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

[blackcap]

Had another look at my numbers on CMO which at $7.70 is trading cum a 31 cent fully imputed divvy. At a theoretical ex divvy price on $$7.39 it is trading on a historical PE of 10.8. No formal forecast for FY18 has been issued but my expectations are for steady growth and I have them on a forward PE of just 10 with their long and highly credible track record of consistent growth compared to Turners with their much shorter history of growth on a forward PE of 12.5 at $3.20. Hmmmm..you guys can have my ones at $3.02. I will hold the bonds to their maturity next year and decide in due course whether to convert them of ask for the cash back.

I have some CMO too... but there is a caveat. What are the dealerships going to do once EV's are the norm... all that maintenance and WOF service money gone. Another is board succession... do they have any plans? Jim is getting a bit long in the tooth, still very good but do they have contingencies for further down the track. I may ask that question at the AGM.

[Beagle]

I have some CMO too... but there is a caveat. What are the dealerships going to do once EV's are the norm... all that maintenance and WOF service money gone. Another is board succession... do they have any plans? Jim is getting a bit long in the tooth, still very good but do they have contingencies for further down the track. I may ask that question at the AGM.

My forward vision best guess mate is that we are at the very least a decade away from EV's becoming mainstream to a major degree and probably at least 15 years away from EV's outselling cars that include an ICE engine. After that they will still be maintaining all the former ICE engine vehicles and newer hybrids and EV's that will need regular checks and WOF's and will need very expensive new battery replacements, (with huge dealer margins) every 8-9 years or they become disposable items so volumes of new sales could increase. Had an interesting discussion with a MB salesman the other day, they're trying to build cars now that don't last as long. Turn up the wick on small turbo petrol engines so they don't last as long as a traditional naturally aspirated engine and fit a hybrid system that will require a battery replacement after about 10 years that's so expensive the vehicle becomes a disposable item...all in the name of fuel efficiency...a remarkable admission from a Mercedes-Benz senior salesman. Having personally experienced the woes of finite hybrid battery life I have no qualms about the volume of car sales going through dealerships in the brave new electric world and honestly believe that durability will only deteriorate and hence the replacement cycle will he shortened and annual volume of new car sales increased

[percy]

I have some CMO too... but there is a caveat. What are the dealerships going to do once EV's are the norm... all that maintenance and WOF service money gone. Another is board succession... do they have any plans? Jim is getting a bit long in the tooth, still very good but do they have contingencies for further down the track. I may ask that question at the AGM.

They are tied to Ford/Mazda.

[Beagle]

N.Z. Shareholders Association unhappy.
http://www.sharechat.co.nz/article/a...-placementhtml

[peat]

https://www.sharetrader.co.nz/showth...l=1#post684212

[blackcap]

My forward vision best guess mate is that we are at the very least a decade away from EV's becoming mainstream to a major degree and probably at least 15 years away from EV's outselling cars that include an ICE engine. After that they will still be maintaining all the former ICE engine vehicles and newer hybrids and EV's that will need regular checks and WOF's and will need very expensive new battery replacements, (with huge dealer margins) every 8-9 years or they become disposable items so volumes of new sales could increase. Had an interesting discussion with a MB salesman the other day, they're trying to build cars now that don't last as long. Turn up the wick on small turbo petrol engines so they don't last as long as a traditional naturally aspirated engine and fit a hybrid system that will require a battery replacement after about 10 years that's so expensive the vehicle becomes a disposable item...all in the name of fuel efficiency...a remarkable admission from a Mercedes-Benz senior salesman. Having personally experienced the woes of finite hybrid battery life I have no qualms about the volume of car sales going through dealerships in the brave new electric world and honestly believe that durability will only deteriorate and hence the replacement cycle will he shortened and annual volume of new car sales increased

Thanks for the reply Beagle. Fair points and point taken. I was starting to get twitchy fingers. The succession planning of the board still concerns me slightly so will be asking that question. Will you be down for the AGM? Its interesting.... like a family reunion with people like me stand out because I "don't belong" All in good fun though.

[percy]

Thanks for the reply Beagle. Fair points and point taken. I was starting to get twitchy fingers. The succession planning of the board still concerns me slightly so will be asking that question. Will you be down for the AGM? Its interesting.... like a family reunion with people like me stand out because I "don't belong" All in good fun though.

There are still plenty of Gibbons coming along,so no worries there.!!...lol.

[percy]

N.Z. Shareholders Association unhappy.
http://www.sharechat.co.nz/article/a...-placementhtml

I agree with them.

[Jaa]

I agree with them.

Also unhappy.

No company should be choosing placements over accelerated rights issues.

[Snoopy]

Note 18 in AR2018 allows us to annualize the profit contribution from acquisitions.

1/ Buy Right Cars:

"If the acquisition had occurred on 1st April 2016, management estimates the group consolidated <snip> profit before acquisition for the year would have been $18.6m"

Since the group consolidated profit was $17.574m, the extra contribution to profit from 'Buy Right Cars' would have been: $18.6m - $17.574m = $1.026m




2/ Autosure:

"If the acquisition had occurred on 1st April 2016, management estimates the group consolidated <snip> profit before acquisition for the year would have been $23m"

Since the group consolidated profit was $17.574m, the extra contribution to profit from 'Autosure' would have been: $23.0m - $17.574m = $5.426m

He forgot..!!!
Big difference between NPBT and NPAT....lol.
No wonder his eps figures were a lot higher than mine.
I note buyers are now at $3.20.

I have corrected the above mistake as noted by Winner and Percy. But the mistake was not made in the primary working of my past 'eps' projections: with maybe one caveat.

When I annualised my results for FY2017., note 18 from AR2017 on the subject of 'Buy Right' cars noted that.

"Group consolidated profit would have been $18.6m" (if Buy Right cars had been owned for 12 months).

I had assumed 'Group consolidated profit' meant NPAT. But further up on the page there is a comment

"The performance percentage is calculated by comparing the actual annual net profit before tax (NPBT) to the target annual NPBT included in the sale and purchase agreement."

If the metric is NPBT not NPAT, then the difference in consolidated group profit for the year, if "Buy Right Cars" had been owned for twelve months would have been.

$18.6m - $24.631m = -$6.031m

This means the profit from 'Buy Right Cars' would have been lower if that business unit had been owned for 12 months, not 8. At first glance this doesn't seem a likely interpretation. But is it possible that 'Buy Right cars' shelled out a lot of borrowed money pre-July to bring in cars from overseas that caused them to lose money in the April to July period? This explanation is plausible. But losing as much as $6m over 3 months doesn't sound likely to me. So I am backing my original judgement and annualised 'eps' projections. Nevertheless I think the wording of note 18 in the annual report is ambiguous on this matter.

SNOOPY