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  1. #2301
    ShareTrader Legend Beagle's Avatar
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    Lets move on from the crash test debate shall we, and leave that debate for a more appropriate off market thread...

    However misguided and morally repugnant (Labour promised no new taxes remember ?) these new fuel taxes being imposed on us are, the fact is they will encourage some people towards updating their vehicle to something more fuel efficient which is good for vehicle volume turnover and therefore good for Turners.
    Last edited by Beagle; 03-06-2018 at 11:15 AM.
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  2. #2302
    Speedy Az winner69's Avatar
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    Quote Originally Posted by janner View Post
    Irrelevant.. It is cheap... It is what I want.. It is no deposit.. Cool...

    Can any one remember Fanny May in this fast moving world . ????
    Is there going to be another Fanny Mae?

    How will Turners cope if another GFC?
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  3. #2303
    percy
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    Quote Originally Posted by winner69 View Post
    Is there going to be another Fanny Mae?

    How will Turners cope if another GFC?
    As they have always coped over the past 50 years...…...carefully.
    NIM of 9% provides TRA with plenty of "wriggle room."
    Last edited by percy; 03-06-2018 at 04:46 PM.

  4. #2304
    always learning ... BlackPeter's Avatar
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    Quote Originally Posted by winner69 View Post
    Is there going to be another Fanny Mae?

    How will Turners cope if another GFC?
    Good question - you are concerned about the sub-prime-car-securities?

    I'd expect the risk is lower ... they don't bundle these car loans and sell them as A-rated securities to unsuspecting investors - and individually I suppose most of the buyers are interested in keeping their cars to still get to work. Lower risk of "jingle mail" with car loans.
    ----
    "Prediction is very difficult, especially about the future" (Niels Bohr)

  5. #2305
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    Quote Originally Posted by BlackPeter View Post
    Winner69 wrote:
    "How will Turners cope if another GFC?"

    Good question - you are concerned about the sub-prime-car-securities?

    I'd expect the risk is lower ... they don't bundle these car loans and sell them as A-rated securities to unsuspecting investors -
    I am not so sure about that BP. This is what Todd Hunter said in the March 2018 "Shareholder News" on page 1

    "To help fund the growth of our finance book we have been diversifying our funding and now utilise bank funding bonds and equity. We are looking to extend the securitization we put in place last year (see AR2017 note 14 was $71m with the BNZ only) to $250m and are close to finalising a new banking syndication."

    If you look back into note 14 in AR2017, there is more information about Turner's securitization arrangements.

    "The Group has a wholesale funding facility with the Bank of New Zealand (BNZ) under which it securitises finance receivables through the Turners Marque Warehouse Trust 1 (The Trust). Under the facility BNZ provides funding to the trust secured by finance receivables sold to the trust from the finance sector.....

    The Trust is a special purpose entity set up solely for the purchase of finance receivables from the finance sector..."

    The third paragraph from the end states:

    "The Group has the power over the trust , exposure or rights to variable returns from its investment within the trust and the ability to use its power over the trust to affect the amount of the groups returns from the Trust. Consequently the Group controls the Trust and has consolidated the Trust into the Group financial statements."

    My first thought on reading this was, why has Turners gone to all this trouble setting up a 'special trust' to package loans which is fully consolidated into the results anyway and still owned by Turners? What a complete waste of time!

    But then I thought perhaps I am looking at this from the wrong angle. Perhaps it was the banks that had the idea of setting up the trust. And perhaps it is the banks that want to on sell the syndicated loans to third party punters? IOW it is the banks that are setting up their own (potential) sub-prime car loans to be packaged up for sale to hapless punters?

    I may have got the wrong end of the stick with this and am happy to be corrected. But the above is how I interpreted what was written in the annual report.

    SNOOPY

    P.S.{note 29th May Presentation, Slide 11}

    "Growth in Securitisation Warehouse reflects growth in finance book and substitution of corporate bank funding."
    "• $140m syndication facility with ASB and BNZ completed May 2018."

    The fact that the securitization of loans is a "substitution" for bank funding suggests to me that the securitized loans must be being "on sold" to third party punters.
    Last edited by Snoopy; 03-06-2018 at 08:53 PM.
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  6. #2306
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    Quote Originally Posted by BlackPeter View Post
    Good question - you are concerned about the sub-prime-car-securities?

