Chin Well’s Shah Alam ware­house to start op­er­a­tions this year

The Star Malaysia - StarBiz - - News - By DAVID TAN david­[email protected]­tar.com.my

BUKIT TENGAH: Chin Well Hold­ings Bhd is di­ver­si­fy­ing into the ware­hous­ing busi­ness as the com­pany makes plans for its new RM12mil au­to­mated ware­house in Shah Alam to start op­er­a­tions this year.

Group ex­ec­u­tive di­rec­tor Tsai Chia-ling told Star­Biz that the ware­house, with a built-up area of 25,479 sq ft and 12,920 stor­age ar­eas, will gen­er­ate long-term re­cur­ring rental in­come for the group.

“The fa­cil­ity, which costs RM12mil to build, pro­vides one-stop ware­hous­ing ser­vices.

“Cus­tomers in the cen­tral re­gion, for ex­am­ple, can use it to store their steel hard­ware prod­ucts.

“If the op­por­tu­nity arises, we could ex­plore set­ting up sim­i­lar ware­hous­ing fa­cil­i­ties in the fu­ture,” she added.

Tsai said with a net cash of RM44.58 mil, the group would ac­quire suit­able busi­ness op­por­tu­ni­ties in the near fu­ture.

Ac­cord­ing to Tsai, the group is work­ing to raise rev­enue from its do-it-your­self (DIY) fas­ten­ers to con­trib­ute 20% to group’s rev­enue in 2020 from the cur­rent 10%.

She added that the on-go­ing China-US trade war pro­vided op­por­tu­ni­ties for the group to ex­pand in the US.

The move by the US to im­pose tar­iff on Chi­nese steel prod­ucts gave Chin Well op­por­tu­ni­ties to fur­ther strengthen its po­si­tion in the US mar­ket.

“Cur­rently, we send 30 con­tain­ers of DIY fas­ten­ers to the US ev­ery month.

“We be­lieve the fig­ure will grad­u­ally in­crease in the 2020 fi­nan­cial year start­ing in July.

“We have also con­tacted po­ten­tial cus­tomers in Ger­many, France, Aus­tralia, and New Zealand for our DIY prod­ucts.

“Specif­i­cally, we are aim­ing for higher sales to ex­ist­ing DIY re­tail­ers in Europe and USA, while also broad­en­ing our cus­tomer base in other re­gions.

“In­ter­nally, we will fo­cus on en­hanc­ing our pro­duc­tion ef­fi­ciency, widen our prod­uct range by de­vel­op­ing more high value added prod­ucts and fur­ther im­prov­ing cost ef­fi­ciency in order to re­main com­pet­i­tive,” she said.

Tsai added that China had started dump­ing its fas­ten­ers in South-East Asia, as a re­sult of the trade war with the US, and this had cre­ated com­pe­ti­tion for Chin Well.

“In In­done­sia, the gov­ern­ment, in order to pro­tect it­self against China-made prod­ucts, is now re­quir­ing its im­porters to get a per­mit be­fore buy­ing im­ported prod­ucts.

“This has af­fected our ex­ports to In­done­sia,” she said.

On its wire divi­sion, Tsai said the up­grad­ing of its gal­vanised wire was in progress and would be com­pleted in the 2019 fi­nan­cial year. “The up­grad­ing aims to en­hance the pro­duc­tion ef­fi­ciency and re­duce the prod­uct cost,” she said.

On Europe, Tsai said the de­mand had slowed down re­cently due to un­cer­tain­ties re­lated to Brexit and the re­cent strikes in France.

“De­spite these chal­lenges, we still ex­pect Europe to con­trib­ute 40% to the group’s rev­enue for the 2019 fi­nan­cial year end­ing June 30, 2019,” she added.

Chin Well’s trade re­ceiv­ables in­creased by 10.72% to RM123.95 mil in 2018 due to higher sales and sell­ing prices of fas­ten­ers and wire prod­ucts. “The out­stand­ing bal­ance as at June 30 2018 is in line with the higher rev­enue of 2018,” she added. Its bank bor­row­ings in­creased by 51.88% to RM73.07 mil in 2018 com­pared to 2017.

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