Sersol shares up 8% as founder steps down

Sersol shares up 8% as founder steps down
Business & Markets 2013
Written by Afiq Isa of theedgemalaysia.com
Tuesday, 03 September 2013 12:22

KUALA LUMPUR: Shares of Sersol Bhd gained 8% yesterday as the company announced the resignation of managing director Tan Fie Ping for personal reasons.

Tan, who is also a substantial shareholder of the company, was replaced by Mohamed Ridzuan Nor Md as the company’s new managing director effective yesterday.

Tan has been managing director of Sersol for the past nine years, since his appointment in September 2004. He is considered a pioneer of the company alongside his brother Tan Fie Jean, a director on Sersol’s board.

Shares in Sersol, one of the top performers in the market this year, have more than tripled in value since July over speculation about a management reshuffle. Based on yesterday’s closing price of 78.5 sen, the stock has recorded a year-to-date gain of 361%.

Some quarters say that the gains were attributed to Sersol’s ongoing restructuring exercise.

As a result of the disposal of non-performing subsidiaries and cessation from the copper business, the industrial chemicals manufacturer posted a net loss of RM4.4 million in 2012 financial year (FY12), an increase from the loss of RM1.55 million in FY11.

Four new members were introduced to Sersol’s board last year, which preceded the review of its operations in order to cut mounting losses. The company had posted a net loss for four out of the past five financial years.

In its annual report, Sersol chairman Seow Thiam Fatt highlighted the lack of improvement in market demand in the electrical and electronics sectors.

“As the industry is affected by a short TECHNOLOGY [] life cycle, we have redirected our focus to opportunities in the domestic market as our long-term strategy.

“Our challenge this year is to achieve a breakthrough in the decorative paint and protective coating sectors. We also aim to etch the Sersol brand name into the property industry,” he added.

In its second quarter (2Q) FY13 results, the company posted a net loss of RM716,000 from a loss of RM385,000 in 2QFY12. According to Sersol, the increased losses were mainly due to additional expenses incurred from the diversification of products in the architectural paints and coatings segments.

The group said it expects the industrial coatings segment to provide the bulk of its revenue in the future.

“Our architectural coatings turnover will continue to increase by adopting several brand name promotions to the private and government sectors,” it said.

While the group expects to grow steadily during the second half of the year, it may take prudent measures to sustain its operations in light of the current macroeconomic uncertainty, Sersol said.

On a day of active trading, the stock peaked at 83 sen before paring down its gains. Yesterday, Sersol closed at 78.5 sen with 21.9 million shares traded.


This article first appeared in The Edge Financial Daily, on September 03, 2013.