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

[Ggcc]

Oh yah! Its about 1/10th of the lost capital value.
I don’t think many shares are doing well this year based on today’s values and it could go down further.

[sb9]

Oh yah! Its about 1/10th of the lost capital value.

Sure get that, however at least they are paying a decent divvy for your investment.

[stoploss]

All set to open.
Looks good.
The signage on the container looks brilliant.

Drove past today Perc , looks well stocked plenty of cars on the lot .

[percy]

Drove past today Perc , looks well stocked plenty of cars on the lot .

Thanks,
Thought it looked good in the photos.
I think we will see more of these small Turners Car yards,most probably on Auckland's North Shore next.

[percy]

Some brokers refer to Turners as a retail stock.
I guess they would call Colonial Motors a retail stock too.
I think this is nonsense.
Latest new car sales setting another record in October, most probably proves my point.
Maybe we should think of Turners as a logistics company,moving cars from one owner to another.?

[Beagle]

Some brokers refer to Turners as a retail stock.
I guess they would call Colonial Motors a retail stock too.
I think this is nonsense.
Latest new car sales setting another record in October, most probably proves my point.
Maybe we should think of Turners as a logistics company,moving cars from one owner to another.?
LOL then we can apply the same forward PE as Mainfreight right :D
I see new vehicle sales hit an all time record in October (against a backdrop of the lowest business confidence since the GFC) and very low consumer confidence.
Reading the tea leaves, what does this suggest ? I suspect their is considerable disquiet about the fuel price and a lot of people are out there buying a new considerably more fuel efficient car. I hope this translates right across the vehicle segment so that people driving really old cars are looking to upgrade to something second hand that's more efficient at Turners or Buy Right cars.
I'm not sure it does but I hope it does. Hope is a strategy right ?

[percy]

LOL then we can apply the same forward PE as Mainfreight right :D
I see new vehicle sales hit an all time record in October (against a backdrop of the lowest business confidence since the GFC) and very low consumer confidence.
Reading the tea leaves, what does this suggest ? I suspect their is considerable disquiet about the fuel price and a lot of people are out there buying a new considerably more fuel efficient car. I hope this translates right across the vehicle segment so that people driving really old cars are looking to upgrade to something second hand that's more efficient at Turners or Buy Right cars.
I'm not sure it does but I hope it does. Hope is a strategy right ?

I think your strategy is correct.
Busy new car market= busy used car market.
Slow down in new car market takes time to be reflected in used car market.
Dead new car market =slow used car market.

[Joshuatree]

LOL then we can apply the same forward PE as Mainfreight right :D
I see new vehicle sales hit an all time record in October (against a backdrop of the lowest business confidence since the GFC) and very low consumer confidence.
Reading the tea leaves, what does this suggest ? I suspect their is considerable disquiet about the fuel price and a lot of people are out there buying a new considerably more fuel efficient car. I hope this translates right across the vehicle segment so that people driving really old cars are looking to upgrade to something second hand that's more efficient at Turners or Buy Right cars.
I'm not sure it does but I hope it does. Hope is a strategy right ?

More fuel efficient, not across the board ,sadly.

Double-cab Ute Nation | RNZ - Radio NZhttps://www.radionz.co.nz/programmes/two-cents-worth/.../double-cab-ute-nation (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&ved=2ahUKEwjsvIS7-7veAhVJL48KHSPYBNQQFjACegQICBAB&url=https%3A%2F%2Fwww.radionz.co.nz%2Fprogrammes%2 Ftwo-cents-worth%2Fstory%2F2018669568%2Fdouble-cab-ute-nation&usg=AOvVaw2-aV7_3LNwQBYUUc8lt0iB)

[Beagle]

More fuel efficient, not across the board ,sadly.

Double-cab Ute Nation | RNZ - Radio NZhttps://www.radionz.co.nz/programmes/two-cents-worth/.../double-cab-ute-nation (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&ved=2ahUKEwjsvIS7-7veAhVJL48KHSPYBNQQFjACegQICBAB&url=https%3A%2F%2Fwww.radionz.co.nz%2Fprogrammes%2 Ftwo-cents-worth%2Fstory%2F2018669568%2Fdouble-cab-ute-nation&usg=AOvVaw2-aV7_3LNwQBYUUc8lt0iB)

Trading my fuel guzzler V8 today for something that's still very nice and grunty but ~ 40% more efficient. Would have gone electric but Jaguar are determined to severely price gouge early adopters of the I Pace. I suspect there's hordes of people out there with the warmer weather and record fuel prices out and about doing a similar thing to what I'm doing. Funnily enough Mrs Beagle wants a double cab ute...I'm doing my best to try and dissuade her.

[Jay]

Why does she want a ute - is due to it being the "in" vehicle to have or so she can put the grandkids in the ute part and won't be able hear them moan about not being there yet :-)

[couta1]

Trading my fuel guzzler V8 today for something that's still very nice and grunty but ~ 40% more efficient. Would have gone electric but Jaguar are determined to severely price gouge early adopters of the I Pace. I suspect there's hordes of people out there with the warmer weather and record fuel prices out and about doing a similar thing to what I'm doing. Funnily enough Mrs Beagle wants a double cab ute...I'm doing my best to try and dissuade her. No intention of selling my resonably fuel efficient big block which does between 4.5-5k per liter of 98, besides I only do around 2000k a year in it tops so doing the planet a big favour, dang that's only 38k/week on average.

[Joshuatree]

More fuel efficient, not across the board ,sadly.

Double-cab Ute Nation | RNZ - Radio NZhttps://www.radionz.co.nz/programmes/two-cents-worth/.../double-cab-ute-nation (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&ved=2ahUKEwjsvIS7-7veAhVJL48KHSPYBNQQFjACegQICBAB&url=https%3A%2F%2Fwww.radionz.co.nz%2Fprogrammes%2 Ftwo-cents-worth%2Fstory%2F2018669568%2Fdouble-cab-ute-nation&usg=AOvVaw2-aV7_3LNwQBYUUc8lt0iB)

"Utes are categorised as a commercial vehicle exempt from FBT, unlike a passenger car.
And if you buy the ute as a business, even if you don’t need to cart around tools or livestock, you can also reclaim the GST."
"In that same year (2017)we bought nearly 37,000 double cab utes almost all of which were diesel-burning gas-guzzlers."

[blackcap]

"Utes are categorised as a commercial vehicle exempt from FBT, unlike a passenger car.
And if you buy the ute as a business, even if you don’t need to cart around tools or livestock, you can also reclaim the GST."
"In that same year (2017)we bought nearly 37,000 double cab utes almost all of which were diesel-burning gas-guzzlers."

Yeah I just bought a Ute recently. A 2.5L gas guzzling Nissan Xtrail. But I need something that can tow the caravan. It is also 4 wheel drive so that works nicely out on the farm and when doing wheelies on the river bed (sometimes need the 4wd if you get stuck) and out in the boggy paddock. Great fun.

[Joshuatree]

Really interesting and pertinent.You could set up your own personal Bog Blogg :t_up:

[Beagle]

Why does she want a ute - is due to it being the "in" vehicle to have or so she can put the grandkids in the ute part and won't be able hear them moan about not being there yet :-) LOL something like that.


No intention of selling my resonably fuel efficient big block which does between 4.5-5k per liter of 98, besides I only do around 2000k a year in it tops so doing the planet a big favour, dang that's only 38k/week on average.

But I am sure you would agree with that sort of fuel consumption they don't make a good everyday car, especially in Auckland traffic :eek2:

[Snoopy]

"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,


Turners 'Autosure' is given a bollocking in the Oct/Nov 2018 Consumer magazine. Some quotes from the article 'Taken for a ride'..

"Mechanical Breakdown Insurance is heavily promoted."

<snip>

"While the insurance holds little value for consumers, it is likely to be a tidy earner for car dealers and insurers. Policy exclusions and claim caps mean the situations in which insurers have to pay out and the amount they pay are heavily ring fenced."

The exclusions mentioned apparently include 'design faults' and anything considered the result of faulty repairs. The cap on each repair can be as low as $2,000 and policy holders must still pay an excess for any claim. Not covered area vehicles battery, shock absorbers , exhaust system, catalytic convertor and brake pads. That sounds fair enough as these are 'wear and tear' parts. But also not covered are airbags, drive belts, seat belts, as well as audio systems and keys. Manual clutches are not covered, but it seems automatic transmissions are (? ).

Oh yes and if your servicing is done at a garage not recommended by Autosure, then your warranty is void as well. And it doesn't cover pre-existing faults either. Lots of ways here for Autosure to slip out of the payment on policy net.

"Autosure is provided by DPL insurance (Turners Automotive Group owned) , with DPL being behind three if the six policies we reviewed including Turners own brand cover and Marac Insurances offering" (that is Heartland retailed I think).

We shareholders look to have the best end of any 'Autosure' deal?

SNOOPY

[percy]

We shareholders look to have the best end of any 'Autosure' deal?

SNOOPY

Agreed.
The same sort of issues could be said for medical insurance,travel insurance, and as most ChCh residents will tell you, home insurance.
When taking out any insurance policy you need to understand what the policy covers.
Buy a new vehicle and the warranty is usually only valid if maintance/service has been done by an approved dealer's service deptarment.
A good number of vehicle buyers will find "Autosure" a peace of mind insurance.

ps.I was really peeved off I did not take the extended waranty the shop salesman tried to talk me into when I brought a new computer a few years ago.Offcourse the computer gave up the ghost two months after the manufacturer,s waranty expired.Cosumer do not like extended warantys either.

[minimoke]

But also not covered are airbags, drive belts, seat belts, as well as audio systems and keys. Manual clutches are not covered, but it seems automatic transmissions are (? ).

Oh yes and if your servicing is done at a garage not recommended by Autosure, then your warranty is void as well. And it doesn't cover pre-existing faults either. Lots of ways here for Autosure to slip out of the payment on policy net.

Nothing in the least bit unreasonable in there - especially as they are likely to be covered by the CGA anyway

[peat]

Nothing in the least bit unreasonable in there - especially as they are likely to be covered by the CGA anyway
Its not so much whether the policies are unreasonable or not. We could argue their value either way. Its whether they are seen to be reasonable or not, and I think these situations not only draw customer pushback and destroy brand reputation but also attract regulation - all of which means they are unlikely to remain as profitable as they were.

[minimoke]

Its not so much whether the policies are unreasonable or not. We could argue their value either way. Its whether they are seen to be reasonable or not, and I think these situations not only draw customer pushback and destroy brand reputation but also attract regulation - all of which means they are unlikely to remain as profitable as they were.Only amongst those who read Consumer Magazine - who I only rate a bit more highly than those who watch Fair Go.

[Joshuatree]

There is a treasure trove of very diverse material on consumer, i recommend it to anyone who wants to save a lot of time and searching. From knowing your consumer rights , to reliability ratings on brands, to what heat pump is most efficient, what power companies are best etc etc etc. Even if you want to do the research yourself and wander up and down the rows of TV's at Noel leaming for ex, i think Consumer is a big advantage all round. happy user here.

[percy]

When buying a motor vehicle, I find it best to take along the mechanic who is going to maintain the vehicle for me.

[couta1]

When buying a motor vehicle, I find it best to take along the mechanic who is going to maintain the vehicle for me. In that case I only need to take myself along.Lol

[minimoke]

There is a treasure trove of very diverse material on consumer, i recommend it to anyone who wants to save a lot of time and searching. I know people like Consumer - if they didn't, the organization wouldn't be around. But in this day an age there are better alternatives.


From knowing your consumer rights , Oh look. type in "nz consumer rights" into google and first on the list is https://www.consumerprotection.govt.nz/?gclid=Cj0KCQiAlIXfBRCpARIsAKvManwBJEXU4PEbbW-qBcPUvkHQx0R4YtDK7U6p2fG1xnJHglUxa3nbTssaAr1zEALw_ wcB

to reliability ratings on brands, all big brands are reliable. And the CGA gives you the added protection for the odd lemon.


to what heat pump is most efficient, type "nz most efficient heat pump" into google, scroll down past the advertising and you wil come to https://www.canstarblue.co.nz/appliances/heat-pumps/ and if you go to the link above you will get https://www.energywise.govt.nz/at-home/heating-and-cooling/types-of-heater/heat-pumps/ for tons of info

what power companies are best etc etc etc. etc and you come up with https://www.powerswitch.org.nz/


Even if you want to do the research yourself and wander up and down the rows of TV's at Noel leaming for ex, i think Consumer is a big advantage all round. happy user here. I accept Consumer is great for those that dont want to do their own research - but they cant expect the best deal with this approach. The organization obviously has an appeal amongst those that think the issue, on say TRA's insurance is interesting. Those people would be better off spending their time reading theri insurance policy before signing.

[percy]

In that case I only need to take myself along.Lol

Yeah right.?
V8 Jaguar 4.5 to 5 klm to a litre.
Think you would get into less trouble if you took your wife along......lol.

[Joshuatree]

About 58 tests, reviews etc on Appliances
PLUS
Life Expectancy
Running Costs
Product Reliability
Retailer satisfaction
Top Brands in 2018

[minimoke]

About 58 tests, reviews etc on Appliances
PLUS
Life Expectancy
Running Costs
Product Reliability
Retailer satisfaction
Top Brands in 2018I'm still not impressed. I thought "who worries about "ruunning costs"? You spend $1500 on a tv and you are worried if your tv is going to cost $28 or $31 a year to run? So within 15 seconds I had an answer here https://www.energywise.govt.nz/tools/running-costs-calculator/#!/television

[Joshuatree]

Family and health 18 reviews /tests/articles
Food and nutrition 46
Health 35
Other 4


TECH
Home and entertainment 12
Mobile devices 8
Computers etc 21
Other 5

Money and Travel 73
campaigns and consumer rights 49

[Joshuatree]

Plus many links eg to price me etc etc all on one website. Saves a huge amount of time.And to me another RARE place (like radio NZ National) where theres is no BIAS.

[peat]

start a thread about it JT ! :p

[BlackPeter]

Plus many links eg to price me etc etc all on one website. Saves a huge amount of time.And to me another RARE place (like radio NZ National) where theres is no BIAS.

Look JT - I do understand your excitement for the Consumer as well as for RNZ. This must be a historic moment to see the both of us agree on anything ;);

But still - are we sure that this is the right thread to discuss these things?

