TTJ Holdings

[BlueKelah]

TTJ's share price has corrected from a high of $0.45 in Jun 2017 to $0.30 currently, reflecting a 33% drop.

It seems that the market doesn't like these 3 points:
1. Loss of dormitory business, which previously contributed to consistent and growing earnings with a profit margin of 30+%
2. Lumpy nature of earnings for the structural steel business, with a lower gross profit margin of around 15-20%. This is slightly mitigated by the fact that the order book rose to an all-time high of $170m.
3. Uncertainty surrounding the diversification into the waste management and waste-to-energy business

The cash pile dropped further from $82m to $76m over the last quarter.

Using very rough back-of-the-envelop calculations, I estimate that the EPS for FY2018 will come in at around 2 cents. At the current share price of $0.30, that represents a PE of 15, which is hard to justify for a company operating in a highly competitive field, with lumpy earnings and compressed margins.

Main reason is the speculation that the company might be privatised. Now that it looks like the cash pile will be used up on their new business, which could end up losing money, it also looks like Boss has no intention of privatising since it will be better to keep the company listed in case he needs to tap the Market for additional funding. If TTJ starts doing rights issue for that, it would be very detrimental for current OPMI. 

Coupled with the loss of profitable dorm business which enabled TTj to give out good dividends, those who treat it as a value cum dividend play would probably have sold it as well.

The share price likely to go lower towards 20c level. Back in 2011/2012 when markets werent so good TTJ was at around 15c lows. As a small cap its quite easy for it to drop back to 15c to 20c level very quickly, especially with not much volume/float, price up or down can be very fast.

[dydx]

The share price likely to go lower towards 20c level. Back in 2011/2012 when markets werent so good TTJ was at around 15c lows. As a small cap its quite easy for it to drop back to 15c to 20c level very quickly, especially with not much volume/float, price up or down can be very fast.

I wish this would happen, as likely many TTJ shareholders including CEO Teo will be too happy to buy up all the shares available in the market. 

The facts remain that TTJ's latest NAV/share is close to $0.38, also backed by a net cash/share of close to $0.22. The well-established structural steel business is having a large order book of $159m (as at 6Dec17), and should continue to make at least $10m a year in NP under the able leadership of CEO Teo.

[BlueKelah]

The share price likely to go lower towards 20c level. Back in 2011/2012 when markets werent so good TTJ was at around 15c lows. As a small cap its quite easy for it to drop back to 15c to 20c level very quickly, especially with not much volume/float, price up or down can be very fast.

I wish this would happen, as likely many TTJ shareholders including CEO Teo will be too happy to buy up all the shares available in the market. 

The facts remain that TTJ's latest NAV/share is close to $0.38, also backed by a net cash/share of close to $0.22. The well-established structural steel business is having a large order book of $159m (as at 6Dec17), and should continue to make at least $10m a year in NP under the able leadership of CEO Teo.

I am pretty sure you loaded up a lot of Penguin when it crashed back below 10c (pre- 1:3 consolidation) like I suggested it would ? 
Same thing could happen to TTJ.

Yeah sure the fact remains it's NAV is 38c. 

But the fact also remains that this is what the company is going to do to the cash pile to fund their new business
[The Group plans to finance the Proposed New Business using a combination of internal sources of funds, and financial institution borrowings and facilities. As announced on 25 September 2017, based on the Group’s unaudited financial statements for full year ended 31 July 2017, the Group has S$82,226,000 in cash and cash equivalents.

While the Board is of the opinion that the aforesaid are sufficient to finance the Proposed New Business and there is no imminent need or present intention to raise
additional funds for the Proposed New Business, the Group may consider tapping on the capital markets via rights issues or otherwise to raise funds for the Proposed New Business as and when necessary and deemed appropriate. The Company will make further announcements on such exercises at the appropriate time.]

So the fact now says that the 82m cash is as good as gone. In fact, over next few years TTJ might even go into a net debt position.

Despite Teo business acumen, TTJ could very well be "diworsifying". Just look at Hyflux, its just been going downhill the past few years. PLus WTE plants will need to get government tender, this type of project usually profit margin is not good and usually pay off after 10years or so.

Maybe can accumulate again lah when it goes back down to 20c. But then again you probably haven't taken any profits yet when the stock hit over 40c half year ago.

[karlmarx]

All that cash on the books no longer provide a margin of safety, now that it is earmarked for something which is considerably outside of TTJ circle of competence.

There is also not much information released on this new project. Not many shareholders may be willing to sit around and wait a few years for the project to generate income, if it does generate income.

The market is pricing all the uncertainties surrounding this project.

[Quickbeam]

I agree that with the lack of liquidity may result in a further downtrend in the business, but valuing this business on a 15x depressed earnings P/E, excluding the cash!, seems irrational. The cash hoard will be reinvested but what are the chances that this investment will be worth less than 100c on the dollar? The ceo has shown to be an able entrepreneur who is now investing his own cash in a new project. His dormitory investment and his management of a what is a difficult business have been nothing but impeccable. In this case it pays to bet on the jockey. Singapore investors seem to be highly focused on NAV per share, which is not the case outside of your country. If you look at what singapore has built over the decades, this is largely because your entrepreneurs and the government have been able to build value well beyond the tangible assets of the investment. Currently i am not vested, but have been in the past.

