Chin Well to gain from solid US demand

PETALING JAYA: Manufacturer of carbon steel fasteners Chin Well Holdings Bhd sees an eventual normalisation of earnings, given that the average selling price of its products have already started to soften.

In a report to clients on the company, TA Research, citing the management of Chin Well, also said while the group sees a slowdown in sales orders from the European market, it will be cushioned by solid sales from the US market as the group continues benefiting from trade diversion.

It said although management guided that the earnings are likely to normalise in financial year ending June 30, 2023 (FY23), given that the average selling prices of fastener products have started to soften, the company is confident that it can achieve a high single-digit net margin in the coming financial year.

This is underpinned by its decent outstanding order book and lower wire rod prices.

The group is also expected to benefit from the US trillion-dollar infrastructure bill.

Moving forward, the group would continue focusing on gaining more market share in the United States via a partnership with local retailers and distributors, TA Research pointed out.

Additionally, it said management remained cautiously optimistic as the group would benefit from the imposition of anti-dumping duties on certain steel fasteners against China from the European Commission.

Recall the European Commission had imposed anti-dumping duties of 22.1% and 86.5% on specific steel fasteners imported from China, effective since February this year, it said.