PETALING JAYA: Chin Well Holdings Bhd’s prospects appear promising, underpinned by strong sales orders for delivery through June 2022 as well as persisting high average selling prices (ASPs).

       The carbon steel fastener manufacturer has started to see additional sales from the European market, following the imposition of anti-dumping duties on certain steel fasteners against China from the European Commission.

       Following a recent meeting with Chin Well’s management, TA Research said that at this juncture, the group was still unable to operate at optimum capacity due to shortage of workers.

       “As such, management is actively looking to recruit new workers to catch up with the delayed orders,” TA Research said.

       Overall, it maintained a “buy” call on Chin Well, with an unchanged target price of RM2.24, based on 12 times forward earnings.

       The target price represented a potential upside of around 37% from its closing price of RM1.63 last Friday.

       “The European Commission has finally imposed anti-dumping duties of between 22.1% and 86.5% on certain steel fasteners imported from China, effective from Feb 17, 2022.

       “Management revealed that the group has started to see additional sales from the European market,” TA Research said.

       “However, the pace is relatively slow due to a slowdown in the business activities in the European region following the spike of daily Covid-19 cases. Therefore, the group may only be able to reap the full benefit of trade diversion in the later part of the year,” it added.

       Based on management’s guidance, the group is currently busy clearing all the delayed orders following the relaxation of movement restrictions.

       “The bulk orders to the United States and Europe are currently fully booked until May 2022, while the do-it-yourself orders to the US are fully booked until June 2022.

       “Despite having solid sales orders, the group is still unable to operate at optimum capacity due to shortage of workers,” TA Research said, adding that Chin Well had applied for additional foreign worker permits for its Malaysian operations.

       On the other hand, it said, Chin Well expected its Vietnam operations to deliver a more robust set of results in the upcoming quarter following the ease of movement restrictions by the Vietnamese government and the workers’ return from the Chinese New Year celebration.

       However, the persisting global logistic disruption might slow down the deliveries.