By the way..yongnam profit margin sometimes can be -14%..at best 2%.
Its making losses and have over 200mil debt and doesnt pay dividend last year and this year also zero.
As i mention, the best example is swiber...submit lowest bid(cld be below cost) to get project but u know swiber recently commit corporate harakiri...
As for ttj is a well manage company. It knows which project can tender and always looking for good returns..and high profit margin..profit margin is important..
Imagine some company- they end up working extremely hard to deliver/complete a project , and "found out later" that they do it below cost and lose money..
So but i do hope they can secure some project later on in nov/dec..
(28-09-2016, 07:44 PM)wind22i Wrote: [ -> ]Just have to relax....
The earlier selling could likely be cause by those contra player who bought last week and hope to make a quick buck..once big dividends come..its not 8c but its 1.7c...so yesterday they have sold..as can be seen the volume today much lower and has stabilised...
The stock has "adjusted" itself from 48.5c to 39.5 - almost similar to the 8c "expected dividend"...
It didnt factor in the solid balance sheet and record results..
So sometimes mkt is like that , but since teo already hold 85%..quite easy for him to take ttj private especially at such "adjusted price"....
If boss teo scoop up the remaining shares..he can get a solid company with plenty of cash and debt free..
I am not too worried about the dormitary which is not its main business...in fact a lot of pure dormitary biz companies like wee hur etc are also not doing fantastic...
And a dormitary u must remember has maintainance cost and subject to renewal by the relevant authorities..
So but i think by next year if the company could have $100mil cash if it can add $30.mil of free cash flow..and new project coming in..it will far outweight its dormitary biz..
Usually the contract be given towards year end..nov/dec usually- a lot of project will be given out after budget is approved..
By then , its order book will go up again...it can choose those project with better margin...
If u see some company like yongnam - win project but with peanuts margin..
And i am sure u all have heard of swiber story- win big project by submitting low bid..
Ttj is a more quality company...
"in fact a lot of pure dormitary biz companies like wee hur etc are also not doing fantastic..."
Wee hur is not a pure dormitory company
(28-09-2016, 08:20 PM)wind22i Wrote: [ -> ]By the way..yongnam profit margin sometimes can be -14%..at best 2%.
Its making losses and have over 200mil debt and doesnt pay dividend last year and this year also zero.
As i mention, the best example is swiber...submit lowest bid(cld be below cost) to get project but u know swiber recently commit corporate harakiri...
As for ttj is a well manage company. It knows which project can tender and always looking for good returns..and high profit margin..profit margin is important..
Imagine some company- they end up working extremely hard to deliver/complete a project , and "found out later" that they do it below cost and lose money..
So but i do hope they can secure some project later on in nov/dec..
Hi wind22i,
Could you like to share why TTJ are able to secure high margin project? What competitive edge it has over it's competitors?
Thanks.
setan
Please allow me to add my 2 cents to the discussion.
To discuss whether the drop in share price was warranted, we need a framework to analyse what we are getting for the current price.
Cash Assets and liabilities.
1) 25.5 cents per share in cash
2) Approximately 13.6 cents per share in receivables and 9 cents in taxes and accounts payable.
Total should be approximately 30.5 cents.
Business side.
Order book of $48 million in the structural steel segment which will bring in approximately $8.5 million in cash profits if we are to assume that the EBITDA margin of the segment will be steady even with low utilization. Of the $8.5 million in expected cash profits to be received from the order book, $961,000 has already been billed so that leaves about $7.5 million. Applying a 10% discount for time value yields a present value of the current order book of $6.7 million or 2 cents a share.
The dormitory business generated 3.7 cents per share of EBITDA in the previous FY. Assuming non renewal, it will operate of about 5 months next year and assuming the same monthly EBITDA, it is worth approximately 1.5 cents per share.
That brings us to a total of about 34 cents per share. We are minority shareholders and must attach a lack of control discount to account for our lack of ability to control the cash flows of the company. Attaching a low 10% lack of control discount to account for privatization possibility, we get a fair value of 30.5 cents.
Now this is just a framework for discussion and the valuation arrived is rather low as it does not attach a value to potential future cash flow from new order wins.
(29-09-2016, 01:14 PM)Clement Wrote: [ -> ]Please allow me to add my 2 cents to the discussion.
To discuss whether the drop in share price was warranted, we need a framework to analyse what we are getting for the current price.
Cash Assets and liabilities.
1) 25.5 cents per share in cash
2) Approximately 13.6 cents per share in receivables and 9 cents in taxes and accounts payable.
Total should be approximately 30.5 cents.
Business side.
Order book of $48 million in the structural steel segment which will bring in approximately $8.5 million in cash profits if we are to assume that the EBITDA margin of the segment will be steady even with low utilization. Of the $8.5 million in expected cash profits to be received from the order book, $961,000 has already been billed so that leaves about $7.5 million. Applying a 10% discount for time value yields a present value of the current order book of $6.7 million or 2 cents a share.
The dormitory business generated 3.7 cents per share of EBITDA in the previous FY. Assuming non renewal, it will operate of about 5 months next year and assuming the same monthly EBITDA, it is worth approximately 1.5 cents per share.
