TTJ Holdings

(09-06-2015, 07:33 PM)BlueKelah Wrote: At current prices stock looks fairly valued, no MOS, probably can consider buying if it goes below around 28c

Based on TTJ's last done share price of $0.325, it is at a 7.7% discount to the latest (as at 30Apr15) NAV/share at $0.3522, itself is backed by $0.23/share in net cash reserve. We should bear in mind that the cash-cow dormitory business alone is adding at least $0.035/year in EPS, or approx. $0.07 till the land lease expires sometime in 2017 (assuming BCA would grant a short extension beyond the stated expiry date of 12Jan17). On top of that, the structural steel business should continue to add another few cents a year in EPS.

Bassed on the above, rationally speaking the fair intrinsic value of each TTJ share should be at a decent premium above its latest NAV/share, to account for the predictable earnings in the foreseeable future. Of course, we must not forget that TTJ's 2 factories in Jurong and Johore have substantially higher market values vs. their book values based on historical cost.

(09-06-2015, 11:59 PM)dydx Wrote:

(09-06-2015, 07:33 PM)BlueKelah Wrote: At current prices stock looks fairly valued, no MOS, probably can consider buying if it goes below around 28c

Based on TTJ's last done share price of $0.325, it is at a 7.7% discount to the latest (as at 30Apr15) NAV/share at $0.3522, itself is backed by $0.23/share in net cash reserve. We should bear in mind that the cash-cow dormitory business alone is adding at least $0.035/year in EPS, or approx. $0.07 till the land lease expires sometime in 2017 (assuming BCA would grant a short extension beyond the stated expiry date of 12Jan17). On top of that, the structural steel business should continue to add another few cents a year in EPS.

Bassed on the above, rationally speaking the fair intrinsic value of each TTJ share should be at a decent premium above its latest NAV/share, to account for the predictable earnings in the foreseeable future. Of course, we must not forget that TTJ's 2 factories in Jurong and Johore have substantially higher market values vs. their book values based on historical cost.

so from the stated numbers should one conclude that the company could afford to easily pay out more of EPS but is not doing so?

its fine and dandy to say TTJ should be a decent premium, but what is the value for it to be fair intrinsic value? care to show some calculation?

Yeah the factories may have higher RNAV but that is only when they are sold off at a premium. Unless TTJ is moving to another country for production, that is unlikely to happen and besides they will need to pay for a new factory as well in such a case.

unless business so bad have to sell factory, in which case selling factory is not gonna help the share price much.

I guess most people should be able to derive their own fair value estimates for the TTJ share by discounting (1) the predictable future earnings of the dormitory business, and (2) a certain assumed but conservative estimate of the recurring earnings from the structural steel business in the say next 3 years, and add them to the latest NAV/share of $0.3522.

I guess at this point we can simply put aside the higher realisable value of the 2 factories.

What if TTJ decides to pay out say $0.08 to $0.10 from its $0.23/share net cash reserve as a special dividend? This is entirely possible and could happen anytime, and I am hoping that it would happen when the company announces its final result for FY15 (ending 31Jul15) in Sep15. Of course, this is just my own wishful thinking.

There are many counters trading below "fair value". So from a value perspective, you have to decide which offers the greater relative MOS

Sustainability is the key, personally i find TTJ structural steel business is sustainable and dormitory business is a bonus. Without the dormitory business, dividend still can be maintained without draining the cash reserve. To me, it is like a (as what GG always said) fixed income with free call option (special div).

Comparing to Powermatic, Hupsteel, Baker Tech, Creative and etc, I have greater faith with TTJ.

[ vested in TTJ and Baker ]

(10-06-2015, 08:02 AM)valuebuddies Wrote: Sustainability is the key, personally i find TTJ structural steel business is sustainable and dormitory business is a bonus. Without the dormitory business, dividend still can be maintained without draining the cash reserve. To me, it is like a (as what GG always said) fixed income with free call option (special div).

"fixed income with free call option (special div)" - what a nice way to say it! Indeed, sustainability is key, not just in securing new projects/contracts, but more importantly in profitability and maintaining acceptable profit margins in projects to cover any untoward risks, and thereby assure a fair return for the work/trouble by the management team (in bonuses) and for the shareholders (in regular dividends and a steady increase in NAV/share). It is not easy to achieve this in the construction industry, but TTJ under Mr Teo has clearly shown its mettle.

Let me contribute with a valuation view on TTJ

A fair view, over longer term, should be the structure steel biz will sustain, while dorm biz will be downsized after 2017, IMO. Thus the valuation over the structure steel matters, and a bonus if dorm biz survives after 2017

TTJ structure steel biz is sustainable and remain profitable, which were shared by buddies before. I share the same view. The ground are the followings
- The management is prudent and only get profitable contracts. This is proven by the track record of Mr. Teo and his team.
- The flexible cost structure allows much less contract-wins, to cover the fixed costs.
- The variable cost remains flexible. The GPM remain reasonably stable, even when sales are reduced significantly in the last few quarters.

So what is the reasonable valuation for the sustainable, and profitable structure steel biz? Base on references from last few years of segment info, and the nature of lumpy project biz, I derived the followings
- Long term average annual sales of 100 mil, and average annual profit 13 mil, with NPM of 13%
- A long term PE of 9, gives a valuation of 117 mil, or 33.5 cents per share, based on current outstanding shares.

The cash reserve will continue to grow till 2017, and I estimated that it might exceed the 33.5 cents, if no distribution till 2017.

What do you think?

I am accumulating, but no one seems is dumping it, even after the "lousy" quarters?

(accumulating, but very slowly, and might be even slower due to this post )

what happened! 45c?

There was someone from philips who bidded 1 lot at 0.45, i sold it to him the $30 commission was worth the pain.

29% gain in one sale

Likely tomorrow it will gap down to below 0.40.There isn't any catalyst to justify the price above 0.40 yet.