Titon Share Discussion Threads

[pugugly] 09/12/2010 08:27

On first read the results look promising. In profit and dividend increased.

[rainmaker] 30/11/2010 16:36

It lives, it's alive...................Results out next month

regards

[bori5] 17/7/2010 10:58

O/T check out IRG. DYOR & GL

[cjohn] 08/7/2010 12:01

But that's still a spread of 2% to buy and sell??

[wad collector] 15/6/2010 17:48

Spiked up today to 55p and the spread has narrowed to 0.5p.Makes it worth trading at those sort of spreads.

[wad collector] 14/5/2010 13:17

Business Review

Financial performance

Titon is pleased to report a Profit before Tax of GBP102,000 for the six months
to 31 March 2010 (2009: GBP366,000 loss) on Revenues 9.2% higher at GBP7,393,000
(2009: GBP6,768,000).

Earnings per share for the period were 0.76p (2009: loss of 3.02p) and the
Directors have declared an unchanged interim dividend of 1.0p per share (2009:
1.0p per share).

Tight control of cash has been a focus of management throughout the recession
and we are pleased to report Net Cash Balances at the 31 March 2010 of
GBP2,863,000 (2009: GBP2,529,000).



The rest of it makes interesting reading.Well, if you like that sort of thing.

[liarspoker] 22/3/2010 14:16

Thanks moathunter. I appreciate your responses to my questions as they are well above the average posters ussual posts. I added 5,000 @ 50p last week and that is my final top up unless the price falls a lot. My price target for TON is about 75p so higher than your target. This is based on asset prices ( only the property in the fixed assets not the rest of fixed assets ) being discounted mixed with somewhat moderate earnings power. Furthermore I usually discount inventory by 50% and receivables by 25% unless I subtract 33% from net net working cap to get a fine margin of safety. My max buy price for TON was around 50.2p or 50.7p from memory hence my final buy at 50p.

[moathunter] 20/3/2010 14:53

Liarspoker - 19 Mar'10 - 19:05 - 1814 of 1818
What valuation would you put on Titon Holdings ( TON )?

TON is a little cheap and I'll be selling at around 65p / £7m. Bought at 47p on the way down (to 19p!) due to the very low probability of it going bust in a recession and my mistake in thinking the share price collapse due to the dividend cut suggested it was cheap.

TON is 35% family owned- usually family run companies are good investments but a few are poor. TON's Anderson family are motivated to preserve the company to avoid the 'ignominy' of having to work as employees elsewhere, so they have admirably pulled out all the stops to maintain their balance sheet during the recession.

But some reasons why TON is a weak company are:
# Av. operating profit 3.7% since 2003.
# Ever-worsening gross margin since 2004 to 22%
# Static sales since 2002.
# Working capital (WC) is a very large 20% of sales, so any sales growth will increase WC and drag cash generation.
# Return on invested capital is dire at 4%.
# The Korean joint venture is tiny, has taken a few years to even reach a profit and won't flicker the dial shareholder value-wise.
# TON were forced into pushing manufacturing eastwards (Eastern Europe) to simply 'stay in the game' back in 2007.

Back in the 1970s TON was solely making trickle vents but suffered margin squeeze in being suppliers to low margin window manufacturers. So they've made a good strategic shift into "window fittings + trickle vents and passive ventilation systems" to stay in business this decade. Trouble is, this converted their clients for trickle vents (passive ventilation system suppliers) into rivals. And window fittings is a very bad sector with bankruptcies in 2008. So it's 'out of the frying pan and into the fire'

Overall, TON has the weak economics of being a manufacturing supplier to the construction industry that is still in the doldrums AND they must keep shovelling cash into the bad economics instead of giving any earnings back to us, because environmental legislation/ building regulation changes every few years demand that TON continually invest capital into R&D to stay in business in the weak economics.

As a result of the above, TON's cash flow generation is weak and obviously the assets like intangibles, machinery and inventory are only worth the cash flow they can generate (else why would anyone pay more for them?).
This means TON is certainly not worth the £10m claimed tangible book value but more like £7m- a little above net net current assets value of £5.5m and orderly liquidation value estimate of £6.3m.

So TON is fairly cheap at current price 50p/ £5.3, but PRP and CFC are better investments.

[captain sensible2] 19/3/2010 20:30

Neeps you can add .gb to the epic i.e ton.gb in the advfn monitor and it will enable you to look at the plus data incl trades.

[neeps] 17/2/2010 18:21

AGM today. I wonder if that'll bring any positive news. Let's hope.

[rainmaker] 07/2/2010 00:09

To the best of my knowledge this is the first time they have manufactured abroad and unit labour costs in Korea are less than half of those in the UK. It's an interesting development, simultaneously opening up new markets and increasing operating margins.

regards

[neeps] 05/2/2010 08:50

Thanks Rainmaker. I don't have access to level 2 but made 2 purchases yesterday as I believe it's undervalued and with the mayhem elsewhere it's worth having a few. I work in a similar company although it's not a listed one and we've been doing pretty well for 6 months or so after a very poor early 2009. We deal with a lot of similar companies to Titon and although the recovery has been patchy, the decent window manufacturers are all doing much better than a year ago. All imho of course.

[rainmaker] 05/2/2010 01:39

Hi Pote, hello again.Obviously if you want fairly decent volume you'll have to make quite a few purchases.

regards

[rainmaker] 05/2/2010 01:32

Neeps, just checked todays trades and there is a trade at 11.53am for the purchase of 2,234 at 44p on.....................sets.Still very cheap at current levels- I believe that net working capital is 56p

regards

[rainmaker] 05/2/2010 01:01

Hi Neeps, If you have access to level 2 on ADVFN, then you put a tick in the "aggregate" box where I'm sure it will show up as having been executed on Plus markets(denoted by a + sign)

regards

[neeps] 04/2/2010 10:32

Have purchased further £1k worth today and again the trade doesn't show anywhere. Window hardware business is picking up although the recent bad weather didn't help. However, with continued poor interest rates on savings & the ups & downs of house prices people may well spend their savings on replacement windows & conservatories again.
Any views on why the trades are not showing would be appreciated.
Good luck.

