That $150m ...your guess or some guru analysts?
I seem to remember you bagging HGH for Dairy loans.
Share milker loans were going to break HGH.You were joined by other great baggers.
Also you remember you bagging HGH for no deposit lending.Esp Holden.
Turners own loans are not the problem.The problem was/is the MTF non-recourse loans.These loans were stopped over a year ago,so it is the tail which continues to be the problem.
The increase in new loan impairments for both HGH and TRA are mainly new accounting rules.In fact no actual change in impairments,[or very little.]
A lot of bagging.
I guess if you howl enough you may get one right,.!
However remember Oxford Finance is now a very substantial business writting good loans.
Also EC Credit is an excellent business.
Also remember Turners' strategic holding of MTF is the key to unlocking MTF. Worth twice [or more] the price TRA paid.
Report says Finance segment assets $271m and liabilities $217m which sort of suggests a book value of $54m
The failed sales of UDC was at 1.6 times book value. Heartland currently trades at 1.5 times book value
Does that suggest Turners Finance might be worth $80m odd?
But some say the quality of the loan book is a bit dodgy ...discount to this figure
In reality I have no idea.
HGH materially underperformed the market for 2 years over the period I was out and Dairy was problematic so I got that right.
Turners own loans are a bit of a problem, overdue loans, (excluding non recourse MTF) are now 2% up from 1.6% in the pcp which indicates to me that despite their multiple attempts to write better quality loans, the delinquency rate continues to rise. Perhaps they should hand over recovery proceedings to a more experienced credit control company ? Non recourse lending is a real mess with over 14% of loans overdue up from about 9% IIRC at the last period, (recall I predicted this problem would get worse),. so I got that right too.
You have waxed lyrical about their integrated full service business model generating huge growth in the years ahead and now it seems even the directors and management don't see it your way. Your persistent glowing positivity about this company against a recent clear downtrend has cost some people I know, that listened to you, tens of thousands of dollars.
There are plenty of problems in their loan book and it will be reflected in the sale price of their loan book, mark my words.
The used car business in N.Z. is a very very tough industry with few barriers to entry. It always will be a tough industry in my opinion.
$70m is my estimate as noted above, less if any buyer finds the real adjusted and properly provisioned profitability is less than $10m per annum and less for the non recourse MTF loans which quite probably are unsellable. Maybe book value of $54m isn't far off the real money in this tough market ?
I reckon that they (Baker and his mates) have wanted out (ie get their cash out) for some time.
They touted the total business throughout Australia and Asia and couldn’t find a buyer. Even that new Singapore Director who appeared well connected failed to find a buyer.
So Plan B is to sell it off part by part - starting with finance arm and the collection business. More attractive these bits without having a retail used car yard business attached.
Will the insurance arm be next to go?
That leaves a used car business ....maybe they will have to face up to living with that as that might be impossible to hock off.
Interesting times ahead
Insurance and end of vehicle life logistics will remain.
Insurance [Autosure] is tracking well, and their "capital reserves" will be used to fund property developments including site relocations.Makes sense and has been very profitable,and with a target of 7 new sites should remain very profitable.
Yes interesting times ahead,and until any sale has happened, we just don't know how interesting.
If TRA sell off the silver, is not the proceeds trapped within the remaining company, hence what happens to those proceeds given the assets are gone and no future earnings from them will accrue to the company. Surely they will have to distribute the proceeds to shareholders, there's only so much scope to grow the remaining assets? Who stands to make a gain from that, oh of course the cornerstone shareholders.
Anyway, I'm disappointed that the silverware is being sold off. I think Winner might be onto it, this is the next fling at an exit strategy, not the continuation of a growth strategy. The business model looked sound until these results, but now it doesn't and it has unanswered questions hanging over it.
Thank goodness I didn't buy the down trend, and now it's gone from my watchlist as well. What a dog it's been, a capital destruction machine and now a strategy to get smaller rather than better.
Yes a very ugly pig dog. Thankfully with careful risk management I have escaped with a very small 3 figure overall loss but the loss of time is far more valuable. Don't care about management's expansion plans as I know the second hand car industry is ultra competitive and probably always will be so the chances of outperformance on capital employed is very, very slim in my opinion. Some will hold for the dividend but should probably ask themselves how that's worked out for them so far ?
Last year the directors who could be bothered turning up told the meeting that the substantial increase in directors fees was because of the complexity of the business including the insurance division. So a slimmed down business model in due course means lower directors fees right ? Yeah right !
Your valuations are "Ball park" with broker's rearch I have read.
I would expect any buyer of Oxford Finance would request TRA sell their MTF shareholding.TRA are MTF largest shareholder.So the proceeds from the sale of these shares would go on top of the $150 mil you quote.
So the nett proceeds, recycled into expanding the retained silverware should make for interesting times.
Those of us who have followed the market for a long time, know companies that have sold parts of their business that are no longer core,and have recycled the funds into their core business, have done very well.Business more focussed.A recent example has been Scales, selling their low margin coolstores,and recycling those funds into higher margin petfood.
The core parts of Turners are still centred around the extremely valuable trusted brand "Turners."
Mmh - so first it was this one stop strategy which made them so attractive. They even increased their board fees for having to do all this hard work. They succeeded to increase their feed, but failed to do the work.
Strategy dropped by the board like a hot potato ... too hard, apparently - or just too busy to consume their increased fees, can't do the additional work as well?
But hey - now it is the simplicity of their business proposition which makes them so attractive. Why didn't we see that from the very beginning - complexity is bad .. only a simple used car yard is what makes the money. Unloved old car in - preloved new car out - only one ticket to clip. Rinse and repeat. Easy. What a bunch of geniuses!
But - are we sure the emperor is wearing any clothes?
Hey percy, you must be a bit gutted that the Turners integrated automotive financial services model with all its ticket clipping attributes is deemed to be broken. I recall you often told the doubters ‘ask yourself my Dorchester acquired Turners’
However I admire your ongoing support for and belief in Turners. No doubt you will often remind us that ‘the capital released from the (dud) businesses can be recycled and produce better earnings developing and running more, and better locations for Turners’ strategic approach is a wonderful shift in thinking.
I have my doubts. But all I can say I feel a little vindicated in that the numerous times I’ve said Turners weren’t generating enough profit to cover their cost of capital has turned out to be the case.
We’ll have to see what the future brings eh