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Monday, January 5, 2015

Chin Well: Email Exchange with IR (01/15)

I dropped another email to Chin Well IR to follow up on my earlier enquiries. Below are the details. 

Since the group intend to improve the DIY segment contribution for FY2015 from 11% in FY2014, what kind of target the group is looking to achieve in terms of revenue contribution?
A: Targeting 30% in 3 years

What is the rough PBT margin for DIY segment, normal fasteners and wire rods respectively? 
A: We do not disclose each segment’s margins due to competitive reasons; suffice to say gross margins are about 15-20% across all products.

It's noted that the group's inventory turnover is quite high and almost half of the inventory is finished goods. Is that any reason why the group need to keep such a high level of finished goods in hands? Does it affected the quality (corrosion) or it will become obsolete? 
A: This is mainly to cater to local market demand, where we are able to make next-day deliveries for orders made before 12 noon. Obsolescence and corrosion are no issues.

The group announced to acquire the remaining 40% stake in Chin Well Fasteners (Vietnam) not owned by the group for RM47mils. Is the acquisition going to be completed at Dec 2014?
A: We are awaiting Bursa’s approval for the share issuance portion.

Since one of the terms of the acquisition is to issue 27mils new shares at RM1.45 to shareholders of Asia Angel, is the price going to be adjusted due to the enlarge paid up capital and ordinary shares? 
A: Only EPS would be affected, i.e. adjusted upwards in tandem with higher profits attributable to shareholders.

Based on the sensitivity analysis for foreign currency risk as published in AR2014, a 10% weakening of the
RM against the USD currencies would have decreased PBT by around RM2.1mils. Is my interpretation correct?
A: Yes, but please take note that forex risk in USD will be set off against forex risk in Euro as both have opposite effects.

There are some local furniture players in Malaysia also shifted part of their operation to Vietnam due to lower labour cost. However, it's noted that the labour wages in Vietnam is increasing recently as was reported in their quarter reports and caused their profit margin dropped. Is the group's operation in Vietnam experiencing the same problem? What steps had been taken? 
A: Favourable product mix of DIY products mitigates the labour cost.

I'm believe Tong Herr Resources group is one of your competitors, but their main products are more to stainless steel fasteners. Is Chin Well exhibit any competitive edge over Tong Herr Resources? 

A: We manufacture different types of fasteners that have different applications. Tong Herr produces stainless steel fasteners that are mainly for indoor applications; Chin Well makes carbon steel fasteners for outdoor applications. Therefore our customers don’t mix, and we do not compete against each other.


  1. Hi Yap,

    Since you asked the IR comparison between Chin Well and Tong Herr. May I also ask, what's your thought between the 2 companies? At first glance, Tong Herr seems to have lower P/E and higher DY, but Chin Well with higher profit margin. Thanks ;)

  2. Wah ah boon, 问到酱见外 :)

    Let me gather all the info and write a post of it.

  3. 看到 Chin Well 成立一间子公司:Chin Herr ... 跟Tong Herr 有关联?呵呵 ;)

  4. 应该没有什么关系吧 哈哈
    不过两家公司创办人都是台湾人,都是姓谢 (Tsai)

  5. 关于你问的us forex risk 和, euro forex risk, Chinwell IR 回答,我没什么明白, 可以帮忙解释吗?。。。Chinwell 是出口公司, 主要出口至欧洲, 这应该是和 euro 有关系吧。 和美元有什么关联吗?

    1. 他指的意思是USD跟EURO的走势是相反得。USD-MYR 起,EURO-MYR 跌
      所以会有counter effect

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