TTJ Holdings

[dydx]

Any buddies attended the AGM on 27Nov and would care to write something about it?

[ksir]

My very rough notes from the AGM, please ignore the casualness and typo/grammatical error :p
Q = Questions from Shareholders
A = Answers from CEO (unless stated otherwise)
C = My comments (take it with pinch of salt)

Q: 8 cents dividend sustainable?
A: It's the cash return from years of Dormitory Biz's retained profits.
The dormitory is very competitive now, unlikely for us to win good bid.
C: so the answer is unsustainable?! but why not Special Dividend? Delisting?? Anybody guess.

Further explanation from CEO: The extension of Terusan Lodge dormitory is unknown.
Only 6 months before expiration, we can write to BCA to try to find out.

Q: for Structural Steel, since the steel price is low, do we benefit?
A: Once the project is secured, we straight-away negotiate with Suppliers to secure the orders.
Hence we don't win or lose from steel price fluctuation.
We don't gamble with material price as that's not our biz.

Q: why we need 2 Company Secretary.
A: (from secretary): for backup, we don't charge extra.
Note: apparently the corporate secretary is outsourced to external party.
Independent Director: we are very cost conscious.

C: the AGM was carried out at Auditor's office.
Pretty small room with standard tea break - not excessive, cost conscious. (well done)
During tea break, in casual chit chat of CEO with some of us.
Mr Teo appears to be a conservative, direct and honest person.

He acknowledged the big gap to fill after the dormitory expired.
He said they're trying their best, but wouldn't want to chase top-line, for him personally he is more concern about bottom line.
Hence he pointed out the stagnant of top-line but stable or improving margin.

In respond to question of what TTJ can do that others can't (in term of structural steel biz), he frankly said none. He pointed the importance of track records.
He added that Jurong project is definitely more strict, even entering Jurong island, there's certain requirements to meet. Probably that explains why recent orders won are in Jurong (margin could be better).

He also shared his experience in managing project won in Malaysia previously, which he said too tough. The workers were too tough to manage and hard to meet project timelines.
Hence his reluctant in getting projects in Malaysia.
He said he will focus on area closer to Singapore, obviously that means Johor.
However currently due to oil price, Petronas projects are on hold, hence that trickle down to downstream projects as well.

He shared that his main(and probably only) hobby is fishing.
Used to fish every week but after TTJ listed, maybe once a month or two.
That could explain his patience heh?

<vested, one of my top 5 holdings>

[smallcaps]

Delist then he can go back to fishing every week? [GRINNING FACE WITH SMILING EYES]
Hopefully can get the extension from BCA in 2nd half of FY...

[ksir]

It also depends on the extension cost. If it's too high, quite sure he won't bite. Haha.
He is well-trained in patience, by years of Fishing.

[smallcaps]

If dormitory segment really close shop in Jan 2017, I sincerely hope that TTJ can do the following further optimisations to enhance shareholders’ value:

Assuming at that point of time, balance sheet roughly the same as end of FY15:
- currents assets of 128 mil
- cash of 84 mil
- equity of 129 mil
- 349.5 mil shares

Assuming that the steel business will require average current liabilities of 30 mil
Assuming a current ratio of 2 is to be maintained
Assuming steel business can do 11 mil net profit on average = 3 cents

1. Return another 68 mil as ‘ordinary’ dividends back to share holders = 19 cents
- current ratio becomes 2
- equity becomes 61 mil
- average ROE become 16%
- PE of 12 would give a price that is 90% premium over book = 116 mil = 33 cents

2. Stick to payout ratio of more than 80%= 8.8 mil = 2.4 cents = 7% yield over 33 cents

[dydx]

In the last $0.08/share 'jumbo' dividend, Mr Teo was supposed to receive approx. $18.8m, but instead he spent all of that plus borrowing $1.9m to buy another 60.0m TTJ shares at $0.345/share for a total of $20.7m from the Ng Family behind Tat Hong Group.

Just based on the above alone, we can reasonably expect a high probability that TTJ would pay out another 'jumbo' dividend from the group's still growing cash reserve in the not too distant future or even in next FY. Or am I just having another wild dream?

[ksir]

Mr Teo mentioned that his family members are not working in TTJ. He is currently about 60 years old. Hence it's very likely that the CEO successor wouldn't be his children.
Capital reduction is quite likely ya?!

[valuebuddies]

It would be too generous for the boss to pay you 8c if the boss has the intention to delist the company at first.

[brattzz]

Mr Teo got a couple of good more years to run TTJ lah, won't delist/retire so soon,

go teo teo TEO!!

[smallcaps]

I guess the question to ask is why Mr Teo want to buy the 60mil shares in the first place? Assuming he has a plan to carry out, why is it so important to clear away this 17% block of shares? His pre purchase holdings of 68% gives him control over most stuff anyway.