TRA - Turners Automotive Group [previously TNR - Turners Limited]

[minimoke]

Well I am seriously disappointed in fellow posters.
Got myself very excited when I was the highest bidder at $3.08 yesterday.
And then MiniMoke announced he was finding a home for his HBL funds. Absolute rotter trend setter that he is.,,lol.
Now there are 63,572 shares wanted ahead of me.!!! [and I am not looking to sell any HBL]
Just as well I already have a good holding...Hopefully you haven't missed the Top Up Bus percy. Maybe $3.15 is now in the rear mirror.

[percy]

Hopefully you haven't missed the Top Up Bus percy. Maybe $3.15 is now in the rear mirror.

I am sitting up near the front of the bus,however, other than the extra 10,000 I brought on 29th May at $2.99,I have not brought anymore.
Only 77,516 currently ahead of me on the buy side.!!!!.Hang on.....only 31,416 now.
Looks as though I have missed the bus with the other two companies I been trying to buy as well.
Just have to get used to sitting on our big pile of cash....lol.



.

[couta1]

The reality is mate you're never going to agree with everything one particular political party does or doesn't do. I think it was extremely harsh of National to not increase the accommodation supplement in their 9 years in power despite skyrocketing rents...and then they wonder why so many people are now homeless :rolleyes:

Some of Labour's policies drive me to despair but something had be done about poverty and good on them for that I reckon. If you look at the example I posted above of a young solo Mum with one child, (who in reality are mostly in a desperate situation with Auckland rents) but is now $232 per week better off they can finally start to live with some dignity including possibly getting a modest vehicle. Am I reading right, the Beagle is turning red, Lol.

[minimoke]

Nice to see TRA adding 2 more stops (Napier / Whagarei) to their roadshow. There is investor money in the regions so a great initiative to spark up demand.

[blackcap]

For those that are interested, letter to shareholders.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TRA/320148/282009.pdf

[minimoke]

I am sitting up near the front of the bus,however, other than the extra 10,000 I brought on 29th May at $2.99,I have not brought anymore.
Only 77,516 currently ahead of me on the buy side.!!!!.Hang on.....only 31,416 now.
Looks as though I have missed the bus with the other two companies I been trying to buy as well.
Just have to get used to sitting on our big pile of cash....lol.



.
Was that you Percy. Biting the bullet at $3.20?

[winner69]

TRA ...go you little beauty

With all this positiveness and punters swapping horses TRA is looking to be the cert of the year to make punters big money this year.

With this momentum come friday which is end June we’ll see 320 and who knows what by end of July ......340?

Hope the IRD sorts out their crap quickly and these poorer people get their extra cash when they should.

Hope it stays up there

Want my ‘projection’ for next week?

Tell you later ....momentum is a powerful force ....and as the excitement builds up at these cheerleading meetings goodness knows what’ll happen.

[percy]

Was that you Percy. Biting the bullet at $3.20?

No,but as W69 points out the momentum is now underway.
Time to sit back and enjoy the ride and pick up our divie's every three months.!

[winner69]

Todd’s crusade through the country starts tomorrow

Hope the comings together are so inspirational that gets shareholders to top up big time .....as well as spread the word to their friends and families.

That should give the share price a decent boost ....maybe 340 by end of July

Hope Todd hasn’t overlooked the fundies and going to have a chat with them as well

Momentum building ......hard to turn around a juggernaut

I won’t be going to Porirua ....seen too many of these ra ra sessions over the years to get too excited.

[percy]

Todd’s crusade through the country starts tomorrow

Hope the comings together are so inspirational that gets shareholders to top up big time .....as well as spread the word to their friends and families.

That should give the share price a decent boost ....maybe 340 by end of July

Hope Todd hasn’t overlooked the fundies and going to have a chat with them as well

Momentum building ......hard to turn around a juggernaut

I won’t be going to Porirua ....seen too many of these ra ra sessions over the years to get too excited.

Can't recall an agm, or a presentation, where I have not learnt something.[even if it is from another shareholder]

[biker]

Think I may have been one of several ST posters at the road show.
The CEO and CFO spoke to the published slides.http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TRA/320216/282084.pdf
Great organic growth possible here and in Australia.
This is a good business with great prospects. If I wasn’t already overloaded I’d buy more.

TRA has only 5% of the used car market. CEO says at least 10% within 5 years.

New bond issue after current one finishes. Will be longer term and won’t be convertible.
Details depend on how much cash they end up with when current bonds mature.

No more cash issues in sight. They have enough cash.
A business with heaps of potential and quarterly dividends.
What’s not to like.

[Joshuatree]

Turners not as iconic as Trade Me ,yet but well on the way. love the linkage and glad to hold both stocks.

Trade Me Yet would make a great subsidiary:D

[percy]

Think I may have been one of several ST posters at the road show.
The CEO and CFO spoke to the published slides.http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TRA/320216/282084.pdf
Great organic growth possible here and in Australia.
This is a good business with great prospects. If I wasn’t already overloaded I’d buy more.

TRA has only 5% of the used car market. CEO says at least 10% within 5 years.

New bond issue after current one finishes. Will be longer term and won’t be convertible.
Details depend on how much cash they end up with when current bonds mature.

No more cash issues in sight. They have enough cash.
A business with heaps of potential and quarterly dividends.
What’s not to like.

Thank you for your post.

[Beagle]

Well run investor presentation. Management clearly articulated their strategy and have a goal of growing their market share to 10% within 5 years, from 5% now.
Steadily increasing amount of business done at a retail level, (as opposed to wholesale) will boost vehicle margins and generate significant growth in opportunities to cross sell insurance, finance and maintenance packages going forward.
Gradually expanding retail footprint.
Focus on organic growth in the years ahead.
Convertible bonds will be replaced with a new issue approx. a couple of months after maturity of current tranche but will probably be for a longer term, 3-4 years and probably won't have a convertibility aspect to them.
I spoke with some of the senior management after the meeting and all seemed to know their market well and impressed.
Todd Hunter impressed as a natural leader. My main reason for going was to get a handle on whether I think he is the right guy to drive future value growth in this company and he gets a big tick as far as I am concerned.

Investment case. I think in general terms the market is pricing Turners as a no growth company on a forward PE of 10 and I think there's a good case for believing that EPS will in fact show modest / good growth in the years ahead.

Summary I think this is probably the cheapest growth stock on the NZX disguised as a value play. I expect high single digits EPS growth for the foreseeable future.

[Joshuatree]

Yes ,thanks b&B , for sharing and opinions.Now an integral stock in my portfolio.. Disclose my av entry $2.99. Taken a while to lift off but heading for higher trails by the looks.

[percy]

Well run investor presentation. Management clearly articulated their strategy and have a goal of growing their market share to 10% within 5 years, from 5% now.
Steadily increasing amount of business done at a retail level, (as opposed to wholesale) will boost vehicle margins and generate significant growth in opportunities to cross sell insurance, finance and maintenance packages going forward.
Gradually expanding retail footprint.
Focus on organic growth in the years ahead.
Convertible bonds will be replaced with a new issue approx. a couple of months after maturity of current tranche but will probably be for a longer term, 3-4 years and probably won't have a convertibility aspect to them.
I spoke with some of the senior management after the meeting and all seemed to know their market well and impressed.
Todd Hunter impressed as a natural leader. My main reason for going was to get a handle on whether I think he is the right guy to drive future value growth in this company and he gets a big tick as far as I am concerned.

Investment case. I think in general terms the market is pricing Turners as a no growth company on a forward PE of 10 and I think there's a good case for believing that EPS will in fact show modest / good growth in the years ahead.

Summary I think this is probably the cheapest growth stock on the NZX disguised as a value play. I expect high single digits EPS growth for the foreseeable future.

Excellent post.
I am expecting double digit eps growth this year.!???

[winner69]

Excellent post.
I am expecting double digit eps growth this year.!???

....And the rest percy

Doubling market share in 5 years while boosting margins and all the ticket clipping along the way implies more than doubling profits so expect earnings growth of ~20%

And what PE are we on at the moment ...just over 10

Jeez I might hold on until the share price gets to $7 plus

[Beagle]

Excellent post.
I am expecting double digit eps growth this year.!???

Official forecast is for 13% earnings growth. With say half of convertible note holders converting to shares that will dilute it a bit.

My sense is that officially we're looking at high single digits, unofficially I think its quite possible that they're being quite conservative with that forecast. Todd Hunter did exude an air of confidence about how the company is going.

Integrating Autosure and Buy Right Cars has obviously been quite a process but my sense is the business is now very well positioned to grow organically.

Outlook going forward looks very sound to me.
Good solid company with sound growth prospects trading on compelling metrics.

I think its a good one to hold long term Winner and the quarterly dividends are a nice point of difference to most companies on the NZX and at over 7% gross we're being paid well to enjoy ongoing growth in the years ahead.

[percy]

Yes trying to work the dilution of the bonds makes projections difficult.
The trust I help out on will convert their bonds to shares.
The larger non-convertible bond issue sounds promising.
No further capital raises, and management/directors fully focused on strong organic growth will be rewarding for shareholders.

[winner69]

Thru 320 she goes

Heading back to where it was once not long ago

C’mon guys ...keep topping up

[trader_jackson]

didn't even blink when a 5c dividend was paid either...
Then again, was always too cheap at under $3

[Timesurfer]

didn't even blink when a 5c dividend was paid either...

Maybe just a little.

[percy]

Thank you Todd Hunter and Aaron Saunders for a fantastic presentation.
Most impressed with the straight honest answers given to the great number of questions asked.
None fobbed off.Todd and Aaron really so knowledgeable in all parts of their business.
They certainly know where they want to take the business, and know how to do that.Exciting times.
I thought I knew the business fairly well,but learnt so much today.

[LAC]

Anything to share from the Q and A's from today?

[BlackPeter]

Thank you Todd Hunter and Aaron Saunders for a fantastic presentation.
Most impressed with the straight honest answers given to the great number of questions asked.
None fobbed off.Todd and Aaron really so knowledgeable in all parts of their business.
They certainly know where they want to take the business, and know how to do that.Exciting times.
I thought I knew the business fairly well,but learnt so much today.

I second that ... probably (in terms of information provided and discussions) the best roadshow event of any company I attended so far. Great to hear they plan to do this from now on annually.

[percy]

Anything to share from the Q and A's from today?

Leases of sites.TRA have the capital to develop their own sites.So landlords need to focus their attention.!
New bond issue will not be convertible, and at a lot lower interest rate.
Securitization works out a lot lower interest charge to TRA ,and requires a lot less capital ratio than bank lending.
Looking at strong organic growth,and will only buy another dealer to secure a site.

[blackcap]

Thank you Todd Hunter and Aaron Saunders for a fantastic presentation.
Most impressed with the straight honest answers given to the great number of questions asked.
None fobbed off.Todd and Aaron really so knowledgeable in all parts of their business.
They certainly know where they want to take the business, and know how to do that.Exciting times.
I thought I knew the business fairly well,but learnt so much today.

That is the impression I got from the presentation in Porirua yesterday afternoon. Todd was apologetic too about the way the rights issue was completed with respect to retail investors and "has learnt" from that experience.

[Beagle]

Thank you Todd Hunter and Aaron Saunders for a fantastic presentation.
Most impressed with the straight honest answers given to the great number of questions asked.
None fobbed off.Todd and Aaron really so knowledgeable in all parts of their business.
They certainly know where they want to take the business, and know how to do that.Exciting times.
I thought I knew the business fairly well,but learnt so much today.


I second that ... probably (in terms of information provided and discussions) the best roadshow event of any company I attended so far. Great to hear they plan to do this from now on annually.

Good that you astute gentlemen were impressed by the roadshow as was I with their presentation in Auckland.

[percy]

Todd Hunter has a good sense of humour.
Some one asked about Dorcester legacy loans.
"All written off the books."
pause
"However still active,"
"So some names come up again,"
pause
"When applying for a loan when buying a car from Turners"
pause
"Yes your car loan looks as though it will be approved...….once you have made satisfactory arrangements to clear your outstanding Dorcester loan." ...lol.

Apologise for taking a bit of a liberty with what Todd actually said.

[Snoopy]

Leases of sites.TRA have the capital to develop their own sites.So landlords need to focus their attention.!


It is interesting to see how things like this go in cycles. 'Back in the day' 'Turners Auctions' (as it was then) sold off their premises to reduce debt. Today 'Turners Automotive Group' not so worried about debt. Aaron Saunders told us they are only paying 4.5-5.5% on bank interest: not so far above home interest rates! One shareholder thought even that was too much and urged them to borrow from Japan at 1%! But I digress.

The problem with renting a premises is that landlords want to build a large building and so get maximum rent. Turners favour a small building (hence lower rent) with plenty of land to stock their cars outside. So both the current Christchurch premises and Penrose in Auckland are 'sub optimal' according to that paradigm. However, both premises have a couple of years to run on their lease agreements. I have to take back what I said before about Turners not being into property development. Buying your own site is the best way to get the site you want. Stick your custom built 'container office' on your new site, which doubles as a billboard if you go for the two story version and design in a back-lit high wall.

Then once the site is developed to Turners requirements, lock in a long lease and sign a lucrative rental agreement. In doing so, you will maximize the capital value of the property for sale and so maximize the development margin returned to Turners. Or if the property is on a potentially lucrative site in a main centre, Turners are not averse to retaining their sites in house. There are a few years of property development in the pipeline!

Finally when the site has run its course, bring in the crane and take your office building away to the next site! The ultimate in leasing capital efficiency?



New bond issue will not be convertible, and at a lot lower interest rate.


They seemed keen on the message of no more - significant - earnings dilution.



Securitization works out a lot lower interest charge to TRA ,and requires a lot less capital ratio than bank lending.


The explanation of the process of securitization was enlightening. The banks are quite fussy about the loans they like grouped together - they want cars loans plain and simple, and the more homogeneous the amounts and terms, the better. Turners fund heavy equipment, and even light property development (the expansion of a dental practice was mentioned). But banks won't have those in their securitized loans! Never mind, Oxford will do those in house.

Car loans supported by bank loans require Turners to hold on the books, shareholders funds based on 20% of the value of the car loans, with the balance of the borrowed money charged out to Turners at a rate of 4.5 - 5.5%. Contrast that to the securitized loans.

Turners are only required to hold on the books 8% of the value of the securitized car loans (so they are more 'capital efficient'). Once a loan is securitized the BNZ (who does the securitization) gets direct access to the loan cashflows. As 'payment' for this privilege, the charge on securitized bank loan funding to Turners is reduced to 3.5 - 4.5%.

SNOOPY

[Snoopy]

Hopefully we will see TRA extend their Buy Right Cars footprint Nationally.


As we heard at today's presentation, this is not going to happen. 'Buy Right' may extend down to Hamilton. But it is seen as a 'top of the North Island' brand.

Slide 12 of the presentation highlighted 'Satisfaction' and 'Likelihood to repurchase' (I have added some more info).



TurnersBuy Right Cars


Satisfaction87%
88%


Likelihood to Repurchase71%77%


Stock Turnover35-45 days60-90 days


Price Sweet Spot$10k-$15k$15k-$25k



These figures are quite good although Todd wants the customer feedback figures to be even higher. Questioned on the relative out performance of 'Buy Right', Todd said that at 'Buy Right', salespeople would spend 3-4 hours with each customer getting a better feel for their needs. With Turners cars at a lower price point, there isn't the staff buyer interaction time required to generate the same depth of mutual understanding of the deal. The 'Turners' brand is more of a self service model. Todd also told us previous management at 'Buy Right'; had done a sub optimal job on stock turn, with some vehicles still on the yard after more than a year. As a result some $2.5m of the $6m earn out payments due by August 2018 (two years after the business purchase ) to the former 'Buy Right' owners will not be paid.

