Tiong Woon Corp

[dydx]

Another presumably large contract secured and another feather on Tiong Woon's cap.....
http://info.sgx.com/webcoranncatth.nsf/V...6002792FC/$file/TWCH_PressRelease_TWOME_Contract.pdf?openelement

This contract will be undertaken by 51%-owned subsidiary Tiong Woon Oasis Marine & Engineering P/L which has recently raised its paid-up capital to $500k.....
http://info.sgx.com/webcoranncatth.nsf/V...60024791E/$file/TWCH_IncreaseInvestment_TWOME.pdf?openelement

Tiong Woon has recently proposed to raise some $10.2m in fresh capital via a 1-for-4 rights issue priced at a shareholder-friendly $0.11 per rights share.....
http://info.sgx.com/webcoranncatth.nsf/V...5000DE825/$file/TWC_PressRelease.pdf?openelement
which has received in-principle approval from SGX.....
http://info.sgx.com/webcoranncatth.nsf/V...5003877C0/$file/TWCH_RI_InprincipleApproval.pdf?openelement

Anyone supporting the coming rights issue?

[Max12345678]

Dydx,

I looked at their financial highlights, the company's revenues and net profits over the last three years (2009 - 2011) have been shrinking. Does that mean they are operating in a competitive industry? Or will 2012 a year of turnaround?

(http://www.tiongwoon.com/financial_information.php)

[dydx]

Dydx,
Does that mean they are operating in a competitive industry? Or will 2012 a year of turnaround?

I guess the Q1 results which showed healthy increases in revenue and PBT may well indicate better numbers to come.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument

Crane rental as a business may become very competitive in an over-supply situation. But a stronger and well-established player can reduce such a risk by going regional or diversifying its markets, or by investing in higher tonage cranes and more specialized equipment, or by developing expertise, skills and reputation in being able to undertake large-scale heavy lifting and haulage projects for prime-name customers including MNCs and state-owned enterprises. I think Tiong Woon has done just that.

[karlmarx]

tiong woon's latest results are not bad, but neither is it good. shareholders are just glad that TWC is not losing money, yet.

TWC offered good price-to-book value awhile back. but at current prices, i no longer see any margin of safety. in fact, now is a good time to offload TWC shares if you have any. it will be at least a year -- but probably more -- before you see TWC back to earning double digit millions.

this ciggy butt has seen its last puff for now, and will be awhile before prices become attractive again.

[dydx]

Today (1Feb12) Tiong Woon closed up another $0.01 at $0.275. At $0.275, Mr Market is pricing Tiong Woon at 46.1% of its lastest (30Sep11) NAV/share of $0.5959, which is represented by mainly productive assets like cranes and other fixed assets on the B/S. Is this an over-priced situation? It doesn't appear so.

Usually when a mediocre listed company raises fresh capital via a rights issue, its share price would more likely than not fall. In Tiong Woon's case, since the announcement of the rights issue on 29Dec11, its share price has risen from $0.23 (the closing price on 29Dec11) to $0.275 today, or by 19.6%. Clearly, there is enough evidence of steady buying by investors supporting the coming rights issue in the last 4+ weeks.

A quick review of Tiong Woon's latest FY11 (ended 30Jun11) AR.....
http://info.sgx.com/listprosp.nsf/07aed3...f002a5b14/$FILE/Tiong%20Woon%20AR2011.pdf
will reveal that Tiong Woon recorded group revenue of $202.28m and PBT of $50.807m in FY09 (ended 30Jun09). A relevant question: Can Tiong Woon repeat similar financial performance in the foreseeable future, say in the next 3 years?

We have to also bear in mind that after the last financial crisis (which ended in mid-2009), many big O&G and infrastructural projects were postponed partly due to bank failures or restructuring. So in 2010 and 2011 Tiong Woon together with the entire crane rental/heavy lift & haulage industry suffered from lack of sufficient work and over-supply of equipment. Many of the big projects in Asia have since been re-started, and there is enough evidence in Tiong Woon's recent order wins and current backlog to suggest that the industry outlook has improved quite substantially.

It is also relevant to bear in mind that Tiong Woon's historical share price touched as high as $1.21 (on 9Jul07).....
http://finance.yahoo.com/echarts?s=T06.S...off;source=;

Clearly, Tiong Woon is engaged in a cyclical business, and its share price has also exhibited sharp volatility over the years. Let's hope that with a larger and more diversified business base, the business and its share price can become less volatile in the future.

