Tek Seng on higher ground, growth in sight

Tek Seng Holdings Bhd may not be investors’ everyday counter to take notice of. In the past year, it only rose a mere 5.2% to close at 30 sen on May 30. Tek Seng share price moved between a 52-low of 28 sen and a high of 35 sen.

Nevertheless, the counter could offer some positve movement with an upswing in progress. The share price has rebounded from a low of 28 sen last month. The strengthening momentum is expected to be driven by the rising trend shown by technical indicators.

As such, the stock could climb to challenge resistance hurdles of 35 sen and 39 sen, offering upside potentials of 15% and 28%, respectively.

Tek Seng’s businesses comprise polyvinyl chloride (PVC) segment and photovoltaic solar segment. Under PVC segment, it is engaged in manufacturing and trading of PVC sheeting, polypropylene non-woven, PVC leather related products, cast polypropylene sheeting,

As for its photovoltaic solar segment, it is engaged in trading of solar cell products and generating and supplying renewable energy and renting of properties.

It has strong fundamentals looking at couple of factors. Firstly, it announcing net earnings of RM6.6 million, down 35% YoY in FY Dec 2023. Its quarterly net profit also slowed 35% YoY to RM2.6 million in 1QFY24. Based on its latest full-year financial results, the stock is currently trading at a trailing price earnings ratio (PER) of 16.7x. Tek Seng is financially steady with its balance sheet backed by net cash holdings of RM18.5 million or 5.1 sen per share as of end-Mar 2024.

The company was also in the news last month. It announced that it is acquiring three parcels of freehold vacant land near its factories in Seberang Perai, Penang for RM33.96 million. Its subsidiary Wangsaga Industries Sdn Bhd (WISB) is acquiring a plot of land measuring 4.8765 hectares from Bagan Specialist Centre Sdn Bhd for RM26.98 million.

WISB is also acquiring a land plot measuring 0.39 hectare for RM2.18 milliom, and another 0.86 hectare for RM4.8 million.“The purchase consideration was arrived at RM51 psf based on an 'as is where is’ basis with vacant possession.

The purchases, it said, are in line with its strategy of acquiring land bank at locations near to its existing factories for investment or future expansion. With expansion in sight, there is a strong chance for Tek Seng to grow further and attract investors to be part of the company in terms of shareholding.