We also learned that Turners had looked at taking on a new car franchise. The problem here was car makers often dictated what sort of show room (usually a capital intensive design) is required to represent that manufacturer. Further, with new car sales at a peak, the price to be paid for acquiring a new car franchise would be high. So this idea has been shelved, but serves to highlight the value of being a 'brand agnostic' seller.

Aaron Saunders also chipped in with his experience of 'market resilience', what happened in the NZ car market during the GFC. New car sales dropped by up to 50%. But the fall in used car sales was a more modest 15%. There is less buyer discretion in the used car market! When you need wheels to get to work, you have to buy something!

SNOOPY

[BlackPeter]

Great stuff Snoopy & Percy, saves me writing up some points :).

Just one small thing (Snoopy) - the name of the CFO is Aaron (not Alan) Saunders, unless he changed next to removing his facial hair as well his first name ;);

Given that percy and snoopy took already all the thunder - here are in no particular order some remaining snippets I found worthwhile to note:

Average stock turnover for Turners Auctions: 30 to 45 days, for Buy Right cars 45 to 60 days (and some of the down writes at BRC, now resolved, >365 days). This reduced my concerns that they might (when electric cars come) end up with a huge pile of obsoleted stock. Todd emphasized however anyway that the number of electric cars in NZ is still minute and replacement of the whole stock will in his view take more than 2 decades (given current number of new cars sold ...);

Todd considered the takeover of BRC as one of the more difficult acquisitions (well, his most difficult one ...), but he is confident the issues are now resolved.

The business allows high flexibility to grow (and shrink) sites as per demand - their sell out of a container strategy obviously makes that still easier

A question re the risk of credit defaults (we discuss this from time to time on this thread): Average default rate for car loans is 2%, at the peak of the GFC it was 4% - i.e. quite manageable, particularly considering that it is quite easy to repossess a car (i.e. default is not equal to total loss).

Credit Management: good business, but not really their core business. Still - they first plan to grow it before they consider selling ...

Somebody asked about expansion into Australia: They thought about it and might do at some stage (but credit management - they are already in Australia) , but focus now on growing NZ (which I think, is a good decision);

Growth potential: current market share 4%; Double that in 5 years?

Oh yes - and here is a bonus: the profs say that winter (i.e. now) is the best time to buy a new used car, given that for some reason most ex lease cars as well as Japanese cars come in our autumn - i.e. stock levels are high, prices therefore lower ... just visit a friendly TRA site close to your home ;);

Discl: holding & feeling confident my money is in good hands.

[Snoopy]

Just one small thing (Snoopy) - the name of the CFO is Aaron (not Alan) Saunders, unless he changed next to removing his facial hair as well his first name ;);


Typo now corrected - thanks.



Credit Management: good business, but not really their core business. Still - they first plan to grow it before they consider selling ...


I was surprised and disappointed to hear that EC Credit may eventually be 'on the block'. As Aaron Saunders put it: People efficient, low CAPEX, spins off cash. Exactly the sort of business you want, I would have thought. Granted I see that it doesn't quite fit with the integrated model that is pervasive between the other branches of the business (with the sole exception of referring bads debts to ECC, fortunately a rare event.)

The ECC business model is to take on the recovery overdue accounts from the likes of ACC, Government Departments, the Big Banks and Electricity Retailers (without buying the associated debt ledgers). Other target customers are SMEs, where debt collection can help terms of trade. Instead of 'buying' the debt ledger, the business model is to earn a 5 to 20% commission on the loans ECC do manage to collect. Turners are passionate users of the IODM software that automates the debt collection process.

http://www.iodm.com.au/about-iodm/

The 'big opportunity' is to extend the successful business relationship that ECC have with the NZ banks to their Australian parents. If that were to happen then the whole business would scale. At that point ECC might be worth more outside the Turners tent than inside it.



Somebody asked about expansion into Australia: They thought about it and might do at some stage (but credit management - they are already in Australia) , but focus now on growing NZ (which I think, is a good decision);


The business that Turners would like to get involved with in Australia is 'Pickles Auctions'.

https://www.pickles.com.au/

Pickles is privately owned and earns a NPAT of between $A25m - $35m per year. However, in terms of turnover it is five to six times bigger than Turners. Turners would love to do a JV with these guys. However, the owners are staunch Australians who see no reason to step outside their own market comfort and ownership zone.

This is the kind of thing that Turners would be looking at in Australia. In the distant past (as TUA) they apparently made a medium sized investment in some smaller auction businesses and turned a medium wad of cash into something smaller.

SNOOPY

[Snoopy]

A question re the risk of credit defaults (we discuss this from time to time on this thread): Average default rate for car loans is 2%, at the peak of the GFC it was 4% - i.e. quite manageable, particularly considering that it is quite easy to repossess a car (i.e. default is not equal to total loss).


A bit more on the finance side. Aaron said of the Turners loans that had gone bad, many had been written through Motor Trade Finance (MTF). Motor Trade Finance had its beginnings in Dunedin as a co-operative more than 40 years ago. The ownership rules state that no one shareholder may own more than 10% of MTF (Turners are the largest shareholder and own 8%). Other significant shareholdings of 3-4% are owned by each by Honda Cars and Colonial Motors. 75% of all stakeholders must vote to change the ownership cap. Heartland had a go at taking over MTF a few years ago. But they couldn't get the 75% of existing stakeholders to agree. Turners are looking to improve the quality of their loans through Motor Trade Finance. Turners originally bought into MTF at a share price of $1.15. While increasing their stake towards the 10% cap cannot be ruled out, the current MTF market price of over $2 make such a move unattractive. MTF has a participating membership of 200 dealers and 50 independent franchisees. MTF is stronger towards the bottom of the South Island and weakens as you move up the country. MTF is slightly under represented in Auckland.

As for the Turners owned finance operations, the three regional sales forces of the constituent companies, the old Dorchester (+ add ons) in Auckland, Oxford Finance in Levin and Southern Finance in Christchurch have retained their own regional sales forces. But the processing facilities have been centralized in Levin. These finance companies have on average written higher quality loans than those through MTF. The objective this year will be to fold in all the Turner's Auctions in house finance business into Oxford Finance. 85% of the loan book of the now rebranded 'Oxford Finance' combination are written on motor vehicles. As well as writing finance for Turners, Oxford is affiliated to 800 dealers across the country.

SNOOPY

[Beagle]

Appreciate your posts Snoopy and BP which add to our understanding of Turners operations.

[Yoda]

thanks guys, that has been a fantastic help . now have 4% of my portfolio there, so see where we are at Christmas . Certainly looks like we might be moving forward with all the MA lines heading north.

[winner69]

did Turners ever own that Gracefield Lower Hutt site they occupied for years before moving out

Peter Jackson going to lease it at $900k a year

[trader_jackson]

Can we have some down-ramping please, the 90 days prior to the Maturity Date for the bonds has started.

Then lots of bigly up-ramping starting 1 October.

Thank you.

[toddhunter]

Hi winner69 - Todd Hunter here...we have never owned the Seaview site. We do own the new site we have moved to in Porirua. Also it is James Cameron who is looking at leasing the old building in Seaview to make the Avatar sequels. Supposedly a 6 year lease for $800k to $900k per annum.

https://www.stuff.co.nz/dominion-post/news/105323175/we-cringed-at-wellywood-and-now-we-can-grimace-at-um-er-huttywood-hills

[winner69]

Thanks Todd for that

[percy]

I wonder whether the staff at Autosure have watched: You Tube;Brazilian Toyota Commercial.??

[Snoopy]

hardt wrote: "In the last year or two their financial services and insurance division continues to become a bigger part of their business, capital intensive on both ends with little room for error."

Not sure that I agree with your above comment in the Turners situation hardt. Here is what Turners said after acquiring Autosure Insurance (p16 AR2017).

"The Autosure Insurance acquisition, including the Autosure brand, mechanical breakdown and payment protection insurance portfolios, was finalised as at 31st March 2017. This provides much needed scale for our insurance group , and focuses our underwriting effort on core products - MBI and Loan Repayment Insurance. We have a 10-year partnership with Vero for underwriting our comprehensive motor vehicle insurance policies."

Autosure was bought from Suncorp. But Vero, the underwriter of Turners Autosure is a subsidiary of Suncorp. So it looks to me as though most of the insurance risk has been outsourced to Suncorp, even though Turners has taken over the 'retail face' of the Autosure insurance business.


Following my attendance at the Christchurch roadshow presentation, I need to back-track on my post above. "Comprehensive motor insurance' has traditionally meant 'fire, theft and accident' cover, both for your vehicle and whatever vehicle(s) you might contact in a collision. However, given the breadth of motor vehicle insurance available today, there are plenty of things that 'comprehensive insurance' does not cover. An extended warranty/repair contract when buying a second hand vehicle is perhaps the most significant. It is into this policy gap that 'Autosure' was launched. The genesis was the Japanese car import business that started in the early 1980s without manufacturer blessing!

There was some discussion at the presentation about the cost of vehicle repairs. Since acquiring 'Autosure', Turners has found that the 'mechanical breakdown' policies on Japanese sourced vehicles were subsidizing the 'mechanical breakdown' policies on European sourced vehicles. Upon realizing this, Turners has directed Autosure to raise the premiums on European vehicles and reduce those on Japanese vehicles to better reflect the risk. A particular example given was of a Mercedes Benz wing mirror. One audience member guessed what he thought a fair price would be and doubled that figure for his 'price guess'. The true answer was three times his price guess IIRC! Anyway, it came out that Turners fully underwrites the Autosure costs themselves, which is contrary to what I suggested above. Nothing was mentioned about having a 'reinsurance' policy with a larger insurance industry player. So I assume that Turners do not do this, for Autosure. Todd told us that Turners spend $2m on mechanical repairs per month.

By contrast Turners do offer the traditional 'comprehensive insurance' for cars via Vero. On this type of policy, Turners earn a one off commission and do not have ongoing responsibility for costs of policy settlements. Turners are a 'retail face' for comprehensive insurance, but fully operate 'Autosure' and assume all risks for that in their own right. I hope that clears things up!

SNOOPY

[BlackPeter]

...
Since acquiring 'Autosure', Turners has found that the 'mechanical breakdown' policies on European sourced vehicles were subsidizing the 'mechanical breakdown' policies on Japanese sourced vehicles.
...
SNOOPY

Snoopy, good stuff, however the above statement should be the other way around ... Policies for Japanese cars (high margins due to low repair costs) are subsidizing policies for European cars (low or even negative margins due to high repair costs)

That's what they said anyway - and as holder of two European cars (I won't repeat this mistake ;); can I confirm that they like to break and are bl**dy expensive to repair

[blackcap]

Snoopy, good stuff, however the above statement should be the other way around ... Policies for Japanese cars (high margins due to low repair costs) are subsidizing policies for European cars (low or even negative margins due to high repair costs)

That's what they said anyway - and as holder of two European cars (I won't repeat this mistake ;); can I confirm that they like to break and are bl**dy expensive to repair

Had a BMW in NZ once... never again. Had one in Holland too.. not a problem. Funny thing was (tis about 10 years ago) but Toyota was the premium brand to be seen in, not BMW. ie there was more status in owning a Toyota than a BMW. Horses for courses, but have gone off European cars in the NZ context too.
Back to TRA, at least they have acknowledged the improper pricing in their insurance division and looked to rectify it.
Snoopy, are you less bearish on TRA now you have been to the presentation or are there still unanswered questions for you?

[percy]

Going by the way he was tucking into the tucka,I would think he is more fullish,rather than bullish or bearish..lol.

[Beagle]

Going by the way he was tucking into the tucka,I would think he is more fullish,rather than bullish or bearish..lol.


LOL that's a classic Beagle for ya...although this particular hound was far more interested in the financial feeds to come so barely nibbled at one scone at the Auckland meeting.


I used to parallel import parts from Singapore for my Mercedes when I had it. Local pricing for parts though official Mercedes-benz channels is highway robbery ! Autosure are dead right to riase premiums for high end Euro's...not only are the parts far more expensive but the cutting edge latest technology Euro's like the latest 7 series BMW are vastly more likely to require repairs due to their immensely complicated technology and systems. The current BMW 750 model (released in 2016) for example has been recalled 5 times for serious issues already. You can just imagine with a very high degree of probability that they will give a lifetime of trouble going forward.

[Jay]

Getting a bit off topic, but you don't seem to hear about these recalls for BMW for example, yet if it was a Toyota or Mazda for example you would.
As the saying goes try to build a car from buying spare parts and it will cost you x times more, you would expect it to cost more but 5 x + is a bit much

[kiwico]

Nothing was mentioned about having a 'reinsurance' policy with a larger insurance industry player. So I assume that Turners do not do this, for Autosure.
SNOOPY

In the insurance world you would normally buy reinsurance for a large single event of wide area damage, such as with the Canterbury earthquakes, or to insure low frequency but high severity risks. Being more of a maintenance type offering the Autosure cover would be covering low high frequency but low severity risks. With this type of cover premium increases can likely cover off what reinsurance would be used for in the regulated insurance world. Good to see they are reviewing where the claims are from and typical average cost, but if buyers of Japanese cars were happy with the original level of premium I'm surprised it was lowered.

[Snoopy]

Had a BMW in NZ once... never again. Had one in Holland too.. not a problem. Funny thing was (tis about 10 years ago) but Toyota was the premium brand to be seen in, not BMW. ie there was more status in owning a Toyota than a BMW. Horses for courses, but have gone off European cars in the NZ context too.


Before the early 1990s I am not sure Toyota had any serious manufacturing capability in Europe. And even now if you want to buy a Toyota out of the mainstream, I expect they are subject to restriction by quotas. As always, it is human nature to want what you can't readily get. So it is unsurprising that Toyota was considered a premium car back in the day when the Bimmer supply was far less limited.



Back to TRA, at least they have acknowledged the improper pricing in their insurance division and looked to rectify it.
Snoopy, are you less bearish on TRA now you have been to the presentation or are there still unanswered questions for you?


There are always unanswered questions. But I am surprised that you consider my latest valuation bearish! (excerpt below)



I believe that 'capitalising earnings' is a more realistic way to go.

The valuation is in two parts. Once again I am using an acceptable gross return of 7.5% for the dividend part of it.

Average dividend received over the last four years

(9c+12+13c+14.5c) / 4 = 48.5c, divide by four = 12.1c

Gross Capitalised Dividend Component = 12.1c / (0.075 x 0.72) = $2.24 (1)

Average Retained Earnings Valuation reinvested over the last four years

All things going to best plan, retained earnings should be worth more than cash paid as a dividend. But this assumes a largely monotonic increasing profit year in year out, with very few exceptions. I don't believe that the historical underlying profitability data indicates that Turners can achieve this. So I think it wise to assume that a 'dividend in the bank account' is worth more than a 'potential dividend in the bush'. To reflect 'business execution' and 'car market volatility' risks, I am going to increase my required return for 'retained earnings' by two percentage points, out to 9.5%

(10.4 + 12.2 + 9.5 + 11.1)/4 = 10.8c (average)

Gross Capitalised Retained Earnings Component = 10.8c / (0.095 x 0.72) = $1.58 (2)

So my total 'fair valuation' for TRA becomes (1) + (2):

$2.24 + $1.58 = $3.82

Thus at a market price of just over $3, it looks like TRA might be worth accumulating!

[blackcap]

Hi Snoops,

My apologies, by less bearish, I meant positive and yes I must have skipped over your latest $3.82 valuation which I did not see.

Glad you are on the accumulate side now :)

Personally I think there might be some more cheap shares for a while, plenty of those at $3.02 still looking for a stronger home but I do not mind, its a long term thing for me and if divs keep going up with EPS, well the SP cannot stay at $3 forever.

[couta1]

Couta's valuation $3.83, Snoopy's $3.82, now that's never happened before, obviously I agree with the dog on this one.

