A relatively healthy Asian economy will play a key role in driving the growth of industrial products companies this year.
Chin Well Holdings Bhd is expecting the Asian market to generate about 30% of the group's revenue this year, compared to about 22% a year ago.
Group director Tsai Chi-yun said in an interview that Europe, which has been the group's traditional strong market, would contribute around 25% to 30% of Chin Well's revenue, compared to 42% in 2012.
“The situation in Europe is still very bad. Germany is the only European nation anticipating a 2% to 3% growth,” she added.
Tsai said the first quarter of 2013, which corresponded to the third quarter of the group's 2013 fiscal year, was expected to be flat compared to last year's corresponding quarter.
“Another market that is improving is the domestic market, which consumes our fasteners for the infrastructure, construction, automotive, household and automotive sectors.
“The domestic market normally contributes about 20% of the group's revenue.
“We are now producing more British Standard Whitworth and Japan Industrial Standard fasteners popularly used in the Asean region and Malaysia,” she revealed.
Chin Well's do-it-yourself (DIY) fastener manufacturing business in Vietnam is also expected to be another important driver of growth for the group.
“The DIY segment, which serves the regional Asean and European markets, would generate about 20% of revenue.
“It is on track to generate about 40% of the group's revenue in 2014,” she said.
The second quarter of 2013 is usually a peak period for the fastener business, but because of the European economic condition, the prospect does not look promising, according to Tsai.
“So, we are expecting only a 2% to 3% improvement in sales over the first quarter of 2013,” she said
The pricing of wire-rod is currently at US$840 (RM2,614) per tonne, compared to about US$700 (RM2,179) per tonne three months ago.
The international market price now ranges between US$1,100 (RM3,410) and US$1,800 (RM5,580) per tonne, depending on the item, grade and quality.
For Chin Well's half-year results for the 2013 fiscal year ended Dec 31, 2012, the group posted a pre-tax profit of RM13.5mil on the back of an RM225.8mil turnover, compared to the RM50.5mil and RM265.4mil achieved in the same period a year ago.
Thong Guan Industrial Bhd managing director Datuk Ang Poon Chuan said the group was looking at its new business for the Asean regional market to boost revenue. “The region would generate about 10% of the group's revenue this year, compared to a single-digit contribution in 2012.
“The products that have been targeted for the Asean economies include our poly-vinyl chloride (PVC) food wraps, filler masterbatch compounds, which are used for making plastic bags, and recycled plastic carrier bags.
“Vietnam would be an important market for our filler masterbatch compounds, while the Middle East, Indonesia and the Philippines are key markets for the PVC food wraps,” he said.
Ang said the group planned to invest RM20mil to expand its stretch film, garbage bags and PVC business. “The stretch film business is picking up and we expect to hit over 110,000 tonnes of industrial packaging products this year,” he said.