Every "Seng" has its day

Every "Seng" has its day

One of the most famous saying phrase is "Every dog has its day".  It was reported that this phrase is over 450 years old. The phrase became popularised from one Hamlet by William Shakespeare in the early 1600's. It is also believed that there are various forms of it that originated earlier.

So what it the actual meaning of this quote in our current era? The meaning is quite simple to understand. It means everyone gets a chance eventually or that everyone will eventually be successful during some period in their life.

But over to Bursa Malaysia, Kassim would like to add in a new phrase : Every "Seng" has its day. In case regular readers are going to think that I am going to share more comments about that famous Keck Seng or Hup Seng again, I am sorry to say you are not right in your guesses this time.

Agreeable that there are many "Seng" companies on Bursa Malaysia but there are only a handful of more famous "Seng" companies that usually hog the limelight now and then. You tell me, who hasn't heard of Keck Seng, Hup Seng or Hap Seng? In fact, readers would be tired if I am going to post another blog about Keck Seng or Hup Seng again.

This time, the "Seng" company I am going to mention is a very quite and hardly known company called : Tek Seng Holdings Berhad. I bet many investors don't even know what business Tek Seng is doing at all. Unless of course you are an investor who is prepared to going for long term with the company.

Tek Seng Holdings Berhad

According to a website : http://klse.i3investor.com, Tek Seng is principally engaged in manufacturing and trading of polyvinyl chloride related products and polypropylene (PP) non-woven products and letting of properties. The Company's main business activities are three areas: manufacture of PVC sheeting and PP non-woven; trading of PP non-woven, and trading of PVC leather. Other business segment includes trading of plastic products and materials. Its range of products include packing film, pattern printed plastic sheet, table cloth, shower curtain, raincoats, inflatable toys, advertising banners and others.

Tek Seng also produces PVC leather product that go into fabrication of bags, diary, shoes and car seats, among others. It distributes its products in Malaysia, Indonesia, Myanmar, Republic of South Africa, Singapore, Yemen and other countries.

Tek Seng has a track record of more than 30 years in the plastics industry. Currently the second generation including three siblings are in the management team. Loh Kok Beng, the eldest son took over the management of the business from his late father Loh Phah Seng @ Loh Boon Teik (the original founder) from 1989.

I do not know if any there are any other listed companies on Bursa Malaysia that are involved in this PVC products, but surely the demand for such products must be there in the market going by the usual profits Tek Seng is making. Other than only a reported loss of 0.04 sen for its 4th Qtr 2014, Tek Seng has been making profits every quarter since the 3rd Qtr 2006 (According to malaysiastock.biz website).

If you calculate the quarter from 3rd Qtr 2006 to 1st Qtr 2014, there are a total 31 quarters and Tek Seng has managed to record 30 quarterly profits! That is quite a remarkable achievement for any listed company.

Granted. Its profits is an average of 3 to 4 sen plus per year only, but Tek Seng has that ability to consistency maintain that profits through difficult times and major crisis that happen sometimes now and then.

After a bonus issue of 1 for 4 implemented in 2006, Tek Seng's share price traded below 40 sen most of the times, occasionally below 30 sen and even below 20 sen during the 2009 world financial meltdown.

Yet if you had invested in Tek Seng after the implementation of the bonus issue in 2006 and bought the share at around 40 sen, you would have received a total of 17 sen dividends since 2007. Yes, Tek Seng has been paying regular dividends since Financial Year 2004. (There was no dividend for Financial Year 2013, the first time since Financial Year 2004).

Yet despite these continuous profits, the management did not rest on their laurels. Tek Seng decided to venture into the solar business. In 2001, Tek Seng's 86.1% subsidiary, TS Solartech Sdn Bhd was formed and deals in solar cells, solar panels, solar modules and solar related products.

