NSP said that TS Solar had stopped production due to market conditions. NSP said it would retrieve the manufacturing equipment according to the purchase contract with TS Solar that would be recognized as an impairment loss but not as a cash cost to the company.
Very smart/good corporate exercise, trim away excess fat / dispose loss making entity and only retain profitable business, like DRB (proton) and Genting(GenS- VSS).
If NSP would retrieve the manufacturing equipment from TS Solar, that mean TS solar will not be cushioned by the "Compensation received from a supplier" any more ( RM3.779 million in Q3 ). Wouldn't that hurt TS solar bottomline ?
If the intepretation is so simple, there won't be a surge in volume and price on friday. For those who are always looking for bad news desoite the announcement, just avoid TS. There are hundreds of other counters in bursa to choose from.
TS solar was making profit for the past 5 qtr. Even in the bad 2016 3Q, it also make profit, even though it was saved by the "Compensation received from a supplier" of RM3.779 million. That is why I opine once this cushion of "Compensation received from a supplier" is removed, TS solar bottomline will suffer.
Now come to the question of "If making profit why sell?". My guess is TS solar could sell back to NSP at a handsome profit. This is a possible as NSP could be so not smart in the first place to offer TS solar good compensation if they do not order enough.
Similarly NSP could be so not smart to write in the contract to take back the equipment from TS solar at a big loss (but profit to TS Solar) . Can anyone confirm this ?
Profit now will turn into liability in the next 2 qr, solar industries supply outpace demand. Remove it before turn cancerous. Sale dropping, light dimming and no sight of light at the other end of tunnel.
As being reported that solar industries needs government subsidy to stay afloat (US), that indicate TS solar will move in that direction & become another Mas, Proton or Perwaja in the near future.
stop production and no business also categorized as good news. Hmm... u r really optimistic. anyway, no doubt Tekseng is still making little profits from pvc segment but it's not enough to drive the price up.
Stop ptoduction in loss making sector is better than comtinue bleeding. this bad news is already discounted. Otherwise, ts won't be trading at 0.80. It will be trading at 1.40.
Whatever the reason for the recent price surge, I opine solar prospect is still grim, otherwise why would NSP dumb dumb take back equipments at huge impairment loss? Furthermore if Taiwan solartech performance is of any guide to TS solar, its poor Jan'17 sale is not very encouraging. http://en.solartech-energy.com/invest/report-mon.aspx Nevertheless I believe TS solar may make good profit (in the form of compensation) selling equipments back to NSP, that is why the recent price surge.
But that profit by way of compensation is only 1 time gain, after that TS solar still has to face with the grim prospect of low pv price and low sale and low/negative margin, and furthermore without the cushion of "Compensation from a supplier" anymore.
For that grim prospect, TS has been beaten down to 0.65 before. for now, no further bad news means good news. That is the way forward. And that explains for the price surge last friday. Example; a company that makes a 10 million loss last qtr is in better shape now if it makes say 300000 loss this qtr. this is law of relativity.
The volume on 7 and 8 Feb is extremely high. Only 2 possibilities: 1. the QR is good, those insiders are collecting; 2: Operator done collecting enough free float from 0.65, now all the way pump up. Personally, no matter which case is it, I am waiting above RM1.x to sell. This stock is too roller coaster for my appetite.
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....
kenen
423 posts
Posted by kenen > 2017-02-17 11:43 | Report Abuse
i wont sell...lollllll