[Beagle]

Couta's valuation $3.83, Snoopy's $3.82, now that's never happened before, obviously I agree with the dog on this one.

This Beagle is $4 so we're all thinking along similar lines but a fair bit of water to go under the bridge before we get there.

[Snoopy]

They seemed keen on the message of no more - significant - earnings dilution.


Before I forget, there was a mention in the presentation of a small future dilution in earnings.



Motor Trade Finance had its beginnings in Dunedin as a co-operative more than 40 years ago. The ownership rules state that no one shareholder may own more than 10% of MTF (Turners are the largest shareholder and own 8%). Other significant shareholdings of 3-4% are owned by each by Honda Cars and Colonial Motors. 75% of all stakeholders must vote to change the ownership cap. Turners are looking to improve the quality of their loans through Motor Trade Finance. Turners originally bought into MTF at a price of $1.15. While increasing their stake towards the 10% cap cannot be ruled out, the current MTF market price of over $2 make such a move unattractive. MTF has a participating membership of 200 dealers and 50 independent franchisees.


Turners are aware that one of the keys to the success of MTF is that the users of the service are also the shareholders. This is the thinking behind the idea of issuing TRA shares to dealers and brokers. Shareholders tend to be loyal users. The shares to be issued are nevertheless expected to be less than 0.1% (less than 100,000 in total) of the shares already on issue.

SNOOPY

[winner69]

This Beagle is $4 so we're all thinking along similar lines but a fair bit of water to go under the bridge before we get there.


I hope you gurus that all come up with $3.80 to $4.00 are right on the button even though the bible says $3.32
http://www.4-traders.com/TURNERS-AUTOMOTIVE-GROUP-31620944/consensus/

My faith in you guys remains strong though

[percy]

Until we see how many note holders convert their notes to shares, or take cash, it is hard to figure out eps without knowing the number of shares that will be on issue.A number of people who own notes,are not natural share investors.
Current shares on issue are 84,802,612.The bond issue is $26mil.
Very rough figures on 50% conversion is 4,062,500 new shares, giving new total on issue 88.865,112.
On 75% conversion is 6,093,750, giving new total on issue 90,996,362.
What would work in shareholders favour is just 25% convert to shares,giving total number of shares on issue 86,833,868 ..
Currently 4-traders are showing eps in 2019 to be 28.6 cps.
I am near them with 28.91cps with 75% conversion,and well ahead of them with 29.67 on 50% conversion,and even further ahead on 30.6 on only 25% conversion..
So eps growth of either 5% or 7.8% or 11.1%..Very positive is 4-traders year on year increase in dividend per share of over 6% per year for the next three years.
What I, and the analysts covering Turners, have not factored in are any property development profits.These could add another 10% to 20% to TRA's net profit each year for the next few years.
Very large developments in both Auckland and ChCh are forecast by Turners.

[Beagle]

Until we see how many note holders convert their notes to shares, or take cash, it is hard to figure out eps without knowing the number of shares that will be on issue.A number of people who own notes,are not natural share investors.
Current shares on issue are 84,802,612.The bond issue is $26mil.
Very rough figures on 50% conversion is 4,062,500 new shares, giving new total on issue 88.865,112.
On 75% conversion is 6,093,750, giving new total on issue 90,996,362.
What would work in shareholders favour is just 25% convert to shares,giving total number of shares on issue 86,833,868 ..
Currently 4-traders are showing eps in 2019 to be 28.6 cps.
I am near them with 28.91cps with 75% conversion,and well ahead of them with 29.67 on 50% conversion,and even further ahead on 30.6 on only 25% conversion..
So eps growth of either 5% or 7.8% or 11.1%..Very positive is 4-traders year on year increase in dividend per share of over 6% per year for the next three years.
What I, and the analysts covering Turners, have not factored in are any property development profits.These could add another 10% to 20% to TRA's net profit each year for the next few years.
Very large developments in both Auckland and ChCh are forecast by Turners.

Best guide in terms of percentage converting to shares is probably that we look at the last time this happened and in 2016 75% of bondholders elected to convert to shares.

[Snoopy]

Best guide in terms of percentage converting to shares is probably that we look at the last time this happened and in 2016 75% of bondholders elected to convert to shares.


At the Christchurch presentation we were told that one big bond holder is definitely not converting their bonds to shares. We weren't told who it was though! In light of that, Aaron Saunders mentioned some likely conversion rates. However, I can't remember what he said specifically :-(

SNOOPY

P.S. I should add that most of the previous new capital raised at bond maturity was used as 'base capital', because of which it became possible to increase the loan book. But some was set aside for property development. I expect the expanded loan book in the future will make up for any initial eps dilution that happens on bond conversion date.

[blackcap]

At the Christchurch presentation we were told that one big bond holder is definitely not converting their bonds to shares. We weren't told who it was though! In light of that, Aaron Saunders mentioned some likely conversion rates. However, I can't remember what he said specifically :-(

SNOOPY

They are also issuing new bonds, I presume that the bond holders can roll over into the new ones if they want as well?

[percy]

Yes a bit vague on timing of new bigger non -convertible bond issue, to be announced before present one expires/converts,where existing bond holders can roll over.Interest rate a lot lower than present issue.
Conversion rate,was 75% with last issue.... Aaron said they expect 50% to 80% to convert bonds to shares this time.

[Beagle]

At the Auckland meeting they gave the clear impression the new issue is unlikely to contain a conversion element to it and is unlikely to happen until a couple / few months after conversion of the old issue. I think people will face the choice of cash back or shares at 5% discount to vwap with no right or preference to the new bond issue. I'll be converting my modest stake in the bonds to shares. When this happens Turners will comprise ~ 10% of my portfolio and I have no plans to raise my stake beyond that level.

[RTM]

Best guide in terms of percentage converting to shares is probably that we look at the last time this happened and in 2016 75% of bondholders elected to convert to shares.
I bought a decent quantity of the bonds. At the time I was looking for more shares, but thought they were over priced. My thinking was that if the conversion was attractive, and I still liked Turner’s, I would convert to shares. At this stage I still plan to do that. There may be a few more like me?

[Snoopy]

You may have missed this nit "

With a tight labour market and requirements for more resource Turners are


working hard to make sure they are an employer of choice and will continue to


attract the right sort of people. We continue to measure and focus on


improving employee engagement, a commitment to ongoing workplace diversity,


building a culture of developing people and promote from within




I wonder how far 'improving employee engagement' goes against the best interests of consumers?

Here is some Sunday evening reading about "Car loan commissions and consumer credit regulation" over the ditch.

https://financialservices.royalcommission.gov.au/public-hearings/Documents/exhibits-2018/23-march/EXHIBIT-1-187.pdf

I see the Australian government has decided to actually ban the practice of 'flex commissions' by November 2018. ANZ sold most of their car loan business when they divested 'Esanda', but have suspended the remaining $2.5b of car finance business still on the books. Westpac by contrast is going all out making money until the legal gate finally closes. But of course, this kind of thing couldn't happen in NZ at little ol' Turners, could it?

SNOOPY

[winner69]

Snoops ....employee engagement if done properly is generally good for consumers ....they say ‘engaged’ employees deliver better solutions and experiences for customers (consumers) than ‘disengaged’ ones

Mind you that bit you quoted is probably in most companies plans ...pretty close word for word.

This Todd seems to have the charisma to lead an engaged workforce.

[percy]

This Beagle is $4 so we're all thinking along similar lines but a fair bit of water to go under the bridge before we get there.
A lot of water went under the bridge this weekend...……………………………...lol.

[blackcap]

Good to see Grant Baker purchasing another 50,075 shares on market on the 11th July, although I dare say this purchase was to make his holding a nice even 6,000,000 rather than anything else....
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TRA/320931/282885.pdf

[percy]

My divie is in the bank.Thanks to the team at Turners.

[JCM]

My divie is in the bank.Thanks to the team at Turners.

Likewise. And a nice rise in SP since initial purchase with more to come. Once again, pleased to have listened to the sage advice from members on this forum (with direct feedback from the CEO himself in this thread). :t_up:

[Beagle]

Likewise. And a nice rise in SP since initial purchase with more to come. Once again, pleased to have listened to the sage advice from members on this forum (with direct feedback from the CEO himself in this thread). :t_up:

Yeap you can't ask for more than that. My rating HHH (Happy hound holder) :)

[Snoopy]

I am changing my analysis this year so that the financial statistics that I am evaluating are applied only to the financial division of the company.

I am applying a 'banking covenant' to a non-bank. While not a legal requirement for TNR, this is to enable a comparison with other listed entities in the finance sector (real banks like Heartland for instance ;-) ), so please bear with me. The data below may be found in the 'Consolidated Statement of Financial Position' (AR2016, p26).

Tier 1 capital > 20% of the loan book.

(Turners Group (Finance Division) has only Tier 1 capital for these calculation purposes.)

Tier 1 Capital = (Shareholder Equity) - (Intangibles: less Turners Auctions Intangibles) - (Deferred tax: Assume finance division using up deferred losses)


"Tier 1 capital > 20% of the loan book" is a Snoopy requirement

In the past on this forum, I have been absolutely pilloried for demanding a 20% capital buffer to be held to back up the loans of a second tier lending institution. This is primarily why I will invest in Turners, but won't invest in Heartland, that has a rather lower capital buffer.



Car loans supported by bank loans require Turners to hold on the books, shareholders funds based on 20% of the value of the car loans, with the balance of the borrowed money charged out to Turners at a rate of 4.5 - 5.5%. Contrast that to the securitized loans.

Turners are only required to hold on the books 8% of the value of the securitized car loans (so they are more 'capital efficient'). Once a loan is securitized the BNZ (who does the securitization) gets direct access to the loan cashflows. As 'payment' for this privilege, the charge on securitized bank loan funding to Turners is reduced to 3.5 - 4.5%.


Yet as we found out at the first Turners road show, the Turners banks require a 20% capital buffer on the car loans they support, which is vindication that my own 20% back up capital 'requirement' was spot on.

This 'back up capital requirement' has been reduced to 8% when these same loans are securitized. I would suggest that the chance of a Turners Finance car loan 'going bad' does not change when that same loan is 'securitized' and bundled up with other similar loans to sell to the master financer - the BNZ bank. So the lesser capital requirement (down from 20% to 8%) is entirely due to the change in 'risk sharing' between 'Turners Automotive Group' and the BNZ who 'buy' the securitized loans. I put that word 'buy' in quotation marks. Yes the loans have been sold to the BNZ. But because Turners have retained a large proportion of the downside risk, they cannot be removed from the Turners balance sheet for accounting purposes. I imagine that Turners are fairly confident that their effective 'capital guarantee' will not be called upon. Otherwise the mere '1 percentage point saving in the interest bill points' to Turners would soon be swallowed up in capital losses.

I can see a curious conundrum in the Turners loan book. There is little doubt that to loan money on a second hand car implies a much greater potential 'capital downside loss' than if that same money was lent against a house (like Heartland's reverse mortgages) or even a cow (loans to share milkers - at least the cow can be butchered for 'cash recovery' even if the milk price collapses). Yet there is a very high incentive to keep up your car payments ahead of even a conventional mortgage. As Percy keeps reminding us, no car means no way to get to work, which means no way to keep up with any of your payments. Some here get excited with Turner's 'net interest margin' (NIM). But the higher NIM is needed, because the asset quality (car) underneath the loan will depreciate rapidly and is expensive to fix and on sell again if servicing is neglected. Thus the conundrum is car loans are on low quality assets, which means the interest rates on such loans are high. But the incentive to keep up paying for these loans is also high. So car loans are in a 'sweet spot' of the loan spectrum. The 'high interest' that customers pay to cover the 'high capital downside risk' looks to provide a higher reward/risk ratio than all other classes of loans.

SNOOPY

[Beagle]

Well...yes, no,...maybe. Surveys overseas have started to indicate young people are more attached to their mobile phones than their cars and rightly or wrongly we're moving to a more urbanized living environment, (some of the big apartment blocks going up close to transport infrastructure are truly heinous) but they do give people the option to live without a car by using public transport most of the time and the likes of uber or some form of ride sharing at other times.

My experience with Geneva finance tells me its the no deposit lending that you really need to worry about....where people haven't got a decent amount of their own skin in the transaction is where the real risk lies. What do you know about Turners loan approval processes ? Do they do much no deposit lending ?

[percy]

At their presentation both Todd and Aaron told us they had to tighten the criteria for their non-recourse lending to MTF originators. Appears they no longer have some of those orginators as part of their network.
No problems with Turners, or Buy Right Cars' originated loans.
Both TRA and HBL have very tight criteria for no deposit lending,so neither have the sort of issues you remember.
So the issues at TRA were at MFT originators, and at HBL their own new systems causing an "own goal,"

[Snoopy]

Well...yes, no,...maybe. Surveys overseas have started to indicate young people are more attached to their mobile phones than their cars and rightly or wrongly we're moving to a more urbanized living environment, (some of the big apartment blocks going up close to transport infrastructure are truly heinous) but they do give people the option to live without a car by using public transport most of the time and the likes of uber or some form of ride sharing at other times.


Not everyone needs a car to drive to work. But if you do need a car, and if you need to finance it, then you will likely keep up your finance payments on that car. That is all I am saying.



My experience with Geneva finance tells me its the no deposit lending that you really need to worry about....where people haven't got a decent amount of their own skin in the transaction is where the real risk lies. What do you know about Turners loan approval processes ? Do they do much no deposit lending ?


I will tell you who do no deposit deals on phones: Spark, Vodaphone and 2 Degrees for starters! I wonder what the default rate is on these deals?

SNOOPY

[Beagle]

Not everyone needs a car to drive to work. But if you do need a car, and if you need to finance it, then you will likely keep up your finance payments on that car. That is all I am saying.



I will tell you who do no deposit deals on phones: Spark, Vodaphone and 2 Degrees for starters! I wonder what the default rate is on these deals?

SNOOPY

Fair enough !

[RupertBear]

Bit of a downward slide and not many buyers lining up :( have to confess to jumping ship today to preserve my capital and small profit. May jump back in later but happy to be out for the time being. ;)

[Baa_Baa]

Bit of a downward slide and not many buyers lining up :( have to confess to jumping ship today to preserve my capital and small profit. May jump back in later but happy to be out for the time being. ;)

Well done, whatever happens next you can decide on, while reflecting on the saying "no one ever went broke by taking a profit" -Jesse Lauriston Livermore.

:t_up:

[Snow Leopard]

Bit of a downward slide and not many buyers lining up :( have to confess to jumping ship today to preserve my capital and small profit. May jump back in later but happy to be out for the time being. ;)

Have you considered whether term deposits are right for you?


Well done, whatever happens next you can decide on, while reflecting on the saying "no one ever went broke by taking a profit" -Jesse Lauriston Livermore.

:t_up:

I just hope the TRA price keeps going down. If it recovers from here I do not know which will be worse:
RB's awesome angst;
you digging out "Let your profits run".

[minimoke]

Bit of a downward slide and not many buyers lining up :( have to confess to jumping ship today to preserve my capital and small profit. May jump back in later but happy to be out for the time being. ;)??? TRA up 1 cent today!. at $3.14 it is above one week low, 4 week low, 26 week low and 52 week low. The 26 week range high is $3.22 so at 8 cents down I dont understand why you would bail - thats a real tight stop loss

The whole of the NZX has had an ugly month in July. Thats the nature of the market and not a good enough reason to bail.

[Baa_Baa]

Have you considered whether term deposits are right for you?



I just hope the TRA price keeps going down. If it recovers from here I do not know which will be worse:
RB's awesome angst;
you digging out "Let your profits run".

Where did I say "Let your profits run"? You quoted me, show me where?

