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?