TTJ Holdings - RHB Invest 2016-09-07: Trading BUY with Fair Value S$0.47

TTJ Holdings (TTJ SP) - RHB Invest 2016-09-07: Trading BUY with Fair Value S$0.47 TTJ HOLDINGS LIMITED K1Q.SI

TTJ Holdings (TTJ SP) - Trading BUY with Fair Value S$0.47

  • TTJ Holdings (TTJ SP) is reporting its full year financials later this month and we think the group is poised for a record year in profits and possibly, higher dividends to go along.
  • The company’s key business activities are in the design, supply and fabrication of structural steelworks with a combined fabrication capacity of 42,000 tons across its factories in Singapore and Johor, Malaysia. Over the years, the group has built up a strong track record in delivering sophisticated structural steel solutions used in diverse industries ranging from commercial building construction and offshore oil and gas to industrial plants. 
  • TTJ was involved in many iconic landmarks in Singapore such as the National Art Gallery, the Orchard Gateway bridge, the SuperTrees at Gardens by the Bay, The Helix at Marina Bay and Pinnacle@Duxton, among others. 
  • It also operates a dormitory business in Singapore with a capacity of 5,300 persons at Jalan Papan, but the lease will be expiring in January next year.
  • Riding on a strong pipeline of contract works for major infrastructural and industrial projects such as the LNG Terminals at Jurong Island and Pengerang, Johor, upgrading works at Changi Terminals and civil defence doors for new MRT lines, the group delivered a 138% growth in net profit to S$22.9m for 9MFY16
  • With an orderbook of some S$70m to be delivered over the next 18 months, we expect full year profits to comfortably exceed S$25m.
  • TTJ stands out for its highly cash-generative business, with S$56m of free cash flows generated in the past 2 year. Despite a bumper dividend of 8 cents/share amounting to S$28m in FY15, cash continues to build up and the group is currently sitting on net cash of S$66m, which amount to 50% of its market capitalisation. 
  • Along with higher profits, we expect the group to dish out good dividends (3cents/share based on a 50% payout). Valuing its structural steel business at a normalised 10x multiple or S$100m and its cash pile of $66m, we believe the stock can trade up to its fair value of S$0.47. 
  • We recommend a Trading BUY.

Goh Han Peng RHB Invest | 2016-09-07
RHB Invest SGX Stock Analyst Report Trading BUY Maintain Trading BUY 0.47 Same 0.47