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

[Beagle]

Jeez $2 .....that’s almost half price from last year (needs doubling to get back there)

PEs don’t mean much ....maybe value as a divie stock ....as no growth likely could treat it like a bond. Maybe should price it like a ‘bond’ with an expected 10% pre tax return to compensate for risk (based on performance and even this sunset industry talk)

Was thinking about that too. You know when HLG was really out of favour and retail was like a hot potato that nobody wanted to own and HLG was $2.70 in August 2016. It was paying a gross yield of 15% back then and I commented that the metrics were truly compelling and it must be a buy.
TRA would need to get down to 17 / 0.72 = 23.61 cps gross divvy / 0.15 = $1.57 to be as compelling. Hmmm... Maybe $1.57 is the floor ?

[winner69]

Was thinking about that too. You know when HLG was really out of favour and retail was like a hot potato that nobody wanted to own and HLG was $2.70 in August 2016. It was paying a gross yield of 15% back then and I commented that the metrics were truly compelling and it must be a buy.
TRA would need to get down to 17 / 0.72 = 23.61 cps gross divvy / 0.15 = $1.57 to be as compelling. Hmmm... Maybe $1.57 is the floor ?

That’s pretty close to the $1.60 the phone typed for me the other day ...maybe omens not gremlins

Messages come from unexpected places eh

[BlackPeter]

Jeez $2 .....that’s almost half price from last year (needs doubling to get back there)

PEs don’t mean much ....maybe value as a divie stock ....as no growth likely could treat it like a bond. Maybe should price it like a ‘bond’ with an expected 10% pre tax return to compensate for risk (based on performance and even this sunset industry talk)

Interesting exercise - what would a bond with a return of 10% AFTER tax (cum imputation credits) be worth these days given that the market prices other higher risk bonds (like e.g. NZR010) at currently 4.6%? Maybe this "TRA bond" is currently trading at a more than 50% discount compared to other bonds?

Clearly shows that the market either misprices this share or that it seems to think they won't be able to continue paying the dividend at this level. Question is - how high is the risk really given the current "discount" rates?

And not so sure about the "sunset industry" either ... I know we talked on this thread a lot about the threat of electrical cars ... however - so far this seems to be just that: talk. And if we think about it - electrical cars are not really a threat to their business model ... somebody needs to sell them as well (so - why not Turners?), however self-driving shared vehicles run and maintained by Uber (or whoever else) might be.

On the other hand - looking at NZ's geography - with the exception of Central Auckland I would not think that we have anywhere the required population density to make a vehicle sharing model economical. I can't get an Uber at our place (less than 40 km into Christchurch) ... and if I book currently only twice a month a taxi into town, than I pay already more for the fare than for owning and driving my own car every day.

Which means - as long as people need to buy their own ride with or without combustion engine do I see no reason why Turners could not stay in business. The only thing stopping them would be if they screw up their business by providing bad service or not competitive pricing ... nothing to do with any disruptive technology.

What happened to the people selling carts and horses in the early 1900's? I suppose they replaced the haybarn with a petrol station and started to sell cars with combustion engine ...

[RTM]

That’s pretty close to the $1.60 the phone typed for me the other day ...maybe omens not gremlins

Messages come from unexpected places eh

One thing that this reporting season has again highlighted to me for is the importance of a well diversified portfolio. Yes, one might miss out on the “highs” of an overweighted position in ATM on the valuation of your portfolio, but...it’s nice to have a steady stream of dividends coming in, many of which are increasing year to year. Like Percy I am relying on my market investments to provide dividends for our living expenses. So when a single stock like Turner’s goes South, it really is only affecting 5%, oops...now 4% of my capital. And as long as the dividend is maintained....well, do I really care that much as long as they stay in business ? (the answer is yes, I hate it) Most of of my portfolio positions are in the 3-6 % range, with a few a wee bit higher...but not more than 10%. Yes, I hear some of you say, diworsification at its best....but when something heads south...well, it sure eases the pain.

[peat]

Most likely so read into that what you will, doesn't say much to me as they have shown on many occasions that they are not the smart money.

Yes Note I wasnt saying it was the right thing for them to do, I was more commenting on the affect it will have (is having if it is true) on the share price.
It could go excessively low if they decide to bail at whatever the cost !

[Snoopy]

And not so sure about the "sunset industry" either ... I know we talked on this thread a lot about the threat of electrical cars ... however - so far this seems to be just that: talk. And if we think about it - electrical cars are not really a threat to their business model ... somebody needs to sell them as well (so - why not Turners?), however self-driving shared vehicles run and maintained by Uber (or whoever else) might be.