[Joshuatree]

Sure , when ive got time i will do that. Consumer needs our support and why not, where else can you find an incorruptible source.
Dems looks to have house but not Senate;)

[Beagle]

Dividend yield at the current price of $2.75 based on company forecast of 17 cps fully imputed = (17.0 / 0.72) / 275 = 8.59% + growth in the years to come.
PE ratio just 9.65 and eps and dps growth in the years ahead and yet the institutions are ignoring this stock ? Go figure ? Any theories why on market turnover is usually very low and its so illiquid ?
https://www.marketscreener.com/TURNERS-LTD-20699914/financials/
Is it time for the company to consider an on market buy-back of its own shares seeing as the directors all seem to think that they're such good value at the recent annual meeting ? Words are cheap, back it up with action !

[minimoke]

Plus many links eg to price me etc etc all on one website. Saves a huge amount of time.And to me another RARE place (like radio NZ National) where theres is no BIAS.
We are getting way off topic - so I'l close with what was the final nail in the coffin for me.

When Tivo came out Consumer rated it as the worse Freeview tuner on the market - when it was actually the best that was available (even today nothing in NZ beats a Tivo). The difference in view was they didn't have the technical expertise to understand the product. And it didn't require a lot of technical expertise. Eg they couldn't work out how big the hard drive was. Well it was in the specs, or alternatively undo half a dozen screws and you would find it plain as day. It got hammered for its power consumption on standby mode. Tivo doesn't have a standby mode - it is recording 2 channels 24.7. Two channel recording you say - yup Consumer didn't understand it was the only product with 2 channel recording - other PVRS could record. To an external hard drive, maybe only one channel - but Consumer did not measure the energy consumption of the external drive.

Consumer rated MySky - but you couldn't even buy that - it came as part of a Sky subscription

Consumers list of recommendations included the Sommet SHD - NZ3. It didn't have a recording function. It was plagued with problems Eg stuttering with audio / video out of sync, totally lost sound and difficult patch / upgrades. Their top recommendation was a Hyundai. But it wasn't Freeview certified, didn't have an internal hard drive recording function, had one tuner and only had a couple of days of Electronic Programme data.

The review was an absolute and total dogs breakfast. Totally worthless. Looked authentic but screamed an appalling lack of technical and product knowledge. Consumer seemed to be driven purely by stand-by use on the back of Climate Change.

That review appealed to the lowest level of consumer intellect. It showed the shabbiness of theri review processes and lack of technical understanding.

I have seen nothing from them that alters the view that they are catering to a very low level of consumer (with due respect to your good self)

If you are clueless and need help buying a vacuum cleaner then Consumer may have some value. Which is why you should ignore anything and every thing they have to say about Autosure insurance.

[winner69]

Dividend yield at the current price of $2.75 based on company forecast of 17 cps fully imputed = (17.0 / 0.72) / 275 = 8.59% + growth in the years to come.
PE ratio just 9.65 and eps and dps growth in the years ahead and yet the institutions are ignoring this stock ? Go figure ? Any theories why on market turnover is usually very low and its so illiquid ?
https://www.marketscreener.com/TURNERS-LTD-20699914/financials/
Is it time for the company to consider an on market buy-back of its own shares seeing as the directors all seem to think that they're such good value at the recent annual meeting ? Words are cheap, back it up with action !

Maybe from inst perspective tainted by the Dorchester connection

You sounding a bit desperate with that current share price.

[kiwico]

Plus many links eg to price me etc etc all on one website. Saves a huge amount of time.And to me another RARE place (like radio NZ National) where theres is no BIAS.

I took advantage of the $1 for 3 months Consumer website access deal a year or so ago and still considered I'd lost out on the deal.

[Beagle]

Maybe from inst perspective tainted by the Dorchester connection

You sounding a bit desperate with that current share price.

Perplexed is the correct adjective.

[Joshuatree]

I took advantage of the $1 for 3 months Consumer website access deal a year or so ago and still considered I'd lost out on the deal.

id agree ,loser status.

[percy]

Is it time for the company to consider an on market buy-back of its own shares seeing as the directors all seem to think that they're such good value at the recent annual meeting ? Words are cheap, back it up with action !

The last shareholder notices that I can remember were The Chairman and The CEO adding to their holdings.The board have a lot of skin on the line,which is real "action",not just words..
Their strategy is excellent,building on their very strong business model.They know where they want to allocate capital for the best growth..They have "possible" large capital expenditure with the "possible" developements of Auckland and Christchurch super sites.Together with "possible" yards on the North Shore .A lot of " possibles" they will want to make "probables" so a share buy back would appear unlikely.So while the business is in a lot better shape than it was two years ago,and the future looks very bright,with a growing fully imputed dividend stream, the share price still goes backwards.
What should a serious investor do.?...........
Do your research and back yourself.
"Buy one and get one half price"...!!!!!...lol.

ps.Next divie is at the end of January.

[DarkHorse]

I took advantage of the $1 for 3 months Consumer website access deal a year or so ago and still considered I'd lost out on the deal.

The problem with Consumer appliance reviews is that reliability and various quirks reveal themselves over time. So they focus a lot on aspects which come down to personal preference and only initial experience. I use www.productreview.com.au (http://www.productreview.com.au) - see the experience of hundreds of australian consumers over years, with by and large exactly the same make and model of products as available here.

[Joshuatree]

I will start a Consumer thread so we can debate pros/cons. Apologies for the hijack on here.

[winner69]

Perplexed is the correct adjective.

Should be ‘perplexed’ about the current share price

Trading at 1.2 times book value which is pretty reasonable for a company not making much of a return on its total invested capital (including debt). Some analysts might say not covering its cost of capital

Heartland for comparative purposes is at 1.3 times book value.

[percy]

Yet their nett interest margin is twice Heartland's,which in turn is twice the Australian Banks'.

[winner69]

Yet their nett interest margin is twice Heartland's,which in turn is twice the Australian Banks'.

Good stuff ....just as well it is as high as it is eh percy

Probably have higher bad debts as well

[forest]

[QUOTE=winner69;736649]Should be ‘perplexed’ about the current share price

Not making much of a return on its total invested capital (including debt). Some analysts might say not covering its cost of capital
QUOTE]

That is one of my dislike with TRA, as far as I can see the cost of capital and the return on capital are both hovering around the 5 to 6%.
For a while now I am trying to figure out why Percy likes this company so much. It looks like the answer is not coming to me just yet.

[percy]

Good stuff ....just as well it is as high as it is eh percy

Probably have higher bad debts as well

Not so.Turners as well as Heartland [Marac} have very few bad motor vehicle loans go bad.
Bad debts did increase with poor non-recourse lending via MTF.This has been rectified by Turners tightening their non-recourse lending citeria,so the "bad loans" are running their course.I think maybe another 6 months or so will see the end of them.TRA are no longer dealing with some MTF originators.
Also adding to Turners margin, Turners are no longer putting about $4mil a month of Turners originated loans through MTF.They are putting them through their own Oxford Finance.
From Market Screener TRA's ROE is 11.3%
'

[Beagle]

Not so.Turners as well as Heartland [Marac} have very few bad motor vehicle loans go bad.
Bad debts did increase with poor non-recourse lending via MTF.This has been rectified by Turners tightening their non-recourse lending citeria,so the "bad loans" are running their course.I think maybe another 6 months or so will see the end of them.TRA are no longer dealing with some MTF originators.
Also adding to Turners margin, Turners are no longer putting about $4mil a month of Turners originated loans through MTF.They are putting them through their own Oxford Finance.
From Market Screener TRA's ROE is 11.3%
'

12-18 months is the impression I got from the annual meeting as to how long those problematic loans will affect the company.

[couta1]

It amuses me looking at the depth chart over the last while, the SP just can't get any traction yet you have a long list on the sell side, not too savvy them sellers.Lol

[percy]

9 months was what Aaron said 3 months ago at the ChCh presentation.
As the agm was after the presentation maybe they revisited the time frame.
What is important is three fold.
1] Non recourse loans criteria tightened.
2]MTF originators sorted?
3]$4mil a month of TRA's originated loans now being put through Turners' Oxford Finance,rather than MTF, with resulting better margin for TRA.
What was not disclosed was the value of these poor loans,or the expected losses from them.
Disappointing,but lesson learnt.They woke up to the problem quickly so I take them as a "one off",and Turners "terms of trade" with MTF and their originators have been clarified.
I find it interesting that both Turners and Heartland now want to be involved right at the start of any loan application.The day of a third party [originator] OKing a loan and then passing it on to Turners or Heartland is over.This will result in even fewer poor loans.

[Beagle]

Huge rally in US markets overnight...wonder if this pup will finally bark... even a little bit ?

[couta1]

Huge rally in US markets overnight...wonder if this pup will finally bark... even a little bit ? I doubt it, looking at that depth chart on the sell side more closely, I reckon it's the same seller for the whole lot with plenty more ready to load.

[Timesurfer]

It is a sad day when TRA is the only glimmer of green in my portfolio. Maybe it is sign that we might be heading to above water again!

[percy]

It is a sad day when TRA is the only glimmer of green in my portfolio. Maybe it is sign that we might be heading to above water again!
A bit of depth on the buy side is positive.
The interim result should be out at the end of the month.
I expect it will confirm they are gaining momentum.
Summer should be good for used car sales.

[percy]

My post #32 on "ARG Placement now by CRAIGS @ 88c " thread,should make interesting reading for TRA shareholders.

[sb9]

My post #32 on "ARG Placement now by CRAIGS @ 88c " thread,should make interesting reading for TRA shareholders.

From other thread as posted by percy...

"TRA.................Turners Automotive Group Ltd.
The property ARG brought from Turners, is Turners Wiri Truck and Machinery site,160 Roscommon Road,which ARG paid $8.6 mil.Interesting to note TRA paid $4mil for it in 2015.It is pleasing seeing TRA "book" the development margin.Great for ARG having a solid NZ listed company on a long lease.
As ARG's CEO,Peter Mence said,"We are pleased to have commenced what we envisage to be a mutually benefical long-term relationship with an organisation that has a significant real estate footprint accross NZ".
TRA's interim at the end of the month should be "interesting".
TRA's future large [more than possible] developments in ChCh and Auckland will most probably be on sold to ARG.
Couta1 may be right with TRA's "target price".......lol."

Useful to read for TRA holders.

[percy]

sb9.
Thank you for transfering my post.
The Roscommon Road site sold to ARG for $8.6mil is No,133,brought for $4mil.Not 160 as in my above post.
Turners still own No.160 Roscommon Road [cnr Vogler Drive] which they brought on 3rd August 2016 for $4.8mil.

[percy]

Turners half year result to 30th September will be announced before 9am on November the 27th.

[trader_jackson]

Same day as ARV I think... what a great day that will be!

[couta1]

Oh deary me, closed at $2.70 but fear not the Bollie Bands are starting to come together.Lol

[RupertBear]

Oh deary me, closed at $2.70.

You probably would have done better buying SLI Mr Couta :D

[couta1]

You probably would have done better buying SLI Mr Couta :D No ways, TRA is acting like a dog whilst SLI is the real doggy deal.

[winner69]

Oh deary me, closed at $2.70 but fear not the Bollie Bands are starting to come together.Lol

Was today’s big(ish) drop a result of HEartland being enthusiastic about motor finance in their presentation ...growth sector for them say

[Beagle]

Oh deary me, closed at $2.70 but fear not the Bollie Bands are starting to come together.Lol

If it looks like a dog (share price), barks like a dog (keeps talking the talk but the share price keeps going down), requires feeding on a regular basis like a dog (capital raisings), has fleas like a dog, (Chairman can't be bothered turning up to the annual meeting) guess what, its a dog ! No point in getting dividends if its matched by SP declines. Might be time to clean out the kennel if we don't see some genuine form at the next dog trials in the very near future.
The market is telling us next weeks results will be anything but joyous barking.

[McGinty]

Buy side been cleaned up at open, smells like something is up?

[iceman]

Buy side been cleaned up at open, smells like something is up?

But I see you've put in a bid to buy 5000 at $ 1.50 :-)

[blackcap]

Buy side been cleaned up at open, smells like something is up?

See Beagles previous post. He might have dropped a bomb :)

[McGinty]

But I see you've put in a bid to buy 5000 at $ 1.50 :-)

Haha, I usually stay away from catching knifes. But at $1.50 that's got to mitigate most risk :-)

Almost doesn't matter which stock at the moment, this is the wrong market for going long in.

[couta1]

Oh deary me and dog gone fasten your seat belts.PS-Plenty want to sell or is it the same seller?

[winner69]

Oh deary me and dog gone fasten your seat belts.PS-Plenty want to sell or is it the same seller?

Might be the disallusioned Mr Baker selling

As long as the other big boys have skin in the game as they say it’ll be all OK

[McGinty]

Now would be a great time for those that benefited from a generous increase in directors fees to step in a use said fee's to hoover up some shares at what must be a discounted price.

[Snoopy]

My 'Capitalised Dividend' valuation for this share was a failure. But after some soul searching, I believe that 'capitalising earnings' is a more realistic way to go.



Turners Automotive Group Limited (TNR/TRA)FY2015FY2016
FY2017FY2018



Snoopy Normalised Earnings Per Share {A}19.4c24.2c22.5c25.6c


Dividend Paid (per share) {B}9c12c13c]14.5c


Underlying Retained Earnings (per share) {A}-{B}10.4c12.2c9.5c]11.1c



I favour using at least five years of data when doing an exercise like this. However, when considering a company as fast evolving as Turners Automotive Group there comes a point when historical data used as a proxy for what might happen going forwards becomes positively antiquated. So I have reverted to using just four years of data which covers the period from when TRA was conceived in its current form.

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!


I have finally nailed this 'valuation' thing:

1/ Make up some numbers for a 'fair valuation'.
2/ Observe share price going down.
3/ Revise my valuation downwards after shareholders lose money, showing how foolish you all were to hold shares at that higher price in the first place - after the event.

My adjustment is not radical. I have just observed how good ideas do take time to implement. Examples include the delayed set up of the new Turners Sales yard at the Basin Reserve in Wellington and the time it will take to bring 'Autosure' to exploit cross market synergies. This means I think it is wise to use an additional 'time value of money' discount to take into account the execution time inherent in all new investments.





Turners Automotive Group Limited (TNR/TRA)FY2015FY2016
FY2017FY2018



Snoopy Normalised Earnings Per Share {A}19.4c24.2c22.5c25.6c


Dividend Paid (per share) {B}9c12c13c]14.5c


Underlying Retained Earnings (per share) {A}-{B}10.4c12.2c9.5c]11.1c



I favour using at least five years of data when doing an exercise like this. However, when considering a company as fast evolving as Turners Automotive Group there comes a point when historical data used as a proxy for what might happen going forwards becomes positively antiquated. So I have reverted to using just four years of data which covers the period from when TRA was conceived in its current form.

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%. On top of this I am attaching an additional 1% as a time value of money execution discount.