    I'd expect the risk is lower ... they don't bundle these car loans and sell them as A-rated securities to unsuspecting investors - and individually I suppose most of the buyers are interested in keeping their cars to still get to work. Lower risk of "jingle mail" with car loans.
    A little less of the sneering would help. IMHO.

    W69. Asked a good question.. No job,, No need to pay for the car.

    Did hear Hunter saying that they are looking for higher quality loans..

    Ergo.. Lower sales.. With possibly the same profit at higher rates..

    Disc. Small holder.

  7. #2307
    Ignorant. Just ignorant.
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    If the BNZ are looking to acquire these loans, it's either because they're a good deal in their own right, or it's to on-sell them.

    Or perhaps a Kiwisaver fund might just be interested in a bit of "alternative" or "high-yield" fixed interest.

  8. #2308
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    Quote Originally Posted by percy View Post
    NIM of 9% provides TRA with plenty of "wriggle room."
    I think investors need to be very careful with using 'net interest margin' as an indicator of how well a finance operation is being run. 9% may be double what the likes of Heartland are doing. But as Jeff Greenslade (or was it one of his underlings?) said, and if I may paraphrase it:.

    "If a sharemilker's loan goes bad, we can always kill the cows."

    With all the high tech in cars today, if you are shy about servicing, you may find a $15,000 car needs $15,000 worth of repairs to get it on the road. IOW from a lenders perspective, it is worthless. Even before that it is depreciating as soon as it drives out of the car yard gate. OTOH, Feed your cows right and they should be increasing in value each time they are driven through the farm gate. IOW the extra margin at Turners is needed to make up for the lower quality asset being financed.

    Another reason why the Turners NIM is so much higher, is because it can largely be run from a centralised office, with no need to have a Turners finance person at every 'Buy Right' car yard. Contrast that with Heartland who have an extensive branch network of finance people throughout the country.

    I would suggest that 'net profit margin after tax' is a better indicator as that takes into account all the other costs of running the business, including the cost of writing down loans.

    I have calculated both sets of figures on the 'Investment Story Thread' started by Winner.

    https://www.sharetrader.co.nz/showth...eartland/page3

    An Investment Story: Chapter 4a 'Net Interest Margin' (note these figures are for the Finance Arm of Turners 'separated out' which makes them look even more impressive).

    An Investment Story: Chapter 4b 'Net Profit Margin' (I have calculated these for both the Finance Arm of Turners and the whole thing - because you can't buy shares in the finance arm alone.)

    Turners still come out well in the latter comparison from a finance group perspective. But from a Turners Limited (now Turners Automotive Group) perspective, the net profit margin is less than half that being achieved by Heartland.

    SNOOPY
    Last edited by Snoopy; 04-06-2018 at 07:59 AM.
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  9. #2309
    percy
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    TRA with low impairment loan rates and high NIM tick the boxes for me,and for securitization.
    Cars today are very reliable,so faults are few.Lenders will not lend on uninsured vehicles.
    Yes regular servicing saves large repair bills.
    The majority of cars under $10,000 to $20,000 are not high tech.
    Machanics just plug the car into a computer to see if their are any faults,so dealers can check them out before trading them in.
    A friend of mine's Merc was under water in a ChCh flood.All eclectrics etc ruined.Vehicle therefore written off. Could not even get into it.!!
    Last edited by percy; 04-06-2018 at 08:09 AM.

  10. #2310
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    Quote Originally Posted by percy View Post
    Cars today are very reliable,so faults are few.
    Yes regular servicing saves large repair bills.
    The majority of cars under $10,000 to $20,000 are not high tech.
    Machanics just plug the car into a computer to see if their are any faults,so dealers can check them out before trading them in.
    'High Tech' is a moving feast. I remember a story from fifteen years ago about a Subaru owner who somehow managed to fry a circuit board under the cars bonnet. The car was over 8 years old so there was no stocks on hand for the part he wanted. The car IIRC was worth around $15,000 (an upmarket niche coupe called the Vortex) retail and the cost quoted to bring in a new circuit board was $30,000. The reason? There were no stocks in Japan so the factory that made the circuit board in the first place would have to tool up to produce a run of new ones!

    The problem is not with cars that are regularly serviced (in general). It is with cars that are not regularly serviced as might happen if you were struggling to pay your car loan. IOW the cars that Turners might have to repossess.

    SNOOPY
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