TRT, a leader in a growth business -at low valuation

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Company Visit


Leader in a growth business which is not slowing down.

I visited TRT (5.40) on June 12 and came away excited. Here is another quality growth company at a below average p/e -and above average dividend yield.  The recent stock split and issue of free warrants should in time increase trading volume and market capitalization. Insiders own a good portion of the shares and the 2008 annual report is comprehensive as it is impressive and its both in Thai and English language. Unfortunately there are no Thai broker research reports in English language available. 

The company was founded in 1987 and is a leader in what it does, which is manufacturing of all sizes of electric transformers.  TRT is the largest manufacturer of electrical transformers in the country.  You can see their web site at:

You can the MAI’s summary of TRT at this link here:

You can see their latest Q. earnings report at this link here

TRT clients include all of the Thai electricity state enterprises, major industrial plants and buildings, and contractors on electrical work. They also sell their products to customers in many countries, such as, Japan, Singapore, Philippines, Malaysia, Laos, Myanmar, Cambodia and Vietnam.  All together, TRT exports to some 25 different countries. Exports are about 1/3 of total sales, government contracts are about another 1/3, and private in Thailand represents the remaining 1/3.  Hence this company is broadly diversified by client type, industry and through exports.

Because their transformers are 100% made to order, the company does not incur any raw material cost increase risks.  80% of TRT’s costs, are raw material.  The company has a relative short delivery time/back log of 6-12 months, and expects revenues to increase to 2.6 Bill this year, up from 2.1 Bill last year.

The 1 Q. net profit margin for 1 Q. ’09 was an impressive 13.1%,  but the company projects over time net profit margins to be around 9%.  If,  I assume a profit margin averages of 10% for this year, I come to a 260 mill. net profit, up from 203 mill of last year.

The 1 Q. ’09, net profit was reported at 88.7 mill. Baht and the company reports no effects seen, due to the global economic crisis.  Hence, I think there could be upward surprises on the net profit projection this year.  When I visited the company the parking lot was overflowing, the meeting rooms full of class attendees on some seminar and the place seemed humming. I ended up getting so engulfed in it all, I missed my plane connection that Friday up

TRT has 202 million shares outstanding, so my earnings per share estimate for this year is 1.30 per share, so the p/e is only 4.2.  Note however that at the end of May ’09, TRT issued new warrants to existing shareholders, to the total diluted shares outstanding, post conversions of these warrants, would by then increase to 280 mill.  (at the ratio of 3 ordinary shares, to 1 warrant).

Since these warrants do not expire for 2 years, the main dilution effect on earnings and dividends are not until year 2011.  The last exercise date will be on 27 May 2011, at the price 3 Baht per share.

TRT is another choice company to be included in my model portfolio.  TRT is not in the tourism, real estate or import/export business… its business is stable and not depended much at all around Thai politicians, tourists, nor vulnerable to raw material prices fluctuations. 

Fact is, Thai electricity demand keeps growing annually between 5-6% (see TRT business overview) and so the need for multiple transformers, starting at the power plants, all the way down to the end user, all are on the increase. Further, life expectancy of transformers is around 30 years -and so the company will benefit in the longer time frame from the transformer replacement business as well.  Yet, for now, it can hardly keep up in demand for new ones.  Global recession? But not for TRT.

As the record shows, in recent times TRT’s business is brisk, the dividend yield relatively high and yet the p/e ratio, well,  all below the MAI’s exchange averages.

For further information and better understanding of TRT,  I urge all members to look at the recent investor presentation I was able to load up to the site. You can see at the “Downloads” link or here:

Best Regards,

Paul A. Renaud.