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

[Waltzing]

"pure financial services firm"

but its not as this company handles, touches the product.

Finance has been at the heart of the car industry since when?

http://americanradioworks.publicradio.org/features/americandream/b1.html

[Beagle]

I note that Jarden came out with a 12m target price of $4.42 and Craigs of $4.75 over the last two days.

Mid point of those two figures, about $4.60 makes common sense to me and in the meantime if they pay 24 cps in dividends in FY23 that's a gross yield of 8.77% @ $3.80. I think its fair to say we're being paid very handsomely while we hold and enjoy future growth
Approx 55% is recurring revenue, (finance and insurance) which will grow and be driven off the back of their retail footprint expansion in the years ahead.

[BlackPeter]

Yes they are going to expand into new horizon's and really there is no place this company cant go!!!

Into the wild blue yonder and beyond!!!

https://www.youtube.com/watch?v=2P2WRF3Znsw

Oh dear ... before we all get too excited - lets not forget that at heart this is just a used car dealer with a finance company attached ; They go up with the economic cycles ... and they shall come down with them.

[Muse]

"pure financial services firm"

but its not as this company handles, touches the product.

Finance has been at the heart of the car industry since when?

http://americanradioworks.publicradio.org/features/americandream/b1.html

yeah, that's why I said "TRA isn't a pure financial services firm so this approach will be of less relevance to say heartland, but still an interesting cross check. "

[Rawz]

Hi Winner69 - my updated warranted price to NTA and warranted price to book analysis is below:

Attachment 13844


On a spot price to nta basis, the 'warranted' model says $4.27. But given brokers expect returns on NTA to reduce from 35.6% in FY22 to an average of 30.2% over the next 3 financial years, I did a scenario using that in the framework, and it produces a warranted price of $3.53

I think P/NTA is much more relevant that price to book given the sheer quantum of intangibles on the balance sheet. I prefer looking at net tangible operating assets.

On a pure price to book basis, the warranted price to book approach pumps out $3.12

The theory behind the warranted price to NTA/book is simple...if a book produces a return on equity of (say) 10%, and an investors cost of equity is (say) 9%, the price to book should be 1.11x (10%/9%), all else equal. The formula then adjusts for a stable growth rate that can be expected from the book - the higher the growth the higher the warranted multiple. It's a great approach for valuing banks and other financial institutions (like insurance). It's only semi relevant to TRA given its retail business is the feeder to those later two operations. But still kinda an interesting sense check. I'm confident in my cost of equity calcs but do some sensitivity tables for it and the stable growth rate that gets used. For the stable growth rate I tried to look at it like a pure financial services firm but didn't put much thought into it - hence the sensitivity table.

I note that Jarden came out with a 12m target price of $4.42 and Craigs of $4.75 over the last two days.

Good stuff FM, does this take into account the property sitting on the balance sheet well under market value?

[percy]

Oh dear ... before we all get too excited - lets not forget that at heart this is just a used car dealer with a finance company attached ; They go up with the economic cycles ... and they shall come down with them.

Used car dealer...............Yes,NZ leader.
Finance Company............Yes with a growing number of dealers.
Insurance.......................Yes a growing business.Even HGH's Marac uses them.
Credit Management.........Yes a good earner.
Property........................Yes Yes Yes..Developing their own sites gives them huge margins.Very clever property dealers.
Unrecognised property gains of $18.8m
We have continued to build our portfolio of property over the last seven years and generated unrecognised gains on the seven developed sites of just under $19m or 22c per share over this time and 5.6c per share in the FY22 year alone. Combining the 7 developed sites with the new sites in Rotorua and Nelson along with the 3 committed sites in Napier, Timaru and Tauranga (Tauriko) we have just under $95m worth of property in the portfolio. We also have offers and negotiations under way in East Auckland, Tauranga and Christchurch. We continue to see property ownership as a key strategy that will ensure the long term resilience of the business.

[Muse]

Good stuff FM, does this take into account the property sitting on the balance sheet well under market value?

no - reported balance sheet

Including it would increase NTA, but it would also diminish the returns on NTA/returns on book value of equity. Haven't done the math to see how it would net out, but a in one hand out the other situation

[winner69]

Yes and according to Mr B this was the biggest dog on the planet a couple of yrs ago, Percy stayed staunch like he has with other stocks he owns.

Percy has been a staunch supporter of Turners ..... no doubt about that .....but he has done the beagle thing a couple of times and sold out

Unsure if he's currently a shareholder

[Waltzing]

There are investors here that should perhaps have had careers as professionals as there proficiency seems to be better than some of the broking firms.

[sb9]

Think that road map to $5 is well and truly buried for now, ah well just keep collecting those divvies for now. At today's price yield is 8.5%, not too shabby even under current rising interest rates scenario.