stagnant for the past two years, making a comeback for the group’s DIY business in 2019.

“The DIY screws, produced in Vietnam, now comprise about 8% of the group’s business.

“We used to ship between 30 and 50 containers per month to the US market eight years ago.

“Then the market slowed down two years back, while demand from Europe picked up.

“But this year, due to new customers in the US, we are optimistic of improved shipments to the US.

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