Selling all Tek Seng Shares and warrants

Selling all Tek Seng

Shares and warrants

Has the curtain finally come down on solar power business? According to world report as I googled to find out, there seemed to be extremely aggressive price falls that are partially driven by unique situations - a Chinese solar panel production glut and historically low costs of money.

Another factor is new technology that on how to further reduce the cost of solar cells and other components, as well as operation and maintenance costs. As such, there is no reason why the cost of solar will ever increase again according to Frank Wouters, the former director of Masar Clean Energy.

Greentech Media also made a quaint seeming prediction that solar costs would fall by 40% by 2020 in September 2015 - but little did they know it might happen before the end of 2016.

Over in Malaysia, public-listed company Tek Seng Holdings Berhad, principally engaged in the manufacturing of solar cells such as multi-crystalline and mono-crystalline solar cells, solar modules and systems, is cutting down on 200 employees - according to an NST online report on September 27, 2016.

The 200 affected employees are considered surplus workers due to redundancy of productivity as stated in a memo purportedly sent out by TS Solartech Sdn Bhd - a subsidiary of Tek Seng. (TS Solartech is a mainland Penang-based crystalline silicon solar cell maker in which Taiwan-based Solartech Energy holds a 42 per cent stake).

At press time, company officials could not be reached for comment.

Now what does this indicate of Tek Seng's solar business? Are the management seeing or even knowing that future demands/orders are somehow being cancelled (although there were several early reports that their orders were full to the end of the year and also the first quarter of next year).

As such and if it true, it is just natural for any businessman in his right mind to cut down on unnecessary production cost as much as possible and quickly as well. And one of the cost cutting measures as usual is always the human factors i.e. the employees employed to man/operate/run the machines.

In this context, the management should be more transparency in their approach by forth coming as soon as possible officially to make a press announcement of its cost cutting measures and also to explain the reasons. After all, the very first person to know of any changes in the company's orders are none other than the top management themselves.

Management must understand that investors appreciate companies that are straight forward forthcoming in their announcement should the business orders see significant changes that might affect its profit/loss account when they make their quarterly result announcement.

So will Tek Seng be announcing a better or poorer result in this 3rd Quarterly result due in November? If you think the results will be better than its previous 2nd Quarterly, then ask yourself why the share price dropped so much on the day the online NST report came out on September 27?

Tek Seng share price dropped 18 sen to RM1.09 and its warrants at 83 sen, also a drop of 18 sen today.

What should investor do?

Yes, if you are an investor of Tek Seng right now, what should you do? NOT  doing or making any decision is also considered making a decision of deciding not to sell. This is the dilemma of investors every time there is a potential changes of business due to whatever reasons.

I am not in a position to advise any Tek Seng investors to sell or hold or buy at this stage. I am only responsible for my own decision of my investment in Tek Seng. (Regular readers would know that I invested 10,000 Tek Seng shares at 39 sen on April 28, 2008 and was rewarded with 7,500 shares of its warrant as well years back).

In view of this over capacity issues of solar business world wide which might be even be more severe in the coming weeks or months, Tek Seng 's future profits might be affected, yours truly has decided to sell all Tek Seng shares and warrants, too.

Selling all my 10,000 shares

of Tek Seng at RM1.13

and 7,500 shares of warrants

at 88 sen on September 27, 2016.

Yes, all were sold on that very day the online NST report came out. I have decided to sell all and not take the risk that the solar business will recover eventually and hence the share price will go higher again.

At the current selling price of its mother shares plus the warrants, it netted me a total sum of RM23,000 which after netting off my original purchase price of RM5,897.00, it gives me a profit of RM17,103.00. Including a rough conservative gross estimation of gross dividend of RM2,500 nets a clear amount of RM19,603.00 of profit or a total return of more than 300% easily.

So dear readers, I have made my stances now. Whether Tek Seng shares will go up or down, I would not be part of it. But for those still holding or still undecided, only you will make a final decision for yourself. Please do not be influenced by my decision to sell. I am not always right. It is just that I would rather take profit now than see it crumbling down should solar business really turns sour for the whole industry and Tek Seng would be seriously affected.

So what is your decision?

