Chin Well looks to Malaysia, Europe markets
Resource from: The Star Online Likes:222
Dec 29,2015
GEORGE TOWN: Chin Well Holdings Bhd, one of the world’s largest manufacturers and suppliers of carbon steel fasteners is looking to markets in Malaysia and Europe to drive growth in the next two years.
Group executive director Tsai Chia-ling said that the domestic contribution to the group’s revenue had improved to 31% in the first quarter of the 2016 fiscal year from 22% in the same period a year ago.
“The contribution from Europe is around 55% for the 2016 fiscal first quarter, down from 58% in the corresponding period 2014.
“During this same period, the contribution from Asia, however, has dropped to less than 5% from 13% in 2013,” she said.
Tsai said it was very difficult for Chin Well to expand its presence in Indonesia, South Korea, and Japan.
“For example, Indonesia imports a lot of fasteners from China, which are about 20% cheaper than our products. In South Korea, the construction sector buys from the local manufacturers. Japan sources from various manufacturers worldwide, and would not change its sourcing unless there are quality issues,” she added.
Chin Well had to look to European countries and the domestic market to grow in the next couple of years.
“In Europe the growth markets are still in Germany and Poland, where there are many construction activities initiated by the government.
“In Malaysia, due to the weakened ringgit which makes it expensive to import, more local construction companies are sourcing from us,” she added.
Tsai said due to the slowdown in China, a lot of steel-based product companies in China were dumping their products outside the country.
Chin Well will also look to the do-it-yourself (DIY) market to grow its business in 2016.
Tsai said the sales orders in 2016 from the DIY segment should increase by 30%.
“This is based on the feedback from the DIY customers in the UK and Germany,” she added.
In Vietnam, the group is producing 3,500 tonnes of fasteners monthly compared with 3,800 tonnes due to the global slowdown in the industrial sector.
“We can expect the DIY segment to contribute 20% to the group’s turnover for this 2016 fiscal year ending next June 30.
“The DIY contribution has steadily risen from 10% in 2014 to 15% in 2015,” she said.
On its fencing products, Tsai the orders had slowed down recently, compared with the first quarter of the 2016 fiscal year (July-September) due to fewer construction projections.
“We don’t see the construction sector improving in the first half of 2016,” she added.
Moving ahead, Tsai said the fastener production output for the group in 2016 should hit around 105,000 tonnes, compared with 108,000 tonnes in 2015.
“Although the output will be reduced, the revenue will increase due to the foreign exchange rate,” she said.
According to a report from Market Research Reports Search Engine on the chemicals and materials industry, the global industrial fasteners market is progressing at a compounded annual growth rate of 5.40% between 2012 and 2018.
The market was valued at US$65.5bil in 2011 and is expected to reach US$94.6bil, said the report.
According to the report, the primary driver of the global industrial fasteners market is the increase in demand from the sectors of maintenance, construction, and infrastructure development.
(The Star Online)
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