The solar business has yet to record any profits as it requires several years for digestion period for it to become viable. But Tek Seng's other divisions such as its PVC products remains stable due to its versatility, cost effectiveness and an excellent record of use. Other than the domestic market, the consumption from overseas still represents a promising market due to the large population size and growth. Tek Seng is also a leading one-stop PVC products supplier in the region.

Tek Seng is a company that will not qualify in my buying's list criteria due to its borrowings compared to its cash and cash equivalents. In fact, I came to know about Tek Seng through a good friend (selling insurance) who was meeting one of the Tek Seng's siblings about insurance. He asked me to do a research on Tek Seng.

It was from his request that I did some research about Tek Seng. I would have given Tek Seng a solid report card for everything except that the company was carrying some rather borrowings which was (in my opinion) more than the small amount of cash it has. But what stood out was its consistent 3 sen plus dividend for a stock that traded at less than 40 sen at that time.

So my friend asked if he should invest or not following my "report". Although I am usually not comfortable to invest in companies with borrowings, but due to Tek Seng's consistent generous dividends and low price of below 40 sen at that time, I decided to put in some money (for its dividend's sake).

On April 28, 2008, Kassim purchased 15,000 shares of Tek Seng at 39 sen. After the purchase with the rare occasions of the share crossing the 40 sen level, Tek Seng's share mostly traded at below 40 sen and sometimes below 30 sen. Since then, Kassim had received a total gross dividend of 12.5 sen or RM1875.00 (12.5 sen x 15,000 shares). My total purchase (including broker's fees) is RM5,897.76 minus RM1875.00 (Dividends) and my cost is RM4022.00. If I am to sell out at today's closing price of 46.5 sen on Aug 15, my profits would be around RM2900.00 plus (46.5 sen x 15,000 shares is RM6975.00 minus broker's fees and my cost of RM4022.00). In term of percentage, it is a good return of 72% for a holding period of 6 years! 

According to the Hokkien Chinese, the pronunciation word of "Seng" means successful. For Kassim, I couldn't agree more. "Seng" has been very successful for me when it comes to investing. I have taken good profits from my investments in Hup Seng and Keck Seng. If I am to cash out today, I would be still enjoying some good profits as well. It would mean Kassim has been triple "Seng" (successful in Hokkien) in his investments in these three "Seng" companies, i.e. Hup Seng, Keck Seng and Tek Seng!

Kassim is willing to go for the longer term with Tek Seng at the moment.

Any Tek Seng shareholders willing to be with me?

Every "Seng" has its day

Most of the times, Tek Seng's volumes was also very subdued ..... until one day, the famous phrase of "Every dog has its day" sprang to life!

On Aug 11, 2014, Tek Seng opened at 38.5 sen and closed at 48 sen with heavy volume of 15,560,000 shares. Tek Seng closed up 8 sen on that day!

Why the sudden unusually volume that triggered the share price to shoot up by as much as nearly 30 %? Why the sudden massive chase for Tek Seng's shares?

There was no material announcement from the company. Neither was there any expected good news regarding its coming 2nd Qtr results announcement. Or could it be that the solar division is turning around this time into the black? Or is there a possible takeover or merger or perhaps a privatisation exercise?

At the moment, minority shareholders can only wait.

alwayswin111 asked me on Aug 12 this simple question:

"How about you. Are you holding any KSENG?"

Kassim's reply :

Personally no. I sold my 5,000 shares (Before the bonus exercise of 1 for 2) on July 6th 2010 at RM4.96. Had I hold on, my 5,000 shares would be 7,500 shares x the current price of RM6.45 and that will be RM48,375.00 - instead of RM24,800.00 (RM4.96 x 5,000 shares). See, the power of holding on to good shares sometimes is indeed very rewarding.

My spouse still hold 1,500 shares. It was on her behalf and the first 1,000 shares of Keck Seng bought at RM1.65 on Nov 2, 1999.

You can refer my to previous blog dated : Friday, Aug 23, 2013. The title is :  The next “mini Public Bank” company. I Have. Have you?