Singapore Youth Flying Club. Singapore Changi Airport Terminal 3. New Supreme Court Building. The Helix at Marina Bay. Supertrees at Gardens by the Bay. Singapore Expo Hall 7 to 10. What is their commonality?
TTJ Holdings [market capitalization S$132.8 million] played a part to build it.
Listed on Singapore Exchange in 2010, TTJ is a structural steel specialist offering design, supply, fabrication and erection of a wide spectrum of structural steel works for use in the construction of buildings, factories, plants and infrastructure. It fabricates and installs various cranes and lifting equipment used in shipyards, factories, and construction sites, as well as handles heavy lifting operations, such as launching of heavy trusses and viaduct beams for MRT and LRT.
Accredited with the highest grading S1 by Singapore Structural Steel Society, it has a combined annual production capacity of 42,000 tonnes for normal structural steel at its two fabrication facilities in Singapore and Johor, Malaysia.
TTJ is running a dormitory with a capacity of 5,300 workers that provides a stable and recurring income stream. On 20 July 2016, TTJ reported non-renewal of tenancy and it will expire in January 2017. The segment contributed 20.3% or S$19.1 million of the Group’s revenue for FY2015. TTJ Holdings commands one of the highest Return of Equity (20.5%) among construction companies listed in Singapore Exchange.
With a S$89.2 million cash pile, it has an enterprise value of S$43.6 million. For FY2016, it reported S$25.8mil net profit. This means that Mr. Market is attaching an P/E valuation of 1.7x to the value of the existing businesses (ex-net-cash). While TTJ may look cheap, an investor has to be forward-looking to understand the risks ahead. When you drive a car, you forward and not the rear mirror.
As of 26 September 2016, its order book stood at S$48million which is within their lower range. It is a concern whether TTJ is able to clinch more contracts in the future.
On a brighter note, in Singapore Budget 2015, Deputy Prime Minister and then Finance Minister Tharman Shanmugaratnam announced Singapore’s investment in infrastructure development will grow to about S$30 billion by the end of this decade.
Teo Hock Chwee, who holds 84.4% of TTJ, is known to be frugal and stringent on project cost management. Mr. Teo is focused on the company’s fundamentals to ensure that each project has a comfortable margin of safety and profitability. In fact, it is known that Mr. Teo has a generous heart and donates frequently to different causes.
To find more about TTJ Holdings, please visit here for TTJ’s FY2016 presentation.
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