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

[JeremyALD]

Forecast 29m to 31m for FY18.

[Snoopy]

If you look at the 'bond covenants' that I have been discussing on the Turners Bonds thread, you will see that I have raised a red flag on leverage.

https://www.nzx.com/files/attachments/265725.pdf

Please review and comment.

Last week, on this thread (and in more detail on the Turners bond thread), I raised the issue of Turners looking very stretched from a leverage point of view. Yet this message didn't resonate on this thread, with other shareholders focussed with relentless positivism that future growth will bring. New shares to be issued means that future 'eps' will decline, and the value of existing shares will be eroded. Those that piled in during the latest significant shareholder sell down at the 'bargain' (sic) price of $3.40 will be tending their subsequent market lashings. All I can say is, I tried to warn you. I have previously suggested that those holding the bonds over the shares might be end up being the smart ones. Below is a quote from me in June:

I think given current 'interest rate' and 'economic' settings, that Turners shares will grow towards a much higher 'fair valuation' figure. But this puts me in the category of 'one of the Turners faithful'. And whether my faith in holding Turners shares that I could sell on the market last week at $3.75 means the share is ultimately worth $3.75 is something that will play out over the next few months. Just because management say they have a "growth plan", does not mean that they will definitely achieve it. I wonder if the 'smart ones' in this situation are really the TRAHB bond holders?

Having said this my own shareholding in TRA is relatively modest, and I do hold a few bonds. I am right behind TRA strengthening their capital base and may look to increase my holding when the smoke from the capital raising clears. I won't be paying $3.40 a share though.

SNOOPY

[percy]

Huge growth means demands for further capital.
No surprises there.
Confirms TRA's business model is ontrack.

[sb9]

Forgive me if I'm wrong but if they hit 30m NPAT doesn't that mean they'll be on a PE of less than 10?

I am also wondering if people knew this capital raising was happening. The SP has dropped 20% from recent highs on no news

Certainly appears that way going by the recent trading pattern of continuous sell down...

[winner69]

Last week, on this thread (and in more detail on the Turners bond thread), I raised the issue of Turners looking very stretched from a leverage point of view. Yet this message didn't resonate on this thread, with other shareholders focussed with relentless positivism that future growth will bring. New shares to be issued means that future 'eps' will decline, and the value of existing shares will be eroded. Those that piled in during the latest significant shareholder sell down at the 'bargain' (sic) price of $3.40 will be tending their subsequent market lashings. All I can say is, I tried to warn you. I have previously suggested that those holding the bonds over the shares might be end up being the smart ones. Below is a quote from me in June:



Having said this my own shareholding in TRA is relatively modest, and I do hold a few bonds. I am right behind TRA strengthening their capital base and may look to increase my holding when the smoke from the capital raising clears. I won't be paying $3.40 a share though.

SNOOPY

Surely at $3.02 though

[blackcap]

YTD revenue up 14% and profit up 13% on pcp is exceptional.

If you add the acquisitions revenue up 59% and profit up 31% on pcp.

Cannot complain, will apply for some more at 3.02.

[winner69]

Snoops has a point re eps

some 10 million new shares on top of the 74 million already out there is quite a lot

But when everything is calculated on weighted averages it will be all honky dory

and all this new liquidity along with the ASX listing will do wonders to the share price as well

No worries

[winner69]

Does the redemption price of $3.75 for the bonds get adjusted for the new shares?

[sb9]

YTD revenue up 14% and profit up 13% on pcp is exceptional.

If you add the acquisitions revenue up 59% and profit up 31% on pcp.

Cannot complain, will apply for some more at 3.02.

Yes, pretty solid growth numbers..will apply for full amount.

[percy]

Snoops has a point re eps

some 10 million new shares on top of the 74 million already out there is quite a lot

But when everything is calculated on weighted averages it will be all honky dory

and all this new liquidity along with the ASX listing will do wonders to the share price as well

No worries

Econmies of scale through supply chain and back offices amalgamation should lead to eps growth.
The $25mil of capital will support over $100mil of lending.