Titon – sold, after trebling my money

PUBLISHED: 04 May 2016 @ 12:50 | Comments (0) |

Titon (LSE:TON) has been a very good share for me. In September 2013 I purchased at 37.9p. I sold all my holdings last week for 106p. Together with dividends (6.5p), that makes Titon almost a 3-bagger (a 197% increase, to be more precise).

I’ve chosen to sell this particular share because I’m concerned that its performance over the next housing cycle will not be as great as recent operating results suggest.

As I pointed out in the 22nd and 23rd Feb 2016 Newsletters, the company seems to lack pricing power. It strategic position in terms of Porter’s Five Forces, and in terms of not possessing an extraordinary resource that allows it to out-compete rivals, concerns me greatly.

It has three strategic business units:

Hardware in UK/Europe

For its simple window vents, handles and other metal/plastic components it faces intense rivalry, giving customers considerable power. Entry to the industry is reasonably easy. The low profits/losses in this area through the recession indicate the low level of pricing power. While the few years ahead might be good for sales as the housing market recovers, the next downturn could bring price-cutting to gain volume, yet again.

Korean hardware

It currently has few rivals in Korea due to first-mover advantage. Consequently……….To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

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