[couta1]

I'm adding in small nibbles currently, not many buyers that's for sure, should be for one of the only value plays currently available on the NZX. Must be Percy or Beagle wanting those 50k shares at $3, im sure if it gets that low they will have plenty of competition. PS-Just 10 weeks approx until the next divvy.

[RupertBear]

Fair enough for those of you that think I made a mistake by jumping ship. The trend seems to be going down and I have learned the hard way not to watch them go down. Happy for them to go back up and be proven wrong but I am also happy to be out atm. ;)

[RupertBear]

[QUOTE=Snow Leopard;723001]Have you considered whether term deposits are right for you?


Thats a bit harsh :(

[RupertBear]

I'm adding in small nibbles currently, not many buyers that's for sure, should be for one of the only value plays currently available on the NZX. Must be Percy or Beagle wanting those 50k shares at $3, im sure if it gets that low they will have plenty of competition. PS-Just 10 weeks approx until the next divvy.

You probably bought mine Couta ;) and yes I did think long and hard before getting out so it wasnt an impulsive decision and I am currently happy with that.

[Snow Leopard]

Thats a bit harsh :(

Sorry.

Did not intend to ruffle any fur!

Or wool!

[BobbyMorocco]

If the share price increases from here the 50EMA will move up through the 200EMA and isn't that KW's favourite time to buy?

I hope this thing's got legs. After buying in at close to $3 I'm hoping it will reach the consensus $3.80-$4.00 valuation and happy to pick up the divvies along the way.

[RupertBear]

Well done, whatever happens next you can decide on, while reflecting on the saying "no one ever went broke by taking a profit" -Jesse Lauriston Livermore.

:t_up:

Thanks Baa Baa :)

[percy]

I'm adding in small nibbles currently, not many buyers that's for sure, should be for one of the only value plays currently available on the NZX. Must be Percy or Beagle wanting those 50k shares at $3, im sure if it gets that low they will have plenty of competition. PS-Just 10 weeks approx until the next divvy.

I am not bidding for TRA or any other share at present, other than a small order on USX market.
I have some cash,but am awaiting the reporting season results,before I decide to buy/sell anything.
I think TRA is great buying under $3.35,and note the share price remains above the 60,90,120 and 180 day, moving averages.

[Beagle]

Business confidence hit a 10 year low according to a very recent ANZ bank survey with a net 45% of respondents expecting business conditions to deteriorate over the next year and is now at a level consistent with how business's felt during the extreme depths of the GFC.

I know Turners are much better placed than others to withstand these conditions, (80% of sales are for less than $20K and are non discretionary) but what does worry me a little is the trend with business confidence. The level of pessimism has really picked up in the last few months and if this trend continues, (from an already extremely gloomy level) I guess the worry is that companies won't have the confidence to make any meaningful capex ?

On the other hand all that extra money the Government is handing out with the families package that started last month should ensure that there's plenty of families that were previously struggling who can now afford to upgrade to something half reasonable.

Net effect...possibly minimal ?

[RupertBear]

??? TRA up 1 cent today!. at $3.14 it is above one week low, 4 week low, 26 week low and 52 week low. The 26 week range high is $3.22 so at 8 cents down I dont understand why you would bail - thats a real tight stop loss

The whole of the NZX has had an ugly month in July. Thats the nature of the market and not a good enough reason to bail.

Yes I had quite a tight stop loss on this one given I only bought in recently at $2.99. Firstly I didnt want to loose money but secondly I was more concerned about the lack of buyers. Hence I took my opportunity to get out. Others may have much bigger buffers than I had and others may be happy to hold long term for the divvy. At the moment getting out was the right decision for me. I also note Craigs have come out today warning of strong headwinds facing some companies, TRA was one of them.

[Beagle]

Yes I had quite a tight stop loss on this one given I only bought in recently at $2.99. Firstly I didnt want to loose money but secondly I was more concerned about the lack of buyers. Hence I took my opportunity to get out. Others may have much bigger buffers than I had and others may be happy to hold long term for the divvy. At the moment getting out was the right decision for me. I also note Craigs have come out today warning of strong headwinds facing some companies, TRA was one of them.

Got a link or was that private communication to fee paying clients only ?

[couta1]

Yes I had quite a tight stop loss on this one given I only bought in recently at $2.99. Firstly I didnt want to loose money but secondly I was more concerned about the lack of buyers. Hence I took my opportunity to get out. Others may have much bigger buffers than I had and others may be happy to hold long term for the divvy. At the moment getting out was the right decision for me. I also note Craigs have come out today warning of strong headwinds facing some companies, TRA was one of them. That just means Craig's want the price to drop on those companies so their clients can get some cheap shares, I see no strong headwinds facing TRA and are in accumulation mode, let it drop. PS-My average buy price is now the same as yours was.

[winner69]

That just means Craig's want the price to drop on those companies so their clients can get some cheap shares, I see no strong headwinds facing TRA and are in accumulation mode, let it drop. PS-My average buy price is now the same as yours was.

So Craig’s want punters to sell TRA so their clients can buy cheaper ......and also encouraging the same punters to buy ATM with that outrageous target (so their clients can sell out before it drops more?)

Is that how the game works?

[couta1]

So Craig’s want punters to sell TRA so their clients can buy cheaper ......and also encouraging the same punters to buy ATM with that outrageous target (so their clients can sell out before it drops more?)

Is that how the game works? It's all about ticket clipping mate.

[percy]

At the recent Turners' roadshow there were no Christchurch brokers, or local fund managers' analysts.?I therefore think I am a lot better informed on TRA's prospects than they are.!!!.
Local broker Hamilton, Hindin, Greene, are hosting a TRA presentation next Tuesday night,so I guess their brokers will be in attendance,
A couple of my friends are attending,so I look forward to hearing their comments.

[RupertBear]

That just means Craig's want the price to drop on those companies so their clients can get some cheap shares, I see no strong headwinds facing TRA and are in accumulation mode, let it drop. PS-My average buy price is now the same as yours was.

Hmm I have always taken Craigs recomendations at face value. Maybe I am completely naive but surely manipulating their clients that way would be unethical and it would actually p**s their clients off? :confused:. Personally I find their research reports quite helpful and I do take them into account as PART of my research. When it comes to TRA however I very strongly value Percys opinion based on his knowlegde of the industry and his thorough research. :)

Yes Mr Beagle the research was for clients so no link.

Thanks for buying my shares Couta :) I hope you do well out of them. You are a much braver investor than me and tolerate big red arrows better than me. Unfortunately my personal circumstances have changed and I have no income atm so my risk tolerance has gone down. Hence my selling when I did. And before people start telling me I shouldnt be investing in shares, yes I know but I am "well positioned" so "no worries" :D

[Yoda]

Hmm I have always taken Craigs recomendations at face value. Maybe I am completely naive but surely manipulating their clients that way would be unethical and it would actually p**s their clients off? :confused:. Personally I find their research reports quite helpful and I do take them into account as PART of my research. When it comes to TRA however I very strongly value Percys opinion based on his knowlegde of the industry and his thorough research. :)

Yes Mr Beagle the research was for clients so no link.

Thanks for buying my shares Couta :) I hope you do well out of them. You are a much braver investor than me and tolerate big red arrows better than me. Unfortunately my personal circumstances have changed and I have no income atm so my risk tolerance has gone down. Hence my selling when I did. And before people start telling me I shouldnt be investing in shares, yes I know but I am "well positioned" so "no worries" :D

I agree with your comments about Craigs. I understand the more they get people to trade the more money they make whether it goes up or down. But I cannot see them doing it that way as there would be a huge loss of confidence in there company.

Secondly ,if you have 5000 shares and sell them at $3 15 , and buy back at 3:10 or even 313 you will have made money right? Buy back at 3:10. It doesn't always work though obviously😎 you might miss the jump

[minimoke]

At the recent Turners' roadshow there were no Christchurch brokers, or local fund managers' analysts.?.That is appalling. No wonder I dont use the sods.

[Beagle]

In fairness to Craigs they have a limited amount of resource and a large number of companies to cover. I agree with Percy that those who have taken the time to attend the investor roadshow and listened carefully are in a good position to understand the prospects for TRA.
The business confidence thing I was talking about yesterday will have a material impact on high end vehicle sales as most of these are sold to business's.
60% of Turners sales are for vehicles under $10K, 80% under $20K. The vast majority of these sales are undertaken with finance assistance.

The vast majority of these sales are non discretionary, the customer needs that car.

[winner69]

That is appalling. No wonder I dont use the sods.

Brokers / fundies have private hearings mini ...don’t mix with the riff raff

[percy]

Brokers / fundies have private hearings mini ...don’t mix with the riff raff

Some do,most do not.
The trust I help out on was advised to sell our SCL and EBO as the broker firm did not cover them.!!!
Their best blue was advising to sell CCC [cavotec] on the morning of their agm.
May be the brokers could be called riff raff.!???

[minimoke]

Brokers / fundies have private hearings mini ...don’t mix with the riff raffIts the rif raff who use their services - should have been a good opportunity to get a feel for their fee paying customers.

[sb9]

Hmmm...for holders the current trade depth on sell side looks very bearish, wonder which of the big boys selling, Milford or Salt?

[percy]

Hmmm...for holders the current trade depth on sell side looks very bearish, wonder which of the big boys selling, Milford or Salt?

Just between you and me I think they have a few more than is on offer,[by a good few million].
Most probably just a few of Craigs' riff raff clients selling...lol

[Beagle]

Sorry...speaking of possible sellers I can't help myself. I can't help wondering about the reasons behind the distribution of shares previously held within the business bakery as an entity into each shareholders nominated account.

Now this hound knows business relationships often run their course for a variety of reasons but one possible reason the dog has been mulling over is a fundamental disagreement over the value of some of the companies owned within the former entity. Distribution of shares could be so that one that doesn't see such a bright future is free to sell on market in which case there could be quite a significant stock overhang.

All mindless speculation...I should probably go back inside my kennel and dream of happier times ahead. $4 in 12 months time, no worries.

[percy]

Agree.Geoff Ross followers will most probably be selling TRA while Grant Baker followers will be selling MOA.
I do not follow MOA so can not comment on it,however ,I can say no matter what TRA share price is doing ,the business of TRA is going from strength to strength.
Business confident may be down,however workers' confidence is up;
TRA's customers are "the workers".

[minimoke]

Business confident may be down,however workers' confidence is up;
TRA's customers are "the workers".
Whats the bet we will see Nurses and Teachers and IRD workers all turning up to work in the new year in new used cars. I've got my money on it.

[Joshuatree]

Testing this isnt the black monday thread.

[percy]

I am told the TRA presentation last night at local broker Hamilton,Hindin Greene went well.
My friend who went was most impressed.
Another friend who was at the Turners presentation I attended, said it was a shorter version of what we enjoyed.
TRA annual report arrived today.Makes for good reading.

[bull....]

dont know if any of you follow ECX in aus similar company but they have had slowing sales in aus , also latest china data shows slowing car sales

https://www.bloomberg.com/news/articles/2018-08-08/china-car-sales-drop-accelerates-on-slowing-economy-trade-war

[percy]

According to my friend who went to the TRA presentation on Tuesday night,Todd Hunter said Turners were trading well,so the NZ market appears to be different from China's .Note TRA do not sell new cars.
Yes I was lucky I did not buy any ECX.Their revenue growth will now be between 12-17% rather than their projected 27-30% but with the extra shares issued for the Grays acquisition, there will be no,or very little eps growth for the next two or three years.Their core business is leasing new vehicles.

[Beagle]

AHG in Australia (major new and second hand dealer with operations throughout Australia and quite a few dealerships in N.Z). tanking lately. Turners SP disappointing me. Broken down below 100 day MA. But all is well because Jascinda says she is taking on the ten year low in business confidence head on. No worries.

[couta1]

AHG in Australia (major new and second hand dealer with operations throughout Australia and quite a few dealerships in N.Z). tanking lately. Turners SP disappointing me. Broken down below 100 day MA. But all is well because Jascinda says she is taking on the ten year low in business confidence head on. No worries. Well I guess we should be selling all our A2 shares then as it approaches the MA200. PS-Good buying opportunities only come on price drops.

[Beagle]

Well I guess we should be selling all our A2 shares then as it approaches the MA200. PS-Good buying opportunities only come on price drops.

http://www.scoop.co.nz/stories/HL1808/S00030/gordon-campbell-on-worrying-about-business-confidence.htm
Some people reckon this business confidence thing is male white businessmen who voted National behaving like 5 year olds and having a tantrum....or could they be right and Labour are sending us down a rabbit hole into a recession ? None of this will matter though because Turners demographic are flush with funds from the new families package lolly scramble and they'll be buying used cars in droves because the workers time has arrived and they couldn't care two hoots about business confidence...right ? So if its all going so well why is the SP back down in the doldrums again ?

[percy]

AHG in Australia (major new and second hand dealer with operations throughout Australia and quite a few dealerships in N.Z). tanking lately. Turners SP disappointing me. Broken down below 100 day MA. But all is well because Jascinda says she is taking on the ten year low in business confidence head on. No worries.

Most probably closer to CMO than TRA.
Just remember every day Turners are improving and growing their business.They have the capacity to pay increasing fully imputated divies.
Concentrate on the business,rather than the share price.Try to think like a business owner, like Warren Buffett.

[couta1]

http://www.scoop.co.nz/stories/HL1808/S00030/gordon-campbell-on-worrying-about-business-confidence.htm
Some people reckon this business confidence thing is male white businessmen who voted National behaving like 5 year olds and having a tantrum....or could they be right and Labour are sending us down a rabbit hole into a recession ? None of this will matter though because Turners demographic are flush with funds from the new families package lolly scramble and they'll be buying used cars in droves because the workers time has arrived and they couldn't care two hoots about business confidence...right ? So if its all going so well why is the SP back down in the doldrums again ? Like you, I'm not at all keen on the current direction the Govt are taking us in, SP drops often have no rational basis and can't be explained in the short term.

[moka]

http://www.scoop.co.nz/stories/HL1808/S00030/gordon-campbell-on-worrying-about-business-confidence.htm
Some people reckon this business confidence thing is male white businessmen who voted National behaving like 5 year olds and having a tantrum....or could they be right and Labour are sending us down a rabbit hole into a recession ?
So if its all going so well why is the SP back down in the doldrums again ?

I think the lack of business confidence is unconscious biases coming into play e.g. National = good, Labour = bad, men competent and women incompetent.
Labour sending us into a recession? National sent a lot of people into recession, especially people who don’t own their own home. People being homeless, living in cars is something you associate with recessions and depressions not a healthy economy. And those who are renting are struggling to pay soaring rents. So officially the stats may say it is not a recession but many are really struggling financially.

[percy]

I think the lack of business confidence is unconscious biases coming into play e.g. National = good, Labour = bad, men competent and women incompetent.
Labour sending us into a recession? National sent a lot of people into recession, especially people who don’t own their own home. People being homeless, living in cars is something you associate with recessions and depressions not a healthy economy. And those who are renting are struggling to pay soaring rents. So officially the stats may say it is not a recession but many are really struggling financially.

Briscoes.Trading well.
Kathmandu.Trading well.
Hallensteins.Trading gang busters.
Oceania.Ryman,Summerset.Trading well.
Sky City.Trading well.
Turners .Trading well.
MCK,CDI.Trading well.
SML.Trading well.

[Joshuatree]

yep politicised misinformation, but thats typical of the national party ,a great example being judith collins fake news snippet ,with a new low ,adding the prime ministers name to the fakery, anything goes with them ala trump, sad hole they are in and its getting deeper.

