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  1. #4006
    Legend minimoke's Avatar
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    Quote Originally Posted by couta1 View Post
    Goes Ex divvy on Monday, no one gives a toss about it by the looks of the SP, should just stay the same after the divvy comes off in that case.
    I' hoping so - only way I'm going to recover my capital loss is if SP holds up.

  2. #4007
    percy
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    Quote Originally Posted by greater fool View Post
    Snoops; the insurance float is the property developer. You will find the 'profits' booked to the insurance business.
    Look at AR (to 31Mar18 ), top of page 7, to read all about it;

    "We have continued to build our investment into property,
    with the aim of securing strategic sites to extend our footprint
    or for reconfiguration of existing sites to drive improved retail
    experience for further growth. We have allocated a proportion
    of insurance reserves to support this property strategy as
    it achieves better utilisation of capital in the business, and
    improved insurance division returns."
    Makes very good sense.
    With site developments planned over the next 5 years,insurance division is "well positioned."
    Last edited by percy; 18-01-2019 at 04:09 PM.

  3. #4008
    ShareTrader Legend Beagle's Avatar
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    This signing up for long leases with expensive minimum annual rent adjustments (which really compound and catch up with you in the future) and on-sale for a profit is not a new trick by any means and has been used by "highly successful" companies in recent times like the Warehouse and PGG Wrightson. All you are doing is making your accounts look artificially good for now and effectively handicapping future profits. In my opinion Snoopy is dead right to adjust these profits out which leaves the company with quite modest true sustainable eps. I am sure others will have a different interpretation of this creative approach and that's fine.
    Here's some more 2019 motor vehicle PE's to further illustrate my point made earlier, mainstream Japanese manufacturers this time
    Honda 7.8
    Mazda 8.5
    Motor vehicle manufacturing, sales and distribution is not a high PE business, its a low PE cyclical business in very gradual long term systemic decline.
    Last edited by Beagle; 18-01-2019 at 04:40 PM.
    No butts, hold no mutts, (unless they're the furry variety).

  4. #4009
    percy
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    Makes great sense to me.
    Get the site they want and can put the buildings they want.
    Most landlords want their site covered in buildings.This does not suit Turners,who require only small amount of land for office etc,and most of a site for displaying vehicles.
    Once Turners have developed a site they know the rent that site will afford,and can then decide to hold or sell..
    The Wiri site I doubt they will sell.
    Other sites such as ChCh, where they are not in agreement with the landlord,they can either foccus the landlord's atention ,or develop their own site.
    It is called independence.
    And why should they fatten a developer's pocket?
    Might just as well "clip the ticket" themselves.
    Last edited by percy; 18-01-2019 at 04:30 PM.

  5. #4010
    Legend
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    Quote Originally Posted by greater fool View Post
    Snoops; the insurance float is the property developer. You will find the 'profits' booked to the insurance business.
    Look at AR (to 31Mar18 ), top of page 7, to read all about it;

    "We have continued to build our investment into property,
    with the aim of securing strategic sites to extend our footprint
    or for reconfiguration of existing sites to drive improved retail
    experience for further growth. We have allocated a proportion
    of insurance reserves to support this property strategy as
    it achieves better utilisation of capital in the business, and
    improved insurance division returns."
    I saw that Greater Fool. Not saying you are wrong, although you might be. But I interpreted that paragraph differently. Instead of using a bank loan to develop a site, Turners are using insurance float money. They pay the insurance division a fixed interest return on that money while the site is being developed. Then the site is sold to a third party and the insurance division get their capital float back with interest: A lot more interest than they would have got had they plonked their float money in a bank account. But Turners shareholders are banking the development profit, not insurance policy holders! I don't believe the insurance division has any more involvement with the property after that.

    SNOOPY
    Last edited by Snoopy; 18-01-2019 at 07:04 PM.
    To be free or not to be free. That is the cash-flow question....

  6. #4011
    percy
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    The profit from the sale of the Roscommon Road property was booked by the insurance division.
    Therefore I take it was owned by that division.

  7. #4012
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    Quote Originally Posted by percy View Post
    The profit from the sale of the Roscommon Road property was booked by the insurance division.
    Therefore I take it was owned by that division.
    Thanks for that Percy.

    From the Argosy HY2019 interim result in November 2018.

    "Argosy also acquired a freehold 15,838 sqm industrial yard in September on Roscommon Road, Wiri for $8.6 million. The site is leased to NZX listed Turners Automotive Group on a 15-year lease, providing a holding return of 5% with fixed reviews of 2.5% per annum, with a market review in year six."

