SingPost (S08)

Draft: 2/14/2017

Source: SingPost Q3 report.

Updated: 2/26/2017, Market size:3.16b, PB 1.9, Price $1.39/share

Another blog by ASSI attractive my interest. Alright, in fact I bought SingPost some time ago; and received an email from my broker on Monday when SingPost's price dropped by 6% after its over-the-weekend profit warning announcement.

eCommerce acquisition: TradeGlobal in Nov 2015 is a flop, merely a year more, mgmt is talking about impairment of that whole acquisition.

Who made that corporate purchase decision? How can it be in this short period of time, two key customers of TradeGlobal one filed for Ch 11, the other went for in-source.

==============================
What does Alibaba value SingPost
- Alibaba invested $86.2m on Oct 27, 2016 for 34% stake in Quantium Solutions. Value QS at S$254m. QS revenue Q3 16/17 is 29.5m; Singpost Logistics segment Q3 16/17 is 171.3m(OP 5%); Singpost Q3 16/17 revenue: 369m(OP 10%).
=> SingPost: ~3.1b
- Alibaba  invested $187.1m on Jan 11, 2017 for 4.2% of SingPost($1.74/share)
=>SingPost: ~4.4b
- Alibaba invested $312.5m for 10.35% of SingPost by Jul 2014.
=>SingPost: ~3b

==============================
Value Catalyst
Only when Tradeglobal stops bleeding.

==============================
Turn around plan
Entry price not attractive, average down.

TTJ Holdings(K1Q)

Draft: 2/20/2017, price $0.38, S$135m.

Data source: Prospectus 2010, Listed Apr 2010, Issue price 0.20/share.

Updated 2/25/2017,
Data source: 2016 AR

Company profile(2010):
- Structural steel specialist strong in SG and Middle East. Production capacity of 42k tonnes/pa.
- Dormitory biz hosting 5700 people.
Chairman & CEO: Mr. Teo Hock Chwee, founded company in 1981<TTJDE>. Age 60(2016).
91% business from SG in 2009. 67% staff are foreign workers(236 work permit holders in two dormitories).

Risk factors:
Business nature: on a project basis and non-recurring, it is critical to continuously secure new projects.
Steel price fluctuation US$582~1160 per tonne in 2006-2010. (US$681, Feb 2017)

	Max Production capacity (tonnes)	Utilization
2007	19000	57%
2008	24000	65.80%
2009	35000	56.70%

<Pg 69 B/S>

$’000 Audited	31-Jul-09
Property, Plant and Equipment	24,074
Investment Property	18,697
Total Non-Current Assets		42,771
Inventories	600
Trade and Other Receivables	49,419
Other Assets	475
Cash and Cash Equivalents	5,875
Total Current Assets		56,369
Total Assets		99,140
Equity
Share Capital	2,000
Retained Earnings	29,941
Other Reserve	(318)
Minority Interest	11
Total Equity		31,634	32%
Deferred Tax Liabilities	768
Finance Leases	1,549
Other Financial Liabilities	15,045
Total Non-Current Liabilities		17,362
Income Tax Payable	2,899
Trade and Other Payables	21,730
Finance Leases	802
Other Financial Liabilities	24,540
Other Liabilities	173
Total Current Liabilities		50,144
Total Liabilities		67,506	68%
Total Equity and Liabilities		99,140	100%

When it was first listed, gearing ratio is high, current ratio is low. Who would think of this underdog in an industry that sounds so dull?

But its shareholder is handsomely rewarded if so holds the IPO pieces till now. TTJ Holdings enjoyed the magic power of capital market to grow its revenue from 60+m revenue to 130+m.
Then:

	2007	2008	2009
Revenue	64.5	65.4	138
Gross Profit	15.4	14.8	23
PBT	10.6	8.4	15.8
PATMI	9.2	6.6	13
Net CF from Operating	3.9	4.4	13.5
EPS(cents/ 350m shares)	2.6	1.9	3.8
NAV(cents)			14.8
			IPO 2010	0.2	(cents)
				70	(million)

Now:

in millions	2007-07	2008-07	2009-07	2010-07	2011-07	2012-07	2013-07	2014-07	2015-07	2016-07
Revenue	—	—	138	70	97	143	127	135	94	137
GP Margin	—	—	17%	26%	29%	21%	22%	28%	29%	29%
OP	—	—	18	11	19	17	17	25	20	30
OP Margin	—	—	13%	16%	20%	12%	13%	19%	21%	22%
Operating CF	—	—	14	17	24	5	18	29	31	35
Capex	—	—	-18	-1	-2	-3	-1	-2	-1	-1
FCF	—	—	-5	16	22	2	17	28	30	35
NAV	—	—	—	0.09	0.18	0.25	0.26	0.32	0.35	0.36
EPS	—	—	0.05	0.02	0.04	—	0.04	0.06	0.04	0.07
Dividend	—	—	—	—	—	0.01	0.01	—	0.01	0.08
Payout Ratio %	—	—	—	—	15.8	—	—	52.6	32	96.9

With the today's price of 0.38 cents, without counting the dividends, it offered its shareholder an annualized return of 10~11% for the past 6.5~7 years since it went public (even though the price was offered at 1.5PB that time, only 1PB today),while STI index was 2900~3030 in Apr 2010 it is still around that range today.

Operation wise, it did much better than its competitor Yongnam Holdings(AXB). Yongnam holding has 300m+ revenue a year, with GM of sub-ten %.

It is a win-win for its founder/owner and its shareholders.
真的是丑小鸭变小天鹅。
History from 1970s, <Pg 84>
TTJ Civil Engineering closed shop in 2002 due to unable to meet its liabilities obligations, renamed to FRC Civil Engineering.

===============================
 Prospects
 Business mainly in Singapore, overseas venture(UAE) doesn't seem work well, with SG gov's continuous infrastructure investment, and company's S1 steel contractor grading, the market demand is promising.
<Permits> Pg 237
===============================
2016 Chairman msg:
careful selection of projects, sustain profit margin and bottom line growth. 姜是老的辣。
Public sector demand: S$16~20b/p.a.
Top 3 customers, 75m out of 137m,50+%
Administrative cost: 25.8m/500+employees(2010 data), 40~50k/pax, which means TTJ can hardly achieve cost adv. over local player in other market(this seems proven by little overseas success so far). It means the major revenue driver will still be construction in SG which company has established track records.
PPE: ~35-40m.
TTJ Green Energy incorporated.

===============================
Initialed a position. Vested, not because my investment, but TTJ built the sky bridges of the place that I'm currently staying.