The company has suffered from the boy who cried wolf syndrome....

The company has suffered from the boy who cried wolf syndrome.

In 2014/15 the company had strong momentum raised money at 8 cents and forecast that they would begin to make road lighting sales to diversify the traffic lighting, traffic management and signage business revenues.

The road lighting sales were very slow in coming and people lost confidence , they actually had a few institutional shareholders , paid down some debt , and had solid momentum

When the road lighting sales did not arrive as anticipated they lost market support nearly all the new shareholders sold out , and some shareholders even tried to have a board spill at the AGM in 2015 and get rid of the MD who is a large shareholder at about 10% from memory

2016/2017 was definitely an improved year for TTI , but with this new deal with the Victorian government road lighting deals seem to gaining a real momentum and ready to hit the revenue line

Sales in Brisbane , Adelaide, now Melbourne appear to be worth up to 30% of last years total revenue , and sales of traffic lighting product also seem to be gaining momentum in Asia, UK Dubai according to the last report .

2016/17 Revenue was around $48m

This $8m sale , and some previously announced sales in the end half of 2016/17 could see revenue jump towards $60m in 2017/18 which is a heavy growth rate .

If they made $2.6m EBIT on $48m of revenues they should make at least $4m EBIT on $60m.

$4m EBIT should really see the debt start to erode quite quickly or someone like Downer buy them.

Downer has a market cap of $4 billion , with their share price about 20 times profit.

After buying SPO , DOW might look at buying TTI.

$4m EBIT added to Downer for a global traffic business with its own IP , would add $60m to their market cap assuming they continue to trade at the same multiple. This calculation is after deducting the $20m debt they would need to repay if they did buy TTI .

The question is what would a Downer need to pay for $60m addition to their market cap?

If it cost 8 cents per share that is $16m market cap for a $60m benefit , synergies would come immediately as DOW already pay TTI $8m for contracts like this one they would be able to keep in house in the future


It seems there are no options or convertible shares on issue so with only 280m shares on issue at 4 cents I agree a $10m market cap looks very good value.