[dydx]

Today (2Feb12) Tiong Woon advanced another $0.03 - a solid 10.91%! - to close at $0.305.....
http://finance.yahoo.com/q?s=T06.SI&ql=1

[dydx]

Yesterday (3Feb12, Friday) Tiong Woon advanced another $0.02, or 6.56%, to close at $0.325.....
http://finance.yahoo.com/echarts?s=T06.S...=undefined;
Yesterday was also the 2nd consecutive day for which the volume traded exceeded 2.0m shares.

It looks like the coming 1-for-4 rights issue priced at a shareholder-friendly $0.11 per rights share will be a big success!

[Musicwhiz]

Clearly, Tiong Woon is engaged in a cyclical business, and its share price has also exhibited sharp volatility over the years. Let's hope that with a larger and more diversified business base, the business and its share price can become less volatile in the future.

dydx,

If you manage to understand the cycle well and catch it at the low, then you would have a decent investment on your hands. Tiong Woon no doubt is much smaller than market leader Tat Hong, but it has heavy lift as one of its business units which means it has some additional capabilities. As you mentioned, the share price volatility and lack of business over the last 1-3 years can be attributed to cyclical factors, and this also explains the necessity of the upcoming rights issue.

I've no penchant for heavy capex companies at the moment, and my understanding of business cycles is still woefully incomplete. Perhaps over time and with more experience, I may dip my toes into such companies at the right opportunity.

Regards.

[dydx]

Tiong Woon no doubt is much smaller than market leader Tat Hong, but it has heavy lift as one of its business units which means it has some additional capabilities. As you mentioned, the share price volatility and lack of business over the last 1-3 years can be attributed to cyclical factors, and this also explains the necessity of the upcoming rights issue.

In the crane rental business, size of the equipment fleet does matter, but I suppose it is equally important to invest/own the right cranes/equipment to meet the current market demand, especially segments which command a better profit margin, enjoy more regular workload, and have fewer competitors. As for the last aspect, Tiong Woon being a regional player in Asia which possesses integrated heavy lift, heavy haulage and offshore marine capabilities as well as fabrication yard resources, does have a certain edge over pure or even larger crane rental companies, including Tat Hong. On top of everything else, being able to make use the right cranes and equipment to win/undertake large-scale projects on a turnkey basis and provide superior and accident-free heavy lifting and haulage, and related logistics services - and make a decent profit from it! - will require a competent, experienced, and driven management team. To better appreciate Tiong Woon's total capabilities, one can simply do a detailed review of the "Our Business" section in the company's website.....
http://www.tiongwoon.com/our_business.php

I suppose the sharp drop in Tiong Woon's profits in 2010 and 2011 was very much attributed to the last global financial crisis in 2008 and 2009, which was an abnormal, drastic and unprecedented global event. I don't suppose it was a part of the evolution of a typical economic cycle for Singapore or the Asia region. As economic and infrastructural developments in Asia continue to be ahead of other regions, the medium-to-longer term business outlook for well-established/managed providers of construction equipment and related services, like Tiong Woon, should be positive.

Tiong Woon is presently ranked as the "top 18th" largest crane owning company worldwide. This itself is no small achievement! Hopefully, Tiong Woon will continue to grow and, given more time, becomes a member in the "top 10".

As for the proposed rights issue which will raise only $10.2m in fresh capital, it is such a small one when compared with Tiong Woon's latest (as at 30Sep11) equity position of $221.4m and very comfortable net debt position of $70.4m. IMHO, this shareholder-friendly rights issue could well have been designed to 'reward' shareholders, in anticipation of better things to come in the business.

[dydx]

SGX has queried Tiong Woon on its latest (as at 31Dec11) short-term bank debts profile and position, and the company today issued a simple response providing some additional relevant details.....
http://info.sgx.com/webcoranncatth.nsf/V...5000AF7A8/$file/TWCH_SGXQuery_15Feb2012.pdf?openelement

I wonder why SGX bordered to even ask Tiong Woon since the group's latest total debts ($103.5m, vs. equity of $219.9m), net debt ($83.0m), and net gearing ratio (0.38x) positions are clearly manageable and quite conservative.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument
IMHO, Tiong Woon's latest B/S and external financing are much more conservative when compared with the latest of Tat Hong.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument
which had much higher total debts ($438.7m, vs. equity of $552.1m), net debt ($352.6m), and net gearing ratio (0.64x) positions as at 31Dec11.