The Super Investor Debate

The Super Investor Debate

Along the journey into the investment world, one would have experienced  winnings and losing from time to time. Unless you are one who only  trades once in your lifetime, then either you are a clear cut winner or loser. But of course most of us do not trade once in our lifetime, rather many times over the periods of years.

The question is do you make more money from your profitable trades or lose more money from your losing trades? Only the individual will know this to himself and no one else. After all, not many people are keen to tell or share to others how much they made from investment or the other way round.

Even a spouse might not want to tell his other half of his winnings from stock market because the wife might want to "impose her income tax" on his winnings. Ha ha, I am just joking although this is true for certain couples when it comes to ringgit and sen issue.

This brings me to the question of if you have been winning more than losing, can you consider yourself a Super Investor? What is the definition of a Super Investor? Is there a clear spelt out written statement that one must win this or that amount to be considered a Super Investor?

Clearly, I can't find a clear definition of it although numerous accord of this prestigious title has been given to so many world famous investors such as Warren Buffet (Check names again) being the top on the mind of most of us. We also have our own locals Super Investors too although it remains to be seen whether it was universally accepted by the majority or minority.

Recently too, a blogger posted about the debate of comparing Super Investors to another one and the lists keep going on. In the end, her views were that there should not be comparison to one another at all. I couldn't agree with her more. Everyone of us here is somehow a super investor in her own way one way or another. As long as one continues to make more  money than losing money, one is on the right track to increase his wealth faster than just keeping inside the bank.

But how many of us can make more winning trades than losing trades over the times? And it is not about winning trades. A few of the winning trades must be Big Winners such as rising more than 100% or at least a ringgit and above. Achieving a few Big Winners can make a very big difference to your winnings' margin.

Then also it is not about losing a few trades. The losing trades must also not be a massive one or else it will be very difficult to recover back your winnings ones.

To simplify this, one must make a few Big Winnings trades among those normal winnings trades and must also NOT LOSE at all any BIG losses in those few losing trades. If one can achieve this more often in the stock market, one is going to see his wealth increasing at a faster pace than he can imagine.

One way to monitor this is to record all those buying and selling details and keep them in a record to that one can see clearly whether one has been winning or losing in a big or small way.

By keeping records, it lets you see clearly how much you have been losing or winning and thus let you realised how much progress or (the other way round) you have been faring with your investment in the stock market. This also let you know if you have been more consistently right with your judgement/analysis/strategies you have applied in your approach.

Then you can safely say to yourself if you earn the title of Super Investor or Super Investor when it comes to losing, haha.

Looking for stable high dividend stocks

Stable companies that continue to pay regular good dividends that are on par or even better than banks' average fixed deposit of 4% are companies that will always be in vogue from time to time.

Several articles appeared through online by several bloggers and by print that appeared in The Edge Weekly and Focus Malaysia from time to time always catch the attention of many, especially conservative investors who are looking not so much for growth, but rather a stable consistent flow of dividends credited into their bank account. I have kept several shares of these companies for many years, a few are more than ten years old and it is always a joys when these money are credited in.

In the early days, the joys were through by post when you received them through cheques. I still remembered those days when I gleefully got it and write down my name and account number behind and have it banked in.

For someone like me who should be retiring comes February 2017, but thanks to the Revised Retirement Age to 60, I would be having the option to whether to continue or decide to retire anytime I wish to.

At my age, I am looking for even more such stocks to invest and hopefully to receive dividends more compared if I keep them in the banks. Of course I am also practising asset allocation too, meaning I would not be all my money into stocks, I still need to keep some in banks just in case stock market might go through another world major crisis.

Anyway, I am searching for more such stable stocks to be added into my Basket of Defensive Stocks from time to time. There are plenty, but I am just practising patience to buy them at appropriate time.

Keep in touch.

From zero to hero to zero again

From zero to hero

to zero again

What can I say about Focus Lumber Berhad's share price performance since I started investing it in the beginning last year? It's share price had gone like one round the world and back to its starting point, I think, haha.

My huge paper profit has just vanished into thin air just like that. I think the declining of its share price is as fast as its rising share price too.