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

Gross Capitalised Retained Earnings Component = 10.8c / (0.105 x 0.72) = $1.43 (2)

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

$2.24 + $1.43 = $3.67

Thus at a market price of over a dollar less than this, it looks like TRA might (still) be worth accumulating!

SNOOPY

discl: did some accumulating myself last week at $2.77

[winner69]

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

So what you doing when share price is $2.60

[Ggcc]

And the value of the dividend keeps rising yet the capital people invested keeps dropping. It’s like giving money to receive your money back. Maybe TNR should be called an ATM (not A2 milk)??

[alex f]

6 very determined sellers, now down to 2.57. I wonder if the MFT hookup is a problem?. Can’t really understand the arrangement, lending the money, no recourse on the 3rd party dealers selling it, but Turners owns debt collection services. Car dealers make money selling cars (and finance) with no recourse, I’m sure they’ll present the loan client in the best possible light. Deals where they over value the trade and the price of the new car to get 100% finance. But in the contract it look as if it’s 70% financed with a 30% deposit paid

[Beagle]

See Beagles previous post. He might have dropped a bomb :)

More likely someone smells a rat with next weeks result. Leaky ship ?

[Beagle]

6 very determined sellers, now down to 2.57. I wonder if the MFT hookup is a problem?. Can’t really understand the arrangement, lending the money, no recourse on the 3rd party dealers selling it, but Turners owns debt collection services. Car dealers make money selling cars (and finance) with no recourse, I’m sure they’ll present the loan client in the best possible light. Deals where they over value the trade and the price of the new car to get 100% finance. But in the contract it look as if it’s 70% financed with a 30% deposit paid

Turners management made lite of this at the annual meeting but yes as posted recently I think the creative sort of shenanigans that some dealers and car buyers get up to is going to hurt Turners, this half, next half and the one thereafter. A certain percentage of people who take out finance had no intention at the time or loan origination to ever pay it back and non recourse has left the company vulnerable. Sure they have fixed this going forward but that doesn't stop the pain coming from these delinquent loans for the rest of their remaining term.

I should have known better than to hold shares in a downtrend. I listened to Percy's regular highly supportive posts and I should have listened to the TA.
I won't make that mistake in the future again. I halved at about $3.16 and halved down again at $3.00 but the quarter left should have gone already.

[minimoke]

Well, thats me gone. Stop loss triggered and cleaned out at $2.59. Carrying a real loss on this dog. Dividends DO NOT make up for capital losses. You got to draw a line somewhere and that line for me was reached today. Best of luck to other holders.

Bright light on horizon I now have some cash - so where to put it next?

[percy]

TRA's share price continues to fall on no news.
Next announcement is their half year to 30th September which will be on Tuesday 27th November.
Other company announcements.
ARG 13th November.We learnt TRA sold a property in September to ARG for $8.6mil that TRA brought 3 years ago for $4mil...
HGH 19th November presentation.Motor.16% growth in net finance receivables in 2018 financial year.
.................................................. ........13% annualised growth in quarter ending 30th September.
So HGH [motor] are enjoying good growth.We know 30% HGH motor is new cars and 70% is used cars.
Taking these two announcements into account, I am expecting a solid interim result from TRA on Tuesday,and confirmation their strategy is on track.

[couta1]

Well, thats me gone. Stop loss triggered and cleaned out at $2.59. Carrying a real loss on this dog. Dividends DO NOT make up for capital losses. You got to draw a line somewhere and that line for me was reached today. Best of luck to other holders.

Bright light on horizon I now have some cash - so where to put it next? Lol, I couldn't use a stop loss on this one otherwise the price would go down another 10c.

[Beagle]

TRA's share price continues to fall on no news.
Next announcement is their half year to 30th September which will be on Tuesday 27th November.
Other company announcements.
ARG 13th November.We learnt TRA sold a property in September to ARG for $8.6mil that TRA brought 3 years ago for $4mil...
HGH 19th November presentation.Motor.16% growth in net finance receivables in 2018 financial year.
.................................................. ........13% annualised growth in quarter ending 30th September.
So HGH [motor] are enjoying good growth.We know 30% HGH motor is new cars and 70% is used cars.
Taking these two announcements into account, I am expecting a solid interim result from TRA on Tuesday,and confirmation their strategy is on track.

Its what they don't tell you that worries me. I suppose you'd like a good example ?...a bit like asking is the Pope a Catholic lol
Case in point, we had a national roadshow of rah rah rah all around the country talking up the company's prospects and all the while the company would / should have known the first quarter results were tough, a fact they only admitted too months later at the annual meeting. I asked them at one of those roadshow's in July how trading had gone in the first quarter and the response I got was extremely dismissive as though I wasn't entitled to ask for that information. There is a genuine question in my mind and warranted a genuine answer at that time, not months later.
Did they conceal the poor first quarters results so some shareholders in a privileged position, (as a result of all the hoopla generated by the national roadshow events) could sell down their shares at around $3.20 or are their accounting systems so poor they couldn't update shareholders on Q1 results at those roadshow events ?

You think that poor Q1 will show up in next weeks result ?

[Timesurfer]

Well, thats me gone. Stop loss triggered and cleaned out at $2.59. Carrying a real loss on this dog. Dividends DO NOT make up for capital losses. You got to draw a line somewhere and that line for me was reached today. Best of luck to other holders.

Bright light on horizon I now have some cash - so where to put it next?

Yeah me too. I am hoping I am not venturing into the same stocks as the bowling club brigade again!

[minimoke]

Yeah me too. I am hoping I am not venturing into the same stocks as the bowling club brigade again!
With us gone SP will no doubt rise!

[percy]

Its what they don't tell you that worries me. I suppose you'd like a good example ?...a bit like asking is the Pope a Catholic lol
Case in point, we had a national roadshow of rah rah rah all around the country talking up the company's prospects and all the while the company would / should have known the first quarter results were tough, a fact they only admitted too months later at the annual meeting. I asked them at one of those roadshow's in July how trading had gone in the first quarter and the response I got was extremely dismissive as though I wasn't entitled to ask for that information. There is a genuine question in my mind and warranted a genuine answer at that time, not months later.
Did they conceal the poor first quarters results so some shareholders in a privileged position, (as a result of all the hoopla generated by the national roadshow events) could sell down their shares at around $3.20 or are their accounting systems so poor they couldn't update shareholders on Q1 results at those roadshow events ?

You think that poor Q1 will show up in next weeks result ?

The Christchurch Roadshow Turner's presentation was the best presentation I have ever been to.Better than RYM,EBO,HGH,MFT etc,etc.
Went on for over two hours.
All questions were answered fully.
Were told to always buy your second hand car in Winter, as the market is the slowest then,so no surprises their first quarter was slow.Always will be.

[JayRiggs]

I'm still holding on.
I don't wanna sell at a loss, especially on no fresh news.
Standing firm with ya percy!

[Beagle]

The Christchurch Roadshow Turner's presentation was the best presentation I have ever been to.Better than RYM,EBO,HGH,MFT etc,etc.
Went on for over two hours.
All questions were answered fully.
Were told to always buy your second hand car in Winter, as the market is the slowest then,so no surprises their first quarter was slow.Always will be.

Agreed the presentation was of a good caliber but I remain bemused why Todd Hunter couldn't / wouldn't answer my question ? What is so difficult about giving investors a steer on how Q1 had gone in July ? My impression at the time was in effect his response was we can't release commercially sensitive information although a simple we're not going to talk about that or words to that effect could be interpreted in a number of ways.

Regarding your Chch presentation comment. It all depends upon the caliber of the questions asked. Nobody asked how the first quarter had gone at the Auckland roadshow except me. Nobody asked at the annual meeting how problematic MTF loans were going and what their average duration was except me. I guess my training as an auditor looking for problems has its occasional uses.

By the way, I gathered from the annual meeting their Q1 performance was poorer than a normal Q1 but others might have gathered a different perspective, (I was pretty hot under the collar about Grant Baker being too scared to face the music with his massive fee increase). Let's see how they go next week. The market is a very harsh taskmaster at present. Any chink in the armor of the robustness of their business model will not be well received.

[percy]

You should have come to the ChCh presentation.
MTF loans were covered in depth by both Todd and Aaron as was Autosure.

[JohnnyTheHorse]

Almost sounds like a capitulation?

[percy]

Almost sounds like a capitulation?

Capitulation is reached when your broker sells his wife's shares.

[winner69]

Almost sounds like a capitulation?

‘Capitulation’ is the time to buy they say

But the neighbours bowling club mates haven’t ‘capitulated’....some are stil holding the ones they didnt sell when they moved onto Oceania. They were tempted with Z but kept out ....but the way Turners and Oceania are going that day might come.

[BlackPeter]

So, while we are all sitting around and some might even bite fingernails in expectation of the great revelations next week, and while some people obviously can't stand the excitement and prefer to sell out - question is, what does the market expect?

So far I would expect a similar EPS than last year (maybe slightly lower) - say 13 cents for the first HY, an indication that the second half will be better (it always is) and (hopefully) on top of that some one off property gains, which percy thankfully brought to our attention.

On the other hand - if that's what the markets expect, than I don't understand the price trend ... somebody here must be really pessimistic.

So - what do you guys think, what would be in your view a really good HY result pushing the SP above the $3 (in my view something above 15 cents EPS without one offs) - and what would be a really terrible result (worse than the disaster the market seems to price in anyway? What do you think it will be?

[Beagle]

TRA are really going to need that property gain from that sale in September is my read on this. Expect them to account for this above the line as normal operating profit, (selling second hand land is just like selling second hand cars right :p) and try and hide and bury the fact that this is an extraordinary item very deep in the fine print of the notes. My guess, without this gain I'd say they'll be in the region of 11-12 cps normal earnings

[winner69]

Heartland talked a lot about increased bad debt expense

Have Turners started using IFRS9 accounting standards yet?

[percy]

TRA are really going to need that property gain from that sale in September is my read on this. Expect them to account for this above the line as normal operating profit, (selling second hand land is just like selling second hand cars right :p) and try and hide and bury the fact that this is an extraordinary item very deep in the fine print of the notes. My guess, without this gain I'd say they'll be in the region of 11-12 cps normal earnings
As I take it Turners business model includes property ownership,development etc.A very important part,especially when we think ahead of very large intended developments in both Auckland and Christchurch.
Property,
Vehicle sales.
Vehicle insurance.
Vehicle finance.
Vehicle service.
End of life vehicle services.
CE Credit.
A very clever fully vertically intregated business model, which is gaining momentum.

[winner69]

TRA are really going to need that property gain from that sale in September is my read on this. Expect them to account for this above the line as normal operating profit, (selling second hand land is just like selling second hand cars right :p) and try and hide and bury the fact that this is an extraordinary item very deep in the fine print of the notes. My guess, without this gain I'd say they'll be in the region of 11-12 cps normal earnings

H118 had $0.9m of property related things in revenues ...so will need to do better to make an impact this half.

I feel a lot of “normalising” coming on .....that’s painful.

[Beagle]

H118 had $0.9m of property related things in revenues ...so will need to do better to make an impact this half.

I feel a lot of “normalising” coming on .....that’s painful.

Snoopy is licking his snout in anticipation of having a field day lol

[winner69]

So, while we are all sitting around and some might even bite fingernails in expectation of the great revelations next week, and while some people obviously can't stand the excitement and prefer to sell out - question is, what does the market expect?

So far I would expect a similar EPS than last year (maybe slightly lower) - say 13 cents for the first HY, an indication that the second half will be better (it always is) and (hopefully) on top of that some one off property gains, which percy thankfully brought to our attention.

On the other hand - if that's what the markets expect, than I don't understand the price trend ... somebody here must be really pessimistic.

So - what do you guys think, what would be in your view a really good HY result pushing the SP above the $3 (in my view something above 15 cents EPS without one offs) - and what would be a really terrible result (worse than the disaster the market seems to price in anyway? What do you think it will be?

My magic spreadsheet comes up with H1 NPBT of $17m and NPAT of $12.2m or 13.7 cents per share (they’ll report 14 cents plus on a weighted average number of shares)

The good news is that there HAS to be a lift in guidance to something like $37m to $40m NPBT or else things just don’t make sense - based on past financials and all the good things they’ve said of late. If their strategy was to under promise and over deliver it has backfired big time eh and Hunter deserves more of a beat up than Hrdlicker is getting from you guys.

I’m going to take a (smallish) punt .....should make 20% / 25% pretty quickly I reckon ...I have faith in my magic spreadsheet ....the only risk is that Baker, Hunter et al (the company) has pissed the market off so much they might just continue to give Turners the fingers and say so what. Once a market pariah in most cases always a market pariah.

Can’t wait until next Tuesday ...bring it on

[Beagle]

If it looks like a dog (share price), barks like a dog (keeps talking the talk but the share price keeps going down), requires feeding on a regular basis like a dog (capital raisings), has fleas like a dog, (Chairman can't be bothered turning up to the annual meeting) guess what, its a dog ! No point in getting dividends if its matched by SP declines. Might be time to clean out the kennel if we don't see some genuine form at the next dog trials in the very near future.
The market is telling us next weeks results will be anything but joyous barking.


My magic spreadsheet comes up with H1 NPBT of $17m and NPAT of $12.2m or 13.7 cents per share (they’ll report 14 cents plus on a weighted average number of shares)

The good news is that there HAS to be a lift in guidance to something like $37m to $40m NPBT or else things just don’t make sense - based on past financials and all the good things they’ve said of late. If their strategy was to under promise and over deliver it has backfired big time eh and Hunter deserves more of a beat up than Hrdlicker is getting from you guys.

I’m going to take a (smallish) punt .....should make 20% / 25% pretty quickly I reckon ...I have faith in my magic spreadsheet ....the only risk is that Baker, Hunter et al (the company) has pissed the market off so much they might just continue to give Turners the fingers and say so what. Once a market pariah in most cases always a market pariah.

Can’t wait until next Tuesday ...bring it on

Had you pegged more of a horse racing punter...you must like betting on the dogs as well :) I have a small stake left and a steel capped boot on ready to kick it out of the kennel if it doesn't bark soon.

[winner69]

Had you pegged more of a horse racing punter...you must like betting on the dogs as well :) I have a small stake left and a steel capped boot on ready to kick it out of the kennel if it doesn't bark soon.

Punting on dogs a no no ....you don’t which ones have been given a drink of water before the race ....and too many get ‘retired’ as they say in the game, a sport that should be banned.

Greyhounds (the ones that get genuinely retired) make great pets.

Report - In the three racing seasons from 2014 to 2017, at least 1300 dogs were euthanised and 1271 were unaccounted for (probably euthanised as well).

