Tek Seng to return to the black this year

Tek Seng Holdings told Bursa Malaysia that its 50.69%-owned subsidiary TSST had decided to temporarily stop its entire production activities. TSST is principally involved in the manufacturing and sales of photovoltaic products.

BUKIT MINYAK: Tek Seng Holdings Bhd expects to return to the black in the 2019 financial year ending Dec 31.

Group managing director Loh Kok Beng told StarBiz that the group’s first quarter results had already shown improvement over the previous year’s corresponding period.

“The improved sales of polyvinyl-chloride (PVC) sheets to Indonesia, Africa, the Middle-East, and Italy were instrumental in helping the group to remain profitable,” he said.

For the first quarter ended March 31, the group posted RM476,000 in net profit on the back of a RM44mil revenue, compared to a loss of RM2.1mil and RM50mil achieved in the previous year same period.

“This year we will ramp up our exports to Africa, the Middle-East, and Italy.

“Our PVC flooring sheets are exported to 38 countries worldwide.

“We expect the contribution from Indonesia to increase to about 50% this year.

“Currently, Indonesia contributes about 30% to the group’s PVC flooring product business segment,” he added.

Tek Seng will work on maintaining its competitive edge as one of the leading PVC sheet producers in Malaysia.

“We are innovating to penetrate into different segments of the vinyl flooring market.

“We are also enhancing our product offerings to further strengthen our position in Malaysia and other export markets,” he said.

Loh added that the PVC flooring sheet production capacity would be raised by about 10% this year.

“Presently, the PVC production floor is about 80% utilised,” he added.

Tek Seng will start production of polypropylene (PP) sheets in the third quarter 2019 for the stationery market in Europe.

“We have invested in four machines to produce PP sheets,” he added.

According to Loh, the group plans to introduce PVC and PP luxury vinyl tiles (LVT) for the renovation industry in the third quarter.

“We plan to sell the LVT products in Malaysia and Europe.”

“We should see the new products contributing to the revenue in 2020,” he added.

On the solar business, Loh said the group had decided to temporarily cease the operation of the photovoltaic solar business mainly due to unforeseen market uncertainties as well as the demand.

“The photovoltaic solar industry has been facing challenges from price pressure, government unfavourable policies, as well as the implementation of anti-dumping taxes,” he said.

On the group’s trade receivables, Loh said the trade and other receivables as at end of the fiscal year (FY) 2018 decreased by RM7.62 mil or 22.75% to RM25.88mil from RM33.50mil in FY 2017.

“This is mainly due to the settlement of receivables and impairment losses of RM1.32 million,” he added.

The group’s inventories stood at RM40.10mil at the end of FY 2018 from RM55.61mil at the end of FY 2017.