ADVFN Logo

We could not find any results for:
Make sure your spelling is correct or try broadening your search.

Trending Now

Toplists

It looks like you aren't logged in.
Click the button below to log in and view your recent history.

Hot Features

Registration Strip Icon for charts Register for streaming realtime charts, analysis tools, and prices.

Titon – an amazing profit recovery

Share On Facebook
share on Linkedin
Print

When I bought into Titon (LSE:TON) in 2013 it had a market capitalisation of only £3.9m. Compare that with the profits it reported in 2014 and 2015:

2014: Profit after tax £1.28m. Profit after tax attributable to holding company shareholders, £0.90m. Eps 8.52p.

2015: Profit after tax £1.71m. Profit after tax attributable to holding company shareholders £1.33m. Eps 12.6p.

I think we can say that it has broken its spell in the profit doldrums. It was helped by the revival of the Korean market and by the efficiencies the management team have delivered.

Now the MCap is 10.6m shares x 93p = £9.9m, and the shares are trading on a price-earnings ratio of 7.4.

Still, we see that Mr Market has little faith in this firm – but trust has grown since 2013!

Understanding the source of profits

The vast majority of profit comes from Titon’s Korean subsidiary. Sales in the UK, Europe and USA are increasing, but not yet shooting the lights out on profits.

The organisational structure in Korean is a little complicated:

Titon Korea is 51% owned by Titon UK, which controls its management. Korean investors own 49%.

As I understand it, the subsidiary, Titon Korea, manufactures or imports from Titon UK.

The accounts, both balance sheet and P&L are consolidated with the Group accounts. Hence an entry for “non-controlling interests” in the Group accounts.

Look at the growth of sales for Titon Korea:

2012 £1.9m
2013 £3.7m
2014 £5.7m
2015 £7.2m

Now for a bit of a twist: Titon Korea does not sell to consumers. Rather, it sells to a marketing company, Browntech, which is 49% owned by Titon UK.

As well as being a shareholder with under 50% of the voting shares, Titon UK does not have managerial control of Browntech. Therefore it is an “Associate” company and the accounting numbers remain unconsolidated.

Browntech/Titon Korea account for 32.2% of overall company sales.

The 51% holding of Titon Korea created profits of about £1.3m after tax.

What are the prospects for the Korean business?

The company is expecting more growth in Korea, but at a more moderate………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

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com