TT ELECTRONICS Looks Primed For Recovery.

Im recommending TT Electronics after having this stock on my watch list for the last few months and have to say it really as a solid management, and a management that backs the company up with solid Director Buying. It’s a business that is in the early stages of recovery after the Bear market and Worldwide recession of the last three years.

What Does It Do?

The company has four main divisions, Automotive, Telecolm and Computer, General Industrial division, and Electrical Division.

Automotive is by far the biggest division and - represents 63 per cent of the electronic sector turnover. It designs and produces amongst other things a range of sensor and system technologies, and also produces a range of resistor and trimmer components. These products are sold worldwide.

Telecom and Computer markets - represent 15 per cent of the electronic sector turnover. The group produces magnets and resistors for mobile products including phones, and as set up a new manufacturing base in Southern china where new products are being designed for the mobile market.

Industrial market - represents 22 per cent of the electronic sector turnover .
In this division additional technical sales and engineering resources have been focused on the more diverse markets of aerospace, defence, medical and control instrumentation. A number of new programmes have been won in all these market areas.

Electrical sector which comprises of two divisions.
Power generation - represents 29 per cent of the electrical sector turnover
Here the company produces power generators mainly for the Chinese market and enviromental connectors for the North African market.

Power transmission - represents 71 per cent of the electrical sector turnover.
Specialist cables for naval vessels and wind farms are produced in this division, and interest is from a worldwide audience.


Latest results.

Interim Results for the half year ended 30 June 2003.

TT electronics, a world leader in resistor and sensor technology today announces its interim results.

KEY POINTS •
Group turnover on continuing activities grew by 4 per cent to 270.4 million (2002: 261.2 million).
•Profit before tax, goodwill amortisation and exceptional items was 9.1 million (2002: 11.3 million). •The interim dividend is maintained at 3.69p per share.
•Operations continue to generate cash and gearing remains low at 27 per cent.
•Sales to the automotive market grew by 11 per cent including a contribution from our French subsidiary acquired in March 2003. •
The strength of the balance sheet positions the group to finance both acquisition opportunities and future growth.
•Neil Rodgers has been appointed to the Board ahead of the retirement of Sheridan Comonte in April 2004.

John Newman, Executive Chairman said today: 'The results we have announced today reflect the strength of our automotive operations while some of our other markets continue to experience weakness. We have continued to implement measures to ensure our resources are aligned to likely future demand. As one of the world's leading producers of customer specific resistive products, we believe that we are well placed to benefit when markets recover. The 11 per cent increase in sales to the automotive market in the face of declining vehicle production underlines the inherent strength of our technologies. TT electronics continues successfully to design high quality new products to satisfy the needs of manufacturers who are committed to increasing the electronic content of motor vehicles. The automotive sensors and systems businesses remain on track to achieve internal forecasts of 25 per cent sales growth between 2002 and 2005.


Recent Developments.

TT as acquired US electronic sensor company Optek Technology for $51.3 million (30.2 million).
About 40% of Optek's sales are of Hall Effect sensors for the automotive market, which are already big business for TT in Europe where it sells somewhat more sophisticated versions.
The acquisition should increase the company's US turnover to about $70 million up towards its target of $100million and provide sales synergies.
Optek managed sales worth 40.4 million in the year to the end of January 2003 and produced profits before tax interest and goodwill charges of 2.4 million.
TT is buying the business in a debt free state and will pay cash.

One great advantage of the acquisition is that the acquisition of Optek will introduce fibre optics to TT electronics' range of technologies. Optek's fibre optic products include transmitters, receivers and transceivers which interface with the terminated end of a fibre optic cable. They are used to convert the light signal travelling through the fibre optic cable to an electrical signal which can be interpreted by a microprocessor. Applications include local area networks, fibre-to-the-desk, industrial data links and storage area networks.. Optek has also developed a 'Plastic Fibre Optic Transceiver' (PFOT) which can be used for fibre optic cable connections in entertainment systems of luxury vehicles. Optek believes that PFOT applications are likely to grow significantly. In particular, the replacement of copper wiring harnesses in vehicles with fibre optic cable significantly reduces weight and is therefore potentially highly attractive for the automotive industry.

Commenting on the acquisition, John Newman, Executive Chairman of TT electronics said 'I am delighted that after an extensive search we have identified an acquisition which both creates clear business synergies and satisfies our financial criteria. The acquisition of Optek will significantly expand our sensor activities in terms of technology, customer base and product range as well as increasing our low cost manufacturing capacity. The acquisition of Optek will enhance TT electronics' earnings per share in the coming year.

Director Share Buying.

Executive chairman J B Newman purchased 100, 000 shares at 124.2p on the 5th of December and director N A Rodgers purchased 10,000 shares at 122p also on the 5th of December, the directors backing the company on its way forward.

The Way Forward.

Executive chairman John Newman told Financial Specialists Citywire, tough conditions over the last few years have moved the acquisitions market in TT's favour as they have injected more realism into the expectations of vendors. He said: 'Times have changed. A few years ago people's aspirations were too high. Now they're more realistic.' following restructuring at Optek, which moved manufacturing to a low cost facility in Mexico, TT is buying the business in far better shape than it was a year ago. He believes Optek is capable of making net margins closer to TT's usual 10%.

Shareholders can also take heart from the fact that trading is at last showing signs of improvement.
Newman said: 'I'm now saying there is an upturn in orders and I think it is sustainable.

The company claims that more than one in two cars made in Europe and North America contain at least one of its products boosted by the move from luxury to volume cars. TT expects growth rates of auto electronics to be well over 6% per year boosted by the new acquisition and this to continue for at least the next 5 years.

Newman's comments about trading are also most encouraging as until recently he was sceptical about any signs that business had picked up. The shares trade on a p/e circa of 13.5 and yield a massive 8.2%.

I look upon this as a long term investment and feel that when the Telecolm division picks up and there are signs Globaly that this is happening in the telecolms Industry, that this will turn out to be a good investment.

Cheers Goldfinger.

Please DYOR, and remember you are responsible for your own buying and selling actions.

I'm rather liking this right now, looks like an easy 220p target..

From the CR thread ( I don't hold these );

"fingers xxd 6 Feb'14 - 12:57 - 165225 of 165225 0 0


This 5 yr chart of TTG has 'caught my eye'.
Appears ready to 'breakaway' from the 200.00p level."

No but I do and noticed same thing as fingers. Bought first thing today.

Get yer wallet out doodles and stop being stingy.

lol

@ 220 I'm selling out...

One for the radar again