"Elsewhere in the world, firms would kill for the favourable conditions that business enjoys in this country. New Zealand is running a surplus, has remarkably low levels of government debt, enjoys historically low interest rates, has excellent terms of trade, has a currency rate increasingly favourable for exporters…. This country also has a government willing to pick up an unequal share of the tab – by OECD standards – of the private sector’s own research and development costs ; it operates a benign tax regime on capital gains, has relatively low labour costs subsidized by welfare payments by the state, has help available from the state for the cyber security risks facing business, has low unemployment, low inflation and a coalition government that’s committed to fostering global trade… Add it all up, and the positive factors for business could hardly be rosier.
On top of all that, the coalition’s Families Package and Winter Energy payments are about to inject hundreds of millions of dollars into the retail sector of the economy. What more help can those in business possibly want, or need? Why don’t these bold buccaneers of commerce show a bit of the pluck and self-reliance that they expect of everyone else? In effect, most of them are behaving like a five year old at a birthday party that isn’t getting everything its own way."

[winner69]

Neighbour getting heaps from his mates for ‘switching’ into Turners ....lamenting buying at recent highs. Reminded him that A2 was being a dog at the moment as well.

Told him it won’t go any lower so just hang in there might be best

Some of them thought they were really cool rubbing shoulders and mixing with real investors at the meetings

[percy]

Neighbour getting heaps from his mates for ‘switching’ into Turners ....lamenting buying at recent highs. Reminded him that A2 was being a dog at the moment as well.

Told him it won’t go any lower so just hang in there might be best

Some of them thought they were really cool rubbing shoulders and mixing with real investors at the meetings

He should chose his mates more carefully.!
Perhaps they would not be laughing at him had they attended the presentation with him.
My mate went to the TRA presentation HHG put on.Most impressed.
Luckily he has you as a neighbour.

ps
Are his mates the "mad investor" bowlers?

[winner69]

He should chose his mates more carefully.!
Perhaps they would not be laughing at him had they attended the presentation with him.
My mate went to the TRA presentation HHG put on.Most impressed.
Luckily he has you as a neighbour.

ps
Are his mates the "mad investor" bowlers?

Yep, that’s them.

TRA still better than TDs I said

Bit worried about the police challenging the club’s liquor license.

[percy]

Yep, that’s them.

TRA still better than TDs I said

Bit worried about the police challenging the club’s liquor license.
Surprised any of them have any money left to invest.!
Police are most probably doing it for "health and safety" reasons,at all times having the club members' best interests at heart...….lol.

Don't they have an ex police commissioner as club captain?.

[Beagle]

One thing that hasn't really been discussed much on here and something I discussed with management after the road show presentation is the seasonality of sales. A huge amount of business is done in spring and winter is the low period. Its always been this way and wondering why I asked management for an explanation.
People feel more confident in spring and are more comfortable shopping for vehicles as the weather warms up.
Might explain the present weakness in SP, just the winter doldrums, (he says hopefully, clutching at straws for possible explanations)

Anyway on a brief read of the annual report yesterday I reminded myself that organic growth is a gradual thing and Rome wasn't built in a day. Essential ingredients with all investing is the requirement for perseverance and persistent patience. I call this the rule of the 3 P's.

Its a little similar to the old army saying of the rule of 7 P's which is also a good one for business. Prior proper planning prevents p### poor performance.

[Beagle]

yep politicised misinformation, but thats typical of the national party ,a great example being judith collins fake news snippet ,with a new low ,adding the prime ministers name to the fakery, anything goes with them ala trump, sad hole they are in and its getting deeper.

"Elsewhere in the world, firms would kill for the favourable conditions that business enjoys in this country. New Zealand is running a surplus, has remarkably low levels of government debt, enjoys historically low interest rates, has excellent terms of trade, has a currency rate increasingly favourable for exporters…. This country also has a government willing to pick up an unequal share of the tab – by OECD standards – of the private sector’s own research and development costs ; it operates a benign tax regime on capital gains, has relatively low labour costs subsidized by welfare payments by the state, has help available from the state for the cyber security risks facing business, has low unemployment, low inflation and a coalition government that’s committed to fostering global trade… Add it all up, and the positive factors for business could hardly be rosier.
On top of all that, the coalition’s Families Package and Winter Energy payments are about to inject hundreds of millions of dollars into the retail sector of the economy. What more help can those in business possibly want, or need? Why don’t these bold buccaneers of commerce show a bit of the pluck and self-reliance that they expect of everyone else? In effect, most of them are behaving like a five year old at a birthday party that isn’t getting everything its own way."

Good post and you make a convincing case.
Here however is a very good counter argument https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12104190
How does one plan in business with so much policy about to be made up at some unknown stage in the future by the 100+ working groups ?
The issue I believe is that Labour are creating so much uncertainty around future policy they are casting a shadow of doubt over the entire economy and decision makers looking at decisions around expansion or capex are basically throwing up their hands in the air and saying with so much doubt perhaps its best we are prudent and do nothing.

Of course little of this is of any relevance to "Johnny" flush with funds from the new families package and getting another $200 per week subsidy for his family from others who will be down at Turners getting a better car.

[Beagle]

I think the lack of business confidence is unconscious biases coming into play e.g. National = good, Labour = bad, men competent and women incompetent.
Labour sending us into a recession? National sent a lot of people into recession, especially people who don’t own their own home. People being homeless, living in cars is something you associate with recessions and depressions not a healthy economy. And those who are renting are struggling to pay soaring rents. So officially the stats may say it is not a recession but many are really struggling financially.

Off topic but I agree National should have done more to spread the benefits of the growth in the economy. Perhaps immigration could have been curtailed more so that house prices and rent are more realistic but this is a problem in many expensive cities in the world. Try renting a good house in Zurich, New York or London for example. I think if I was a young person facing Auckland's systemic rental cost and transport issues I would throw my hands up and say its too hard and shift elsewhere. Napier or Nelson spring to mind.

[oldtech]

One thing that hasn't really been discussed much on here and something I discussed with management after the road show presentation is the seasonality of sales. A huge amount of business is done in spring and winter is the low period. Its always been this way and wondering why I asked management for an explanation.
People feel more confident in spring and are more comfortable shopping for vehicles as the weather warms up.
Might explain the present weakness in SP, just the winter doldrums, (he says hopefully, clutching at straws for possible explanations)

Anyway on a brief read of the annual report yesterday I reminded myself that organic growth is a gradual thing and Rome wasn't built in a day. Essential ingredients with all investing is the requirement for perseverance and persistent patience. I call this the rule of the 3 P's.

Its a little similar to the old army saying of the rule of 7 P's which is also a good one for business. Prior proper planning prevents p### poor performance.

Good point Beagle.

I went shopping with my daughter last year for a car (currently in her third year at University). We were looking at cars in January for several reasons:

- Daughter was able to spend the time looking at cars and making a decision before returning to Uni and her job
- I don't know what it's like in other parts of the country, but in Auckland there are pockets of car-yards in certain areas (Wairau Park, Otahuhu, Manukau) and walking from one car-yard to the next in the cold rain of winter is unpleasant
- And of course you're spending a lot of time looking at cars outside. Who wants to do that in miserable weather?

[RupertBear]

One thing that hasn't really been discussed much on here and something I discussed with management after the road show presentation is the seasonality of sales. A huge amount of business is done in spring and winter is the low period. Its always been this way and wondering why I asked management for an explanation.
People feel more confident in spring and are more comfortable shopping for vehicles as the weather warms up.
Might explain the present weakness in SP, just the winter doldrums, (he says hopefully, clutching at straws for possible explanations)

Anyway on a brief read of the annual report yesterday I reminded myself that organic growth is a gradual thing and Rome wasn't built in a day. Essential ingredients with all investing is the requirement for perseverance and persistent patience. I call this the rule of the 3 P's.

Its a little similar to the old army saying of the rule of 7 P's which is also a good one for business. Prior proper planning prevents p### poor performance.

Might be Craigs clients jumping ship due to perceived pricing power weakness :confused:

[couta1]

Might be Craigs clients jumping ship due to perceived pricing power weakness :confused: You can't explain the irrational, just accept it as a market fact and relax.

[kiwico]

http://www.scoop.co.nz/stories/HL1808/S00030/gordon-campbell-on-worrying-about-business-confidence.htm
Some people reckon this business confidence thing is male white businessmen who voted National behaving like 5 year olds and having a tantrum....or could they be right and Labour are sending us down a rabbit hole into a recession ?

The traffic when travelling from central Auckland to the airport for a 5pm/ 6pm flight is much quieter than it used to be. I remarked on this to the taxi driver yesterday evening whom said there was much less business to the airport these days. I interpreted this as fewer businessmen in their Corporate Cabs rushing to meet business flights - I see this as supporting a slow down of NZ business whatever one's political persuasions (i.e. even if you voted for the CoL).

[percy]

Business confidence down.
The workers confidence up.
Ask yourself who buys cars under $15,000.
Then work out who sells cars under $15,000.

[Beagle]

Good point Beagle.

I went shopping with my daughter last year for a car (currently in her third year at University). We were looking at cars in January for several reasons:

- Daughter was able to spend the time looking at cars and making a decision before returning to Uni and her job
- I don't know what it's like in other parts of the country, but in Auckland there are pockets of car-yards in certain areas (Wairau Park, Otahuhu, Manukau) and walking from one car-yard to the next in the cold rain of winter is unpleasant
- And of course you're spending a lot of time looking at cars outside. Who wants to do that in miserable weather?

Nobody unless they have too. I think the other thing is that when test driving cars one doesn't really want to be driving in filthy weather conditions. You really want nice dry roads so you can evaluate a vehicle 's handling properly by pushing it a bit and wet greasy roads in winter don't really fit with that agenda either.

Just thinking out loud. Lower currency and spring just around the corner. Could it be that we're looking at price rises ahead for used cars as we head into the peak spring selling period ? Noticed an article on CNBC this morning about how firm used car prices are in America. Good for the value of Turners existing stock ?

[minimoke]

Business confidence down.
The workers confidence up.
Ask yourself who buys cars under $15,000.
Then work out who sells cars under $15,000.And by the time worker confidence turns they aren't going to be wanting left holding the repayments on a $25,000 car.

(reserve bank reckons lower interest rates may be on the cards - what better time to be buying a well priced vehicle!)

[percy]

Yes Turners will be "well positioned" for the spring buying season.
Take care buying a car in wet weather.Check it does not leak,however it is very difficult to check for panel damage that has been poorly repaired,or paint mismatches .These can only be properly checked in fine weather.

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TRA/322253/284574.pdf

New bond issue contemplated at 5.5%.

[RTM]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TRA/322253/284574.pdf

New bond issue contemplated at 5.5%.

Yes....so do I convert to shares ....current dividend slightly greater than 5% @301, but a chance of appreciation / depreciation ? Or go with the bonds at 5.5 %
Or take the cash and look elsewhere ? When I bought the bonds I had hoped the SP would be quite a bit higher than the current level where I am 1.5% underwater. I'm leaning towards taking the shares....given that was my original intention. I guess I will get a few more with the low SP, that's the silver lining to the current SP.

[percy]

Yes....so do I convert to shares ....current dividend slightly greater than 5% @301, but a chance of appreciation / depreciation ? Or go with the bonds at 5.5 %
Or take the cash and look elsewhere ? When I bought the bonds I had hoped the SP would be quite a bit higher than the current level where I am 1.5% underwater. I'm leaning towards taking the shares....given that was my original intention. I guess I will get a few more with the low SP, that's the silver lining to the current SP.

Exactly.Known as a win,win situation.The trust I help out on, will be more than happy getting a good few more shares.

[kiwico]

Yes....so do I convert to shares ....current dividend slightly greater than 5% @301, but a chance of appreciation / depreciation ? Or go with the bonds at 5.5 %

Only one will give you imputation credits to help counter the tax...

[RTM]

Only one will give you imputation credits to help counter the tax...

With both my last two tax returns I am accumulating IC's ! Hopefully this rectifies itself now I am getting super.

[Beagle]

I am hoping for 17 cps in dividends this year up from 15.5 cps in FY18. These should be fully imputed, (yes I have checked their imputation credit account when making that assessment) so that's 17 / 0.72 = 23.61 cps gross dividends from the shares. .2361 / $2.92* = gross yield on conversion of 8.1%.
*$2.92 is my best guess of the conversion price based on a 5% discount to 90 day VWAP. Has been trading around $3.15 and more lately $3.01 so I have taken the average of the two = $3.08 less the 5% conversion discount.

I will exercise my right to covert the bonds into shares. Barring some major exogenous overseas shock I think there is limited if any downside from a conversion price of about $2.92.

Yes you can offset imputation credits to the effect that you will get some or all of the PAYE deducted from your super refunded. IRD will not refund imputation credits per se, as you know.

These bonds have been a big disappointment to me but its time to move on...you can't win every time !

[RTM]

These bonds have been a big disappointment to me but its time to move on...you can't win every time !


Bemused as to why they should be such a disappointment. Great interest rate while they were active with opportunity of converting to stock or get your money back or roll over into new non convertible bond....your choice. Seems pretty much an OK deal from my perspective.

The disappointment for me is that the shares have not appreciated more. Maybe they will in the future and we will therefore be happy with the SP over the last 2/3 months. Am I missing something ?

[Beagle]

The degree of disappointment depends upon what you paid for them. At one point they traded as high as nearly $1.10 on the prospect of them providing upside potential well above the $3.75 maximum conversion price. I'm not as disappointed as shareholders who bough the shares at ~ $3.90 though !

Wonder when this dog will start barking ?...(opps did I really say that out loud) :blush: For homework tonight I'd better write 100 times...I must not p inside the tent (pleased I sold half my shares at $3.16 in anticipation of this conversion)...sometimes you have to work the dog to make it bark a bit

[RTM]

The degree of disappointment depends upon what you paid for them. At one point they traded as high as nearly $1.10 on the prospect of them providing upside potential well above the $3.75 maximum conversion price. I'm not as disappointed as shareholders who bough the shares at ~ $3.90 though !

Wonder when this dog will start barking ?...(opps did I really say that out loud) :blush: For homework tonight I'd better write 100 times...I must not p inside the tent (pleased I sold half my shares at $3.16 in anticipation of this conversion)

OK….got it....I got my bonds at face value when they were issued....so for me....all good.
Cheers, RTM

[Beagle]

OK….got it....I got my bonds at face value when they were issued....so for me....all good.
Cheers, RTM

I think they are being "ambitious" trying to launch another bond issue at just 5.5% with no convertibility option but good luck to them.

[couta1]

Under $3 is buy more territory for me, bond conversion price under $3 could be weighing on the minds of some? PS-Nice move Beagle, your half sale was all right.

[Beagle]

Its pretty sad to see them under $3 again. Really does make you wonder what with a national roadshow and all and they can't even hold $3.

[couta1]

Its pretty sad to see them under $3 again. Really does make you wonder what with a national roadshow and all and they can't even hold $3. Sure is,but it's a boring low liquidity stock so you get a lot of restless reef fish doing what they do.

[percy]

The market values Turners at the current price,so that's where it trades.
It is for investors to work out for themselves, whether the market is correct or not.
Sometimes you can be wrong, and the market says you are right,while other times you are right, and the market says you are wrong.
The market always adjusts to earnings and dividend growth,[just can take its time doing so.].
This is why investing is so rewarding, and so much fun.

[BlackPeter]

Couldn't resist to buy today some more given the good info in the roadshow and today's price. I guess if I want them, than its certainly more fun to buy them cheap - isn't it?

[winner69]

Bentley Motors celebrates a centenary soon

Here’s a cool history for those interested
https://www.bloomberg.com/news/sponsors/features/bentley/an-extraordinary-journey/?adv=18415&prx_t=E-UDAAAAAAFEANA

Sorry not on topic but is thread about cars

[Beagle]

Couldn't resist to buy today some more given the good info in the roadshow and today's price. I guess if I want them, than its certainly more fun to buy them cheap - isn't it?

