Oil prices, word of warning
Tek Seng.....get the facts
Desa20201956
Publish date: Fri, 19 Feb 2016, 02:50 PM
...TEK SENG
This is almost like a venture capital proposition in its early stage if the Company's plans become successful..........
An optimists will call it Hartalega / Top Glove in the making?
Tek Seng to triple production capacity
images extracted from http://klse.i3investor.
salient points
pros
1. Being a responsible citizen, green energy has interested me for many years, the important thing is not to lose money while doing it.
2. Having two sources of income, the company is more diversified, more stable than single players..I like it like this.
3. if the company triples production by end of the year....all things being equal, we can assume contributions from this division to be 4- 5 times from $11m PAT to...say $45 m per quarter or $ $180 million a year?
of course, this is grossly optimistic, but you get the point.
cons
1. Solar panels are a highly competitive and fast changing industry ...major players such as YingLi, SunPower and Elon Musk's Solar City are not doing well at the moment.
2. Incentives introduced in US by Obama is expiring and we may get a Republican President...then die lo.
3. Incentives in China are also expiring, and may or may not be extended
4. Oil prices dropping from > $100 to < $30 has changed the dynamics. ...and scared investors.
but, to be honest with you, it is not all gloom and doom...here is why.....
1. The company says its production for next two quarters are already fully booked. The company must have done some thing right. Further more, the ringgit at this current level, Malaysia wages is already cheaper than China, even with the new levies. The feasibility studies were done at a time when Ringgit was below $ 3.5, no wonder they have started to report very good margins for the last quarter.
2.....Solar Cells...their raw materials are following some sort of Murphy's Law and and today is < !0% what it was 10 years ago.
3. There are expectations that solar energy is highly competitive with fossil fuels even without subsidy in the next few years.
warnings
The story is compelling
The figures are compelling
But here are some points to note.............
the shares has rise from 50 sen (Aug) to $1.20 with good volume. Plenty of people are ahead in the game.
most of them are in the plastic and currency play and only few will know of the huge potential in the solar play prior to the result. ....so there is still room to move.
with current assets of $ 120 million and current liabilities of $ 120 million....it is not easy to fund their expansions of > $ 200 million. They did a $30 million private placement at $1 each to partly finance the expansions. By my estimation they are still short by about $40 million which they hope to finance from working capital and future profits.
They hold 70% of the solar cell subsidiary., the Taiwanese 20% and I assume the family the other 10% of the solar company. So, there is a 30% minority interest in the crown jewel and this has to be taken account.
.a paid up capital of 240 million shares of 25 sen each with 120 million warrants ( convertible at 25 sen ) issued means the dilution can be substantial. Together with the 30 million shares issued pursuant to the private placements, the fully diluted capital of the company is 390 million shares.
assuming target price of $ 2 then fully diluted market cap of $2X 390 million shares or $ 780 million. , the company needs to produce $ 72 million profits , after tax after minority interest for PE 10. .....all depends on the implementation. It is very very unlikely they can do this kind of figures by the end of this year, at best we are looking at 2017.
product pricing risk
Presently, the Taiwanese JV partner helps them by providing technical assistance as well as marketing of the final product. That means, the final product price is at the mercy of the Taiwanese.
This is a sexy proposition but full of risks too as you can see that the major players have not been doing well.
No risk no gain.
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Discussions
2 people like this. Showing 26 of 26 comments
http://www.bloomberg.com/news/articles/2016-02-12/solarworld-wins-eu-extension-of-china-duties-to-malaysia-taiwan
Die lah if it is affected.
2016-02-19 15:54
Don't b a joker la, what incentives
CHINA HAD BEEN SLAPPED WITH ANTI DUMPING POLICY, MALAYSIA is not, that's why tekseng is making money while others are not, your risk segment is not VALIDDD
2016-02-19 16:16
plenty of icon ball lickers in this forum.....all of them likes to be charmed like little ladies .....
all these Icon ball lickers, fans and disciples....Can I assume none of you like to use your head?
2016-02-19 16:17
why? you all in already so fast?
wait la...by 2018 you will be rewarded.
tripleiii > Feb 19, 2016 04:16 PM | Report Abuse
Don't b a joker la, what incentives
CHINA HAD BEEN SLAPPED WITH ANTI DUMPING POLICY, MALAYSIA is not, that's why tekseng is making money while others are not, your risk segment is not VALIDDD
2016-02-19 16:24
I start to admire Desa already, she/he is like a bull fighter, always fighting here & there. But she/he will be become little kitty when under Mr Koon.
2016-02-19 16:32
Desa Past 7 days comments are 298
Mine only 65, how to compare, ganasai, yees
2016-02-19 16:34
if you are here to make money.....you got to do real analytic work, not just story telling work
moneySIFU > Feb 19, 2016 04:34 PM | Report Abuse
Desa Past 7 days comments are 298
Mine only 65, how to compare, ganasai, yees
2016-02-19 16:37
I suspect his RM20k also withdraw from EPF account wan, driver where got saving
2016-02-19 16:54
the story teller is back....hahaha
there used to be a Li Tai Soa in Rediffusion....is that you?
2016-02-19 16:55
How to explain why VSOLAR another company in solar panel business until today price like shit ? Hope to get experts' opinions and views. TQ
2016-02-19 17:04
Have to do more research.
But this Tek Seng solar business also like shit until they got Taiwanese partner some time last year.
2016-02-19 17:14
not 70%....only 50% of Solartech....more die lo.
how to support a fully diluted issued share capital of almost 400 million shares?
2016-02-19 18:16
I bot a little bit...now I know it is only 50% in solar, I think I will stop already
2016-02-19 19:14
No wonder why, Desa recommend Maybank only to i3 fellas. U might be bit cautious in your investment. Nothing wrong on that, pls alert. Their diversification into solar div has been doing very well. Your criterion are way too conservative for a fast booming industrial biz. Taiwan entrepreneurs Are more concern to the OPTIMIZATION LEVEL of their productivity. In order to reap maximum profit from the production scale and to position themselves on a strong base that no other competitors dare to challenge.
If u feel not comfortable to the biz model, juz bet small.
For Tek seng young generation they hv d gut and intelligent to making a strong footing in Asia region at least.
IT IS GOING THROUGH AND TASTE THE FRUITS , NOTHING CAN STOP Tek Seng.
2016-02-19 19:36
Felix.....you need a super bull to bail you out......but super Bulls not that common.
2016-02-19 22:57
Felix....from all your comments in i3, you need a super bull to bail you out.
You can operate only when there is a super bull.
2016-02-21 14:04
I got 5 lots
Decided to sell them away.....
With a fully diluted base of almost 400 million shares, only 50% interest in that solar project.....it will be lucky to stay around this price for the next 6 months.
With zero net current assets, now they raise $ 30 million to part finance the expansions that needs $120 million, or half of total of $240 million.......even with 50% borrowings, there still need to find another $ 30 million.
Implementation risks are still high, the Taiwanese control the pricing and all major players in this sector not doing well......not worth it.
I am sure I can find better deals.
Some say there is this quota system that depends on who can bribe who in this industry.
2016-02-22 15:15
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Desa20201956
what? scared of a review of your work?
that is an analysis not a story teller like you.
2016-02-19 15:44