The Important Points in the HY2019 Result
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Originally Posted by
Snoopy
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?
Profits at 'Autosure' up, a big tick!
"Insurance (Autosure): Revenue $25.7m up 15%, Op profit $6.4m up 144%"
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Are bad debts really reducing as management hoped?
"The primary impact on results was the impairment levels for MTF non-recourse loans which have been higher than anticipated. Stricter lending criteria have been introduced and MTF lending processes and credit scoring systems have also been reviewed to ensure robustness, with changes made progressively over the past six months. While the performance of the non-recourse loan offer has been disappointing, MTF’s network of over 300 dealers and franchisees remains an attractive channel for Oxford Finance. "
I really thought the $6.380m provision over FY2018 would have sorted this out. However, it appears the changes have had to be phased in over this HY reporting period. So I remain optimistic that the HY2019 period will see the back of this issue.
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Is market share holding up?
"The challenging conditions will inevitably lead to consolidation in the dealer market which will provide Turners with further opportunity in the medium term, as both Turners and Buy Right Cars focus on building market share."
Sounds like it is.
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How is the 'securitization of loans' going?
"The securitisation warehouse has recently been extended to $200m, and the new banking syndication with ASB and BNZ is working effectively."
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These are the kind of things I will be looking to find out!
The headline remarks don't look good with that 'Motor Industry downturn' coming over FY2019.
"a potential downside impact of 5 - 10% to forecasted FY19 pre-tax profits if current market conditions persist."
But the motor trade has always been up and down. For those that have a longer time horizon than the current year, I think TRA are on track.
SNOOPY
discl: holder, with shares currently down 10% on my purchase cost.