That brings us to a total of about 34 cents per share. We are minority shareholders and must attach a lack of control discount to account for our lack of ability to control the cash flows of the company. Attaching a low 10% lack of control discount to account for privatization possibility, we get a fair value of 30.5 cents.
Now this is just a framework for discussion and the valuation arrived is rather low as it does not attach a value to potential future cash flow from new order wins.
This figure is rather close to my estimated amount from my scorecard.
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Since its listing (IPO priced at $0.20; which raised $22.0m in gross proceeds via issuing 110.0m new shares) on SGX on 1Apr2010, TTJ has not raised additional new capital. Its issued shares base has remained the same 350.0m shares (less 0.5m treasury shares held by the company). Since listing, TTJ has delivered a total cumulative EPS of $0.3363 in the last 7 financial years - averaging $0.048/year - and has paid out or declared a total cumulative $0.138 in yearly dividends. Based on the last done share price of $0.39, and including the total dividends of $0.138, shareholders who bought into TTJ during IPO and have held onto their shares till now, have enjoyed a total return of $0.328 or 164% - averaging 23.4% p.a. over a 6.5 year holding period - todate. I would imagine most blue-chip stocks listed on SGX have delivered less.
(29-09-2016, 01:14 PM)Clement Wrote: [ -> ]1)Here you have not factor in its assets like factory etc ...and also its business is free..the 25.5 is pure cash.
2)The dormitary already confirm not gonna get renewed. So no need to "assumed" non renewal..dom biz not great anyway.
3)usually nov/dec is the month where a lot of project given out
Best if boss teo buy out the rest of the share..since the mkt price it below its real value/potential..
Just relax and enjoy ...every year got dividend anyway...
Please allow me to add my 2 cents to the discussion.
To discuss whether the drop in share price was warranted, we need a framework to analyse what we are getting for the current price.
Cash Assets and liabilities.
1) 25.5 cents per share in cash
2) Approximately 13.6 cents per share in receivables and 9 cents in taxes and accounts payable.
Total should be approximately 30.5 cents.
Business side.
Order book of $48 million in the structural steel segment which will bring in approximately $8.5 million in cash profits if we are to assume that the EBITDA margin of the segment will be steady even with low utilization. Of the $8.5 million in expected cash profits to be received from the order book, $961,000 has already been billed so that leaves about $7.5 million. Applying a 10% discount for time value yields a present value of the current order book of $6.7 million or 2 cents a share.
The dormitory business generated 3.7 cents per share of EBITDA in the previous FY. Assuming non renewal, it will operate of about 5 months next year and assuming the same monthly EBITDA, it is worth approximately 1.5 cents per share.
That brings us to a total of about 34 cents per share. We are minority shareholders and must attach a lack of control discount to account for our lack of ability to control the cash flows of the company. Attaching a low 10% lack of control discount to account for privatization possibility, we get a fair value of 30.5 cents.
Now this is just a framework for discussion and the valuation arrived is rather low as it does not attach a value to potential future cash flow from new order wins.
(29-09-2016, 08:43 PM)wind22i Wrote: [ -> ]1)Here you have not factor in its assets like factory etc ...and also its business is free..the 25.5 is pure cash.
2)The dormitary already confirm not gonna get renewed. So no need to "assumed" non renewal..dom biz not great anyway.
3)usually nov/dec is the month where a lot of project given out
Best if boss teo buy out the rest of the share..since the mkt price it below its real value/potential..
Just relax and enjoy ...every year got dividend anyway...
Hi,
The post was just a rough framework on discussing the value of the company and not a real attempt at a financial valuation of the company's shares.
1) Yes, there is 25.5 cents of cash on the balance sheet as well as receivables and all that. However it adds up to 30.5 cents and with the current share price at 39 cents, the business is not free. I did not attach a value to the factory as it is a required asset to realise the business value.
2) The dormitory business generated very high margins and more importantly provided recurring income.
3) Why would he want to buy out the rest of the shareholders at a premium to the current price though? At the current price, some future orders are priced in and he will probably not want to pay for value that he is going to bring to the table.
The thing is, with the large amount of excess cash on the balance sheet, the business will have to be incredibly successful to generate a suitable return on equity. The company has a very efficient business model, with high returns on invested capital. However, it is currently constrained by a limited opportunity set and can only invest a relatively small amount of capital.
Based on TTJ's proven continuous profitability track record over 7 years as a listed company, my take on the fair intrinsic value of the group business and of its shares is minimum the latest NAV plus a reasonable premium to account for (1) any hidden value in the group's assets, especially property assets; and (2) the expected/projected near-term earning streams (say up to 3 years) based on the business volume already secured and those that are under negotiation.
As TTJ's latest (as at 31Jul16) NAV/share is already $0.3599, it is conceivable that the fair intrinsic value could be close to the $0.50 mark if we include the additional value from (1) and (2) above.
Those who didn't ride the run are cursing how bad the company is
Those who bought for speculation are boasting about the baseless expectations
Those who invest seeing the true value in the company are the one who keep quiet