I think some Turners shareholders might have forgotten that this iteration of 'Turners' is a finance company. They were a car sales business once, back in the old 'Turners Auctions' days. But 'Turners Automotive Group' is actually the old Dorchester with a good lick of paint over the old name.

It is nice for a finance company to have a vertically integrated car sales chain as it provides a useful channel through which to solicit business. But actually 'Turners' could sell off the whole vehicle sales business, after tying up an exclusive finance deal of course, and turn a lot of that goodwill on the balance sheet back into cash and grow the business via 'Oxford Finance' building dental surgeries (we found out at the road show they built one last year). Sunset industry? Show me the day that every kiwi buys all their stuff with cash and I will believe you.

SNOOPY

[couta1]

I think some Turners shareholders might have forgotten that this iteration of 'Turners' is a finance company. They were a car sales business once, back in the old 'Turners Auctions' days. But 'Turners Automotive Group' is actually the old Dorchester with a good lick of paint over the old name.

It is nice for a finance company to have a vertically integrated car sales chain as it provides a useful channel through which to solicit business. But actually 'Turners' could sell off the whole vehicle sales business, after tying up an exclusive finance deal of course, and turn a lot of that goodwill on the balance sheet back into cash and grow the business via 'Oxford Finance' building dental surgeries (we found out at the road show they built one last year). Sunset industry? Show me the day that every kiwi buys all their stuff with cash and I will believe you.

SNOOPY

Yes and Dorchester and Oxford Finance were two of only a very small number of companies in this sector which survived the GFC so definitely made of resilient stuff.

[percy]

I think some Turners shareholders might have forgotten that this iteration of 'Turners' is a finance company. They were a car sales business once, back in the old 'Turners Auctions' days. But 'Turners Automotive Group' is actually the old Dorchester with a good lick of paint over the old name.

It is nice for a finance company to have a vertically integrated car sales chain as it provides a useful channel through which to solicit business. But actually 'Turners' could sell off the whole vehicle sales business, after tying up an exclusive finance deal of course, and turn a lot of that goodwill on the balance sheet back into cash and grow the business via 'Oxford Finance' building dental surgeries (we found out at the road show they built one last year). Sunset industry? Show me the day that every kiwi buys all their stuff with cash and I will believe you.

SNOOPY

Agreed.....
Most probably more than "a lot" of that goodwill.

[Beagle]

Yes trying times for all Turners shareholders including directors who have a lot of skin in the game.
However as we all know NZders love to buy cars [even suspect Holdens]...lol.

Every manufacturer has the odd lemon that comes off the production line not right. Some manufactures like Ferrari xray the castings of each engine to ensure they're cast to specification and produced right but we're not talking Ferrari prices here, this is mass production. The brand new replacement Holden is going fine so far and I see Holden had the third highest number of registrations for 2018 so hardly a tin pot brand that's ignored by the public...but speaking of possible pups, another new multi year low for TRA today...I think I'd rather take my chances putting my money in a new Holden at least there's only a small chance of a pup there lol

ah ooo Werewolves of London.

Speaking of strange things mate. What I find incredibly strange with this one is the absolute paucity of depth on the buy side. This is not a now and again thing, its basically all the time. I would go so far as to say there is no proper market in these securities, buyers just aren't interested. If this is such a bargain as some on here suggest, why aren't buyers lining up left right and centre ? This stock appears to have no institutional support whatsoever and now that Percy and you have finished buying and the buy-back will conclude in due course what hope is there ? Maybe BP will come to the rescue with a private equity buy-out or maybe its a conspiracy and Grant Baker et al wants it to go lower so he and his mates can take it private at a dirt cheap price ?

One thing that this reporting season has again highlighted to me for is the importance of a well diversified portfolio. Yes, one might miss out on the “highs” of an overweighted position in ATM on the valuation of your portfolio, but...it’s nice to have a steady stream of dividends coming in, many of which are increasing year to year. Like Percy I am relying on my market investments to provide dividends for our living expenses. So when a single stock like Turner’s goes South, it really is only affecting 5%, oops...now 4% of my capital. And as long as the dividend is maintained....well, do I really care that much as long as they stay in business ? (the answer is yes, I hate it) Most of of my portfolio positions are in the 3-6 % range, with a few a wee bit higher...but not more than 10%. Yes, I hear some of you say, diworsification at its best....but when something heads south...well, it sure eases the pain.

A very good post that I think some on here should read more than once.

[winner69]

Saw the depth just before the end of day shenagins and though hell’s bell it’s going to close at 220

Phew but it held at 220 ....maybe divine intervention held it up.