TA ENTERPRISE BERHAD (4898)

16-Jan-2015


What do they do? 
TA Enterprise Berhad, an investment holding company, is primarily engaged in:

(i) Broking and financial services - stockbroking, fund management, unit trust, derivatives broking and trading;
(ii) Investment holding - provision of funding and investment related services;
(iii) Credit and lending - provision of finance and related services;
(iv) Property investment - investment in residential and commercial properties;
(v) Property development - development of residential and commercial properties; and
(vi) Hotel operations - operation of hotel and related services.

It has operations primarily in Malaysia, Hong Kong, Canada, Australia, and the British Virgin Islands. The company was incorporated in 1973 and is based in Kuala Lumpur, Malaysia.

How do they make money? 

Last year they managed to achieve a revenue of 871 million and net profit of 179 million.

Bulk of their revenue is from Hotel Operations which amounts to 480.7 million or 55% of total revenue.

However Hotel Operations only achieves a net profit of 53.1 million or 30% of total net profit.

The segment that achieve most net profit is Credit and Lending; 107.3 million or 60% of total net profit.

Naturally, we wish to understand how the Credit and Lending segment makes money. And this explanation is from their 2014 Annual Report:

It gives the impression that this segment's performance is erratic judging from the huge jump from 16 million to 101 million in net profit.

Outlook

What's cooking in Malaysia?

What's cooking in Canada?
What's cooking in Australia? 

TA shall be busy for many years with new projects in both property and hotel segments while being supported by its broking, credit and lending segments.

Valuation

As of 16-Jan-2015:

Non-Current Asset: 3,630 million
Current Assets: 2,676 million
Total Assets: 6,307 million

Non-current Liabilities: 755 million
Current Liabilities: 2,501 million
Total Liabilities: 3,257 million

Total Equity: 3,050 million
Net Assets per share (RM): 1.78

Cash from Operations:130 million (Based on 2014)
Capital Expenditure: 47 million (Based on 2014)
Free Cash Flow: 83 million (Based on 2014)

2015 Net Profit (TTM): 165 million

Current Share Price: RM0.73
No. of shares: 1,712 million
Market Capital: 1,250 million

Dividend per share (RM): 0.028

In terms of Net Assets, TA is currently valued at a discount of 60%.
In terms of Net Profit, TA is currently yielding 13.2%
In terms of Free Cash Flow, TA is currently yielding 6.64%
In terms of Dividend, TA is currently yielding 3.8%

I think TA Enterprise is attractively priced and is worth a LONG TERM investment.