GEORGE TOWN: Chin Well Holdings Bhd
expects the growing global do-it-yourself (DIY) fastener market to mitigate the impact of the global economic slowdown on the group’s performance for the financial year 2024 (FY24).
Executive director Tsai Chia-ling told StarBiz that the DIY segment generated 33.75% of the group’s fourth-quarter FY23 revenue, up from 28.6% in 2022.
“The existing DIY segment in Vietnam will contribute positively to the group’s performance by increasing its distribution network in both the United States and European markets.
“The group has also seen signs of improving demand for its DIY products, and expects this to strengthen further towards the first half of the next financial year.
“We are talking to DIY customers from Europe and the United States, who are looking to switch suppliers due to the increasing tension between China and the United States over Taiwan.
“The DIY orders from the United States also remained stable,” Tsai noted.
She said the recovery and growth in the construction industry, urbanisation, and machinery and equipment manufacturing sectors offer lucrative growth opportunities for DIY fasteners and hand tools market players.
“The growth is more obvious in the developing countries which empower the DIY culture and helps the market growth rapidly,” Tsai said.
According to a Mordor Intelligence report, the global DIY market growth was in tandem with the worldwide hand tool market, which is expected to reach a US$30bil market size from US$22.2bil in 2019.
Currently, the group’s DIY segment generates about 25% of the group’s annual turnover.
According to Tsai, the European market for the group is expected to be soft due to the ongoing Ukraine-Russia war.
“The demand from Europe, our primary market, is slow.
“In 2023, Europe contributed 32% of our revenue compared with about 43% to 50% previously.
“We expect the contribution from Europe to remain flat in 2024,” she said.
The global demand for industrial fasteners, expected to grow at a 4.97% compounded annual growth rate from 2023 to 2032, will reach US$153bil by 2032 from US$94.2bil in 2022, said the Precedence Research report.
The Asia-Pacific region dominated the market and contributed over 44% of revenue share in 2022.
“The North American region generated over 25% of revenue share in 2022,” the report added.
According to Tsai, the group expects the major construction projects in Malaysia to restart after the state elections, resulting in deliveries to customers in the related industry.
“In addition to the existing core business, from time to time, the group will explore other new business ventures to drive the group’s growth.
“The contribution from Malaysia to the group’s revenue is expected to increase in FY24 from 33% in FY23 ended June,” she said.
According to Tsai, the wire products such as welded fencing, gabion and poultry mesh are expected to enhance the division’s result in the long term with its high value-added margin in FY24.
Tsai said the group has allocated a capital expenditure (capex) of between RM10mil and RM15mil in FY24 to upgrade its manufacturing process.
“A similar capex will be allocated for the next financial year to continue updating our manufacturing process and reduce carbon emissions.
“The upgrading exercise enables us to comply with the carbon border adjustment mechanism (CBAM) tariff policy.
“If we comply with CBAM, we pay a lower CBAM tariff, thus enabling us to compete more effectively in Europe,” she added.
Tsai said the group’s average selling price of industrial fasteners had also dropped by about 13% in 2023 compared with 2022.
