GEORGE TOWN: Tek Seng Holdings Bhd , a solar cell maker, is expanding its production capacity to 150 MW from 40 MW as it targets the business to contribute half of its annual sales this year.
Group managing director Loh Kok Beng said the group had recently spent RM87mil to install a second and third production lines at its facility in Penang.
In the first quarter of 2015, the group delivered 4 million pieces of solar cell worth US$5mil, running on a single line.
The solar cell business is still running at a loss, contributing about RM16mil or 25% to group revenue of RM58mil in the first quarter of 2015.
“However, as the order book for the third and fourth quarters is being filled up, we expect the solar cell business to generate 50% of the group’s revenue for 2015, contributing positively to the turnover and bottom line,” Loh said after the company AGM.
The market value of 150 MW of solar power, equivalent to about 32 million pieces of cell, is around US$45mil.
“Each production line has the capacity to produce 70 MW of solar power per annum or 16 million pieces of solar cell,” he said.
The price of solar cell is about US$1.40 per piece, compared to US$1.50 per piece a year ago.
The price of silicon wafer, the key ingredient of solar cell, is US$0.85 compared to US$0.90 a year ago.
Tek Seng’s solar cells are sold mainly to Taiwan, China, the US, Canada, and eastern Europe.
On its polyvinyl chloride (PVC) flooring and packaging product business, Loh said the bottom line of the PVC business should improve this year as the price of PVC resin had dropped to US$900 per tonne compared with US$1,000 per tonne early this year, lowering production cost.
“Orders from the emerging markets celebrating Ramadan are now coming in.
“However, the buying power from emerging markets has been affected as their currencies have depreciated against the greenback, raising their import costs,” he said.