CHINWEL (5007) - Stock Review – CHINWEL (5007) (CHIN WELL HOLDING BERHAD) - 3 - ivkls




Tuesday, 11 September 2018
 
Bursa Malaysia - 5007
Bloomberg - CWH:MK
Yahoo - 5007 .kl
Webpage - http://www.chinwell.com.my/


Company Profile
 
CHINWEL is a Malaysia based company which principle activities are manufacturing and trading of fastening and wire products.
 
1) Business Segment
 
CHINWEL had two business segments which are:
 
1. Fastening Products – 82.14 % of 2017 revenue
2. Wire Products – 17.86 % of 2017 revenue
 
According to the 2017 annual report fastening product has an asset turnover ratio of 0.82 while the wire products has an asset turnover ratio of 0.98. In 2017 CHINWEL has invested RM 8,208,997 in wire products non current assets compare to RM 5,162,576 for fastening products.
 
PROS:
è CHINWEL has invested more non current asset in high asset turnover ratio segment which is wire products.
 
2) Geographical Information
 
According to CHINWEL 2017 annual report, CHINWEL had revenue from four principle region as follows:
 
1. European Countries – 45.97 % of revenue
2. Malaysia – 36.63 % of revenue
3. Other Asean Countries – 9.44 % of revenue
4.  Others – 6.40 % of revenue
5. Vietnam – 1.56 % of revenue
 
According to CHINWEL 2017 annual report, currency profile of trade receivable is as follows:
1. US Dollar – 44.63 %
2. Ringgit Malaysia – 44.52 %
3.  Euro – 10.47 %
4. Vietnam Dong – 0.35 %
5.  Singapore Dollar – 0.03 %
 
PROS:
è CHINWEL trade receivable is dividing into US Dollar and Ringgit Malaysia.
 
Financial Statement



CHINWEL’s inventories had increase from RM 195,429,666 (2016) to RM 227,475,274 (2017), 16.40 % of increase. The inventories increase is mainly due to the increase of raw materials and indirect materials, RM 16,304,390 (23.19%) and RM 15,997,103 (266.96 %) respectively. However the finished good had decrease by RM 15,158,801 (17.06  %).
Of the RM 111,954,999 of trade receivables 28% of the trade receivable outstanding is from 2 customers.
 
CONS:
è Increase of inventories mainly due to increase of price of raw material and indirect materials.
è Decrease of finished good despite increase of inventories.
è 28% of the trade receivables from 2 customers



CHINWEL borrowing had decrease from RM 60,343,648 to RM 48,112,566, 20.27 % decrease in borrowing. RM 30,962,606 of the RM 48,112,566 borrowing for CHINWEL is in US dollar.
 

PROS:
è CHINWEL had 20.27 % decrease in borrowing

CONS:
è 64.35 % of the CHINWEL borrowing is in USD.
 
Financial Ratio
 
Description
2017
2018
Different
Gross Profit Margin
0.18
0.21
- 0.03
Net Profit Margin
0.10
0.12
- 0.02
Interest Coverage Ratio
58.75
61.08
- 2.33
Effective Tax
0.18
0.15
0.03

 
Dividend and Bonus Issued for the past five year
 
CHINWEL had constant dividend for the past five year from 2013 – 2017 with the average dividend of RM 0.0579 with the dividend yield of 3.57 % (base on closing price 7 September 2018 RM 1.62).
 
PROS:
è CHINWEL has dividend yield of 3.57 % which is higher than fix deposit rate of 3.15%
 
 
 
Market Research
 
ZJ RESOURCE (28 August 2018)
 
Price Target : RM 1.90
 
  • The fastener sector had increase in earning due to higher profit margin
  • Malaysia and European countries remain the largest contributors of revenue, making up of 77% of revenue.

 
MALACCA SECURITY SDN BHD (28 August 2018)
 
Price Target : RM 1.85
 
 
  • Weaker margins seen in the wire segment due to sharp increase in raw materials prices and a forex loss.

 
Estimated Price
 
IVKLS Price : RM 1.35
 
Peers
 
1)   SAM
2)    CBIP
3)    RAPID
4)   TONGHER
5)   HCK
6)   DUFU
7)   GLOTEC
8)   UNIMECH
9)      MBL
10) SCH

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