Unless they get even cheaper :eek2: Clear breakdown through the 100 day MA now. Every time lately someone is brave enough to put up a decent volume bid it gets smashed. Hmmmm, make what you will of that...but I for one am not feeling especially brave with this one right at the minute. Maybe it'll test $2.80 again ?

[couta1]

Unless they get even cheaper :eek2: Clear breakdown through the 100 day MA now. Every time lately someone is brave enough to put up a decent volume bid it gets smashed. Hmmmm, make what you will of that...but I for one am not feeling especially brave with this one right at the minute. Maybe it'll test $2.80 again ? You could be right Beagle, $2.96 just got smashed, bid depth is atrocious, time to stop nibbling me thinks.

[BlackPeter]

Unless they get even cheaper :eek2: Clear breakdown through the 100 day MA now. Every time lately someone is brave enough to put up a decent volume bid it gets smashed. Hmmmm, make what you will of that...but I for one am not feeling especially brave with this one right at the minute. Maybe it'll test $2.80 again ?


You could be right Beagle, $2.96 just got smashed, bid depth is atrocious, time to stop nibbling me thinks.

If it bounces at $2.95 the uptrend channel stays intact - and volume on the down side is pathetic. Less than $50 k went through today. So far I am optimistic, but sure - you never know.

Question is - if it breaks through the $2.95, how much further down can it go given the amazing fundamentals?

[winner69]

If it bounces at $2.95 the uptrend channel stays intact - and volume on the down side is pathetic. Less than $50 k went through today. So far I am optimistic, but sure - you never know.

Question is - if it breaks through the $2.95, how much further down can it go given the amazing fundamentals?

‘Amazing fundamentals’ — bit subjective eh BP

Not like you to be that way

[couta1]

‘Amazing fundamentals’ — bit subjective eh BP

Not like you to be that way I'm sure BP will agree with the Couta relativity theorum on this one which says the price should be $3.83-$4 relative to CMO.

[Beagle]

If it bounces at $2.95 the uptrend channel stays intact - and volume on the down side is pathetic. Less than $50 k went through today. So far I am optimistic, but sure - you never know.

Question is - if it breaks through the $2.95, how much further down can it go given the amazing fundamentals?

My bloodhound nose smells a rat.
1. Despite a fulsome national roadshow and being talked up almost ad nauseum it can't hold $3.
2. The split up of the Baker boys empire and distribution of shares to individual shareholders nominated accounts suggests there could have been fundamental differences in how those guys see Turners prospects and one could have been a major seller in recent times.
3. Every time in recent weeks anyone is brave enough to put up a decent sized bid it gets smashed.
4. The paucity of depth on the buy side is an ongoing concern.
5. Clear break down through 100 day MA
I give this even money on testing $2.80 again.

[winner69]

The Rainbow Moving Average thing on yahoo charts is pretty cool

And there’s a ZigZag thingie to .....TRA now in down zig or zag

[traineeinvestor]

I'm sure BP will agree with the Couta relativity theorum on this one which says the price should be $3.83-$4 relative to CMO.

Or should we flip that around and ask what price CMO should be relative to the current price of TRA? :eek2:

Disc: love my CMO dividends

[RTM]

My bloodhound nose smells a rat.
1. Despite a fulsome national roadshow and being talked up almost ad nauseum it can't hold $3.
2. The split up of the Baker boys empire and distribution of shares to individual shareholders nominated accounts suggests there could have been fundamental differences in how those guys see Turners prospects and one could have been a major seller in recent times.
3. Every time in recent weeks anyone is brave enough to put up a decent sized bid it gets smashed.
4. The paucity of depth on the buy side is an ongoing concern.
5. Clear break down through 100 day MA
I give this even money on testing $2.80 again.

Yes, I am concerned as well. How many companies need to go on a road show to sell/support their story ? But against that....the numbers seem compelling. Decision time coming up for me with respect to conversion of my bonds. Do I nearly double my holding...or .?. I guess Percy would still take them from me !

[percy]

The Rainbow Moving Average thing on yahoo charts is pretty cool

And there’s a ZigZag thingie to .....TRA now in down zig or zag

Looks to me as though it is both..!!!...lol.

[percy]

Yes, I am concerned as well. How many companies need to go on a road show to sell/support their story ? But against that....the numbers seem compelling. Decision time coming up for me with respect to conversion of my bonds. Do I nearly double my holding...or .?. I guess Percy would still take them from me !

I am happy to see Turners' 5.27% net yield has now over taken Heartland's 5.20% net yield.
Happy days.

[BlackPeter]

‘Amazing fundamentals’ — bit subjective eh BP

Not like you to be that way

Subjective? not really. Just thought we discussed the fundamentals already to death, but maybe its time to repeat them. Here are the key parameters again (updated for a market close of $2.94 - Ouch):

forward PE (3 years forward - EPS estimates from 4-traders): 9.5;
forward EPS CAGR (3 years forward, 4 years back): 21.9;

backward EPS CAGR actually still better: 26.4;

PEG: 0.43; (and yes, I do call this amazing) ... but sure - "Prediction is very difficult, especially about the future" (Niels Bohr).

However, from where I stand would I think that the NZ used car market will get a strong push into the arm thanks to all these recent two digit pay rises in combination with rapid rise of fuel cost (and I am sure we will see more of both of them).

Obviously - lots of things can go wrong in the real world if you think they go right, but than - lots of things can go right when the market thinks they go wrong ;);

Anyway - time will tell. Spring is nigh - increasing market demand. Good time for car sellers.

[BlackPeter]

I'm sure BP will agree with the Couta relativity theorum on this one which says the price should be $3.83-$4 relative to CMO.

Actually - quite consistent with my target ;);

[RTM]

I am happy to see Turners' 5.27% net yield has now over taken Heartland's 5.20% net yield.
Happy days.

I would be even happier if Heartlands yield was depressed by the SP going to 2.10 again !

[percy]

I would be even happier if Heartlands yield was depressed by the SP going to 2.10 again !

Lol.Yes well.?
Why if you are never going to sell them.?
Just look forward to what you will receive on 21st September.Fully imputed too.!!

[Beagle]

Yes, I am concerned as well. How many companies need to go on a road show to sell/support their story ? But against that....the numbers seem compelling. Decision time coming up for me with respect to conversion of my bonds. Do I nearly double my holding...or .?. I guess Percy would still take them from me !


The way things are panning out I am not longer sure the 5% discount to 90 day VWAP is going to be any advantage. The other day I did a quick back of the envelope calculation and got an estimated exercise price of approximately $2.92. Unless I missed something from the announcement to the NZX and attached letter bondholders have to make sure their election is with the share registry by 31 August without knowing what the conversion price will be. I think this methodology is fundamentally unfair to bondholders. I also think if someone were brave enough to put up a big bid at $2.92 it is highly likely this would get smashed like every other recent decent sized bid. The fact is the 5% discount thing doesn't confer any advantage if very late in the 90 day VWAP period the SP is tanking like it is.

$2.92 could end up as effectively paying over the odds if this tanks down to $2.80 in the coming week(s). Shares aren't issued upon conversion until 1 October so you're effectively flying blind for over a month from the time you make a decision, (even a hand delivered one to the registry on the afternoon of Thursday 30 August), and you're flying blind on the share price for all that time in terms of what the SP will do based on an unknown conversion price.

Interesting decision for bondholders. I think I would like to know for certain what I am paying for the shares and with the recent bid looking so weak I think this is likely to test the bottom of the range, ($2.80 again). Moosie on another forum put up a good chart suggesting if $2.95 support line gets breeched its grim from there and I note that level was breeched on Friday. I think bondholders who elect to convert to shares are at least 50% chance of getting skunked.

I have come around to thinking a 5% discount isn't enough of a discount for the risks involved, especially with the recent trend in the share price. Momentum is a powerful force. I'm highly likely now to take the cash and any buying I do will be based on a price I set, at a time of my choosing, not a price to be set by someone else at a date of someone else's choosing. Making blind decisions and letting someone else set the price is a process I think is disempowering to bondholders.

[BlackPeter]

The way things are panning out I am not longer sure the 5% discount to 90 day VWAP is going to be any advantage. The other day I did a quick back of the envelope calculation and got an estimated exercise price of approximately $2.92. Unless I missed something from the announcement to the NZX and attached letter bondholders have to make sure their election is with the share registry by 31 August without knowing what the conversion price will be. I think this methodology is fundamentally unfair to bondholders. I also think if someone were brave enough to put up a big bid at $2.92 it is highly likely this would get smashed like every other recent decent sized bid. The fact is the 5% discount thing doesn't confer any advantage if very late in the 90 day VWAP period the SP is tanking like it is.

$2.92 could end up as effectively paying over the odds if this tanks down to $2.80 in the coming week(s). Shares aren't issued upon conversion until 1 October so you're effectively flying blind for over a month from the time you make a decision, (even a hand delivered one to the registry on the afternoon of Thursday 30 August), and you're flying blind on the share price for all that time in terms of what the SP will do based on an unknown conversion price.

Interesting decision for bondholders. I think I would like to know for certain what I am paying for the shares and with the recent bid looking so weak I think this is likely to test the bottom of the range, ($2.80 again). Moosie on another forum put up a good chart suggesting if $2.95 support line gets breeched its grim from there and I note that level was breeched on Friday. I think bondholders who elect to convert to shares are at least 50% chance of getting skunked.

I have come around to thinking a 5% discount isn't enough of a discount for the risks involved, especially with the recent trend in the share price. Momentum is a powerful force. I'm highly likely now to take the cash and any buying I do will be based on a price I set, at a time of my choosing, not a price to be set by someone else at a date of someone else's choosing. Making blind decisions and letting someone else set the price is a process I think is disempowering to bondholders.

Oh dear. Personally am I not convinced that spreading this discussion across various forums is the best way to do it, but I think this post needs some answer.

Just wondering what's happening - did your cold caught the best of you or are you otherwise in a very dark room?

I am not yet convinced that the trend line is broken. Sort of depends what line width you use to draw the support line, but if it stays at $2.94 than I'd see the trend line unbroken - not even a bear trap. Interesting question is - how will the SP develop on Monday. But yes, given the low liquidity of this share and your bleak posts all over the web might it well further drop. One frightened seller might pull it down or one keen buyer might push it up. That's the nature of low liquidity stocks.

So what? Are you looking to buy yourself some very cheap TRA shares or do you question the fundamentals you used to praise yourself. If yes, why?

The way I see it - if the SP keeps dropping than I see very strong support around $2.80 - which is incidentally 5% below the current SP. Hardly a huge enough move to justify all these dark clouds you try to conjure. This is the share market and 5 to 10 % are just normal jitter!

Or do you expect them to do a CBL on us? If yes, why? Whats going on?

[Beagle]

All I am saying BP is something is strange when a company does a fancy national roadshow but garners next to no buying support.
I think the big fish are driving this and quite probably nothing you or I would say on any forum will make one iota of difference.
FA is what it is and TA says get out. I made the post for bondholders benefit to help them decide for themselves. FA looks good but sentiment and momentum tell another story.
I don't have a bid in at $2.80 or any other price at present.
Almost over the flu but that has nothing to do with it. I'm not on some new crusade. People can decide what they want to do for themselves, I am simply pointing out there's some concerns for bondholders now and the decision is far from an easy one. I think some bondholders might actually appreciate what I've highlighted as the risks even if you don't mate. Disc: I recently reduced my stake in Turners in anticipation of this bond conversion. Perhaps others are too which might explain the SP tanking ?

[percy]

Last time when the TRAHA bonds came up for conversion,bond holders took advantage of arbitrage opportunities,and sold shares and converted their bonds into shares.
I expect we are starting to see the same sort of fun and games starting now.
This activity has no bearing on the business of Turners,which continues to grow and improve, no matter what the arbitrages do.
Maybe it will throw up opportunities for long term investors to either buy into TRA, or add to their existing holdings.
A lot of noise can cause loss of concentration,so take care.

[Beagle]

Last time when the TRAHA bonds came up for conversion,bond holders took advantage of arbitrage opportunities,and sold shares and converted their bonds into shares.
I expect we are starting to see the same sort of fun and games starting now.
This activity has no bearing on the business of Turners,which continues to grow and improve, no matter what the arbitrages do.
Maybe it will throw up opportunities for long term investors to either buy into TRA, or add to their existing holdings.
A lot of noise can cause loss of concentration,so take care.

Agree with that 100% and went back and had a look at the chart from two years ago. History shows that whenever this company does a capital raise in whatever form including bond conversion, it really affects the SP. For that reason I expect ongoing share price pressure through to potentially as late as the conversion date of 1 October. Brave people might ignore the TA and buy. I am short on brave pills right at the minute but some might argue I need some happy pills :)

[percy]

Concentrate on the business.
Think about what was said at the presentations.
Did it make sense to you or not.?
Good research means you have no need for brave or happy pills.
Growing dividends means you can spend your money on other things.
I may even use part of my huge HBL divie,due 21st September,to buy a few TRA.?.
Then again I may buy a few more HBL.....Fun times...lol.

[couta1]

Concentrate on the business.
Think about what was said at the presentations.
Did it make sense to you or not.? I've been adding to my original holding since $3.13 until yesterday, I must admit I never thought it would drop back down to these levels after such a strong report plus the roadshows. My Gutometer says the market is wrong and the current price is nonsense however I'm not buying any more until things settle down. PS-Buying a downtrend is sometimes a very profitable move long term eg HLG.

[percy]

I've been adding to my original holding since $3.13 until yesterday, I must admit I never thought it would drop back down to these levels after such a strong report plus the roadshows. My Gutometer says the market is wrong and the current price is nonsense however I'm not buying any more until things settle down. PS-Buying a downtrend is sometimes a very profitable move long term eg HLG.

You are not alone.
Since the result I brought more.
More importantly so did both The Chairman and the CEO.
I expect they know the business better than us.?

[Beagle]

Concentrate on the business.
Think about what was said at the presentations.
Did it make sense to you or not.?
Good research means you have no need for brave or happy pills.
Growing dividends means you can spend your money on other things.
I may even use part of my huge HBL divie,due 21st September,to buy a few TRA.?.
Then again I may buy a few more HBL.....Fun times...lol.

Good post. I need a holiday...been overworked and sick. Believe me I know how the CFO of THL feels but I simply cannot take any more sick leave at present.
Factually I think from a fundamental viewpoint this is a good buy under $3 but as Couta1 suggests the prudent thing to do appears to be to see where it settles first.
Vitamin D supplements can provide a much needed boost over winter. In case its not already obvious, I have run out of them lol

[percy]

Two Kiwi fruit before breakfast.
At work do all the easy jobs first.
Half an hour nap after lunch.
Short walk at 4 pm.
Take time out of the market.ie just half an hour in the morning and half an hour after your walk.
Try to imagen you don't mind if the market closes down for a year or two.

[couta1]

Two Kiwi fruit before breakfast.
Half an hour nap after lunch.
Short walk at 4 pm.
Take time out of the market.ie just half an hour in the morning and half an hour after your walk.
Try to imagen you don't mind if the market closes down for a year or two. Don't say that Percy, if the market closes down for a year or two, Beagle and I will be admitted to a Psychiatric unit(Well in my case I will just move into the one I do some work at)

[percy]

QUOTE=couta1;725239]Don't say that Percy, if the market closes down for a year or two, Beagle and I will be admitted to a Psychiatric unit(Well in my case I will just move into the one I do some work at)[/QUOTE]

Your sure he is not headed there with the market open.?
Nice and handy for you.Great having friends in the trade.??……………….lol.

[Beagle]

Don't say that Percy, if the market closes down for a year or two, Beagle and I will be admitted to a Psychiatric unit(Well in my case I will just move into the one I do some work at)

:lol: :lol:

[RTM]

All,
Thanks for all the posts which are helping me to decide whether or not to convert my bonds.
Looking at dates with respect to this.
Need to return Conversion Notice by 30 August 18
Maturity Date. 30 Sept 18
Conversion Price: Volume weighted price for the 90 days prior to 30 Sept 18.
So there is some unknown risk for the month of September. If the SP drops further during this month, and maybe the volume is light, then the conversion price might not be attractive.

