Sunday, July 24, 2016

TTJ Holdings Ltd - Non-Renewal Of Tenancy For Foreign Workers Dormitory

On 20 July 2016, TTJ Holdings Ltd has announced that "BCA has not granted the Group’s application for a renewal for a further term of the tenancy for the Terusan Dormitory. Currently, the Terusan Dormitory houses approximately 5,300 workers and is the only workers dormitory operated by the Group.
 

The Board also wishes to inform shareholders that the Group has been successful in securing the tender for the management and operation of an existing foreign workers dormitory situated at Upper Jurong Road (the “Jurong Dormitory”). The tenancy for the Jurong Dormitory will be for approximately 3 years commencing on 1 August 2016 and ending on 30 July 2019. The Jurong Dormitory has a capacity of approximately 500 workers.

The Group’s Dormitory business contributed approximately 20.3% or S$19.1 million of the Group’s revenue for FY2015. Accordingly, the non-renewal of the Terusan Dormitory is expected to have a material impact on the Group’s financial and operating results for the financial year ending 31 July 2017 (“FY2017”). The Jurong Dormitory is not expected to have a material impact on the Group’s financial and operating results for FY2017."

Click on this link for the full report.

Being the "promoter" of TTJ Holdings Ltd ever since I purchase the stock, I have been telling people how great this company is and how the company was able to pass Enhanced Triple S Scorecard. Therefore, when I saw this news, I was worried.

A dormitory of 500 to substitute one with 5,300! How is he able to achieve similar profit margin for the future years? What is going to happen?

I decided to go back to the latest TTJ Holdings Ltd financials and its respective Triple S Scorecard to calculate its score.

Firstly we need to input the changes stated in the announcement into the financials. We remove the investment property from the non-current assets and $19.1 Million from the free cash flow.

And we still get... that TTJ Holdings Ltd is still a value stock!


Furthermore, if you are able to pick out the right information, you will realise that:

1. The lease will only expire in Jan 2017.
2. For financial year 2016, its financials will not be affected.
3. The new lease for the new dormitory starts in April 2016 - Which meant 3 months of the revenue will be recorded in the revenue for the financials of 2016.

With the information above and the exceptional 3rd Quarter recorded, we can predict the revenue and net profit for Financial Year 2016 will most probably be much higher. Thus, this should be something to celebrate rather than sad.

Do note that there are some insider purchases by the CEO himself lately as well.

However, I will not advise people to go in right now as the price is rather high now. In addition, after financial year 2016, the future financial report will be affect by information stated in this latest announcement. 

Please invest with caution if you are really thinking of purchasing this company.

Current Price: $0.360 as of 24 July 2016.

Please do your own due diligence before you invest in this stock.

Do note the author is vested in this stock/company at $0.325.

Anyway if you are thinking of investing in stocks for the long term, do give my initial Triple S Scorecard a try. It's still a good tool!

However, I will only be releasing the Enhanced Triple S Scorecard for those that attend My Sharing Session with T.U.B. The attendees of the 1st Sharing Session with T.U.B has all received it. If you are interested to attend, do not hesitate to contact me directly.

Oh... and do remember, please like our Facebook page - T.U.B Investing.

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