[Snoopy]

Maybe the share price is just drifting down to match the company’s book value of $2.52

Could be as Turners don’t make much of a return on total invested capital

and i’ll leave it to Snoops to discuss goodwill

Getting close to Winner's 'book value'.

I am not sure of the best way of calculating 'Return on Total Invested Capital'. I pulled this formula off the net.

'Return on Total Invested Capital' = (Net income - Dividends) / (Debt + Equity)

'Net Income' here represents 'Net Operational Income'. Don't count 'foreign exchange gains' and 'the sale of business units'. Dividends are removed from the calculation, because they are 'paid out' and not reinvested. However, I am struggling to see the value in such a calculation. Every shareholder is entitled to the dividend. So what is the purpose of a 'valuation calculation' that removes the principal 'compulsory benefit' of TRA share ownership?

SNOOPY

[Snoopy]

So - what do you guys think, what would be in your view a really good HY result pushing the SP above the $3 (in my view something above 15 cents EPS without one offs) - and what would be a really terrible result (worse than the disaster the market seems to price in anyway?) What do you think it will be?


I think shareholders should pay little attention to the half year numbers. Much more important will be how the big picture is developing. Is 'Autosure' getting traction? Are bad debts really reducing as management hoped? Is market share holding up? How is the 'securitization of loans' going? These are the kind of things I will be looking to find out!

SNOOPY

[percy]

Pretty much agree.
One of the most important things is business is saying "We appear to have a problem".That said,what is the problemd? Next they fix it.
Successful companies I have invested in have said it....Ebos' Mark Waller said at one agm,"We are wasting our time in Australia,we either get big or get out." They got big.! Same with Mainfreight."We either fix it or get out".They fixed it.They are still fixing Europe and USA.They will.
So Turners problems.
Autosure.Problem of under costing of European cars,and over costing Japanese cars identified.So they know what the problem was and have adjusted their pricing.
MTF unsecured loans.Problem known.Turners now right at the start of the loan origination. Lending criteria tightened.Originators sorted.
BuyRight cars.Old stock.Problem known.Problem sorted.
Staff adjusting from auction to sales.Staff training is helping.[Interesting Turners management/staff certainly got on top of BuyRight cars quickly].
Previous problems.
Poor site for Truck sales at Wiri.Fixed with the fantastic site developed at 160 Roscommon Road.
Lack of penetration in Auckland.Sorted by buying BuyRight Cars.
Lack of Finance in South Island.Fixed buy buying a South Island Finance Company.
Future problems or opportunities.
Develop a major site in ChCh for Turners Car Sales.
Develop a major site in Auckland for Turners Car Sales.
Develop a number of Turners Car Sales in Auckland's North Shore.

[winner69]

Getting close to Winner's 'book value'.

I am not sure of the best way of calculating 'Return on Total Invested Capital'. I pulled this formula off the net.

'Return on Total Invested Capital' = (Net income - Dividends) / (Debt + Equity)

'Net Income' here represents 'Net Operational Income'. Don't count 'foreign exchange gains' and 'the sale of business units'. Dividends are removed from the calculation, because they are 'paid out' and not reinvested. However, I am struggling to see the value in such a calculation. Every shareholder is entitled to the dividend. So what is the purpose of a 'valuation calculation' that removes the principal 'compulsory benefit' of TRA share ownership?

SNOOPY

Snoops — told you not to believe everything you find on the net, especially most things bad from investopedia.com

Simplest formula is ROIC = (EBIT x (1-Tax Rate)) / (Equity + Debt)

[SCOTTY]

Pretty much agree.
One of the most important things is business is saying "We appear to have a problem".That said,what is the problemd? Next they fix it.
Successful companies I have invested in have said it....Ebos' Mark Waller said at one agm,"We are wasting our time in Australia,we either get big or get out." They got big.! Same with Mainfreight."We either fix it or get out".They fixed it.They are still fixing Europe and USA.They will.
So Turners problems.
Autosure.Problem of under costing of European cars,and over costing Japanese cars identified.So they know what the problem was and have adjusted their pricing.
MTF unsecured loans.Problem known.Turners now right at the start of the loan origination. Lending criteria tightened.Originators sorted.
BuyRight cars.Old stock.Problem known.Problem sorted.
Staff adjusting from auction to sales.Staff training is helping.[Interesting Turners management/staff certainly got on top of BuyRight cars quickly].
Previous problems.
Poor site for Truck sales at Wiri.Fixed with the fantastic site developed at 160 Roscommon Road.
Lack of penetration in Auckland.Sorted by buying BuyRight Cars.
Lack of Finance in South Island.Fixed buy buying a South Island Finance Company.
Future problems or opportunities.
Develop a major site in ChCh for Turners Car Sales.
Develop a major site in Auckland for Turners Car Sales.
Develop a number of Turners Car Sales in Auckland's North Shore.

Great work thanks Percy

[Beagle]

I think shareholders should pay little attention to the half year numbers. Much more important will be how the big picture is developing. Is 'Autosure' getting traction? Are bad debts really reducing as management hoped? Is market share holding up? How is the 'securitization of loans' going? These are the kind of things I will be looking to find out!

SNOOPY

Best guide to the near term future is the immediate past period. I think not paying attention to the numbers is absolute folly. The market is telling us through its clear downtrend for over a year from a high of ~ $3.90 down to less than $2.60 close yesterday, a fall of more than a third that there are some things that are not right with the business. I agree the market is always forward looking but I think it is foolish to ignore the immediate past as that gives you the very best guide to the short term future. Some people are conveniently overlooking the fact that those problematic / delinquent MTF loans will dog this company for at least this and the next two half year reporting periods.

They have a big site in Albany, I don't know how long the lease is or whether they own it but its a large site adjacent to the northern motorway and very poorly positioned in terms of attracting retail traffic. All good to talk about new sites and expansion but how many of these sort of more unfavorable sites do they have and how long does that legacy continue for ?

If the shares are such a raving bargain and the directors thought so when they were 30-40 cps higher why aren't they buying in decent or any volume now ?

[winner69]

Baker et al probably need to wait until next week before they are allowed to buy any more

Hope they keen as mustard ...and help me make my 20%/25% quick gain.

[winner69]

Best guide to the near term future is the immediate past period. I think not paying attention to the numbers is absolute folly. The market is telling us through its clear downtrend for over a year from a high of ~ $3.90 down to less than $2.60 close yesterday, a fall of more than a third that there are some things that are not right with the business. I agree the market is always forward looking but I think it is foolish to ignore the immediate past as that gives you the very best guide to the short term future. Some people are conveniently overlooking the fact that those problematic / delinquent MTF loans will dog this company for at least this and the next two half year reporting periods.

They have a big site in Albany, I don't know how long the lease is or whether they own it but its a large site adjacent to the northern motorway and very poorly positioned in terms of attracting retail traffic. All good to talk about new sites and expansion but how many of these sort of more unfavorable sites do they have and how long does that legacy continue for ?

If the shares are such a raving bargain and the directors thought so when they were 30-40 cps higher why aren't they buying in decent or any volume now ?

That guidance of $34-$36m (essentially no increase in eps);has been with us for some time now and been reaffirmed twice one would have to think no it’s a certainty

In saying that the market only thinks that $34-$36m is only worth $2.60 odd - a PE of 9 and high divie reflecting perceived risks etc.

The market has stopped voting and weighed it all up ....and it’s only worth what it’s worth today

But when the guidance is lifted and includes a $40m that will reflected in the share price - $3.22 here we come and that’s without being rerated

Jeez $3.22 - that’s my 25% profit ...cool

[Beagle]

Guidance lifted lol...you've been Percyerised :)
Just have another look at the chart, that might be the reality check you need.

[winner69]

Guidance lifted lol...you've been Percyerised :)
Just have another look at the chart, that might be the reality check you need.

Chart tells me it’s oversold and about to spike

[RTM]

That guidance of $34-$36m (essentially no increase in eps);has been with us for some time now and been reaffirmed twice one would have to think no it’s a certainty

In saying that the market only thinks that $34-$36m is only worth $2.60 odd - a PE of 9 and high divie reflecting perceived risks etc.

The market has stopped voting and weighed it all up ....and it’s only worth what it’s worth today

But when the guidance is lifted and includes a $40m that will reflected in the share price - $3.22 here we come and that’s without being rerated

Jeez $3.22 - that’s my 25% profit ...cool

Yes....and while you wait.....the dividend keeps being paid. Now...if the dividend was being decreased or stopped, then that would be a major concern. Disc. Down ~15%, will continue to hold and enjoy the div, not point in needlessly booking a loss.

[winner69]

Yes....and while you wait.....the dividend keeps being paid. Now...if the dividend was being decreased or stopped, then that would be a major concern. Disc. Down ~15%, will continue to hold and enjoy the div, not point in needlessly booking a loss.

Not going to wait too long for that $3.22 share price ....that will come soon

We’ll both be happy then ....you’ll be back in profit as well as collecting divies and I’ll be rapt taking my quick 25% profit.

[RTM]

Not going to wait too long for that $2.25 share price ....that will come soon

We’ll both be happy then ....you’ll be back in profit as well as collecting divies and I’ll be rapt taking my quick 25% profit.

I'm really hoping you mean 3.25.... That will make me happy.

[Beagle]

Chart tells me it’s oversold and about to spike

RSI does indicate that but is that because they're about to deliver a shocker ? I guess you can draw some comfort from their forecast and their continuous disclosure requirements although how good their governance is when the chairman doesn't have the courage to even show up at the annual meeting and face the music (barking), is anyone's guess. Its cheap on a PE basis and gross yield I'll give you that, but the question is, is it cheap for a reason and is the board dysfunctional ? (deputy chair looked for all intents and purposes like he'd been thrown a hospital pass at the very last minute when chairing that meeting).

[winner69]

I'm really hoping you mean 3.25.... That will make me happy.

Shucks ...$3.22 to be precise ....early December

When’s next divie ...not that I collect divies

[percy]

Shucks ...$3.22 to be precise ....early December

When’s next divie ...not that I collect divies

End of January.4 cps.
I find my growing collection of divies most rewarding.
In fact I would go so far as to say "i love them."

ps.I wonder if this time next week Beagle will be back in love with TRA.?...............lol.

[winner69]

RSI does indicate that but is that because they're about to deliver a shocker ? I guess you can draw some comfort from their forecast and their continuous disclosure requirements although how good their governance is when the chairman doesn't have the courage to even show up at the annual meeting and face the music (barking), is anyone's guess. Its cheap on a PE basis and gross yield I'll give you that, but the question is, is it cheap for a reason and is the board dysfunctional ? (deputy chair looked for all intents and purposes like he'd been thrown a hospital pass at the very last minute when chairing that meeting).

I’ll enjoy the bit in the announcement that reads -

Chairman Mr Grant Baker, speaking from Switzerland, says the half year result beats our own high expectations and demonstrates that we have a robust integrated business to make Turners a great business.

[percy]

I’ll enjoy the bit in the announcement that reads -

Chairman Mr Grant Baker, speaking from Switzerland, says the half year result beats our own high expectations and demonstrates that we have a robust integrated business to make Turners a great business.

I would be happy if Deputy Chair Paul Byrne, speaking on behalf of Chair Grant Baker, who is doing charity work in Bangladish,confirmed Turners business strategy is "well positioned."...

[minimoke]

End of January.4 cps.
I find my growing collection of divies most rewarding.
In fact I would go so far as to say "i love them."

ps.I wonder if this time next week Beagle will be back in love with TRA.?...............lol.I am really at a loss on why you enjoy these divies so much. While you are enjoying 6% divies your capital has reduced 22% in the past 12 months. Every month your capital is being severely eroded. It looks like you would be better off to have the cash in your bank and make a withdrawal every quarter. That way you get some cash as well as a small erosion in capital - offset by any interest gained from your account.

[Beagle]

I’ll enjoy the bit in the announcement that reads -

Chairman Mr Grant Baker, speaking from Switzerland, says the half year result beats our own high expectations and demonstrates that we have a robust integrated business to make Turners a great business.

LOL I think that's where he was at the last annual meeting. Probably saw the institutional voting and proxies and knew he was getting the increase and was relaxing in his lakefront villa looking out over lake Geneva thinking I don't need to front that angry Beagle...just let him bark his head off and let the poor deputy chair face the music.

[percy]

I am really at a loss on why you enjoy these divies so much. While you are enjoying 6% divies your capital has reduced 22% in the past 12 months. Every month your capital is being severely eroded. It looks like you would be better off to have the cash in your bank and make a withdrawal every quarter. That way you get some cash as well as a small erosion in capital - offset by any interest gained from your account.

Yes but since GFC my capital has increased about 400%.

[Beagle]

I am really at a loss on why you enjoy these divies so much. While you are enjoying 6% divies your capital has reduced 22% in the past 12 months. Every month your capital is being severely eroded. It looks like you would be better off to have the cash in your bank and make a withdrawal every quarter. That way you get some cash as well as a small erosion in capital - offset by any interest gained from your account.

The shares are actually down more than 33% from their high ~ 12 months ago. Some people who have held the whole way have to keep telling themselves the long term story is great. Others took measures to mitigate their losses and are taking a more realistic view on Turners prospects. I leave you to judge who you think is more sensible.

[Beagle]

Yes but since GFC my capital has increased about 400%.

So has the S&P 500 so you could have saved yourself an absolute truck load of work over the last decade and simply bought an ETF based on that index :p

[minimoke]

Yes but since GFC my capital has increased about 400%.Thats a rear view mirror looking a long way back. I track my capital back decades - but its where I want it to be in 1 - 5 years that I am focussing on.

[percy]

Thats a rear view mirror looking a long way back. I track my capital back decades - but its where I want it to be in 1 - 5 years that I am focussing on.

Forward view is dividends increasing over 5% pa,and capital value of portfolio doubling in 3 to 5 years.

[Snoopy]

I agree the market is always forward looking but I think it is foolish to ignore the immediate past as that gives you the very best guide to the short term future.


I focus more on the medium and long term Beagle. With hindsight I should have redeemed my TRAHB bonds in cash and bought the shares on market this week (although I was pleasantly surprised to collect my November dividend on shares so recently converted). I should have been 'really mean' with my bid and bought on market at $2.57, not the $2.77 I did. But I find it is best not to be too focussed on getting my TRA shares at the absolute optimal purchase price. Rather I make sure I actually do get around to buying them at a yield that is acceptable to me. When the shares climb above $3.50, I won't be too worried if I bought at $2.57 or $2.77. If others can buy at an even better yield later good luck to them. I wouldn't have bought at the price I bought if I wasn't happy with the yield at my purchase price.



