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  1. #1681
    Speedy Az winner69's Avatar
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    Been on the ASX since July - no transasctions yet

    But with all these new Australian investors and the drive to improve liquidity no doubt this will change

    But if these Austrlaian investors who bought the other day are really keen on their new investment why would they sell anyway - liquidity to improve?

    Maybe just one of those phrases you use to sound like you know what you are doing
    Last edited by winner69; 16-09-2017 at 11:51 AM.
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  2. #1682
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    Default The right PE for Turners?

    Quote Originally Posted by Snoopy View Post
    No. Shares on issue EOFY2017 74,523,527
    No. Shares Sept 2017 Placement $25m / $3.02 = 8,278,146
    No. Shares Sept 2017 SPP $5m / $3.02 = 1,655,629
    Post capital raising total No. Shares 84,457,302 {A}

    Guidance for FY2018 is for NPBT of $29m - $31m
    Guidance for FY2018 is for NPAT is NPBT x 0.72 = $20.9m - $22.2m {B}

    Forecast 'eps' based on the number of shares at the end of the financial year is therefore {B}/{A} which translates to a range of:

    24.7c to 26.3c per share

    I know this doesn't take into account the 'weighted average number of shares' that Beagle asked for, but I have my reasons for not doing so.

    The equivalent figure for FY2017 was:

    $17.609m / 74,523,527 = 23.6cps

    Quote Originally Posted by winner69 View Post
    Surely at $3.02 though
    At $3.02, TRA is on a projected PE ratio of between:

    302/26.3 = 11.4

    302/24.7 = 12.2

    I don't think it is fair to categorize TRA as a dog. There is still a good business waiting to get out under the recent 'share'nanigans. But I think it is true that it is probably not a good idea to pay too much for the shares. The real question for investors must be 'what is fair value'?

    $3.40, with the benefit of the capital raising hindsight, which to be fair was not transparent to the many who took shares at $3.40 for what appeared to be a 'generous discount', looks a bit rich to me. But $3.02? I am feeling a bit warmer towards that price. Yet there is a risk that $3.02 is not cheap enough.

    SNOOPY
    Last edited by Snoopy; 16-09-2017 at 12:39 PM.
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  3. #1683
    Speedy Az winner69's Avatar
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    Quote Originally Posted by Snoopy View Post
    At $3.02, TRA is on a projected PE ratio of between:

    302/26.3 = 11.4

    302/24.7 = 12.2

    I don't think it is fair to categorize TRA as a dog. There is still a good business waiting to get out under the recent 'share'nanigans. But I think it is true that it is probably not a good idea to pay too much for the shares. The real question for investors must be 'what is fair value'?

    $3.40, with the benefit of the capital raising hindsight, which to be fair was not transparent to many to took shares at $3.40 for what appeared to be a 'generous discount', looks a bit rich to me. But $3.02? I am feeling a bit warmer towards that price. Yet there is a risk that $3.02 is not cheap enough.

    SNOOPY
    So $3.02 a fair price for a good company then?
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  4. #1684
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    Quote Originally Posted by winner69 View Post
    Snoops - if you look at the cap raising presentation and the 4 months financials you can work out that buy Right and Autosure made $1.3m npbt, say $0.93m after tax
    'Buy Right Cars' net profit margin

    p18 of the Capital raising presentation says 'Buy Right cars' made a 4 month contribution of $1.4m to 'Operating Profit'. Annualise that and I get $4.2m NPBT. Take off tax at 28% and I get at NPAT contribution from 'Buy Right Cars' of $3.0m ($1m for 4 months {C}).

    Now if we go back to p17 for the incremental revenue for 'Buy Right cars' I get:

    $76.5m - $56m = $20.5m {D}

    So I get a 'net profit margin' from 'Buy Right Cars', excluding corporate costs and intercompany revenue adjustments, of {C}/{D}:

    $1.0m/$20.5m = 4.8%

    'Autosure' net profit margin

    p17 shows that the 'incremental increase' in insurance EBT profit (NPBT) from 'Autosure' was:

    $2.3m - $0.5m = $1.8m

    After tax:

    $1.8m x 0.72 = $1.3m {A}

    p17 shows that the 'incremental increase' in insurance revenue from 'Autosure' was:

    $14.5m - $4m = $10.5m {B}

    So I get a 'net profit margin' from 'Autosure', excluding corporate costs and intercompany revenue adjustments, of {A}/{B}:

    $1.3m / $10.5m = 12.4%

    Annualise the profit and I get an annual contribution from 'Autosure' to NPAT of:

    ($1.3m * 3) = $3.9m

    Annualised suggests only $2.8m NPAT in FY18 from these acquisitions
    I get $3.0m + $3.9m = $6.9m annualised NPAT combined contribution from 'Buy Right cars' and 'Autosure'.

    Seems at odds with the notes in the F17 accounts doesn't it.
    Actually my impression is a close agreement.