For those who went in for short term and have gone out with some profits, I would like to congratulate them for their right or lucky execution to exit. For those who bought higher than the current price or even near its RM3.09 peaks and still holding, I share your disappointment and pain as well.

For those like me who had been sitting on a near 100% paper profit gain and let it disappear off just like that, do not feel sad although not every one will feel the same. Some might still feel very hati sakit for letting off an wonderful opportunity to let go of such a massive paper profit gain.

I wonder if there are some who might feel bad or sorry for following me in this Focus Lumber investment all the way. If you feel so, you have reason to be. I feel bad too because I didn't sell when there is a big profit to take. Some of you might feel to take profit at certain stage, but because I wasn't taking profit yet, some of you might hold off the idea of selling and instead in the same boat as me now.

So what went wrong

for Focus Lumber actually?

Here, I would like to break down into several sections to see a clearer picture of what were the good points (if any depending on individual's perceptions) and the disappointing points.

Revenue

Revenue for Quarter Two 2016 was RM52.74 million which was a slight decrease of just RM0.55 million from the preceding quarter. So we can safely say it is still business as usual which should be alright for its usual business operation. What one should fear is there is a gradual decrease of revenue indicating that business are dwindling down and that is a bad sign which investor should take note of.

Higher Quarterly Profit

Quarter Two 2016 profit of 4.5 sen was 40% higher than its preceding quarter of 3.21 sen. Isn't this an improving result which investor should rejoice if we are able to see our companies reporting a stronger set of result than its preceding quarter?

I would be happy if this sort of 4.5 sen earnings per share is just maintained for many more quarters to come. It would amount to an annualised 18 sen  per share which in my opinion, a dividend of 8 to 10 sen would still be in the comfortable range for Focus Lumber to pay out.

Absence of a Dividend Announcement

I think many investors are disappointed of an absence of an expected interim dividend (which was a five sen dividend last year) that did not happen. This must have put off many dividend loving investors to invest in this stock.

I understand that there are many conservative investors who are dividends lovers just like me. A stock that is able to pay a reasonable regular dividends that amount to nearly 5% or more would normally have a steady base on its share price.

Increased of fund in

Other Investment

Its cash hoard has been reduced to RM 19,614 million as at June 2016 while its Other Investment sees an increase to RM62,510 million. According to its Annual Report 2015, the fund is invested in something called Structured Investment where it will earns 3.08% per annum, plus bonus interest of 2% for the first quarter of the year for Year 1, followed by 0.34% per annum, plus enhanced interest (3M KLIBOR) of 2.7% per annum for the number of days that the daily 3M KLIBOR is fixed at or below a predefined level throughout Year 2-5.

The purpose in this investment is to provide income for investors through investments in fixed deposits with financial institutions and/or money market instruments. The weighted average effective interest rate at Dec 31, 2015 was 3.61%.

As an investor, I think it is alright as long as the management would want to enhance more returns from this hoard of cash, but then there should be a reasonable amount for such investment that is comfortable, certainly not more than 50%.

What if such investment goes awry? Who would suffer the massive loss? In such investment, there is always some new potential risk which might effect it without a warning.

Why not return some of its money to shareholders in the form of special dividends and let individual investor decide what to do with their windfall? Isn't this most individual investor would prefer?

I am 100% sure if management allows minority to vote for special dividend or investment in this structured typed, the majority minorities would vote for the former. But sadly, management decided on their own which must have not gone down well as reflected in its share price having a declination   to RM1.54 as at September 2, 2016.

Management must understand all this money belongs to all shareholders although the majority minorities are not in the power to decide as the minority majorities shareholders are.

Is there anything to learn

from this episode?

Is there anything we can learn from here? How could a much touted rising star suddenly in just a few months is ditched so badly that those who still keep faith in it must be reeling their mistake badly. Is is better to take profit rather than keeping for long term investment?

In this instance, short term investors who profited are mostly likely to argue it is always better to trade short term rather than long term. In this particular case, they were 100% right and I congratulate them for their precise judgement.

For those who are still holding like me, we can only hope that all will turn up well in the end. We never know when if there could be a new catalyst again that will make share price rise again.

By the way, have a wonderful belated Merdeka Day!!!!!!!!