Some people are conveniently overlooking the fact that those problematic / delinquent MTF loans will dog this company for at least this and the next two half year reporting periods.


Bad MTF loans may take time to fully decay from the loan book, true. But with the big jump in provisioning last year ('Impairment Provision' up from $2.026m to $6.380m), I expect that new provisioning to cover multiple years of losses going forwards will not be needed. Unlike you, I don't expect any more MTF loan provisioning in the next 18 months. Consequently there will be no effect on profit going forwards.



They have a big site in Albany, I don't know how long the lease is or whether they own it but its a large site adjacent to the northern motorway and very poorly positioned in terms of attracting retail traffic. All good to talk about new sites and expansion but how many of these sort of more unfavorable sites do they have and how long does that legacy continue for ?


Pretty sure Albany is rented. I expect they will reconsider their occupation of the Albany site when the lease expires. Same thing with the 'Tower Junction' site in Christchurch. Turners are now looking for 'more land' and 'less buildings' (= cheaper rent) on the future sites they occupy. But at the Christchurch Road Show, Todd seemed to be equivocal on whether they move or not. They will only move if the right site comes up. They will let the lease(s) expire and see what is available. I detected no panic to move from either the Albany or Tower Junction site.



If the shares are such a raving bargain and the directors thought so when they were 30-40 cps higher why aren't they buying in decent or any volume now ?

As Winner has already noted, insiders aren't allowed to buy TRA shares until the half year results are announced to the NZX.

SNOOPY

[Snoopy]

Snoops — told you not to believe everything you find on the net, especially most things bags from investopedia.com

Simplest formula is ROIC = (EBIT x (1-Tax Rate)) / (Equity + Debt)

Equity + Debt added together make up the company assets. So the 'Winner ROIC formula' looks like an alternative to ROA ( NPAT/Assets ) albeit with the 'interest charge' removed from the numerator?

SNOOPY

[percy]

Bad MTF loans.
I think Turners would have acted already on these.Sorted the wheat from the chaff.
Non-payers would have had the vehicle repossed.
Slow payers would be watched and would have been advised to pay on time,or have the vehicle repossed.
Turners would have either been able to work with these people or acted straight away.
They certainly lost no time tightening their lending criteria and sorting out MTF originators,making sure TRA were involved at the start of any lending process.

[winner69]

Equity + Debt added together make up the company assets. So the 'Winner ROIC formula' looks like an alternative to ROA ( NPAT/Assets ) albeit with the 'interest charge' removed from the numerator?

SNOOPY

Snoops — Maybe it’s just a matter of semantics but to me your first sentence is incorrect


Then again I could / should have been a bit more concise and instead of ’Debt’ said ‘Interest Bearing Debt (and/or Borrowings)”

[Beagle]

Snoops, a lot of people have had a lot of positive things to say about Turners over the last year and yet TA has made them all look like fools. Directors could have been buying in the 290's, 280's or 270's before the close out period commenced but were conspicuous by their absence. I sold half mine during the rah rah road trip sessions when it became apparent there was almost infinite supply at $3.20 and another half (to sit on a quarter of original position) when it was $3. I am very pleased I took steps to mitigate my losses.

Lets see how it goes next week. I suspect there is vast volume's sitting in the wings to offload at around $3 so anyone hoping for a fast 25% gain is probably dreaming.

[winner69]

Lets see how it goes next week. I suspect there is vast volume's sitting in the wings to offload at around $3 so anyone hoping for a fast 25% gain is probably dreaming.

Bugger ....might just have to settle for 15% odd when I join this offloading at $3

One thing it can’t go any lower than what it is now so almost a risk free punt eh

[Beagle]

Bugger ....might just have to settle for 15% odd when I join this offloading at $3

One thing it can’t go any lower than what it is now so almost a risk free punt eh

What could possibly go wrong :D Opps...I vaguely recall some people saying it couldn't possibly go lower than the long term support at $2.80...and before that most people thought $3 was the floor. Where is the floor really ?

I can understand you rolling the dice at this level...odds don't look too shabby but probably best not to pretend its a one sided bet as quite a few people thought the same when the SP was higher. A downgrade could see this rapidly heading towards $2.00.

[Snoopy]

Snoops — told you not to believe everything you find on the net, especially most things bags from investopedia.com

Simplest formula is ROIC = (EBIT x (1-Tax Rate)) / (Equity + Debt)

I could / should have been a bit more concise and instead of ’Debt’ said ‘Interest Bearing Debt (and/or Borrowings)”


Time for my own attempt to quantify 'Winner's Worry' over FY2018.

ROIC= ([$23.360m+$7.773m+$14.434m] x (1-0.28) ) / ($214.323m+ $317.373m) = 6.2%

All figures are taken from the Income Statement and Balance Sheet. How did I do?

SNOOPY

[winner69]

Time for my own attempt to quantify 'Winner's Worry'.

SNOOPY

The answer coming soon?

[Beagle]

Next weeks result will have to be a "real belter" to get your $3 mate. SP will most likely do nothing, (you read it from me first)
Motor vehicle companies can easily go down to a PE as low as 7 (and even 5 in a GFC) if the market thinks there's a recession coming. $2.00 on the cards if the market and economy get ugly in 2019.

[percy]

Is the full moon tonight or tomorrow night.?

[Beagle]

Not sure Percy but its pretty dark out there so probably time to lie down in my kennel. $2.00 sounds crazy eh... Not possible I hear you say...but its already fallen by $1.30 in the last 12 months so another 65 cents in the next 6 months isn't completely out of the question...just a logical extrapolation of the existing well established downtrend.

No worries though because the future prospects and metrics would be really compelling at $2 eh :)

[winner69]

Time for my own attempt to quantify 'Winner's Worry' over FY2018.

ROIC= ([$23.360m+$7.773m+$14.434m] x (1-0.28) ) / ($214.323m+ $317.373m) = 6.2%

All figures are taken from the Income Statement and Balance Sheet. How did I do?

SNOOPY

Good effort Snoops. ROIC is slightly higher if average capital over the year is used.

Next question - is this 6.2% return on invested capital more or less than Turner’s total cost of capital? - ie is Turners a value creator or not?

Give me your answer to that and I’ll try to explain the relevance to Turners Book Value (hopefully which will be more than $2.52 on Monday) and that while trading at that at the moment it still implies a fair degree of future improved financial performance.

[winner69]

Is the full moon tonight or tomorrow night.?

It’s today percy ....unfortunately

[percy]

It’s today percy ....unfortunately

Excessive barking from hounds made me think it may have been a day early.?.........................lol.

[winner69]

Excessive barking from hounds made me think it may have been a day early.?.........................lol.

......and more ominious is that metservice reports lot less cloud cover tonight so the moon will be shing bright

[Snoopy]

Good effort Snoops. ROIC is slightly higher if average capital over the year is used.


I understand the logic. The 'return' is earned over the whole year. So it makes sense to use the 'average invested capital' over the year, not the 'invested capital' on hand just at the end of the year. However there is always time taken to effectively deploy any new capital.

By using just the end of year capital, that means I will be underestimating ROIC (assuming the capital funding base was growing). If little new investment capital is introduced over FY2019, and if ROIC increases over FY2019, then this will show the new capital from the previous year is indeed being better deployed given time. And that is the kind of positive trend we shareholders want to be able to identify.



Next question - is this 6.2% return on invested capital more or less than Turner’s total cost of capital? - ie is Turners a value creator or not?


Given Turners told the Christchurch Roadshow that they can secure corporate funding at 4.5% to 5.5%, and they are earning 6.2% on their invested capital, then the answer must be 'yes.' It does make sense for them to borrow to invest. However I am aware that 'cost of capital' in accounting terms has a rather wider meaning than this. It incorporates the concept of 'Beta' which brings in 'equity price volatility'. Ironically if the TRA share price dived to $2.50 and then stayed there for two years, TRA's 'Cost of Capital' would decrease in accounting terms. However, I don't think there are many TRA shareholders today that are hoping for this to happen. Calculating a cost of capital based on past share price volatility seems a bit daft to me. So I prefer to set my own 'industry standard' capital cost based on how stable the earnings of a particular company might be in a future downturn. For Turners, I set this number at 7.5%. So by that measure, no Turners is not earning its cost of capital.

In this situation I think it is useful to take a wider industry viewpoint, and that is where 'The Investment Story' thread comes in. Go to post 6 in that thread and you will see that the 'net interest margin' for the Finance Division only compares very favourably with Heartland and Geneva. Also the net profit margin is only just below that of Geneva (post 22), while Geneva is in materially higher risk market. This leads me to believe that the underlying 'bones' of TRA Finance are very sound. When you take a bigger picture view, the Turners retail side of the business is not so capital efficient. But I feel that tying retail and finance together, under the TRA umbrella, should provide a kind of resilience that even Heartland does not have.

Turners have committed to not going back to shareholders for more cash. So I would argue that not making their 'cost of capital' in an accounting sense becomes less relevant if your expansion plans only involve bank borrowing. Clearly TRA is making a positive return on that.



Give me your answer to that and I’ll try to explain the relevance to Turners Book Value (hopefully which will be more than $2.52 on Monday) and that while trading at that at the moment it still implies a fair degree of future improved financial performance.

SNOOPY

[winner69]

Here’s a nice piece of poetry about the moon ....a bit lonely is the moon

[Joshuatree]

:t_up: lol

[winner69]

Snoops ....do you ever consider “equity risk premium”?


PWC in a recent report (to be updated) had Turners WACC at 9.4%, one analyst had it at 10.1% and Turners appear to use a higher number than those internally.

[James108]

Winner that is how my DCF model works (haven't done one for TRA as I don't know how to value finance and insurance parts of business).

The more debt the higher the cost of equity. Although I feel like that for finance companies the debt probably needs to be netted out against whatever secures it with some judgement about the risk to the value of whatever secures it.

[winner69]

Share price on a roll ..positive momentum building

I feel a guidance upgrade coming next week

Very solid result + profit upgrade = 25% quick win for winner

[minimoke]

Share price on a roll ..positive momentum building

I feel a guidance upgrade coming next week

Very solid result + profit upgrade = 25% quick win for winnerAt $2.65 it has just clawed itself of a 2 year low of $2.57. Nothing to get excited about.

[Snoopy]

Snoops ....do you ever consider “equity risk premium”?

PWC in a recent report (to be updated) had Turners WACC at 9.4%, one analyst had it at 10.1% and Turners appear to use a higher number than those internally.


I would be interested in finding out where you saw that "Turners appear to use a higher (WACC) number (9.4% and 10.1%) than those internally."

In the meantime here is what your favourite website Investopedia says on the topic.

------

Equity Component of WACC Formula

It is a common misconception that equity capital has no concrete cost that the company must pay after it has listed its shares on the exchange. In reality, there is a cost of equity.

Since shareholders remain invested in expectations of certain returns on their investments in a company, the shareholders' expected rate of return is a cost from the company's perspective. It is because if the company fails to deliver this expected return, shareholders will simply sell off their shares which will lead to a decrease in share price and in the company’s overall valuation. The cost of equity is essentially the amount that a company must spend in order to maintain a share price that will keep its investors satisfied and invested.

------

What the above explanation doesn't say is that unless the company concerned needs to raise capital by issuing new shares, the quoted share price has no effect on the day to day running of the company at all. This is the situation with Turners Automotive Group today.

To answer the question "What do Turners need to Spend?" (to support the share price) the answer is "All the big spending is already done." They have the retail sales footprint already. They have the ability to finance their retail sales already. They have the insurance add business to clip that ticket. And they have the debt collection agency to pick up any accounts seriously in arrears. There is work to do to optimise the integration of all the above.

At the corporate level, TRA can decrease their interest costs by securitising their loans. They can pocket a development margin on any new property they develop. Both are works in progress.

The question I ask then is this. If all of this spending is done and only incremental spending is to come, what is the 'hidden spending needed' to justify a WACC of 9.4% to 10.1% going forwards? Furthermore if there are no plans to raise more capital why does the value of the WACC matter at all?

SNOOPY

[winner69]

Snoops ....I thought I told you investopedia was bad for your health

[Snoopy]

Snoops ....I thought I told you investopedia was bad for your health


What bit of their treatise on the Cost of Equity do you disagree with?

SNOOPY

[winner69]

What bit of their treatise on the Cost of Equity do you disagree with?

SNOOPY

Ok ...I’ve read it a bit more carefully ...but even though they say that equity has a cost I think they confuse the issue with that bit about the amount needed to be spent to maintain the share price so that shareholders are happy.

Maybe that last bit confused you as well. I don’t know but your added comments although sort of make sense they don’t address the ‘cost of equity’ per se.

To me that cost of equity is the risk adjusted return that a shareholder needs (to remain happy as investopedia says). Let’s say in Turners case thats 10% (for ease of calculating) then Turners essentially have a ‘cost’ of $21.4m.

To save others getting bored I’ll PM you how I see Turners ROIC

[forest]

Ok ...I’ve read it a bit more carefully ...but even though they say that equity has a cost I think they confuse the issue with that bit about the amount needed to be spent to maintain the share price so that shareholders are happy.

Maybe that last bit confused you as well. I don’t know but your added comments although sort of make sense they don’t address the ‘cost of equity’ per se.

To me that cost of equity is the risk adjusted return that a shareholder needs (to remain happy as investopedia says). Let’s say in Turners case thats 10% (for ease of calculating) then Turners essentially have a ‘cost’ of $21.4m.

To save others getting bored I’ll PM you how I see Turners ROIC

Winner, I find this ROIC most interesting so please share.

[blackcap]

Winner, I find this ROIC most interesting so please share.

Yes please share Winner, I am all ears too, especially where TRA are concerned.

Wow looks like 280 not far away now with this kind of depth showing. Maybe the 25% will happen before the result.

[Beagle]

Yes please share Winner, I am all ears too, especially where TRA are concerned.

Wow looks like 280 not far away now with this kind of depth showing. Maybe the 25% will happen before the result.

:lol: Beagle bait plain and simple. Mrs Beagle told me today there's no point barking if no one's listening. Sometimes she is right, (she thinks she's always right :)

[percy]

:lol: Beagle bait plain and simple. Mrs Beagle told me today there's no point barking if no one's listening. Sometimes she is right, (she thinks she's always right :)

She most probably is.
Take care, big night tonight for howling dogs with the full moon........................lol.

[winner69]

She most probably is.
Take care, big night tonight for howling dogs with the full moon........................lol.

