TTJ Holdings

[CityFarmer]

Just wondering how do you rationalise a share price of $0.465 for a firm with a NAV of $0.3599 per share. Furthermore order books are significantly down at $48 million vis-a-vis $99 million at the same point of time last year. The icing on the cake is the dormitory business coming to an end in Jan17 with the replacement dormitory bearing a far smaller capacity (500 persons vs 5300 persons). Management seems to see the writing on the wall and so the focus now on pursuing opportunities in new areas of business. This seems to be quiet similar to the situation at CDW Holdings where the exisitng main line of business is in a decline and management is looking out for new areas to move into. The difference being TTJ is near 52 week highs while CDW is at 52 week lows. Will be interesting to see how the market continues to value TTJ...

The P/B >1, might suggest that the net asset warrants higher valuation? I prefer to value it by earning instead, as service-based company.

Few points to note
- more than half of total assets is cash, and no debt.
- ROA 16%, ROE 20%, and ROCE (estimated) is 37% due to high cash and no debt
- Steel biz is the core, and dorm biz is the supplementary. Core biz will stay, with uncertainty ahead.

(just sharing few points for consideration, and vested)