    The notes in AR2017, which I used to compile my post 1478, show that the incremental gain in 'consolidated profit' was $1.026m (Buy Right Cars) and $5.440m (Autosure). However, 'Buy Right Cars' had been part of the group since the end of July (8 months of the financial year). Autosure was only added on the last day of the financial year (no profit contribution over FY2017) Annualising that 'Buy Right' figure raises the 'consolidated profit' from 'Buy Right Cars' to:

    $1.026m x 12/8 = $1.539m

    This means the change in annualised consolidated profit if both new business units had been owned for the full year was:

    $1.539m + $5.440m = $6.979m

    (Note that in my post 1661 I figured out that 'consolidated profit' means NPAT.)

    That looks to be in very close agreement with the annualised FY2018 contribution from these business units in the Turners Capital raising presentation. Not much change between FY2017 and FY2018?

    SNOOPY
    Last edited by Snoopy; 17-09-2017 at 12:26 PM.
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  5. #1685
    Speedy Az winner69's Avatar
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    Snoops - a few different meanings of 'profit' in Turners presentation

    So take carevp what you assume to be npbt (esp at division level)

    Prob thy do this on purpose to make life difficult for analysts like yourself.
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  6. #1686
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    Quote Originally Posted by winner69 View Post
    So $3.02 a fair price for a good company then?
    At $3.02, TRA is on a projected PE ratio of between:

    302/26.3 = 11.4

    302/24.7 = 12.2

    Quote Originally Posted by winner69 View Post
    A PE of 20 for TRA is ridiculous

    Methinks 12/13 is about fair, maybe that is even a bit high
    You have already answered your own question?

    SNOOPY
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  7. #1687
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    Quote Originally Posted by winner69 View Post
    Snoops - a few different meanings of 'profit' in Turners presentation

    So take care what you assume to be npbt (esp at division level)

    Prob they do this on purpose to make life difficult for analysts like yourself.
    I always thought 'operating earnings' meant EBIT. It does with some companies. But Turners use 'operating earnings' to mean EBT. Following that, it becomes an open question of how to take into account 'eliminations' and how to allocate 'corporate costs' to get the real picture of how well all the divisions are doing. The process is such a minefield, you could say there is no one 'right' answer. So rather than pursue the 'right' answer, I instead make it my goal to give a 'consistent' answer. And as long as readers understand the assumptions I have had to make to gain that consistency, that is my best realistic goal.

    The specific point you raised Winner, was about the acquisitions having a lower profit margin than the existing business. We can work out what the various profit margins were for the first four months of FY2018. Four months probably isn't enough time to bed in the acquisitions. So whatever answer I get doesn't really 'prove' anything. Nevertheless it is a 'window' into the performance of the acquisitions in relation to the rest of the business. Time to finish the exercise.

    SNOOPY
    Last edited by Snoopy; 17-09-2017 at 12:41 PM.
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  8. #1688
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    Quote Originally Posted by Snoopy View Post
    The specific point you raised Winner, was about the acquisitions having a lower profit margin than the existing business. We can work out what the various profit margins were for the first four months of FY2018. Four months probably isn't enough time to bed in the acquisitions. So whatever answer I get doesn't really 'prove' anything. Nevertheless it is a 'window' into the performance of the acquisitions in relation to the rest of the business. Time to finish the exercise.
    The information below is compiled from p17 of the capital raising presentation:

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

    Legacy Business: Net Profit Margin (First Four Months FY2018)

    Note: excluded from the table below are the 'Buy Right Cars' and 'Autosure' acquisitions. Also no adjustment has been made for 'eliminations' and 'corporate costs'.

    Operating Revenue {A} Operating Profit (NPAT) {B} Net Profit Margin {B}/{A}
    Automotive $56.0m $4.4m 7.9%
    Finance $11.3m $3.7m 32.7%
    Insurance $4.0m $0.5m 12.5%
    Debt Management $8.0m $2.0m 25%
    Total $79.3m $10.6m 13.4%

    From my post 1685, 'Autosure' has a profit margin of 12.4% and 'Buy Right Cars' has a profit margin of 4.8%. This is evidence that the net profit margin for the acquisitions is below that of the legacy business. So Winner's assertion looks correct.

    Delve into the net profit margin a bit deeper and you can see that 'Autosure' has a 'net profit margin' very close to that of the existing insurance business. But 'Buy Right Cars' has a net profit margin rather less than existing automotive. Yet IMO, over just four months, it is probably too soon to draw a definitive conclusion.

    SNOOPY
    Last edited by Snoopy; 17-09-2017 at 01:18 PM.
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  9. #1689
    Speedy Az winner69's Avatar
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    Tomorrow is the much looked forward to AGM

    In view of the cap raise will be learn anything new about their future prospects?
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  10. #1690
    percy
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    Quote Originally Posted by winner69 View Post
    Tomorrow is the much looked forward to AGM

    In view of the cap raise will be learn anything new about their future prospects?
    Could be a fun and very interesting meeting.
    Now wish I was going to it.

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