Rises just after 8pm tonight

[Beagle]

Rises just after 8pm tonight

Selfie of me howling about the Turners share price lol https://www.youtube.com/watch?v=esjec0JWEXU

[winner69]

Today is Fibonacci Day (on other side of world anyway as yesterday here) and as I love Fibonacci things and all things natural I had a quick look at the TRA chart

Yes, my target of $3.23 (soon) is indeed a Fibonacci Retracement level (a 50% one as well)

Looks like the ones are on my side ...$3.23 here we come ...+25%

Spooky eh ...but nature really is a reliable indicator

[JayRiggs]

Hello everyone,
I started investing in TRA last year shortly after the Hugh Green sell out in late June 2017, as I thought it provided a good entry point into what looks like a fundamentally very sound business.
Since then, the share price has been in a gradual downtrend, despite the company posting what appear to be very solid financial results. In particular the FY2018 result in May. +33% net profit, +15% EPS growth. Positive commentary from board and management across all divisions. Positive outlook and increasing dividends. The FY2018 result seemed like the turning point and gave reprieve to the share price as it rose from under $3 to $3.20... alas that was short lived and we're now down even further to 2.63 and trading on a low PE of around 9.

The past few months I've been really scratching my head over why TRA has significantly underperformed the NZX (even before the market recent correction).
After doing a bit of research, I believe this could largely to related to a number of potential headwinds and disruptions to the traditional car dealership business model.

The fundamental way in which people buy and own cars is going to change over the long term.

- The average punter can now go and directly import a second-hand car from sites such as www.beforward.jp and save on the average 25% mark-up that dealers slap on the imported cars. The only reason you would go to a second-hand car dealer would be if you didn't have the finance and you need to pay it off in installments.

- If we take a queue from overseas, we notice a new trend in car ownership happening. Most brands in the US now offer a 'subscription' based service, where you pay a monthly fee and take any car of your choosing from the yard. The traditional burden of buying, owning, maintaining, insuring etc is taken away from the millennials. This could catch on eventually to the rest of the world.
Mercedes for example:
(http://www.autonews.com/article/20180605/RETAIL/180609870/mercedes-subscription-sales-retail-dealerships)

- We can also see this in full swing with the first-hand dealers as well. Some car manufacturers are slowly moving towards the Tesla model. You can only buy a Tesla from the Tesla stores. The next big manufacturer that is going in that direction is Toyota. Starting middle of this year, they have revamped the traditional commission-based dealerships.
(https://www.stuff.co.nz/business/102686931/Toyota-NZ-ditches-dealerships-for-stores-in-big-changes-to-sales-methods)

- The most important disruption of all, is the electric car revolution. At the moment the electric vehicle penetration is less than 1%, but this is set to change rapidly as fuel prices go up. Environmental sentiment echoes louder. More people are becoming more aware of global warming and want to do their bit to reduce greenhouse gas emissions. In some countries, up to 30-40% of the EV's cost is subsidised. The Greens are wanting to bring this to NZ as well to encourage more people to buy first hand EVs:
(https://www.greens.org.nz/news/press-release/government%E2%80%99s-electric-vehicle-announcement-low-power).

Adding to that, a large number of car manufacturers have indicated they are all committed to having a majority electric fleet only by 2025.
(https://www.vox.com/energy-and-environment/2017/9/13/16293258/ev-revolution)

- The key issues with buying second hand EVs is around the battery. The more an EV is used, the more the battery diminishes over time. The battery in EVs is the most important component.
(https://www.edmunds.com/car-technology/electric-car-battery-basics-capacity-charging-and-range.html)
It is currently far more ideal to buy EVs first hand from the manufacturer, in order to get a fresh battery + the 8 year battery warranty.
There doesn't seem to be much point in buying a second hand EV when it costs almost the same first hand if you take the Greens subsidy into account along with the additional risk of a diminished battery and possible lack of the original manufacturer warranty for the battery.

I'm thinking that all these headwinds and disruptions are potentially causing uncertainties around the traditional car dealership model and hence weighing down on the TRA share price. All the tailwinds that used to be with car dealers appear to be slowly fading in a similar way to fossil fuel companies (like Z Energy). For sure the car dealers still have their place today and tomorrow. But it's the day after tomorrow that concerns me.

What you guys think?

Would be great to hear from Turners themselves to see how or if they plan to adapt their business models around each of the points above.

disc: still holding TRA

[Brain]

After reading your carefully thought out post JayRiggs my question would be who are the sellers that have carefully thought out the future about the future of turners and come to the conclusion to sell based on one or more of your points above. My view is that 99% of investors are not that analytic nor that bright - posters on sharetrader are the exception of course and no disrespect is intended. Turners SP depreciation in my view is just general market pessimism and scepticism. In the absence of really good news share prices will continue to drop because the pundits are saying NZ shares are over priced and besides that the sky is going to fall in. At some point the attitude will change and it may change very quickly and TA cannot be relied on to predict it. I am not selling. I am relying on the board and management doing the right thing and after all that’s what they are paid to do.

[BlackPeter]

Hello everyone,
I started investing in TRA last year shortly after the Hugh Green sell out in late June 2017, as I thought it provided a good entry point into what looks like a fundamentally very sound business.
Since then, the share price has been in a gradual downtrend, despite the company posting what appear to be very solid financial results. In particular the FY2018 result in May. +33% net profit, +15% EPS growth. Positive commentary from board and management across all divisions. Positive outlook and increasing dividends. The FY2018 result seemed like the turning point and gave reprieve to the share price as it rose from under $3 to $3.20... alas that was short lived and we're now down even further to 2.63 and trading on a low PE of around 9.

The past few months I've been really scratching my head over why TRA has significantly underperformed the NZX (even before the market recent correction).
After doing a bit of research, I believe this could largely to related to a number of potential headwinds and disruptions to the traditional car dealership business model.

The fundamental way in which people buy and own cars is going to change over the long term.

- The average punter can now go and directly import a second-hand car from sites such as www.beforward.jp and save on the average 25% mark-up that dealers slap on the imported cars. The only reason you would go to a second-hand car dealer would be if you didn't have the finance and you need to pay it off in installments.

- If we take a queue from overseas, we notice a new trend in car ownership happening. Most brands in the US now offer a 'subscription' based service, where you pay a monthly fee and take any car of your choosing from the yard. The traditional burden of buying, owning, maintaining, insuring etc is taken away from the millennials. This could catch on eventually to the rest of the world.
Mercedes for example:
(http://www.autonews.com/article/20180605/RETAIL/180609870/mercedes-subscription-sales-retail-dealerships)

- We can also see this in full swing with the first-hand dealers as well. Some car manufacturers are slowly moving towards the Tesla model. You can only buy a Tesla from the Tesla stores. The next big manufacturer that is going in that direction is Toyota. Starting middle of this year, they have revamped the traditional commission-based dealerships.
(https://www.stuff.co.nz/business/102686931/Toyota-NZ-ditches-dealerships-for-stores-in-big-changes-to-sales-methods)

- The most important disruption of all, is the electric car revolution. At the moment the electric vehicle penetration is less than 1%, but this is set to change rapidly as fuel prices go up. Environmental sentiment echoes louder. More people are becoming more aware of global warming and want to do their bit to reduce greenhouse gas emissions. In some countries, up to 30-40% of the EV's cost is subsidised. The Greens are wanting to bring this to NZ as well to encourage more people to buy first hand EVs:
(https://www.greens.org.nz/news/press-release/government%E2%80%99s-electric-vehicle-announcement-low-power).

Adding to that, a large number of car manufacturers have indicated they are all committed to having a majority electric fleet only by 2025.
(https://www.vox.com/energy-and-environment/2017/9/13/16293258/ev-revolution)

- The key issues with buying second hand EVs is around the battery. The more an EV is used, the more the battery diminishes over time. The battery in EVs is the most important component.
(https://www.edmunds.com/car-technology/electric-car-battery-basics-capacity-charging-and-range.html)
It is currently far more ideal to buy EVs first hand from the manufacturer, in order to get a fresh battery + the 8 year battery warranty.
There doesn't seem to be much point in buying a second hand EV when it costs almost the same first hand if you take the Greens subsidy into account along with the additional risk of a diminished battery and possible lack of the original manufacturer warranty for the battery.

I'm thinking that all these headwinds and disruptions are potentially causing uncertainties around the traditional car dealership model and hence weighing down on the TRA share price. All the tailwinds that used to be with car dealers appear to be slowly fading in a similar way to fossil fuel companies (like Z Energy). For sure the car dealers still have their place today and tomorrow. But it's the day after tomorrow that concerns me.

What you guys think?

Would be great to hear from Turners themselves to see how or if they plan to adapt their business models around each of the points above.

disc: still holding TRA

Great post +1;

Looking into the trends you indicated I would however think that they are at this stage no threat to TRA - and might well turn into opportunities.

Subscription based service - basically the entitlement for a permanent but swapable rental: Looking at the examples you cited this service seems to be at this stage both unprofitable as well as very expensive (i.e. unaffordable to TRA customers). Just imagine a standard TRA customer coughing up between $1500 and $4500 per month for the entitlement to drive one (admittedly rather new, upper class and serviced and insured) vehicle. However - if this subscription becomes standard and profitable, than I'd say that Turners woud be ideally equipped to adopt and benefit from offering such a service. Pay $750 per month for a swapable maintained and insured middle of the road vehicle? Something I could imagine - and Turners should be an ideal company to offer this service. Lots of choice, and they have already insurance and workshops in their network.

EVs: Yes, I believe as well they might come faster than we think, unless they turn out to be a similar environmental flop than the biofuel disaster (nothing destroyed more tropical rainforest than the braindead idea of using biofuel. Huge parts of Sumatra, Bornea, Malaysia and Indonesia have been deforested to plant oil palms instead) - time will tell. I believe however that - if the EV idea gains momentum battery prices will drop fast, and than there is no reason why Turners couldn't offer e.g. 8 year old EV's with new or reconditioned batteries. No reason for them to go out of business ...

But yes - there is uncertainty, and markets don't like that. Could be a threat or could be an opportunity.

[Beagle]

Nice post Jayriggs and nice to see someone take the bit between their teeth and try and understand TRA's woeful underperformance.
Add into the mix long term autonomous self driving cars and overseas survey's are showing many young people would rather own a smartphone than own a car. Good public transport in some overseas cities, uber, self driving cars and now people getting around en masse in cities on electric scooters. The world is slowly changing.

I keep an eye on AHG the largest vehicle retailer in Australasia. Its interesting to compare the two graph's and it would appear these long term developing trends are having a meaningful effect on both companies, with AHG in yellow getting based even harder with the ugly stick over the last two years, see attached comparison graph 10171

I think there's more too it with TRA. As Winner has correctly pointed out their ROIC is not great and eps growth this year will be minimal, if any. Then there's the fear of a recession in FY19 or FY20 and car companies have traditionally faired very poorly in a deep recession. The lack of liquidity is also off-putting for many and the chairman did himself and the company a tremendous disservice by not attending the annual meeting.

[blackcap]

Nice post Jayriggs and nice to see someone take the bit between their teeth and try and understand TRA's woeful underperformance.
Add into the mix long term autonomous self driving cars and overseas survey's are showing many young people would rather own a smartphone than own a car. Good public transport in some overseas cities, uber, self driving cars and now people getting around en masse in cities on electric scooters. The world is slowly changing.
.

To be fair, NZ's topography and geography is not really like the rest of the world. Good public transport in NZ will remain a challenge for a while. But agree on a lot of the comments but there are opportunities for TRA here too. Even in the changing environment.

[percy]

To be fair, NZ's topography and geography is not really like the rest of the world. Good public transport in NZ will remain a challenge for a while. But agree on a lot of the comments but there are opportunities for TRA here too. Even in the changing environment.

Without being tied to a new vehicle franchise model,Turners are able to take advantage of changing opportunities before all the others.

[BlackPeter]

Interesting gap between bidders and sellers in relation to the last noted price ... but at least market appears to be optimistic

10174

[peat]

Interesting gap

10173

Thinner than my hair.
offputting or providing liquidity premium?

[BlackPeter]

Thinner than my hair.
offputting or providing liquidity premium?

Please provide a sample of your hair for verification :p;

But yes, you are right - the volume (the standoff settled at $2.70) is not overwhelming. I guess most punters obviously wait for tomorrow.

On the other hand - I prefer anytime a small volume of up-bidders to a large number of down-sellers :);

[Marilyn Munroe]

My opinion is the challenges refereed to by JayRiggs are in the future and have only a slight influence on the current situation.

There is a world wide glut of cars with the situation worsened by Presidents Xi and Trump standing on the wharf demanding large payments for foreign manufactured cars. I know a country which will allow auto manufacturers to import as many cars as they like without tariffs. Those Kiwis who have observed the large number of new car advertisements on TV can probably guess which country I am referring to.

I would not be surprised if the head offices of car manufacturers have not rung their assembly plants and told them to quickly put the steering wheel on the other side and ship to New Zealand.

The affect of this diverts a segment of second hand car buyers to the new market and transforms the second hand car market from a cascading market to a clearance market.

Neither of these changes are necessarily of advantage to Turners.

Boop boop de do
Marilyn

[JayRiggs]

After reading your carefully thought out post JayRiggs my question would be who are the sellers that have carefully thought out the future about the future of turners and come to the conclusion to sell based on one or more of your points above. My view is that 99% of investors are not that analytic nor that bright - posters on sharetrader are the exception of course and no disrespect is intended. Turners SP depreciation in my view is just general market pessimism and scepticism. In the absence of really good news share prices will continue to drop because the pundits are saying NZ shares are over priced and besides that the sky is going to fall in. At some point the attitude will change and it may change very quickly and TA cannot be relied on to predict it. I am not selling. I am relying on the board and management doing the right thing and after all that’s what they are paid to do.

I'd definitely be keen to know who's selling and what for. Or maybe they know something we don't...
I'm not selling either :)

[JayRiggs]

Great post +1;

Looking into the trends you indicated I would however think that they are at this stage no threat to TRA - and might well turn into opportunities.

Subscription based service - basically the entitlement for a permanent but swapable rental: Looking at the examples you cited this service seems to be at this stage both unprofitable as well as very expensive (i.e. unaffordable to TRA customers). Just imagine a standard TRA customer coughing up between $1500 and $4500 per month for the entitlement to drive one (admittedly rather new, upper class and serviced and insured) vehicle. However - if this subscription becomes standard and profitable, than I'd say that Turners woud be ideally equipped to adopt and benefit from offering such a service. Pay $750 per month for a swapable maintained and insured middle of the road vehicle? Something I could imagine - and Turners should be an ideal company to offer this service. Lots of choice, and they have already insurance and workshops in their network.