On balance...I am thinking I may just redeem the bonds. And choose to buy more stock or not. This is not the outcome I expected when I invested in the bonds. However I did consider that it might be an option. And I am more than happy with the return I have received on the bonds I have held.

Around 10 days to decide.

[Beagle]

Conversion notice must be received by the registry by 5.00 p.m. 30 August 2018.

Conversion is based on 5% discount to 90 day VWAP in the 90 days leading up to conversion, i.e. 1 July to 30 September trading.
I brought up the chart since 1 July and looked at volume and prices traded since 1 July.
1 July to 31 July. Stock traded down commencing the month at $3.20 and ending at $3.10. Low volume most of the month but big volume days (for TRA) were noted during the month as 430K at $3.20 and 200K at $3.15.

August has seen the SP open at $3.10 and trade down to $2.94 with big volume days for this lightly traded share noted as 400K at $3.05 and $800K at $3.03.

I don't have access to the full detail that the independent party appointed by Turners will have but based on what I can see the weighted average price to date taking into account the 5% discount, my best updated estimate is $2.945. Obviously so far the 5% discount is useless as it closed at $2.94 with more stock offered at that price and best bid $2.91 from memory.
Price and volume traded between now and 30 September relative to price and volume traded 1 July to date will be what determines the final price, unknown.

Allowing a safe 3 days for snail mail delivery to the registry, (4 if you live in some parts of rural N.Z.) most investors need to decide by 27 August or courier or hand deliver to the registry on 30 August. If there is significant volume, (obviously the major factor) I will update my estimated VWAP price based on ongoing data to 27 August to help bondholders get as much visibility as possible.

Asking for the cash back is looking like the best option at this stage especially given the clear dowmward SP momentum over the last month and a half and clear breech of the 100 day MA and $3.00 resistance level more recently.

TA as mentioned looks awful but keeping an open mind this could well be due to the fact that many bondholders are also shareholders and some like me have sold down their shares in anticipation of the conversion.

Another look at the FA. Based on the mid point of their forecast $35m NPBT, less their average corporate tax rate last year 25% gives $26.25m NPAT.
Assuming half bondholders covert to shares it would appear weighted average number of shares for FY19 is going to be approx. 87m which gives 30.2 cps up from 28.87 cps based on a much lower weighted average number of shares on issue last year. Forecast FY19 EPS growth is thus by my estimate 4.6%.

At $2.945, the estimated conversion rate based on data to date and estimated earnings of 30.2 cps TRA are on a forward PE of 9.75.
How does this compare with the only other listed vehicle retailer, Colonial Motors ?
Due to report this coming week and I am estimating approx. 80 cps up from 72 cps last year. I have them on a (historical, not forward) PE of 10.
Colonial motors celebrate their 100th year in business this year. I will leave you to decide for yourself if TRA is cheap or not on a FA basis relative to Colonial Motors taking into account their respective business models are in many ways quite different.

Hope the above helps bondholders decide for themselves.

Why are Colonial Motors and Turners so cheap on a fundamental basis ?
One possible explanation is that Millennials often see smartphone's as more valuable than cars from a social connectivity point of view and ownership patterns of vehicles could be changing with widespread electric vehicle sharing scheme's not that far away...some are here already https://www.yoogoshare.co.nz/business-use-new/

[macduffy]

Why are Colonial Motors and Turners so cheap on a fundamental basis ?

My impression over the 40+ years that I've been interested in such things has been that Colonial Motors has almost always been cheap on fundamentals. Something to do with perceived as being a boring old income stock with limited growth prospects?

[percy]

My impression over the 40+ years that I've been interested in such things has been that Colonial Motors has almost always been cheap on fundamentals. Something to do with perceived as being a boring old income stock with limited growth prospects?

Nothing to do with:
Chair..... J Gibbons
Director...G.Gibbons.
Director.. S.Gibbons.
CEO...…….G.Gibbons
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.?.
CMO owned Hutchinson Motors Christchurch.
CEOs.O Hutchinson,...…………………......Grandfather
………...O.A.Hutchinson………………………..Son.
………….J.Hutchinson, current CEO...…...Grandson.

[Beagle]

My impression over the 40+ years that I've been interested in such things has been that Colonial Motors has almost always been cheap on fundamentals. Something to do with perceived as being a boring old income stock with limited growth prospects?

Did you check the half year report out in February 18...16% eps growth for the first half from memory. This weeks results will be very interesting. Special divvy to commemorate their 100 year anniversary perhaps ?

[blackcap]

Nothing to do with:
Chair..... J Gibbons
Director...G.Gibbons.
Director.. S.Gibbons.
CEO...…….G.Gibbons
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.?.
CMO owned Hutchinson Motors Christchurch.
CEOs.O Hutchinson,...…………………......Grandfather
………...O.A.Hutchinson………………………..Son.
………….J.Hutchinson, current CEO...…...Grandson.

To be fair Percy, I know Jim Gibbons (the chair) and he said to me that it was a family business (thus the board) but the rationale for listing was to enhance governance and thus enhance the performance of Colonial. They seem to have done that. I am very happy with my investment in this boring but very EPS growing company.

[blackcap]

Conversion notice must be received by the registry by 5.00 p.m. 30 August 2018.

Conversion is based on 5% discount to 90 day VWAP in the 90 days leading up to conversion, i.e. 1 July to 30 September trading.
I brought up the chart since 1 July and looked at volume and prices traded since 1 July.
1 July to 31 July.

Stock traded down commencing the month at $3.20 and ending at $3.10. Low volume most of the month but big volume days (for TRA) were noted during the month as 430K at $3.20 and 200K at $3.15.

August has seen the SP open at $3.10 and trade down to $2.94 with big volume days for this lightly traded share noted as 400K at $3.05 and $800K at $3.03.


/[/url]


The cynic in me says that the Bakery Business changed their affairs so they could "cross" some large volume at high prices during the 90 day period such as to "help" the conversion of bonds into shares..... (but what would I know)

[winner69]

This new director seems to be the bee’s knees or is it’s the cat’s whiskers
https://www.nzx.com/announcements/322431

Bit of a worry if he’s well connected and has has access to networks as well as success in selling businesses (just putting some of the words in a different order)

[RTM]

The cynic in me says that the Bakery Business changed their affairs so they could "cross" some large volume at high prices during the 90 day period such as to "help" the conversion of bonds into shares..... (but what would I know)

Dunno about that. I could make an argument that depressing the price helps bond holders with a more favourable strike price. And that putting more stock into the market during the 90 day period would do exactly that.

Can anyone point me to where I could source the volume and daily weighted average price ? Or is this not easily available to Joe Av. Punter. Should have started to collect the data a couple of months ago, knowing this was coming up.

[blackcap]

Dunno about that. I could make an argument that depressing the price helps bond holders with a more favourable strike price. And that putting more stock into the market during the 90 day period would do exactly that.

Can anyone point me to where I could source the volume and daily weighted average price ? Or is this not easily available to Joe Av. Punter. Should have started to collect the data a couple of months ago, knowing this was coming up.

Sorry you understand me wrong. What I meant was that they want the exercise price to be high so that less shares are diluted. But I see what you mean, by having a higher price more shares may not be converted which would lead to more cash leaving the business, something that may not be seen as optimum either. Moot point either way I guess. They cynic has been exercised :)

[percy]

Turners already had a board with a great deal of skin in the game,so I welcome Martin Berry's appointment.
He certainly has a wealth of experience.
Turners is far from being a family business, which I think is positive.
With a great business model, strong balance sheet,capable directors and management, shareholders can look to the future with a sense of wellbeing,and excitement..
I remain,as expected "well positioned."

ps The Trust I help out on with be converting its bonds to shares.
Worked out very well for it.Will get more bang for its buck.
pps.No brokerage to pay...

[RTM]

You need to have a record of every transaction to calculate the WVAP properly for any particular period. As such you need access to stuff mere plebs don’t usually have.

Even averaging daily WVAP numbers won’t get you the right answer but probably wouldn’t be too far off ...unless there are few million share days

ANZ Securities provides WVAP for each share on their depth screen. If I had recorded that at end of each day....I could have used it and not been to far astray. Or do I have this wrong ?

[BlackPeter]

This new director seems to be the bee’s knees or is it’s the cat’s whiskers
https://www.nzx.com/announcements/322431

Bit of a worry if he’s well connected and has has access to networks as well as success in selling businesses (just putting some of the words in a different order)

Interesting - I guess somebody with "a successful track record of having built, acquired and sold several companies with values in excess of USD 100m" might come handy in a venture with the involvement of the Bakers. Wouldn't be the fist time they play this game.

On the other hand - his banking experience might be useful as well, so lets see how things go.

[causecelebre]

Can anyone point me to where I could source the volume and daily weighted average price ? Or is this not easily available to Joe Av. Punter. Should have started to collect the data a couple of months ago, knowing this was coming up.

Try TradingView. NZ equities data is slightly delayed, 10-15 minutes but should be good enough for what you are looking for?

Volume bars at bottom. VWAP Blue line running through the candles. Note VWAP only computes for intraday periods

9861

[RTM]

Try TradingView. NZ equities data is slightly delayed, 10-15 minutes but should be good enough for what you are looking for?

Volume bars at bottom. VWAP Blue line running through the candles. Note VWAP only computes for intraday periods

9861

Thanks...will take a look later in the day.

[Beagle]

Using daily WVAPs doesn't necessary equal the real WVAP over the period (calculated by using every single transaction) but it probably would be pretty close


(Thats how a guru explained it to me once)

I had a really good go at this on the weekend. The paucity of volume on most days means one must place a lot of emphasis on the days when there is somewhat reasonable volume. I am happy with my work and arrived at a conversion price of $2.945 based on data to date. Happy to be corrected if someone can get access to actual VWAP data since 1 July.

[Beagle]

Volume weighted price based on daily totals from July 1st is $3.09


But thats not WVAP as one needs every single transaction to calculate that

Less 5% gives $2.9355. Split the difference with you. Its presently somewhere round $2.94 for the bond conversion I reckon.

[winner69]

Less 5% gives $2.9355. Split the difference with you. Its presently somewhere round $2.94 for the bond conversion I reckon.

Yep forgot about the 5%

Jeez that last divie is down the gurgler big time eh.

[winner69]

Turners new bonds indicative 5.5% pa bloody good value compared to Z’s miserly 4.0% pa ..but then Turners seen as heaps more risky

But then the way Orr is carrying on 4% might be seen as the the bargain of the century

[winner69]

Bond conversion price would have dropped a tad more yesterday

[RTM]

Bond conversion price would have dropped a tad more yesterday

I guess. But volume was pretty light when I last looked. That will minimise the drop.

[BlackPeter]

Bond conversion price would have dropped a tad more yesterday

You mean bondholders selling slightly above the conversion price is something like a vicious circle? You might be right, but other than a circle it will have an end - and rather soon ;);

[RTM]

I wonder what is best for the SP of the company ?
All bondholders to convert ?
All bondholders not to convert ?
Or maybe it’s neutral given the new bond offer which wii be possibly taken up by existing bondholders who do not convert ?

[BlackPeter]

I wonder what is best for the SP of the company ?
All bondholders to convert ?
All bondholders not to convert ?
Or maybe it’s neutral given the new bond offer which wii be possibly taken up by existing bondholders who do not convert ?

I guess the question is - is it better for them to have more equity or more loans on the balance sheet? Any conversion will reduce their leverage, which is good if you feel that they carry currently too much debt. Obviously - it means as well dilution, which is not necessarily good for existing share holders.

If the new bond pays 5.5%, than a low conversion rate would be good for shareholders if the company makes in average more than 5.5%, which they do. I.e. following this argument a low conversion rate would be good for existing share holders and the share price.

On the other hand could a low conversion rate point to limited investors confidence in the share price of the company (otherwise - why would you not convert) - I.e. a high conversion rate would point to high confidence, which again is likely to push the share price up.

No matter what it is - it might be seen as a win-win as well as a lose-lose :confused:.

In reality I think the conversion rate will be somewhere in the middle ... and it should be all good.

[RTM]

Thanks BP, you’ve summed up my confused thoughts !��

[winner69]

Doesn’t seem that long ago punters were paying a premium for the bonds because it seemed the hype was going to drive the share price way beyond 4 bucks.

Share price way off those expectations and about the same as it was a few years ago.

A casual observer would say something not quite right .....with the company that is

[percy]

Doesn’t seem that long ago punters were paying a premium for the bonds because it seemed the hype was going to drive the share price way beyond 4 bucks.

Share price way off those expectations and about the same as it was a few years ago.

A casual observer would say something not quite right .....with the company that is

Fully informed investors know the business is in great shape and its growth trajectory is on course.

[BlackPeter]

Doesn’t seem that long ago punters were paying a premium for the bonds because it seemed the hype was going to drive the share price way beyond 4 bucks.

Share price way off those expectations and about the same as it was a few years ago.

A casual observer would say something not quite right .....with the company that is

Well yes, they might say that. Problem is - casual observers are sometimes right and sometimes wrong. Remember the time when SUM was hoovering below the MA200? It is not that long ago, and just check where they are now.

[RTM]

Fully informed investors know the business is in great shape and its growth trajectory is on course.

Not sure I would classify myself as a fully informed investor, but I do want another 10-20k of Turner’s stock. That’s why I took up the bonds as the SP at the time was running away a bit. I didn’t pay a premium for the bonds. So I am trying to decide whether to convert the bonds, or simply take the money and buy what I want on market. I think I am leaning towards the latter. Especially as we have an unknown month to work into the strike price.

[Beagle]

Well yes, they might say that. Problem is - casual observers are sometimes right and sometimes wrong. Remember the time when SUM was hoovering below the MA200? It is not that long ago, and just check where they are now.

You can't compare a company that's grown EPS 45% per annum on average for six years with Turners. You can compare Colonial Motors with Turners.
I think the issue is that Turners MUST stop issuing new shares to fund their growth. I calculated on the weekend just approx. 4.5% eps growth forecast for FY19 this year because the estimated weighted average number of shares on issue for FY19, (assuming half bondholders convert to shares) is considerably higher than FY18. Maybe in FY20 they can grow organically and generate some decent eps growth without even more shares on issue or maybe this government sends us down a rat hole into a deep recession, who knows, but I think that's why the shares are trading on a forward PE of just 9.75. Maybe a bit cheap but try telling Colonial Motors shareholders that.

[James108]

You can't compare a company that's grown EPS 45% per annum on average for six years with Turners. You can compare Colonial Motors with Turners.
I think the issue is that Turners MUST stop issuing new shares to fund their growth. I calculated on the weekend just approx. 4.5% eps growth forecast for FY19 this year because the estimated weighted average number of shares on issue for FY19, (assuming half bondholders convert to shares) is considerably higher than FY18. Maybe in FY20 they can grow organically and generate some decent eps growth without even more shares on issue or maybe this government sends us down a rat hole into a deep recession, who knows, but I think that's why the shares are trading on a forward PE of just 9.75. Maybe a bit cheap but try telling Colonial Motors shareholders that.

4.5% eps growth is a good result if debt burden decreases (due to converting bonds to shares). Haven’t actually looked into this much though.

[Beagle]

4.5% eps growth is a good result if debt burden decreases (due to converting bonds to shares). Haven’t actually looked into this much though.

They're issuing a new tranche of bonds, $25m. Its okay...we hope for better things in FY20. Rome wasn't built in a day...and I guess there's always the possibility that FY19 guidance might be lifted at some stage, maybe with the half year result in due course ?

[BlackPeter]

You can't compare a company that's grown EPS 45% per annum on average for six years with Turners. You can compare Colonial Motors with Turners.


