KUALA LUMPUR (Nov 20): Tek Seng Holdings Bhd's share price fell to 41 sen, a more than two-year low, after the group reported a loss for the third quarter.

The group posted a net loss of RM1.08 million for the quarter ended Sept 30, 2017, compared with a net profit of RM7.43 million a year ago, on lower sales volume across all of its business segments. Revenue fell 16.2% to RM68.96 million from RM82.28 million.

Cumulative nine-month net profit plunged 90.8% to RM3.57 million from RM38.74 million a year ago. Revenue fell 39% to RM227.43 million.

Tek Seng shares hit an intraday low of 41 sen this morning, its lowest level since touching 40.4 sen on Sept 21, 2015.

UOB Kay Hian today set a target price of 40 sen for Tek Seng. The firm said that despite the positive long-term prospects of renewable energy sector, the global outlook for the solar business remains challenging.

"The outlook for Tek Seng's key market, the US, remains gloomy on President Trump's fossil fuel-focused agenda and the move away from promoting renewable energy," UOB Kay Hian said in a note.

"To mitigate the prolonged losses in the solar segment, Tek Seng is exploring moving downstream to serve the local market.

"This could shield Tek Seng from the high volatility in global solar cell prices and allow it to enjoy Malaysia's feed-in tariff. However, we note that Tek Seng has no clear timeline on the commencement of this new venture as it is still in the midst of finalising the working models with potential industrial customers," said the firm.

UOB Kay Hian cut its 2017 to 2019 net profit forecasts for Tek Seng by 64% to 71% as it expects the solar segment to continue to suffer in the near to medium term until the company has a concrete plan on moving downstream.

"We also reduce our margin assumptions for the polyvinyl chloride segment," it said.

At 3.15pm, Tek Seng shares were down 3 sen or 6.7% at 42 sen.