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

[Snoopy]

Very solid result and outlook. Can't argue with EPS growth of 15%.

Actually, I think you can argue this point. There are some strange things listed in the depths of the cashflow statement, in particular the "RECONCILIATION OF NET SURPLUS WITH CASH FLOWS FROM OPERATING ACTIVITIES" for FY2018.

1/ There is $1m in Property Plant and Equipment sales profit that has gone straight through to the net profit figures. That is not part of normal business operations for a start.

2/ There is a very large increase in 'deferred expenses', over $3m up on the previous year that should be scrutinised.

3/ $2.845m of 'Contingent Consideration', a non cash benefit, has appeared that requires further explanation (something to do with the Autosure insurance business?).

4/ An $0.820m gain in an investment property value looks to have bolstered the bottom line. That looks to me to be nothing to do with the core Turners Automotive business either. An equivalent figure of $0.500m was listed as an investment property increase back in FY2017. Yet if I look back in the equivalent statement in Note 30 of AR2017, no such property gain is mentioned.

I think Turners have a lot of explaining to do. And no doubt much of this will be explained when the full annual accounts, complete with all the notes are released. But based on the limited summary of results issued so far, it looks like much of that EPS gain could be explained with one offs that will not be repeated in subsequent years.

Perhaps on paper growth in EPS is around 15% year on year. But if I said the EPS growth over the last two year period is only 4% total (also true), that 'growth' sounds far less impressive.

SNOOPY

discl: holder, despite never having bought any 'on the market'!

[Beagle]

If we accept that at face value Snoopy (thank you for your post as I have been meaning to have a good look at the financials' and will as soon as I get some more time), that such extraordinary item gains are indeed one-off's then the EPS growth implied by the profit outlook guidance is even more impressive seeing as the outlook is all just normal profit and seeing as the market is always forward looking that enhances implied growth rate of normal trading profit actually enhances the value of the company by virtue of the significantly higher EPS growth rate so I had better buy more before the price goes up further when the market wakes up to this Besides that I need to work my way down to the big and sunny end of the tent where the clever people hang out and the warm glow of the large juicy dividends soothes my winter aches and pains

[Snoopy]

If we accept that at face value Snoopy (thank you for your post as I have been meaning to have a good look at the financials' and will as soon as I get some more time), that such extraordinary item gains are indeed one-off's then the EPS growth implied by the profit outlook guidance is even more impressive seeing as the outlook is all just normal profit and seeing as the market is always forward looking that enhances implied growth rate of normal trading profit actually enhances the value of the company by virtue of the significantly higher EPS growth rate

Beagle your post makes good sense, except for the bit I have outlined in bold. We actually don't know what part of next years forecast profit is made up of 'one offs'.

SNOOPY

[percy]

Get used to property profits.
TRA are also property developers.
A bare site is not worth a great deal.Yet a developed site with a national tenant is .
Rather than passing the margin onto a developer, TRA clip that ticket too.

[winner69]

Get used to property profits.
TRA are also property developers.
A bare site is not worth a great deal.Yet a developed site with a national tenant is .
Rather than passing the margin onto a developer, TRA clip that ticket too.

And they get a building fit for purpose eh

[winner69]

Snoops .....don’t get too hung up on those items you listed.

Might sound ‘abnormal’ or non-recurring on first read but Turners will always have these sort of things because of the diverse nature of their business.

You make things too complex when in fact they’re quite simple ...just saying

By the way the reported EPS of 15% was boosted by having a lower tax rate this year v last year. (Normalised you could say it was less than 10% but does it really matter when nobody knows what the F19 tax rate will be)

[percy]

And they get a building fit for purpose eh

Off course.
And from page 15 of their last presentation;
Property.
"Five years of property opportunities ahead including large projects in Auckland and Christchurch."

[percy]

Snoops .....don’t get too hung up on those items they listed.

Might sound ‘abnormal’ or non-recurring on first read but Turners will always have these sort of things because of the diverse nature of their business.

You make things too complex when in fact they’re quite simple ...just saying

By the way the reported EPS of 15% was boosted by having a lower tax rate this year v last year. (Normalised you could say it was less than 10% but does it really matter when nobody knows what the F19 tax rate will be)

The crunch comes down to whether TRA can achieve what they say they will do.
Guidance given."FY 19 NPBT of $34 million to $36 million.
We will have to wait until their interim result, or an up date, to see how they are tracking.

[couta1]

Simple is good, current price $3.01, Couta target price $3.83 plus quarterly divvies, is that simple enough.

[winner69]

The crunch comes down to whether TRA can achieve what they say they will do.
Guidance given."FY 19 NPBT of $34 million to $36 million.
We will have to wait until their interim result, or an up date, to see how they are tracking.

.....and that’s 15% earnings growth

Share price follows earnings growth .....sometimes