    I couldn't find a link/ news release referencing the Turners side of the deal. Do you have one? If the profits were indeed booked by the insurance division, do we Turners shareholders get to keep the any capital float left after all the insurance obligations have been paid out?

    SNOOPY
    Last edited by Snoopy; 18-01-2019 at 07:17 PM.
    To be free or not to be free. That is the cash-flow question....

  8. #4013
    percy
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    This was dicussed on the Argosy thread.The only announcement was Argosy's,none from Turners.
    I think they do it to confuse you..lol.
    Fun was had as Turners owned two properties on Roscommon Road,and we got mixed up by thinking there was only one property Turners owned on that road.I blame Beagle....lol.
    The other site is a corner site,that they developed.Fantastic position for their trucks and equipment sales.
    This new site they paid $6.8mil for,and my guess they would not sell it for twice that amount.

    The second part of you post.Offcourse we do.!
    Last edited by percy; 18-01-2019 at 07:30 PM.

  9. #4014
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    Default What happens in a tough market?

    Quote Originally Posted by BlackPeter View Post
    I think your (beagle's) view is absolutely legitimate - and sure, if TRA's strategy doesn't work out and they always stay a boring old used car dealer without any noticable additional income from insurance, finance, maintenance, end-of-life business and property development than, yes - longterm an average PE of around 10 might be quite appropriate. But isn't their income from all these other "branches" growing?
    I have long been concerned about the reverse of the 'clip the ticket' effect. While things are going well, all the different divisions get to 'clip the ticket' in a growth spiral. But when things are not going so well, do all the divisions miss 'clipping the ticket' in a contraction spiral?

    The downturn in the car market that has affected Auckland and the figures thrown up by that shed some light on this question.

    Division HY2019 HY2018 Change FY2017 HY2017e
    Automotive Retail EBT {A} $8.013m $8.771m -8.64%
    Automotive Retail Revenue {B} $112.765m $115.694m -1.49%
    Automotive Retail EBT Margin {A}/{B} 7.11% 7.58%
    Inventory $42.877m $42.143m +1.74%
    Finance EBT {C} $5.423m $5.537m -2.06%
    Finance Revenue {D} $25.564m $17.791m +21.2%
    Finance EBT Margin {C}/{D} 21.2%% 31.1%
    Insurance EBT {E} $6,414m $2,627m +154%
    Insurance Revenue {F} $25.669m $22.369m +14.7%
    Insurance EBT Margin {E}/{F} 25.0% 11.7%
    Autosure EBT $5.426m/0.72 $3.768m
    Autosure Revenue $34.300m $17.150m
    Autosure EBT Margin 22.0% 22.0%
    Collection EBT {G} $3.076m $3.413m -9.87%
    Collection Revenue {H} $9.249m $10.189m -9.23%
    Collection EBT Margin {G}/{H} 33.2%% 33.5%

    The increasingly tough Auckland market has barely affected overall car sales revenue. So Turners are still able to shift nearly as many cars as before. But the operating profit on car sales is hurting. Inventory is slightly up on the prior comparative period (pcp). But 1.7% is near margin of error stuff. Divided by the number of branches now open, with new branches in Wellington City and New Plymouth and Hamilton, the number of stock per premises may even be down. The new Turners branches plus the new 'Buy Right Cars' branch in Hamilton is evidence of Turners growing market share in a tight market.

    Meantime in Finance, revenue is up strongly even as car sales are static. Part of this could be the new dealers outside of Turners ownership who are plugged in to Oxford Finance, those 150 new originators that Percy keeps referring to. But not all Oxford Finance is car finance. It is possible that Oxford are taking on more consumer loans as the big banks tighten their lending criteria.

    Insurance is up strongly with both profit and revenue. The purchase of 'Autosure' was settled on 31st March 2017, which is Turner's balance date. So FY2018 was the first year that 'Autosure', extended mechanical warranty insurance, became part of the Turners Automotive Group. We must also remember that Insurance includes a likely $6m in premiums relating to Life insurance, completely unrelated to Automotive sales activity. We heard at the roadshow how the payout ratio on European brand cars with Autosure policies was generally much higher than those of Japanese origin. And that Turners would be adjusting their Autosure premium pricing to reflect this. That change, plus better integration with the finance operation are likely largely responsible for the hugely improved performance of the insurance division.

    When faced with a downturn it is tempting to suggest that Sales, Finance and Insurance will suffer together. But this assumption is assuming that all three divisional sales already reflect maximum integration efficiencies across the whole group. This is far from the truth as the half yearly pcp comparisons show. We can also expect that retail stocking rates will now be closely monitored to ensure that excess inventory, or the wrong type of inventory does not stick around. I would be expecting a slight uptick in car sales profitability going forwards, even if car sales shrink from here, as a result of better matching inventory to market.

