Chin Well earmarks RM10m for 2014 capex

BUKIT MERTAJAM: Chin Well Holdings Bhd, the largest carbon steel fastener manufacturer in Malaysia, has allocated RM10 million as capital expenditure for the 2014 fiscal year to enhance its fastener production capacity.

Its Managing Director Tsai Yung Chuan said the group expects brighter prospects next year following the economic recovery in Europe and the United States (US).

He said there were indications of the recovery as the Group recorded increased sales orders from Europe in recent months.

"Mindful of the tremendous opportunity in Europe and the US, we intend to invest RM10 million in capital expenditure, of which about RM3 million will be utilised to purchase equipment to increase our production capacity," he told reporters after the company's annual general meeting here today.

He said the group also planned to upgrade the production capacity for fasteners at its manufacturing facilities in Penang and Vietnam.

For the first quarter of its financial year ending June 30, 2014 (FY14), group sales to Europe increased 22.4 per cent to RM59.1 million from RM48.3 million in the same period a year ago, due to higher sales orders from restocking and increased housing starts.

Tsai said Europe has always been the largest market for the Group, constituting 44.7 per cent of group revenue of RM461.9 million in FY13.

"We are ready to ride on the economic turnaround of the Eurozone. To date, we have established an extensive distribution network there, particularly among key distributors which supply fasteners for wide-ranging industries such as housing, automotive and infrastructure sectors, all of which are likely to benefit from improved consumer sentiments.

"With this, we remain optimistic that investors will see Chin Well as the proxy to the Eurozone recovery," he said.

He said the group also planned to expand the production of threaded rods following a five-year anti-dumping duty imposed by the US on steel threaded rod manufacturers in India and Thailand effective August this year.

"We believe the new ruling will help to boost our sales of threaded rods in the US but our main market will still be Europe," he said