[brattzz]

i would thought it's better for boss teo to just issue 1 for 1 rights, mop up the excess rights and take the co. private anyway... no need to share the up/down side of the new biz to opmi...

similar to hongkong biz-owners..

[brattzz]

Review of Group performance
For the three months ended 31 January 2018 (“Q2FY2018”), the Group recorded a revenue of $26.5
million, an increase of 32% as compared to $20.0 million for the previous corresponding period
(“Q2FY2017”). The increase was mainly contributed by the structural steel business.
The Group’s gross profit margin stood at 19.9% in Q2FY2018. In comparison, the gross profit margin in
Q2FY2017 was 26.2% due to better gross margins derived from the projects executed during the reporting
period and contribution from its dormitory business.

Other gains increased from $0.3 million in Q2FY2017 to $0.8 million in Q2FY2018. The higher amount
recorded in Q2FY2018 was mainly due to a foreign exchange gain.
Administrative expenses increased by 15% from $1.7 million in Q2FY2017 to $2.0 million in Q2FY2018.
This was mainly due to expenses incurred by a new subsidiary which was acquired during the second half
of FY2017.

For the half year ended 31 January 2018 (“1HFY2018”), the Group reported a revenue of $40.1 million, a
decrease of 14% as compared to $46.5 million for the previous corresponding period (“1HFY2017”). The
decrease was mainly due to the decrease in structural steel business and expiry of the tenure of the
dormitory at Terusan Lodge I, resulting in no revenue contribution from the dormitory business.
The Group’s gross profit margin decreased from 22.9% in 1HFY2017 to 18.5% in 1HFY2018. The gross
profit margin in 1HFY2017 was higher due to better gross margins derived from the projects executed
during the reporting period and contribution from its dormitory business.
Other gains increased by 51% from $0.7 million in 1HFY2017 to $1.1 million in 1HFY2018. This was
mainly due to net foreign exchange gains.

Administrative expenses increased by 12% from $3.4 million in 1HFY2017 to $3.8 million in 1HFY2018.
This was mainly due to expenses incurred by a new subsidiary which was acquired during the second half
of FY2017 and partially offset by a decrease in staff related cost, and legal and professional fees.
Profit before tax of the Group was $4.9 million in 1HFY2018 as compared to $8.3 million in 1HFY2017.
The decrease was mainly due to the Group’s lower turnover, lower gross profit margin; increase in
administrative expenses and offset by the increase in other gains as explained above.

Review of changes in working capital, assets and liabilities
The movement in the Group’s assets and liabilities are as follows:
(i) Total assets increased from $153.8 million as at 31 July 2017 to $160.8 million as at 31 January
2018. This was mainly due to increase in property, plant and equipment, and trade and other
receivables and partially offset by the decrease in cash and cash equivalents.
(ii) Total liabilities increased from $21.9 million as at 31 July 2017 to $25.6 million as at 31 January
2018. This was mainly due to increase in trade and other payables.

Review of changes in cash flow
The net decrease in cash and cash equivalents for 1HFY2018 was $27.4 million as compared to a net
decrease of $7.4 million for 1HFY2017. This was mainly due to the net cash flows of $16.9 million used in
investing activities 1HFY2018. The major investing activities were mainly for acquisition of property and
equipment in Malaysia as announced in May and November 2017.

The net cash flows used in operating activities amounted to $8.4 million in 1HFY2018, compared to $0.3
million in 1HFY2017.

The net cash flows used in financing activities amounted to $2.1 million in 1HFY2018, compared to $5.9
million in 1HFY2017. The higher cash flow used in 1HFY2017 was mainly due to the payment of
dividends.

Cash and cash equivalents for the statement of cash flows of the Group stood at $54.8 million as at 31
January 2018, representing a decrease of $27.1 million as compared to $81.9 million as at 31 January
2017.

As at 7 March 2018, T T J’s projects order book stood at $136 million which it expects to substantially
complete between FY2018 and FY2021. To date, the Group continues to experience a healthy level of
enquiries for a mix of public and private sector projects. Going forward, the Group will continue to
monitor its costs closely and enhance productivity to remain competitive.

The Company is continuing to explore opportunities in its business of waste management and treatment,
including identifying potential acquisition opportunities. The Board will make further announcements as
and when there are material developments on this matter.

[cyclone]

Structural steel specialist T T J secures new contracts bringing order book to a record $217 million

T T J Holdings Limited today announced it has successfully secured a series of new contracts, boosting its latest order book from $136 million as at 7 March 2018 to $217 million today. The Group expects to substantially complete the orders in its book between FY2018 and FY2021.

[brattzz]

waos! Boss Teo ramping up the book-orders to make up for the exit in dorm biz... need to see if the profit margins are maintained!!

[cyclone]

T T J secures new contracts, bringing order book to S$212 million

T T J Holdings Limited, one of Singapore’s largest structural steel specialists, has secured a few new contracts, bringing its order book to S$212 million.

The projects within the current order book are expected to be delivered substantially between FY2019 and FY2021.

More details in http://infopub.sgx.com/FileOpen/TTJ%20-%...eID=525699