TTJ 3Q2017 Result Review

TTJ (K1Q)

I bought this company at few months ago and sold it away at 0.45 before they announced their 3Q result, as I believe that the result won't be so impressive and should align with previous quarter results. Although the share price gap up after they announced that they managed to secure more contracts, I don't think the order book will boost the revenue. 3Q result is not very good, somehow disappointed, but within my expectation. Surprisingly market didn't have big reaction after the result announced (actually I thought the price will straight away gap down). 

Let us take a look at the 3Q result. After tenure for the Terusan Lodge I expired, the company's performance is not so good. Revenue drops 69% and COGS drops only 66% so gross profit drops 75%, which indicates that the gross profit margin drops as well. Net profit drops 81% but other gains up 175%. In Note 8 the report explained that Other gains increased by 133% from $0.9 million in 3QFY2016 to $2.1 million in 3QFY2017. The increase was mainly due to the credit balance written back amounting to $1.1 million recorded by a newly acquired subsidiary. 9 months earning per share is now only 2.74 cents compared 6.56 cents from previous year. If last quarter result is similar with 3Q result, 2017 eps will be around 2.8 cents (assuming that the company won't report another 2.1 million other gains in last quarter). So the share is currently trading at PE 14.8 (today share price closed at 0.415), which didn't provide enough margin of safety to invest in the stock. 

When I read the balance sheets few questions came up into my mind. The report shows that the company got 153k of intangible assets in balance sheet. Where is it from? The company is also having more liabilities too. The finance cost increased 850% from last year. The company paid 38k interest in 3Q so I assumed that the liabilities' interest rate is around 5.2% (interest paid 38,000 divided by total secure borrowings 2,924,000 then multiply by 4). The company is also having operating cash outflow and net cash outflow in 3Q, which is not a good sign to me. Net asset value is 37.13 cents per share so the share is trading at PB 1.118. However, cash and cash equivalent stood at 79 million, which is around 22.7 cents per share! This should provide strong support for the share price (well its still far away from current price, it should be a good deal to load some shares if the price drops below 22.7, but it is very unlikely to happened). 

I like cash rich company, but if the performance is falling yet the company is still sitting on its cash, it might shows that the company can't fully utilize its assets to create value for its shareholders. I really hope that the company can do something with its cash, if not net cash outflow will slowly burn its cash away.

https://www.facebook.com/TUBInvesting/posts/934059953403434?comment_id=934146323394797&reply_comment_id=935975699878526&ref=notif&notif_t=share_reply&notif_id=1497111690193879

The above link is a post on facebook by superior investor TUB.

Currently I am not vested in this company, and I don't think I will invest in it again unless the price drops below 35 cents which will provide more margin of safety for me. DYODD huh.