Well, you can - just depends what you want to demonstrate.

My point was: Given that even a gold star company like SUM had periods of quite ugly looking TA does it seems dangerous to assess a companies health just based on latter.

[Patient Panda]

Yes the underlying business is doing very well but they need to get tough on themselves and really commit to no more dilution.

Anyone knowhow difficult or what the chance of them improving their credit rating to get lower cost of capital is?

[Beagle]

Well, you can - just depends what you want to demonstrate.

My point was: Given that even a gold star company like SUM had periods of quite ugly looking TA does it seems dangerous to assess a companies health just based on latter.

Okay I see you point now. Yes last November was a grim time. I clung on like a sick dog hanging in their by the skin of its claws to my SUM shares when things got really ugly and I'm really glad I did. Suppose Percy knows the feeling a bit seeing as this was $3.60 years ago and meanwhile the market has roared away....

[percy]

Yes the underlying business is doing very well but they need to get tough on themselves and really commit to no more dilution.

Anyone knowhow difficult or what the chance of them improving their credit rating to get lower cost of capital is?

The message at their presentation was that they had already got "tough on themselves and really committed to no more dilution." This has been borne out by the fact the new bond issue will not be convertible.
Credit rating.Always helpful,but in today's low cost of funding I think it is more important to concentrate on their very high NIM [net interest margin] which is over 9%.
Should TRA want to raise capital in the future, I think we will see a pro-rata rights issue,after their last capital raise attracted widespread criticism.

[Patient Panda]

Thanks Percy. I was reading an article yesterday and was surprised to see Z energy bonds were 4% whilst TRA at 5% and whilst they’re obviously very different business a 1.5% differential is fairly substantial and even a small reduction in TRA cost of capital would surely be a huge gain to NPAT

forgive my ignorance but whats the advantage of a pro rata rights issue? Thats still issuing new shares isn’t it?

[percy]

Thanks Percy. I was reading an article yesterday and was surprised to see Z energy bonds were 4% whilst TRA at 5% and whilst they’re obviously very different business a 1.5% differential is fairly substantial and even a small reduction in TRA cost of capital would surely be a huge gain to NPAT

forgive my ignorance but whats the advantage of a pro rata rights issue? Thats still issuing new shares isn’t it?
Yes/no/maybe.It is funny how rising interest rates actually do not hinder firms such as TRA.Yes borrowing at a lesser rate would improve profit,however they are still not paying over the top for funds.
SSP.Everyone can apply for $15,000 worth,whether you have a 100 shares or 100,000 shares.Last time those with 100 shares received very few,while those with 100,000 received $15,000 worth of shares.
Rights issue.Now a 1 for 10 rights issue,or whatever 1 for 5 etc means everyone has a fair go based on the number of shares they hold.
Should it be an renounceable rights issue you can sell your rights,should you decide not to take them up.
Both TRA and HBL received a great deal [rightly]of criticism from NZ Shareholders Assn when they did placements and SPPs.Both companies realised their mistake.

[winner69]

I guess the question is - is it better for them to have more equity or more loans on the balance sheet? Any conversion will reduce their leverage, which is good if you feel that they carry currently too much debt. Obviously - it means as well dilution, which is not necessarily good for existing share holders.

If the new bond pays 5.5%, than a low conversion rate would be good for shareholders if the company makes in average more than 5.5%, which they do. I.e. following this argument a low conversion rate would be good for existing share holders and the share price.

On the other hand could a low conversion rate point to limited investors confidence in the share price of the company (otherwise - why would you not convert) - I.e. a high conversion rate would point to high confidence, which again is likely to push the share price up.

No matter what it is - it might be seen as a win-win as well as a lose-lose :confused:.

In reality I think the conversion rate will be somewhere in the middle ... and it should be all good.


What is their ROIC?

[BlackPeter]

What is their ROIC?

Sorry - not a bean counter and unfamiliar with this term. Their RoE was last time I checked 10.9%;

[percy]

Brought more at $2.96 today.
{ No Couta1, not the 150,000.}

[JayRiggs]

I've been buying the past few weeks myself around $3.
We are well positioned for the dividends due in about a month!!!

[winner69]

this from Turners the other day about the proposed new bond offer —

In the event of any scaling of applications, Turners intends to give preference to Existing Convertible Bondholders who are New Zealand resident and who have not elected to convert their Existing Convertible Bonds. Turners intend to allow such holders to request that Turners apply some or all of the redemption proceeds from their Existing Convertible Bonds to subscribe for New Bonds.

Is this the bribe to try to minimise the number converted to shares

Can’t have too much dilution can we

[Beagle]

Decision day tomorrow on Turners bond election, (allowing 3 clear days for mail delivery to registry to be sure of delivery on time).
SP is currently slightly below where i see the 90 day VWAP up to this point.
What to do Hmmmmm…... Might take half in cash and half in shares and can then only be half wrong lol

[RupertBear]

Decision day tomorrow on Turners bond election, (allowing 3 clear days for mail delivery to registry to be sure of delivery on time).
SP is currently slightly below where i see the 90 day VWAP up to this point.
What to do Hmmmmm…... Might take half in cash and half in shares and can then only be half wrong lol

Trust the hound to go half and half :D

[LAC]

Decision day tomorrow on Turners bond election, (allowing 3 clear days for mail delivery to registry to be sure of delivery on time).
SP is currently slightly below where i see the 90 day VWAP up to this point.
What to do Hmmmmm…... Might take half in cash and half in shares and can then only be half wrong lol

Or half right.....

Live on the edge a little;)

[percy]

Take the money.
Why take the risk.?
Shares are risky.
Downtrend looks set to continue.
Better to have the cash at home so you can count it very day.
It is real..!!!...……………………………………………………………………………………………..l ol.





Disc.As a shareholder, it is in my interest that fewer people convert their TRAHBs to shares.

[Beagle]

Take the money.
Why take the risk.?
Shares are risky.
Downtrend looks set to continue.
Better to have the cash at home so you can count it very day.
It is real..!!!...……………………………………………………………………………………………..l ol.





Disc.As a shareholder, it is in my interest that fewer people convert their TRAHBs to shares.

lol classic. $2.93 is a new low in recent months though.

[couta1]

lol classic. $2.93 is a new low in recent months though. An absolute steal, babies offering up candy right here.

[Beagle]

An absolute steal, babies offering up candy right here.

Maybe but its like National Women's hospital at $3.00 though with plenty of babies happy to cough up their candy with plenty more probably in the background with their candy hidden (for now).

[couta1]

Maybe but its like National Women's hospital at $3.00 though with plenty of babies happy to cough up their candy with plenty more probably in the background with their candy hidden (for now). I like buying candy at bargin prices, not many bargins left in the candy store currently,don't expect babies to see value.

[percy]

5.27% net yield with the divie paid quarterly,means can load up the candy cupboard every three months..

[sb9]

5.27% net yield with the divie paid quarterly,means can load up the candy cupboard every three months..

Absolutely, added some more at current prices seeing that next quarter divvy isn't far way. Let's see how overhang of bond conversion plays out.

[Snoopy]

Disc.As a shareholder, it is in my interest that fewer people convert their TRAHBs to shares.


I disagree. As a shareholder I want Turners to be in as strong a capital position as possible to help fund their future growth. So I am converting all of my bonds to shares.

SNOOPY

[percy]

I disagree. As a shareholder I want Turners to be in as strong a capital position as possible to help fund their future growth. So I am converting all of my bonds to shares.

SNOOPY

Remember what they said at the presentation about their strong balance sheet, and the fact they had enough capital to support their future plans, without calling on shareholders for the foreseeable future.
Also remember the interest payments on the new bonds [5.5%] with TRA's 9% NIM margin means borrowing gives better ROE and EPS.

[RTM]

Decision day tomorrow on Turners bond election, (allowing 3 clear days for mail delivery to registry to be sure of delivery on time).
SP is currently slightly below where i see the 90 day VWAP up to this point.
What to do Hmmmmm…... Might take half in cash and half in shares and can then only be half wrong lol

I still have a decision to make tomorrow. Although maybe I could scan/email the form through later on ? But I have reduced the unknown piece by buying today at 294. Can’t see the conversion price being much less than this.

[Beagle]

I still have a decision to make tomorrow. Although maybe I could scan/email the form through later on ? But I have reduced the unknown piece by buying today at 294. Can’t see the conversion price being much less than this.

Maybe I'm going cross eyed but I can't see anything in the correspondence or election form that gives that option. Bit old fashioned having to use snail mail isn't it !

[percy]

I still have a decision to make tomorrow. Although maybe I could scan/email the form through later on ? But I have reduced the unknown piece by buying today at 294. Can’t see the conversion price being much less than this.

What happens should you do nothing?

[Snoopy]

What happens should you do nothing?

You get repaid.

SNOOPY

[percy]

Thank you.
Always best when in doubt to do nothing.!!………………...lol.

[Beagle]

Thank you.
Always best when in doubt to do nothing.!!………………...lol.

My mum always reckones "when in doubt do naught" Remembering that saying has saved me a fortune with the BMW dealers this year lol

[percy]

Yes that's the saying.
Sage advice.Must have been W69 going on about nothing, that made it stick in my mind.
Had a rather nice BMW draw up alongside me at the lights.Said to the guy "nice car"."Do you want to buy it?" he asked.
"No thanks, I am rather impressed with my Nissan which cost under $6,000,and has only 25,000 K on the clock,as new."
Going from the admiring looks he gave it, so was he."
Just as well the lights change before he offered to trade his BMW on my Nissan.....
Another fortune saved.....lol.

[Beagle]

Simon Bridges reckons BMW's are big trouble too lol

[janner]

Simon Bridges reckons BMW's are big trouble too lol

However.. It is not his money paying the bill..

[Beagle]

However.. It is not his money paying the bill..

Hasn't stopped him getting into big trouble though has it lol

[percy]

Classic...……………………………...lol.

[janner]

Hasn't stopped him getting into big trouble though has it lol

Should that be a reason for mirth ???.

But.. That is a little off topic.

[Beagle]

Back on topic. History shows that the bond conversion period coincides with a low period in the SP and it rebounds later. I am going to run with that and complete my bond conversion option paperwork with full share conversion election and put it in the letterbox quickly before I change my mind. (This bob each way thing has possibly got a little out of hand and we need some push back and decisiveness)

[winner69]

Back on topic. History shows that the bond conversion period coincides with a low period in the SP and it rebounds later. I am going to run with that and complete my bond conversion option paperwork with full share conversion election and put it in the letterbox quickly before I change my mind. (This bob each way thing has possibly got a little out of hand and we need some push back and decisiveness)

Probably left it too late knowing NZ Post

But then fate might make the right decision for you

[Beagle]

Probably left it too late knowing NZ Post

But then fate might make the right decision for you

LOL yeah I probably have played Russian roulette with the post...bit like having a bob each way I suppose :blush:

[percy]

Reading the last few posts I find them funny as a play...….lol.


All the time Turners are improving their business.

[Joshuatree]

Wasn't Beagle talking about Quantum Physics just then , im a bit confused:confused:

[Snoopy]

I am not going through the full Buffett analysis for FY2018. The key sticking point is the far from stellar (based on a 15% target) return on equity over many years.



FY2014FY2015
FY2016FY2017FY2018


NPAT (Turners Limited) (A)$3.823m$12.210m$15.332m$16.789m$21.696m (e)


Shareholder Equity (Turners Auctions :TUA)$13.378mm


Shareholder Equity (Dorchester Pacific: DPC)$74.052m


Shareholder Equity (Turners Limited: TNR)$121.002m$129.812m$171.716m$214.323m


Total Combined Shareholder Equity (B)$92.430m$121.002m$129.812m$171.716m$214.323m

[/TR]

Return On Equity (A)/(B)4.1%10.1%11.8%9.8%10.1%



(e) Profit for FY2018 assumed to be as declared in first FY2018 profit release statement. In past years the headline declared figure has required significant normalisation corrections once the detailed results are published.

If we remember that the bare ROE figure for FY2017 was distorted because of the capital raising during that year, unfortunately ROE is going backwards, away from our 15% target. Granted I believe that 10.1% is still above the company's cost of capital, but perhaps not by much. The problem is if your return on equity is only just above your cost of capital the company becomes more vulnerable (to ongoing changes in the loan/car market in this instance). It then becomes plausible that return on equity could drop below the cost of capital. And this means the company could start destroying shareholder value, should the business cycle turn. So Warren Buffett would almost certainly not invest in this company. But that doesn't mean TRA isn't a satisfactory investment, using other investment criteria and different expectations.


I make a point of not taking any Turners result at face value. It seems inevitable that once you delve into the results something comes out a bit smelly. And so it has proved with the FY2018 result. The key to 'cleaning out the garbage' is once again found under note 7 (the detail of the 'Profit Before Tax', and in particular the section marked 'Other Income'..

There you will find a very significant figure of $2.664m which is a 'Fair Value Gain on Contingent Consideration.'

Say what??? If there is a heading you can't understand, it often pays to look under the general heading of 'insurance' for further clarification. That took the nose of this hound to p76, and the heading 'Insurance Contracts' threw up the following detail.



Change in Discount rate 3.08% to 2.61% (Insurance Contracts)-$0.120m


Difference between Actual and Assumed Experience (Insurance Contracts)$2.491m


Difference between Actual and Assumed Experience (Life Investments)$0.294m


Total$2.665m



Within the bounds of the third decimal place rounding error, this is in agreement with the $2.664m which is a 'Fair Value Gain on Contingent Consideration.' I don't think this is a co-incidence. While this extra profit is real, I believe it is due to the ups and downs of markets and/or settlements of insurance contracts. These kinds of gains are not sustainable year to year. So the underlying profit for TRA was significantly less than the headline figure quoted. The same can be said for the money made on the 'revaluation gains on investments', 'revaluation gain on investment property' and the 'gain on sale of property plant and equipment'. In my judgement the actual comparable net profit gain, the figure that should be used when comparing results from year to year should be adjusted from the headline figure as follows:

Operating Net Profit = $23.192m - 0.72x$2.664m - ($0.590m+$0.820m+$1.000m) = $19.085m which is 18% lower than the headline figure.

With 84.802m shares on issue at balance date this equates to 'earnings per share' of 22.5cps

At today's trading price of $2.94, this puts TRA on an historical PE of 13.0

That looks 'about right' and shows that at under $3, TRA may not be quite the bargain that some think. Maybe Mr Market knows what he is doing after all?

The other element that must be factored into the 'profit growth' is the ever increasing number of shares on issue. I have added this information into the table below via an 'earnings per share' calculation..



FY2014FY2015
FY2016FY2017FY2018


NPAT (Turners Limited) (A)$3.823m$8.595m$15.332m$16.789m$19.085m


Shareholder Equity (Turners Auctions :TUA)$13.378mm


Shareholder Equity (Dorchester Pacific: DPC)$74.052m


Shareholder Equity (Turners Limited: TNR)$121.002m$129.812m$171.716m$214.323m


Total Combined Shareholder Equity (B)$92.430m$121.002m$129.812m$171.716m$214.323m


Shares on Issue EOFY {C}NM63.077m63.431m74.524m84.802m


eps {A}/{C}NM13.6c24.2c21.8c22.5c


Return On Equity (A)/(B)4.1%7.1%11.8%9.8%8.9%



Note: I have also now normalized the tax treatment of the FY2015 result, as this gives a better basis for comparison.

It is interesting to see that while share price has gone nowhere over the last two years neither has Operating NPAT. And that correlation might not be a co-incidence!

SNOOPY

[Beagle]

Good you've got the time to get your snout deep in the accounts mate. I don't know how you get the time for all this but I for one am glad you do and I am also glad I have a very modest stake in these. Looks like as I suspected all along Colonial Motors is better value.