Tek Seng sees a sunnier second half
Company expects solar cell orders to improve
BUKIT MERTAJAM: Tek Seng Holdings Bhd, which manufactures solar cells and polyvinyl chloride (PVC) products, expects its performance for the second half of this year to improve over the first half.
Group managing director Loh Kok Beng told StarBiz that the company expects solar cell orders to register a slight improvement of about 5% over the first half, although the demand for solar power has declined.
“The market in the US is still supportive of the group’s solar cells.
“The bulk of our solar cells, although shipped to Vietnam and Thailand to be assembled into solar panels, eventually find their way to the end-users in the US, China, and Europe.
“The market in the US is still the strongest. “California is still the largest state market for residential PV, while non-residential photovoltaic (PV) cells continue to be popularly deployed in states like Minnesota.
“Total installed US solar PV capacity is expected to nearly triple over the next five years.
“By 2022, over 17 GW of solar PV capacity will be installed annually, according to a Solar Energy Industries Association/GTM research report,” he said.
Loh said to date, the company had delivered about 18 million units of solar cells to customers in US, China and Europe.
The company’s solar cells are expected to generate 40% of the group’s revenue for 2017, compared to about 50% in 2016.
“We now produce about three million solar cells per month.
“We expect to manufacture some 36 million pieces of solar cells or 165 MW of solar power this year.
“In 2018, we are aiming to achieve the production of 50 million pieces of solar cells or some 200 MW of solar power,” he added.
Going forward, Loh said the company would take initiatives on various options, including producing higher efficiencies of solar products and exploring the possibility of downstream business to improve the solar power segment performance.
The company now has a total of three production lines in operation.
The price of a solar cell is US$1 currently, compared to about US$1.50 per piece in the second half of last year.
On its PVC business, Loh said the segment should remain stable, although it might be affected by raw material pricing, due to mar- ket uncertainty and a fluctuating ringgit.
“However, we will take cautious approaches to mitigate the exposure by improving operational efficiency, product quality and product innovation as a positive step forward to sustain business growth and success as well as monitoring financial aspect more closely.
“We will also look into exploring new market share globally,” he added.
Loh said the company does not have any bank borrowings.
For the first half of 2017 ended June 30, the company posted RM4.6mil in net profit on the back of a RM158.4mil turnover, compared to RM31.3mil and RM290.8mil in net profit and turnover respectively achieved in the previous year corresponding period.
According to a report from Seeking Alpha, a crowd-sourced content service for financial markets, overcapacity in the solar industry will last through 2017.
“Therefore, the costs of PV panels will continue to drop.
“One of the surprises to the PV installers will be that solar panels will no longer be the single most expensive part of a system.
“Racking, cables and the installation itself will become a significant part of the total cost by 2018,” the report added.