EVs: Yes, I believe as well they might come faster than we think, unless they turn out to be a similar environmental flop than the biofuel disaster (nothing destroyed more tropical rainforest than the braindead idea of using biofuel. Huge parts of Sumatra, Bornea, Malaysia and Indonesia have been deforested to plant oil palms instead) - time will tell. I believe however that - if the EV idea gains momentum battery prices will drop fast, and than there is no reason why Turners couldn't offer e.g. 8 year old EV's with new or reconditioned batteries. No reason for them to go out of business ...

But yes - there is uncertainty, and markets don't like that. Could be a threat or could be an opportunity.

Yes some very good points BlackPeter. If a subscription service can be profitable for Turners - they can offer a mid market solution perhaps.
Would definitely like to see Turners take advantage of these opportunities.

[JayRiggs]

Nice post Jayriggs and nice to see someone take the bit between their teeth and try and understand TRA's woeful underperformance.
Add into the mix long term autonomous self driving cars and overseas survey's are showing many young people would rather own a smartphone than own a car. Good public transport in some overseas cities, uber, self driving cars and now people getting around en masse in cities on electric scooters. The world is slowly changing.

I keep an eye on AHG the largest vehicle retailer in Australasia. Its interesting to compare the two graph's and it would appear these long term developing trends are having a meaningful effect on both companies, with AHG in yellow getting based even harder with the ugly stick over the last two years, see attached comparison graph 10171

I think there's more too it with TRA. As Winner has correctly pointed out their ROIC is not great and eps growth this year will be minimal, if any. Then there's the fear of a recession in FY19 or FY20 and car companies have traditionally faired very poorly in a deep recession. The lack of liquidity is also off-putting for many and the chairman did himself and the company a tremendous disservice by not attending the annual meeting.

I agree. Young people these days would rather buy a good smart phone and uber around than own a car.
Good point about autonomous self driving cars. Something Elon Musk and Tesla are working hard on.
Oh my goodness, AHG on the ASX. I was not aware of them. That chart really does look dreadful!

[JayRiggs]

Plenty to chew on for the TRA HY2019 result tomorrow.
Looking forward to it. All the best fellas. :t_up:

[minimoke]

o 28% increase in net profit after tax with strong outperformance from the insurance business offsetting a country-wide slowdown in the automotive retail sector

o Further quarterly dividend of 4cps declared taking total half year dividends to 8cps

o Continued focus on optimising real estate assets delivers $3.4m gain from the sale of Wiri holding

o Industry-wide headwinds emerging in the automotive retail sector with a potential downside impact of 5 - 10% to forecasted FY19 pre-tax profits if current market conditions persist

o On-Market Share Buyback of up to 5% of issued shares announced with current share price considered undervalued by Directors

[winner69]

OMG ....A PROFIT DOWNGRADE


Industry-wide headwinds emerging in the automotive retail sector with a potential downside impact of 5 - 10% to forecasted FY19 pre-tax profits if current market conditions persist


No wonder Todd didn’t want to answer Beagles question about how things were going

Hope punters gloss over that bit ....it’s only a possibilityeh

[winner69]

Good they doing a share back to support the share price

Helps Total Shareholder Return calculation as well .....is this one measure bonuses are calculated on?

[Beagle]

I agree. Young people these days would rather buy a good smart phone and uber around than own a car.
Good point about autonomous self driving cars. Something Elon Musk and Tesla are working hard on.
Oh my goodness, AHG on the ASX. I was not aware of them. That chart really does look dreadful!

Factor in too the regional planning with Auckland council now allowing very dense housing developments around public transport and we'll probably continue to see the weak demand Turners alluded too in the Auckland market continue.

First impressions. Result has been enhanced by the $3.4m gain on the sale of Wiri property. If it were not for that profit would be down. One could argue both ways as to whether this is an extraordinary item and should have been included below the profit reporting line or whether these sort of gains are an integral part of their business. I continue to believe these sort of gains due to their spasmodic nature are not part of their core business activities and reporting as an extraordinary item is more appropriate...but what would a tired old bean counter with decades of experience know...I am sure others will have their own "expert" opinions on this.

We have seen the same factors that are impacting AHG impacting Turners. Will the very recent lower fuel prices, (down a fair bit from early October high's) spur demand in the remaining 5 months of the second half ?...that as they say is the $64,000 question. Buy back is a good idea. Net profit from Autosure is extremely impressive, up 144%, just as well they bought that !

Overall my sense is the shares are about fair value all things considered at the current price and management are doing a pretty good job in a more difficult trading environment. I don't see the compelling growth opportunities that one or two others constantly remind us of and the opportunities that are there are probably equally balanced by the risks. Probably just plod along and do okay on an eps basis unless we get a major exogenous economic shock or some major international geopolitical event.
Disc: Holding a very modest stake for dividend yield.

[winner69]

My magic spreadsheet comes up with H1 NPBT of $17m and NPAT of $12.2m or 13.7 cents per share (they’ll report 14 cents plus on a weighted average number of shares)

The good news is that there HAS to be a lift in guidance to something like $37m to $40m NPBT

Magic spreadsheet pretty good

Pity about the profit upgrade bit

[BlackPeter]

OMG ....A PROFIT DOWNGRADE


Industry-wide headwinds emerging in the automotive retail sector with a potential downside
impact of 5 - 10% to forecasted FY19 pre-tax profits if current market conditions persist


No wonder Todd didn’t want to answer Beagles question about how things were going

Hope punters gloss over that bit ....it’s only a possibilityeh

Well, yes - a possible profit downgrade ... but than - its really nicely wrapped - isn't it?

Increased HY earnings, good dividend, share buyback (which actually might reduce the impact of any profit downgrade ;) - and than, all these big payrises still need to find their way through to the car market - don't they?

[winner69]

Beagles ......property gains probably should be treated as ‘normal’ (more so because it’s a investment return on the insurance float eh)

Just leads to lumpy performance ....and it’s helped out this time in what has been a pretty poor half ...even though Todd still raves on about this integrated model

[Beagle]

Beagles ......property gains probably should be treated as ‘normal’ (more so because it’s a investment return on the insurance float eh)

Just leads to lumpy performance ....and it’s helped out this time in what has been a pretty poor half ...even though Todd still raves on about this integrated model

LOL - Yes I am sure the usual suspect will wax lyrical about the stunning profit growth of 28% and assure us that these sort of gains are a normal part of their business and we can expect them on a really regular basis...oh hang on a minute...what about that inconvenient truth of a profit downgrade :ohmy:

[bull....]

OMG ....A PROFIT DOWNGRADE


Industry-wide headwinds emerging in the automotive retail sector with a potential downside impact of 5 - 10% to forecasted FY19 pre-tax profits if current market conditions persist


No wonder Todd didn’t want to answer Beagles question about how things were going

Hope punters gloss over that bit ....it’s only a possibilityeh

now why the price has been going down is known, probably more like 10 - 20% headwinds. gm in us closing plants due to poor retail sales , ahg in aus poor retail sales , nz last mth poor sales

[percy]

Today is the day, that yesterday we worried about, and all is well.!
Looking forward to owning an even lager slice of the cake.

[bull....]

5 - 10% is really the 10 - 20% as it flows thru there whole business model

[Beagle]

Can't wait for the buyback to start then the Couta1 relativity theory will come into play and these will be $3.80 again :D

[winner69]

Suppose it is a profit downgrade and 10% is the number

Means full year npbt likely to be less than F18

And H2 npbt will be 20% less than prior year

Not headwinds ...a southerly blast

Don’t think I’ll be getting my $3.23 now

[forest]

Well, yes - a possible profit downgrade ... but than - its really nicely wrapped - isn't it?

Increased HY earnings, good dividend, share buyback (which actually might reduce the impact of any profit downgrade ;) - and than, all these big payrises still need to find their way through to the car market - don't they?

BlackPeter, to me it looks like the wrapping Grant Baker was using also for Trilogy, he recommended the share holders a capital raising at a share price above what the company later was taken over for. Without his special nice wrapping that would have been unlikely to have happened. I would be very wary of Grant Bakers wrapping.

[couta1]

Can't wait for the buyback to start then the Couta1 relativity theory will come into play and these will be $3.80 again :D Search your heart, you know it's true and resistance is futile.

[forest]

Suppose it is a profit downgrade and 10% is the number

Means full year ebit likely to be less than F18

And H2 ebit will be 20% less than prior year

Not headwinds ...a southerly blast

Don’t think I’ll be getting my $3.23 now

Ouch, AND we have 10% more shares on issue!!!

[couta1]

now why the price has been going down is known, probably more like 10 - 20% headwinds. gm in us closing plants due to poor retail sales , ahg in aus poor retail sales , nz last mth poor sales Where would we be without our resident doom n gloom merchant.Lol

[Beagle]

Suppose it is a profit downgrade and 10% is the number

Means full year ebit likely to be less than F18

And H2 ebit will be 20% less than prior year

Not headwinds ...a southerly blast

Don’t think I’ll be getting my $3.23 now

I did tell you you're 25% quick buck was the stuff of some fantasy fiction novel ! That said, a certain hound did get quite grumpy in early October when fuel prices went berserk and now they're back to a somewhat less painful zone I am more optimistic about consumer spending in the Christmas holiday season. Maybe Turners October sales were the result of shell shocked motorists simply going into their shell and things will normalize a bit going forward ?

[winner69]

I see “Net cash inflow/(outflow) from operating activities before changes in operating assets” was negative

Don’t know what really means but payments to suppliers and employees was a lot higher than receipts from customers

[minimoke]

Just wondering where they will get the cash for the share buy back from. 2018 they had $25m on hand ($69m in 2017). Of this $4.9m belongs to Marque Warehouse trust 1 leaving $20.1m. Then they have to have enough cash on hand to meet solvency standards for the insurance business.

4.4m shares at $2.72 = $12m in cash

[Beagle]

I see “Net cash inflow/(outflow) from operating activities before changes in operating assets” was negative

Don’t know what really means but payments to suppliers and employees was a lot higher than receipts from customers


Just wondering where they will get the cash for the share buy back from. 2018 they had $25m on hand ($69m in 2017). Of this $4.9m belongs to Marque Warehouse trust 1 leaving $20.1m. Then they have to have enough cash on hand to meet solvency standards for the insurance business.

4.4m shares at $2.72 = $12m in cash

Details details, who cares...the usual suspect assures us everything is fine so there's nothing to worry about is there...or is there ?

[forest]

Winner and minimoke, sadly I do not think Grant Baker want you to unwrap these result or the next.

[winner69]

I note a thing called “impairment provision expense” is up 72% on last year

Suppose that’s code for bad debts

[Beagle]

Just wondering where they will get the cash for the share buy back from. 2018 they had $25m on hand ($69m in 2017). Of this $4.9m belongs to Marque Warehouse trust 1 leaving $20.1m. Then they have to have enough cash on hand to meet solvency standards for the insurance business.

4.4m shares at $2.72 = $12m in cash

Cheaper now...there's a surprise, NOT.

[minimoke]

Cheaper now...there's a surprise, NOT.At $2.57 it brings it down to $11.3m. Still a bit of cash to find

[James108]

Sold out today. I think one of the main drivers on lower second hand vehicle outlook this is often overlooked is a decrease in net migration. To me it makes sense that most migrants would purchase a second hand car (especially the "low quality" migrants the newspapers tell us we are getting), less migrants equals less demand. I don't see this migration trend reversing for a little bit.

[trader_jackson]

I did not expect such a violent share price reaction downward... given TRA had already been trending downward post FY results... The HF results were not good, nor bad

Should have converted my bonds back to cash and invested in ARV

[minimoke]

Sold out today. I think one of the main drivers on lower second hand vehicle outlook this is often overlooked is a decrease in net migration. To me it makes sense that most migrants would purchase a second hand car (especially the "low quality" migrants the newspapers tell us we are getting), less migrants equals less demand. I don't see this migration trend reversing for a little bit.
I'm not a migrant but we've been car shopping lately. Unfortunately Turners did not stock any Subaru so one buy went to another yard and one went to a private sale. Talking to another guy the other who is proud as punch having bought his first car (a new found independence!). Didn't buy from Turners - felt too much just like a number. So went to a yard down the road.

[winner69]

Can't wait for the buyback to start then the Couta1 relativity theory will come into play and these will be $3.80 again :D

Neighbour came over to have a coffee but really wanting to know what a share buy back was

I just said that’s when a company buys shares from the likes of you and your mates because they think they are too cheap and should be worth more. If you wait long enough they might even buy yours back at $3.20 (what he and his mates paid for them)

That’s good they keen to buy them he said because nobody else wants to buy them ....and he/they might hang in there a bit longer. I didn’t bother answer his question ‘Do they use our money to buy these shares back? ...that was all too hard. They still worried they still under water with Oceania and feel that’s a dud as well.

[Beagle]

Neighbour came over to have a coffee but really wanting to know what a share buy back was

I just said that’s when a company buys shares from the likes of you and your mates because they think they are too cheap and should be worth more. If you wait long enough they might even buy yours back at $3.20 (what he and his mates paid for them)

That’s good they keen to buy them he said because nobody else wants to buy them ....and he/they might hang in there a bit longer. I didn’t bother answer his question ‘Do they use our money to buy these shares back? ...that was all too hard. They still worried they still under water with Oceania and feel that’s a dud as well.

You can reassure your neighbor that oceans of money will flow from owning Oceania long term...tailwinds for Africa...can't go wrong.
Every dog has its day...just got to be patient to wait for TRA to bark. The usual suspect tells us everything is fine and dandy...what could possibly go wrong lol

[winner69]

I did not expect such a violent share price reaction downward... given TRA had already been trending downward post FY results... The HF results were not good, nor bad

Should have converted my bonds back to cash and invested in ARV

Metros result was not good, nor bad either and see what happened there

Profits boosted by a lumpy one off gain when balance of business going backwards not good

[couta1]

HaHa love the panic merchants work, advantage of having an XXXOS holding is you know you can't sell unless you want to settle for $2 a share.Lol

[percy]

At $2.57 it brings it down to $11.3m. Still a bit of cash to find

Buying back 4,474,000 shares at $2.57 would require $11.498 mil.
Cost of funding at 5% would be $574,909 which would be deductable.
Savings on dividends, which are paid from after tax profit would be $738,210.

[bull....]

be a steady grind down in share price , slowing sales next year filter thru there whole business

[winner69]

Hey Beagle - was this the answer to the question you asked atbthe AGM that they deftly avoided answering (ie subtly told you to go away)


• Impairments on higher risk lending categories has been worse than expected.

A few points in the presentation seem to be at odds at what was said at road show and AGM presentations

[couta1]

be a steady grind down in share price , slowing sales next year filter thru there whole business Pure guesswork and fearmongering bull, oil prices plummeting equals more cash to buy cars.PS-This business has many strings to it's bow.

