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

[sb9]

The very large sell down by Hugh Green family was always going to take time for the shares to find loving,caring homes.
I would think this parcel is just some one taking quick profits,from that sell down.
I have seen John Ryder sell out of Ryman very early on,Mark Stewart sell out of Ebos before they took off,so although I watch who is buying/selling I pay more attention to the actual company's fundamentals.
Milford again.?...lol.
Just received the contract note.Very please to get the number I asked for.

Nice one for you.

[percy]

Nice one for you.

Yes very nice , as I have been watching the TRA sp, and was thinking of adding to our holding at over $3.50.
Funny thing the market,all the latest results for shares I hold have been great,and the bonus takeover for OIC a total surprise.
Just getting myself ready for the market to give me a good kick up the backside, and say you are still a dummy.!!!! lol.

[Snoopy]

You also should bear in mind that the aggressive acquisition program of TNR is largely being funded by a booming car and equipment market. If this were to suddenly reverse: a whole lot of vehicle loans were to go bad and TNR were forced to sell inventory at below cost to shore up the balance sheet, then the outlook for the company might not be so rosy. Not saying this will happen. Just saying this so that you know where the risks in investing in TNR might lie.

Since the first year of the 'modern' incarnation of Turners in 2015, the breakdown between divisions in EBIT terms I have modelled as below.

	EBIT FY2015	EBIT FY2016	EBIT FY2017
Automotive Retail	$2.268m	$9.392m	$13.105m
Collection Services NZ	$4.907m	$6.119m	$5.932m
Collection Services Aus	$0.128m	$0.005m	-$0.038m
Finance	$9.504m	$14.854m	$13.984m
Insurance	$1.739m	$2.617m	$2.998m
Total	$18.547m	$32.987m	$35.981m

I have always like the balance the 'debt collection' arm(s) of Turners gives to the overall business. Put simply, if the loan market goes down, then we can expect a corresponding increase in debt collection activity. Since 2015, Turners have built up the automotive retail, finance and insurance sides of the business with acquisitions. However, the debt collection side of the business has not been built up. In FY2015 the Australian and NZ loan collection business made up 27.2% of the EBIT of the whole business. In FY2016 that reduced to just 18.6%, and in FY2017 the figure was down to 16.4%.

This means that Turners as a group has become less resilient to possible changes in the automotive market. A downturn in the automotive market will affect 83.6% of the business as 'automotive' 'finance' and 'insurance' are now very much linked.

I find it very curious that Turners have now a secondary listing in Australia when earnings from that market are minuscule (negative if you apportion costs the way I have). Are the Aussies really going to be keen to come in and help fund future expansion? Or is the Oz listing all part of some grandiose plan that is getting very far away from the core business here in NZ?

The growth of Turners is good. But the reduction in resilience needs to be watched.

SNOOPY

[percy]

Come on Snoopy put your thinking cap on.
The Australian listing is not so Paul Byrnes can claim family holidays to Aussie as business fact finding trips.
Think little ChCh business Ebos, who do 80% of their $7 billion turnover, in Australia.
Do you think TRA will be doing 80% of their business in Australia in 10 years time,or would you guess 20 years?.No Australian business is going to accept NZ only, listed scrip as part payment.
Resilient? Downturns in the motor trade happen,but the trade recovers very quickly.The huge increase in vehicles over the past few years has grown the opportunites for TRA.
Vertical integration of vehicle imports,vehicle/equipment sales,finance and insurance,means TRA are a totally focussed business,which is further scalable in Australasia.
I would also point out EC Credit Control does not rely on TRA as a customer.The Australian listing will benefit their dealing with their Australian clients straight away.

ps.Most probably take Paul Byrnes less time to get to Brisbane or Sydney than Dunedin.Few more people there too.
If you have a great business model why not roll it out.!

[percy]

After I added to my TRA holding yesterday, I looked at the trust I help out with's portfolio.The trust only had TRAHB [bonds].
We therefore added some TRA shares to the portfolio today buying at $3.51.

[Elles]

Put my hand up with Craigs for some.
Will have to wait for the contract note to see if I received what I asked for.
Would expect confirmation by tomorrow morning.

Hi Percy, sorry for the newby question, but how does this off-market buying work? Did you know someone was willing to sell below market value or will Craig's try to find a seller for you? Presumably this only works for large transactions? Anyway, good to see you're positive about this stock, so am I

[Joshuatree]

Elles , a big shareholder decides to sell down quickly. They contact a broker,Craigs in this instance ; they work outa deal,price etc and ring around their clients offering them at a discount to mkt price, so you need an account and relationship with your broker at Craigs . I queried my guy late friday ,he said plenty there still, but not a big enough margin for me. Craigs make money by charging up to 1% commission.

[percy]

A large private shareholder or an institution approaches a broker, with say 800,000 or 1mil shares to sell.In this case Craigs said they would sell them.Head office of Craigs then advises their brokers to find buyers. The brokers then ring their clients,usually clients who already hold shares in that company,as was the case here with me already holding TRA shares.Sometimes they sell very quickly,and you either miss out or get fewer than you wanted.That is why I said it was extremely likely I would be buying more. as I was waiting see if I got them or not.A case of first in first served.
The placement or line of shares is usually done at a bit of a discount to market price.In this case the price was $3.44 compared to market price of $3.51 /$3.52.
As I was looking to adding to my TRA holding it suited me.

[Elles]

Interesting, thanks for the replies. It's a good way to do it as otherwise they'd push the share price down trying to sell that much on market, so now both seller and buyer get a good deal. Nice.

[Snoopy]

Come on Snoopy put your thinking cap on.
The Australian listing is not so Paul Byrnes can claim family holidays to Aussie as business fact finding trips.
Think little ChCh business Ebos, who do 80% of their $7 billion turnover, in Australia.
Do you think TRA will be doing 80% of their business in Australia in 10 years time,or would you guess 20 years?.No Australian business is going to accept NZ only, listed scrip as part payment.

Good point Percy. Yes if TNR are looking to acquire businesses in Oz, there is almost certain to be an element of 'share scrip' in the payment. The Oz market for used cars is rather different. I don't think they allow used imports from Japan as we do here. TRA in NZ sources a lot of their used car stock from Japan. But with the shutdown in local manufacturing in Oz, maybe this will change? Maybe TRA is looking to get in on the ground floor if/when import regulations change? Could be huge for TRA if they can crack the Aus retail market. Yet many kiwi retail companies have tried this in other product categories. The result is not always pretty.

Resilient? Downturns in the motor trade happen,but the trade recovers very quickly.The huge increase in vehicles over the past few years has grown the opportunites for TRA.

Lots of stories in the media around the ever aging NZ car fleet. One thing you never hear mentioned is how good a fifteen year old Japanese car can still be. Is there really they same pressure to update your car as there once was. I can think quite a few fifteen year old cars (built in 2002) I would be happy to drive around in as my everyday transport. Not sure I could say the same ten, fifteen years ago.

I would also point out EC Credit Control does not rely on TRA as a customer.

Yes absolutely correct. But the EC credit Control business is now less of the overall business than it was, in percentage terms. That was my point.

SNOOPY