[pote] 04/2/2010 02:00

RM
"market in it's shares is so thin"
Tried to top-up with £2k worth of TON today, with a limit of 40p.
Selftrade could only fill £1k worth (2500 shares), I tried again soon after and they wanted 44p.

[rainmaker] 04/2/2010 01:52

"Titon shares are in bargain territory, they cost six times average earnings over the last ten years" using average earnings over many years and then expressing the current share as a multiple of that figure IMHO is an excellent yet simple technique, designed to gauge the attractiveness of a share in terms of its long range earnings.

regards

[rainmaker] 04/2/2010 01:43

Not a bad article but the ratio he's speaking of is net net current asset value not, net current asset value AND you need to take current assets and subtract all liabilities then divide this by its market capitalisation ie net net current asset value divided by market capitalisation. Ben Graham looked for a Company where it's net net current asset value per share(also known as net working capital) was 50% greater than the share price ie a so called bargain ratio of 1.50. He reckoned that if you bought a Company at this level you didn't even need to know what the Company did before buying it's shares.

It's also worth pointing out that in buying Titon Holdings at current levels you effectively gain £4mln of tangible fixed assets, equivalent to the current market capitalisation at NO COST. That and the discount to it's net net current asset is your margin of safety to protect yourself against future unseen adverse events likely ensuring that the Company's undervaluation remains intact and giving a satisfactory prospect of a good return.

Although Titon made a loss for the year it actually made £256k in the last six months and that is without any contribution from the promising new South Korean joint venture, as it is still loss making although it is winning new contracts. I can see this share price making excellent progress
from current levels to 60p short term particularly when the market in it's shares is so thin.


regards

[wad collector] 03/2/2010 18:22

The spread's a bit of a killer atm.Needs a 10% rise just to break even , never mind brokers fee and stamp duty.Still , general upward trend continues.

[neeps] 03/2/2010 15:58

Dipped my toe in at 2.00pm but the trade isn't showing. Happy with 3p movement since then though. I wonder how many other trades are not showing.
Just went in to get some more & now it's negotiated trades only. Mmmm!
Good luck.

[peawacks] 03/2/2010 14:03

From Richard Beddard in Interactive Investor, !st Feb

"Statistically, distressed companies like Titon are most likely to recover impressively when they are financially strong, they are staying afloat without relying on borrowing more money or raising it from shareholders, and profits, however bad, are at least improving. That's what the F_Score shows. In cash terms Titon is profitable, allowing it to maintain a dividend (although the payout was reduced last year).

The absolute strength of Titan's balance sheet is also a source of confidence. In its annual report for the year to 30 September 2009, it didn't have any long-term debt (and a negligible bank overdraft) and shareholders had by far the biggest claim on the company's assets (shareholders' equity is just shy of 80% of assets). Virtually all of those assets are tangible, in the form of property (about two thirds of the property, plant and equipment), cash, and receivables (money owed by its customers).


Titon shares are in bargain territory, they cost six times average earnings over the last ten years, and perhaps more importantly four tenths of book value. It's so cheap, it's quite close to being a 'net net', the ultimate Ben Graham value stock.

Graham liked to pay less for companies than they were worth. He'd discount any value they might add in the future (in the form of profits) and pay less than the accounting value of the company's assets, minus its liabilities. Ideally, he'd only pay two thirds of the value of the current assets (those that could be most readily converted into cash, like stocks (inventory), receivables, and cash itself) minus total liabilities. Another way of expressing the calculation is net current assets (current assets minus current liabilities), net of non-current liabilities, hence 'net-net'.

Here's the calculation, so you can get a feel for the size of Titon (TON), because it isn't a titan:

Price : Net Current assets =

Market capitalisation/(Current assets-Total liabilities)

4,117,000/(8,108,000-2,650,000) = 75%

Not quite 66%, then, but pretty cheap.

The size of Titon is another reason for investors' lack of enthusiasm. The whole company has a market value of only £4m, implying that the shares may be difficult to get hold of (or sell later on) close to the quoted mid-price. In fact you could buy £1,000 worth of shares for 39.5p today, inside the spread of 38p-40p, so I've surprised myself and added unprofitable Titon to the Thrifty 30 model portfolio at that price.

Founded in 1972 by its current chairman, John Anderson, who owns 22% of the shares, Titon has survived this long. I'm hoping it's going to find a way of being profitable in the low growth, or recessionary economy many anticipate. So far, by cutting jobs and overheads, it has survived. Now it's looking to a new (and loss-making) joint venture in South Korea for growth, and the UK housing market for recovery. Meanwhile, I take comfort from the fact that I've almost snapped-up that rarest of things, an absolute bargain."

[rainmaker] 01/2/2010 23:31

Thanks CJohn,I wonder if the IC will agree. I have to say I think they will but all will be revealed on Friday. And look for the tell tell in the next few days.

regards

[cjohn] 29/1/2010 11:53

Hello Rainmaker. Yesterday's interim management statement made, on the face of it, for mixed reading. UK construction activity has sloped off a little, in comparison with the previous quarter. Nonetheless, group turonver for the three months is 9% higher - thanks to increased sales in South Korea.

Cash remains healthy at 3 million sterling.

These are sharply undervalued: the downturn in their trading perfromance over the last couple of years has a clear cyclical component, and trading will pick up at some point.