Medtecs International

[BlueKelah]

"We are also exploring the possibility of foraying into the renewable energy market to develop another growth driver and will provide further details to shareholders if and when these materialise."

From MEDTECS INTERNATIONAL CORPORATION LIMITED (Incorporated in Bermuda) Announcement on Selected Financial Information for the Nine Months Ended 30 September 2021 and FY2021 Outlook

Yet another example of Company management looking to venture into a totally unrelated & crowded business where they appear to have little to no edge. At least the recently announced JV with ACO to produce nitrile gloves is a venture into a market segment adjacent to PPE (albeit a very crowded, low margin space with entrenched players all expanding capacity).

A PPE producer venturing into renewable energy appears to be a prime example of "diworsification" to me.

I don't understand what competitive edge Medtecs is going to have in renewable energy. If management proceeds with this, it is likely to divert management attention from their core business & burn cash that was earned during the pandemic to build new capability in renewable energy.....cash that is probably better distributed as dividends to shareholders who can then invest in renewable energy companies if they so wish. I highly doubt existing shareholders invested in Medtecs on the premise that they were going into renewable energy.

Management is far better off focusing on their core business than chasing ephemeral "growth drivers" in unrelated industry segments. I had thought value was starting to emerge & that the recent sell down from exuberant levels was the result of shareholders looking past the extraordinary revenue, profit & FCF growth due to the pandemic and starting to focus on what sustainable revenue & FCF looked like post-pandemic. Evidently not.

With the recent announcement, I am no longer sure Medtecs management can be trusted to focus on their core business.....sigh.

share price gonna boom again though on the news of new COVID vax resistant strain?