Hot Stock Tek Seng shares up 14.3% after returning to profit in 4QFY15

by **Cals** Wed 17 Feb 2016, 01:27

Hot Stock

[size=28]Tek Seng shares up 14.3% after returning to profit in 4QFY15

By Meena Lakshana / theedgemarkets.com | February 16, 2016 : 11:24 AM MYT

KUALA LUMPUR (Feb 16): Shares of Penang-based PVC product and solar cell manufacturer Tek Seng Holdings Bhd rose as high as 14.29% after the company reported a return to profit in the fourth quarter ended Dec 31, 2015 (4QFY15) from a net loss a year ago.

The stock gained 16 sen to RM1.28, before paring gains and settling at RM1.21. A total of 2.74 million shares were traded.

The counter has been on the rise since Oct 26, after the company began its conversion of warrants to shares at an issue price of 25 sen per share.

The company's near threefold profit, or 183% increase year-on-year, to RM5.04 million or 2.01 sen per share recorded in 3QFY15 — on higher revenue primarily from the solar segment — further propelled the stock higher.

Yesterday, Tek Seng announced a net profit of RM10.41 million or 4.02 sen per share compared to a net loss of 513,000 or 0.21 sen per share a year ago.

Tek Seng said 4QFY15 revenue also saw a significant rise of 2.5 times to RM122.36 million from RM49 million in the previous corresponding period, with contribution from the solar segment accounting for 67.9%.

The company also said profit before tax for the solar segment in 4QFY15 increased to RM11.5 million, due to higher sales volume.

For the full year of FY15, Tek Seng registered a 76.1% increase in net profit to RM21.27 million or 8.51 sen per share from RM12.08 million or 5.03 sen per share reported a year ago.

Revenue registered a 54.9% increase at RM359.52 million from RM232.11 million in FY14.

Tek Seng said expects its performance for 2016 to remain stable for its PVC business but concedes the business may be affected by the fluctuation in the price of raw materials, as a result of market uncertainty and the weakening ringgit.

The solar division, namely TS Solartech Sdn Bhd, on the other hand, is contributing "significantly" to its revenue and profit, it added.

Tek Seng had announced on Jan 29 this year that it plans to raise up to RM37.08 million through a proposed private placement exercise to third party investors, of which it would allocate RM16.06 million to RM21.08 million for capital expenditure.

Tek Seng executive chairman Loh Kok Beng had reportedly said the group had set aside RM200 million in FY16 to boost its production capacity to capture growth. The funds will be utilised for the installation of four additional new production lines, which would boost its total production capacity to 490 megawatt (MW) from 210MW currently.
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