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

[Beagle]

17 cps fully imputed = 17 / 0.72 =23.61 cps gross. 23.61 / 290 = 8.1% Gross Yield

Disc: I topped up a few more this morning. I am very pleased to see them stripping $4m+ from overhead costs. Augers extremely well for the future and I think its highly likely that yield is sustainable going forward.

Posted 25/11/20 - Good to see the guidance upgrade today and recall that the stripping of $4m per annum of overhead will come into effect in FY22. (Possibility of $40m per annum for FY22 in my opinion which could see a further dividend uplift). Increased dividend presently to 18 cps will be welcomed by the market. I ended up with more of these than I thought I ever would due to the encouraging looking chart.
Maybe we get 19 cps dividend in FY22 = 26.4 cps gross / $3.20 = 8.25% gross yield

P.S. Agree sb9 and was just thinking about the possibility of a "4" handle myself.

[winner69]

One of the unsung heroes of NZX this one. Might see sp with 4 handle by end of this year and if balance sheet is strong they may pay out bit more in divvies. That'll get yield chasers pretty excited.

Growing profits to more and increased dividends surely 4 bucks is a certainty sooner than later

Even at 4 bucks yield over 6% ....and as you say chances are the 18 cents divie will soon be 20 cents

[winner69]

so share price will be 4 bucks soon

Improved profit might have been baked in already but surely not 16% more than expected

Hope punters get in soon ..... longer you leave it less the gains

[Beagle]

20 cps quite possible next year, maybe even 21 cps ?

Mid point of guidance is $34m and they are suggesting that at the mid point of dividend range 60-70% that equates to 18 cps in annual dividends
If they can do $40m before tax next year that suggests 40/34 x 18 = 21cps is possible ! 21 / 0.72 = 29.16 cps / $3.20 = 9.1%.

[Rawz]

What a beautiful surprise. Love this company. Strongly held by management is the best thing about TRA. Already sitting on 100% gain since buying in April, then topped up some more in May.

High dividends + growth, the best combination.

[Louloubell]

A corresponding response in the share price. Great, am a happy holder.

[LaserEyeKiwi]

Excellent management. Bravo to the Turners Team.

[Beagle]

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Hi Beagle, thanks for the kudos...I appreciate that. I hope the comments I make from time to time are helpful and provide insight. Well done on your share purchase too. Answers to your questions below...

1. Short answer is yes...we didn't stockpile non ESC cars, but vehicle prices have definitely gone up. There have been two large impacts on supply this year....

a) the ESC change which has reduced the pool of available cars that could be imported into NZ.
b) Covid and the impact on new car supply chain which had an impact not just locally but also in Japan and the number of cars available in the auctions over there.

2. Prices for used cars have risen steadily from late May. At this stage, the effect of supply disruption i.e. the new car supply chain interruptions + ESC change mentioned above are more material effects than any shift in demand caused by substitution of public transport with private vehicles.

3. Yes I do. I think this business always goes slightly better in a centre-left government due to the level of support/stimulus that comes with Labour. Beneficiaries are not really our target market but middle NZ families do benefit as well. Most of our customers who have mortgages will have or about to get substantial decreases in their mortgage payments, no overseas travel etc, and the unemployment rate has not peaked like the economists thought it would. We feel confident we will continue to prosper. In regard to the minimum wage it will be an immaterial impact as we have a small number of people on the team at this sort of level.

Thanks
Todd

Marvelous that Todd took the time to share some insights in late October 2020 with us. The only CEO of a listed company (that I am aware of) that makes the effort to do so. My nose for a feed was giving a solid reading as early as October that FY21 was going to be a great year and I expect the tailwinds to continue into FY22 and ultra low interest rates could persist for many years.

[winner69]

Marvelous that Todd took the time to share some insights in late October 2020 with us. The only CEO of a listed company (that I am aware of) that makes the effort to do so. My nose for a feed was giving a solid reading as early as October that FY21 was going to be a great year and I expect the tailwinds to continue into FY22 and ultra low interest rates could persist for many years.

And those $4m odd cost savings persist for years

[Beagle]

Indeed Winner69.
Just one other random thought. https://www.nzherald.co.nz/business/...GDM26OL7TWE4Y/
More lending and lower loan delinquency might have positive implications for Heartland Bank as well.