TTJ Holdings

[BlueKelah]

Without dorm biz expect the yield and share price to drop

How to drop when Chairman Teo already owns 84.38% of TTJ....
http://infopub.sgx.com/FileOpen/_eFORM1V...eID=393594
and he can quite easily privatise the company by offering a fair premium over its NAV/share.

From another perspective : How to drop when the company can easily declare another 'jumbo' dividend from its huge $60.1m (as at 31Jan16) cash reserve - equivalent to $0.17/share - which is expected to increase further to at least $70.0m as at 31Jul16 (FY16's year-end).

How to drop?

1) Chairman Teo large stake contribute to less float and low liquidity. look at today's tiny volume, any trigger will magnify movement up or down. So easy to drop on any sort of bad news. As bratzz mentioned, dormitory business which has provided earnings visibility is fading fast and could be a negative trigger, though may not be a big one as main business is still pretty profitable.
Possibility of privatisation itself does not prevent price drops. There are many privatisations that happen after a significant price drop.

2) The cash reserve is only to 51% of Mcap. 70m will only put it up to 59% of Mcap. Company will not do a jumbo dividend just to prevent a price drop. So price can still drop given the right negative news.

3) Order book as of march is down to 106m from 146m end 2015 (thats only about a years worth of revenue left). Still 2 weeks to go , but since december there have been no contract wins. Of course one could argue TTJ may only wanna pick up projects with good margins, but then again, less order book/revenue will translate to less EPS, less earnings usually means price drop.

3a) Given the poor local economy, projects could be drying up and competition hotting up, affecting future order book as well. There could also be sudden cancelation / delay of project or worse client bankrupt.

4) TTJ is already trading pretty close to NAV. For a small cap which is not in the "growth" category, it is already looking fairly valued. Just couple months back it was trading at 26cents, any turn in market sentiment could see it back there easily, thats a 10% drop.