Not brave enough to....lol
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I'm glad they've actually exited the financing business because things are about to get tough on that front, better to just clip the ticket on each deal they get.
"Vehicle loan arrears were also up 39 percent in April over the year earlier"
https://www.rnz.co.nz/news/business/...financial-pain
Yeah thats true there's been a massive consolidation on secondhand car dealers. The smaller ones can no longer compete with the larger ones that have a cost advantage.
They should be fine in this environment with their price range, most people can afford their cars. The bonus is their cars are New Zealand new as well, which given the current risk of buying a flood damaged car on the market these days, they are a pretty safe bet since its fresh from Japan.
The value its trading at is pretty fair for the risk you take, if they can beat their last financial year performance then you're already getting a good return, never mind their current guidance of $3.8m - $4.2 m. They would have to perform exceeding worse than the last financial year to see a downside.
On 45,554,500 shares on issue.
NPAT of $3.8 mil is eps 8.34 cents.......PE 3.6..
NPAT of $4.2 mil is eps 9.22 cents........PE 3.25
NPAT of $3.8mil..Payout half of eps in divie is 4.17 cents and at share price of 30 cents the yield is 13.9%
NPAT of $4.2 mil .Payout of half eps in divie is 4.61 cents and at share price of 30 cents the yield is 15.37%
I totally agree, they don't need to hit guidance to generate a reasonable return.
With regards to the previous boardroom disagreement. This is me speculating, but I believe the issues were around growth and the finance arm.
They wanted to write loans at a percentage of vehicles that were sold through their dealership. Sounds fine in principle. I imagine they figured a certain percentage of customers would require an loan, so why not offer this inhouse. Pre IPO, I believe they sold on average 11,000 vehicles per annum. I think the numbers dropped, even in the last financial year they sold just over 8,000 vehicles. So loan volume wise the numbers would have dropped too. The other issue that I see is the funding risk. They offered loans at fixed rates, however I believe their funding was at a variable or short term rates so there is a mismatch. In the last forty odd years, this is probably the second time the rates went up this fast. So this put pressure on interest margin. I think some of the existing loans they may have been losing money because the interest income barely covered the interest costs and once you factor in operating expenses they wouldn't be making anything.
So this essentially put pressure on interest margin. Normally to mitigate this, you write more loans. But the issue I see is loans are only derived from their dealership. They cannot generate more loan volume without compromising on loan quality. I looked at the segmentation again, the finance arm was either breaking even or generating a loss but I think there was some plenty of headwind at the time. Part of the reason for the IPO was to help build the finance arm. In hindsight, you could say they were abit unlucky in terms of timing. But randomness is a part of business. I did note they issued $3mill in dividend which was more than they earned in the year and questionable given they were focusing on growth. I don't think that was a good move.
I think we are in agreement the good news is that they are no longer writing loans and focusing on their core business.
Shaw said the board was "carefully examining and re-calibrating the core business"
https://www.rnz.co.nz/news/business/...annual-meeting
We have no way to know what happened in the boardroom. But if it is the case, I do respect Sena for taking action.
In general they were under pressure on all fronts and it looked like they couldn't figure there way out so they got frustrated with each other. We'll never know what really happened, but as long as they've learnt there lessons and they build a good company going forward, all is forgot. If you look at the stats in the last few years it will actually surprise you that they've been selling around 8k cars for the last few years and still managed to generate good profits. They usually made $3-4million every year so, they must of though paying a few million in dividends was fine.
The stats for the Cars sold are:
2023: 8367
2022: 7882
2021: 8207
2020: 11020
2019: 10919
FY Revenue NPAT 2023 $82,737,000.00 $1,292,000.00 2022 $65,956,000.00 $2,594,000.00 2021 $66,125,000.00 $3,199,000.00 2020 $76,316,000.00 $4,229,000.00 2019 $78,400,000.00 $3,400,000.00 2018 $73,700,000.00 $4,400,000.00
Eugene Williams still constantly selling. His holding has dropped from 15.1 million shares to 14.6 million shares. Looks like the share price will be under pressure for a while yet. He seems more interested in getting his money out than what price hes getting per share.
https://www.nzx.com/announcements/412839
In terms of pursuing an aggressive sales strategy, wasn't Williams the CEO when all those complaints and rulings against the company arose? (with Sena focused on procurement)
Of course he'd say he's committed to honesty and transparency for his new business, but I'd be inclined to pin the blame primarily on him rather than Sena.
I've only invested because they now have an entirely new CEO, CFO and board - including the former head of Waka Kotahi and the Deputy Chair of the shareholders association, both of whom will be very cognisant of the strict governance legislation now in place.
You're right Eugene Williams was the CEO up to 2019 when he was replaced by Huffer founder Daniel Buckley. Eugene was directing the ship behind the company's messy history, either he was directly involved or at least he wasn't a very good manager of the company to have those issues pop up.
The current management team and board seem like a level up, which should hopefully help NZA shine!
Director Sharif buying.
http://nzx-prod-s7fsd7f98s.s3-websit...903/396319.pdf