[minimoke]

Buying back 4,474,000 shares at $2.57 would require $11.498 mil.
Cost of funding at 5% would be $574,909 which would be deductable.
Savings on dividends, which are paid from after tax profit would be $738,210.
sounds a bit liek a Briscoes add where you can spend $60 to save $40 on a $100 frypan.

There is a line missing though

Buying back 4,474,000 shares at $2.57 would require $11.498 mil.
Cost of funding at 5% would be $574,909 which would be deductable.
Expenses go up, profit goes down. Dividend reduces
Savings on dividends, which are paid from after tax profit would be $yet to be calculated

[bull....]

Pure guesswork and fearmongering bull, oil prices plummeting equals more cash to buy cars.PS-This business has many strings to it's bow.

no lower oil and petrol prices help pay for increased rents , rates , food etc etc etc also slowing property market affects car purchases big time. cars are a luxury buy so they get ditched first when things slow down

[percy]

HaHa love the panic merchants work, advantage of having an XXXOS holding is you know you can't sell unless you want to settle for $2 a share.Lol

in 1967/69 I was working for ChCh Ford dealer Hutchinson Motors.
I think it was 1968 we had a drought in Canterbury.The four tractor salesmen sold one tractor between them.!
In 1974 The Labour Govt tightened Credit conditions.No finance company had funds for car loans.Dealers formed MTF.
So good years/bad years are the norm in the car sales market.Yet I know of a lot of extremely wealthy car dealers.
Having shares in the only fully veterically intergrated business in this sector;ie property,vehicle sales,finance,insurance,service and end of life means Turners are "well positioned" to weather any slow down in vehicle sales,and take advantage of any opportunities.I note further increase in their national footprint of vehicle sales sites,as well as an additional 120 new dealers added to Oxford Finance's dealer network.

[Leftfield]

be a steady grind down in share price , slowing sales next year filter thru there whole business

Yep you should definitely change your name to 'Bear' ;)

Disc - non holder watching from sidelines.

[Joshuatree]

Neighbour came over to have a coffee but really wanting to know what a share buy back was

I just said that’s when a company buys shares from the likes of you and your mates because they think they are too cheap and should be worth more. If you wait long enough they might even buy yours back at $3.20 (what he and his mates paid for them)

That’s good they keen to buy them he said because nobody else wants to buy them ....and he/they might hang in there a bit longer. I didn’t bother answer his question ‘Do they use our money to buy these shares back? ...that was all too hard. They still worried they still under water with Oceania and feel that’s a dud as well.

Do the decent thing and tell them about share trader and what your nick is.;)

[couta1]

no lower oil and petrol prices help pay for increased rents , rates , food etc etc etc also slowing property market affects car purchases big time. cars are a luxury buy so they get ditched first when things slow down Cars are a luxury yeah right, in NZ they are a lifestyle.

[percy]

sounds a bit liek a Briscoes add where you can spend $60 to save $40 on a $100 frypan.

There is a line missing though

Buying back 4,474,000 shares at $2.57 would require $11.498 mil.
Cost of funding at 5% would be $574,909 which would be deductable.
Expenses go up, profit goes down. Dividend reduces
Savings on dividends, which are paid from after tax profit would be $yet to be calculated

I think Turners will see the huge benefits.
Perhaps they may then buy back another 5%...lol.

[bull....]

Yep you should definitely change your name to 'Bear' ;)

Disc - non holder watching from sidelines.

just speaking reality, look back at my post in a year and your realise i am the speaker of truth lol

[minimoke]

I did not expect such a violent share price reaction downward... given TRA had already been trending downward post FY results... The HF results were not good, nor bad

Should have converted my bonds back to cash and invested in ARVTheres always that period of doubt when ones stop loss is hit and you sell out at a loss at $2.59. With todays SP action and a dry-up of willing buyers (only 3 at the moment looking for 11,000 shares in total) Im not so worried about the decision I made on the 20th.

[couta1]

just speaking reality, look back at my post in a year and your realise i am the speaker of truth lol Or not.Lol

[couta1]

Theres always that period of doubt when ones stop loss is hit and you sell out at a loss at $2.59. With todays SP action and a dry-up of willing buyers (only 3 at the moment looking for 11,000 shares in total) Im not so worried about the decision I made on the 20th. I'm not sure why people would choose to sell today, if they thought about it properly they would wait until the share buy back starts.

[minimoke]

I'm not sure why people would choose to sell today, if they thought about it properly they would wait until the share buy back starts.
Sharebuy back might start at $2.40 (or less depending how this trends over the next few days)

[Joshuatree]

Cars are a luxury yeah right, in NZ they are a lifestyle.

Thats true,alot of kiwis are living in them.

[couta1]

Sharebuy back might start at $2.40 (or less depending how this trends over the next few days) Low liquidity stock with a lot of shares to buy back coming from rats and mice sellers in the main equals a higher SP in my book.

[winner69]

Thats true,alot of kiwis are living in them.

Very good JT ....but a Wgtn City councillor wants them classified as freedom campers, esp the 32 living along Oriental Parade with tremendous sea views

[minimoke]

Low liquidity stock with a lot of shares to buy back coming from rats and mice sellers in the main equals a higher SP in my book.Dead right. Might see SP lift from $2.40 to $2.50

[hardt]

Just bought in at 255.

This stock is priced for 0 growth.

I never really liked TRA previously but it looks cheap and pays a divi + buybacks incoming so thought I'd give it a go.

[peat]

if the markets really against the stock then being a buyer of last resort might be a bit of a thankless task in the short term.
I think of it in terms of say the Bank of England vs Soros , or more recently when the Swiss dropped their peg to the Euro.

Holder at average just under 3
Patient. Possibly consider some more at these prices

Do Turners sell double cabs? I see so many of them here

[winner69]

Beagle - I see on Slide 8 of their presentation they do show a thing called Underlying NPBT (up 3%) which doesn’t into account property sales profits.

Implies they recognise such things as property profits as not entirely normal or at least something that causes lumpiness in earnings

One thing though - this time next year they can do the Underlying NPBT trick and show growth from there (assuming they won’t have a $3.5m property windfall). Sneaky eh

[LAC]

Today is the day, that yesterday we worried about, and all is well.!
Looking forward to owning an even lager slice of the cake.
mmmm profit downgrade 5-10% on forecast, braver man than I, Percy....

[winner69]

The tWHO'S TELLING PORKIES ABOUT CAR SALES?

http://www.sharechat.co.nz/article/40e5715e/who-s-telling-porkies-about-car-sales.html

Interesting October was dreadful month

[percy]

mmmm profit downgrade 5-10% on forecast, braver man than I, Percy....

Don't know about brave.
Looking rather foolish at present.
Neither buying or selling.

[Marilyn Munroe]

The tWHO'S TELLING PORKIES ABOUT CAR SALES?

http://www.sharechat.co.nz/article/40e5715e/who-s-telling-porkies-about-car-sales.html

Interesting October was dreadful month

The article linked backs up my post yesterday that the new car market is glutted and is consequently sucking oxygen from the used car market.

Boop boop de do
Marilyn

[winner69]

This picture shows what a disappointing performance looks like

Turners Group made $0.3m more
Buy Right Cars made $0.9m LESS
Finance made $0.1m LESS
Insurance made $0.3m more
Property Profit of $3.5m a bonus
EC Credit made $0.3m LESS

[winner69]

They told Beagle at the AGM these MTF loans weren't a worry any more.

From that picture

Finance result materially impacted by impairment in the MTF non-recourse channel

[couta1]

This picture shows what a disappointing performance looks like

Turners Group made $0.3m more
Buy Right Cars made $0.9m LESS
Finance made $0.1m LESS
Insurance made $0.3m more
Property Profit of $3.5m a bonus
EC Credit made $0.3m LESS You sold out winner?

[winner69]

You sold out winner?

Not yet .....waiting for the buyback to kick in in earnest (doesn’t start until Friday) ....and hoping like mad I’ll get more than 257

Good gamble though ...just imagine if they had held of with this veiled profit downgrade....which was worse than Metro’s downgrade

You never know in a day or so I might decide to hold forever ...like Metro things have to come right sometime

[Beagle]

They told Beagle at the AGM these MTF loans weren't a worry any more.

From that picture

Finance result materially impacted by impairment in the MTF non-recourse channel

Correction they tried to tell Beagle ….
Dog's been around the block a few times and knows old non recourse loans hang around and impact for a long time...worse than your mother in law outstaying her welcome over the Christmas holidays. Those loans will keep biting in 2H and 1H FY20 as well....might be down to the tail of the ugly mutts by 2H FY20. You see that 8% of them are overdue :eek2: Arrears in general up significantly this year compared to last year. Thing is this Labour Govt told us their new families package which kicked into effect 1 July 2018 was going to make a huge difference to families living standards...it probably has so they're buying new vehicles instead of second hand and why not with the interest free deals, long new car warranties and excellent fuel efficiency of smaller new cars these days. Sister in law bought a new Suzuki Swift on interest free terms a while back. Laughing all the way to the bank with fuel consumption of only 5.6L per 100 km's. Reckons the fuel savings help pay the car off.

[Beagle]

Not yet .....waiting for the buyback to kick in in earnest (doesn’t start until Friday) ....and hoping like mad I’ll get more than 257

Good gamble though ...just imagine if they had held of with this veiled profit downgrade....which was worse than Metro’s downgrade

You never know in a day or so I might decide to hold forever ...like Metro things have to come right sometime

You told me the other day that punting at the dog's was no good for you or the dog's. You were right and should have known better mate :p

[winner69]

You told me the other day that punting at the dog's was no good for you or the dog's. You were right and should have known better mate :p

Those sort of dogs that don’t consistently perform are ‘retired’ ....ie taken out the back and put to sleep

Maybe some Turners management need to retire.

[Beagle]

Those sort of dogs that don’t consistently perform are ‘retired’ ....ie taken out the back and put to sleep

Maybe some Turners management need to retire.

Directors huge fee increase obviously a factor in lowered guidance isn't it !

[ratkin]

As dodgy as some of their motors

[forest]

Don't know about brave.
Looking rather foolish at present.
Neither buying or selling.

Hi Percy, I do not think you look foolish at all. You have made so many excellent call on companies which were under valued.
One should be able to trust the information a public companies give out.

I think in TRA case it is the body language of the deputy Chair at the AGM and the lack of a Chairman at the AGM which gives away that things are not the way with this company as they are trying to project.

Brian Gaynor had a story about FBU in the weekend and stated that the lack of energy of board members was a problem for FBU.
Sadly TRA chairman not turning up at a number of meetings must be the ultimate of lacking energy for the roll he is paid for.

[minimoke]

Sadly TRA chairman not turning up at a number of meetings must be the ultimate of lacking energy for the roll he is paid for.To be fair. He did turn up. It was just that he was lurking behind a computer (presumably on a beach) somewhere, and the acting chair forgot to mention this at the start.

[forest]

To be fair. He did turn up. It was just that he was lurking behind a computer (presumably on a beach) somewhere, and the acting chair forgot to mention this at the start.

Depends I guess what your definition is of turning up. Share holders could not engage in a conversation with the Chair Grant Baker so as far as I see he was not there.

[minimoke]

Depends I guess what your definition is of turning up. Share holders could not engage in a conversation with the Chair Grant Baker so as far as I see he was not there.Weeeeelllllll. They could, sort of. Had the chair raised it, and with their IT skills I am sure they could have got a mike over to the SH'er and projected the laptop screen up to include him in the conversation. We know he was listening (so he could hear) and we heard him speak, so we know the two way coms was working.

[Beagle]

Depends I guess what your definition is of turning up. Share holders could not engage in a conversation with the Chair Grant Baker so as far as I see he was not there.

I suspect he couldn't face the wrath of the barking Beagle lol
Might as well spend that "well earned" directors fee increase on a decent ski resort eh https://www.zermatt.ch/en/Media/News/Zermatt-is-the-Best-Ski-Resort-in-Switzerland
All good though because now the SP has been beaten savagely with the ugly stick those buyers in now at around $2.50 will be able to enjoy a Swiss holiday themselves in due course...

[winner69]

I think Turner management have been selling us down the river all year .....accentuating all the positives and glossing over any negatives.

Even now they not coming out with a profit downgrade ...just might be a possibility of one ...cool

Any used car salesman jokes anyone?

[winner69]

From the presentation - Reduction in cash balances due to investment of insurance reserves into longer dated term deposits

Prudent move but the insurance guy won’t be able to proudly state at next years agm that his investment return is probably the envy of other insurance companies (all over the world)

[Beagle]

Don't know about brave.
Looking rather foolish at present.
Neither buying or selling.

What has our friend KW told you about buying stocks in a downtrend but all the time you've been talking up the official company line about growth opportunities !
You are right to feel rather foolish AND show some contrition on this forum about this matter.

All good now though at ~ $2.50...must be a bargain and with a multi million dollar share buy-back coming what could possibly go wrong lol

[percy]

I seem to be the only one who accepts the Deputy Chairman,Paul Byrnes explanation, the board changed the date of the meeting,not Grant Baker.
I have a great deal of time for Paul Byrnes,and the rest of the board,so it meant very little to me that Baker was not there " in the flesh".
So we have a poor half year,and a slow market for used cars.
Going forward it would appear we are on track.
Issues.
Finance.MTF non-recourse loans.According to MTF result issued yesterday, Turners' Oxford Finance altered their lending citeria in April.So looks as though Turners are working their way through them.Non payers identified,slow payers identified.
Turners now putting $4mil a month of Turners originated loans through Turners Oxford Finance rather than MTF.Better margin.
Buy Right Cars.Old stock discounted and moved.Adjusting to slower market.
Turners/Buy right Cars Stock levels.Stock levels adjusting to match sales.Positive.
Autosure Insurance.Appears to be better matching premiums to cost of repairs.
Staff.Appears up skilling staff is on track.
EC Credit.Acknowledged growth will come from Australia and must be sourced.Work in progress.
End of live vehicles.Trading well.
Liquidity.Plenty of undrawn lines of credit.
Property development.On course.
Share buy back I take as positive.

[percy]

What has our friend KW told you about buying stocks in a downtrend but all the time you've been talking up the official company line about growth opportunities !
You are right to feel rather foolish AND show some contrition on this forum about this matter.

KW has a great record.
So have I.
I am not buying or selling any TRA shares.I have what I want.

[couta1]

KW has a great record.
So have I.
I am not buying or selling any TRA shares.I have what I want. I'm not buying nor selling TRA either but I don't agree with KW about not buying in a downtrend if that downtrend is not driven by a serious deterioration in company fundamentals but rather a Schizophrenic market.