    The EC Credit side of the business shows a remarkably consistent margin even though revenue has fallen. This is because EC Credit is not an asset rich business to run and wage inflation can be offset by increasing automation. EC Credit is going along its own path with significant expansion planned in Australia. This is uncorrelated with the NZ car sales market, and we shareholders can realistically hope for better things from EC Credit.

    Overall then, I see far from a gloomy picture. The benefits of a fully integrated business in NZ are, I believe, yet to be fully seen. I have plenty of optimism that these improvements will offset any short term retail downturn. The share buyback will help improve the eps situation after years of dilution. And Turners have the ability to quickly turn inventory into cash if there are ever any parent bank debt issues to address. Has the share price reached a bottom? Mr Market always has the last word on that! But I have some cash available for some fresh 'bottom picking' if the share price moves lower.

    SNOOPY
    Last edited by Snoopy; 19-01-2019 at 03:27 PM.
    To be free or not to be free. That is the cash-flow question....

  10. #4015
    Legend
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    Quote Originally Posted by percy View Post
    This was dicussed on the Argosy thread.The only announcement was Argosy's,none from Turners.
    I think they do it to confuse you..lol.
    Fun was had as Turners owned two properties on Roscommon Road.
    The other site is a corner site,that they developed.Fantastic position for their trucks and equipment sales.
    This new site they paid $6.8mil for,and my guess they would not sell it for twice that amount.
    Does not the fact that the profits were booked for Turners shareholders, and not Insurance policy holders, suggest that it is we the shareholders that benefitted from the Roscommon Road property redevelopment?

    SNOOPY
    Last edited by Snoopy; 18-01-2019 at 07:29 PM.
    To be free or not to be free. That is the cash-flow question....

  11. #4016
    percy
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    Correct.....

  12. #4017
    percy
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    Quote Originally Posted by Snoopy View Post
    I have long been concerned about the reverse of the 'clip the ticket' effect. While things are going well, all the different divisions get to 'clip the ticket' in a growth spiral. But when things are not going so well, do all the divisions miss 'clipping the ticket' in a contraction spiral?

    The downturn in the car market that has affected Auckland and the figures thrown up by that shed some light on this question.

    Division HY2018 HY2017 Change
    Automotive Retail Revenue $112.765m $115.694m -1.49%
    150 new originators added in the 1st half alone.
    OK these are not Turners vechicle sales,but these originators are "selling" Turner's owned Oxford Finance loans, and most probably these borrowers took out Turner's owned Autosure policies.[Two "tickets"].
    Not long ago Turners announced another insurance company are using Turners for their end of life logistics and sales.Therefore that "ticket" is getting bigger too.
    So where are we.?
    Turners property division working on ChCh and Auckland and possibly other developments.
    Turners and BuyRight vehicle sales in Auckland are most probably down.
    BuyRight Cars in Hamilton last reported to be trading ahead of budget.
    Turners vehicle sales for the rest of the country,we do not know,yet two more sites added recently..
    Oxford Finance,with Turners themselves putting more their way,about $5mil a month, I last heard [rather than through MTF]together with the 150 extra new originators.Could be well up,could be down.
    Autosure.As above with more originators could be up,could be down.
    Vehicle Sevice ticket.New,I expect it will start as a small "ticket".
    End of Life vehicles.Certainly looking to be well up."Big ticket".
    EC Credit.Unsure.
    Last edited by percy; 18-01-2019 at 08:51 PM.

  13. #4018
    An Awesome Cool Cat winner69's Avatar
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    TRA chart sees price getting close to the 50MA

    The other day somebody told me he follows the 48MA .....said it gives him a two day head start on the mob.
    “In a roaring bull market, knowledge is superfluous and experience is a handicap.”

    –Benjamin Graham”

  14. #4019
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    Wonder if Turners will ever be part of a Tinder like thing for car sales .....

    https://www.businessnewsaus.com.au/a...d=%5BUNIQID%5D
    Last edited by winner69; 19-01-2019 at 08:45 AM.
    “In a roaring bull market, knowledge is superfluous and experience is a handicap.”

    –Benjamin Graham”

  15. #4020
    An Awesome Cool Cat winner69's Avatar
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    I feel honoured .....just got a message saying Porirua and Wellington yards will be open Monday even though a public holiday

    As a shareholder pleased my staff are clipping tickets on a public holiday ...hope they are busy as
    “In a roaring bull market, knowledge is superfluous and experience is a handicap.”

    –Benjamin Graham”

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