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

[Louloubell]

Investor presentation out today shows the ship is continuing to sail well. Matching last year's record profit, nice and reliable divvies, low pe, and a rising market share. Turners is not a cyclical business and largely recession proof. Close to 20% of my portfolio and a happy holder.

[Rawz]

Investor presentation out today shows the ship is continuing to sail well. Matching last year's record profit, nice and reliable divvies, low pe, and a rising market share. Turners is not a cyclical business and largely recession proof. Close to 20% of my portfolio and a happy holder.

SAme, my top holding and happy with it as top in these times.

here is the link https://www.nzx.com/announcements/411163

Interesting on page 5 under the 'Overview of Turners Group' they note in a box that they are the 54th largest company on the NZX by free float... must be targeting top 50 at some stage aye. Its a question of when not if in my mind

[Rawz]

Key Messages (from the preso):

1.Continue to produce robust and reliable earnings, despite macro challenges Following a number of strategic initiatives, and focus on de-risking, Turners continues to produce reliable and consistent earnings and a sustainable dividend yield. Auto and Insurance are growing strongly offsetting the impact of the interest rate environment on Finance.

2.Continue to grow market share in key auto retail segment With more branches in the pipeline, customers turning to “trusted” brands in times of uncertainty and a diversified sourcing model Turners is well positioned to widen its competitive moat in the used vehicle segment.

3.Used car market is mostly needs based…lots of market resilience in this segment 20% of NZ vehicle fleet is 20 years or older…this is over 830,000 cars that are at the end of their life.

4.We are very conscious of NZ and global economic challenges over the next 12-24 months We are aware of the challenges and still have clear plans to mitigate these. We still see opportunities in the markets we operate in, and are well positioned to take advantage of these. The strong will get stronger.

[Muse]

Said it before and I'll say it again - TRA is a blue chip business and a high quality stock.

[BlackPeter]

Said it before and I'll say it again - TRA is a blue chip business and a high quality stock.

From investopedia:

What Is a Blue Chip?
A blue chip is a nationally or internationally recognized, well-established, and financially sound company that is publicly traded. Blue chips generally sell high-quality, widely accepted products and services.

Blue chip companies have reputable brands that have been built and maintained over many years. That and the fact that they have weathered multiple downturns in the economy make them stable companies to have in a portfolio.

Blue chip companies operate profitably despite adverse economic conditions, which helps to contribute to their long records of stable and reliable growth.

Actually - I realise many people in this thread love TRA, and I, while not in love with them, do respect their management. Their board is a different point of discussion, though.

Anyway - "blue chip" appears a bit over the top, isn't it? - I guess after all - they are a used car dealer with their own finance company, and they nearly did bite the dust in the last big downturn (at that stage still called "Dorchester Pacific" and destroying hundreds of millions of shareholder value - though, yes, they survived by running a hotel. Flexible they clearly are ...).

But Blue Chip? - Is this like "World Famous in New Zealand"?

[Muse]

Yes I appreciate the irony of it being centred around used car sales and my view of it. Blue chip might be a smidge generous in that respect (IE not in the same externally viewed esteem as the likes of EBO, SKL, FPH etc) but I do believe its got a fit for purpose business model (integrated across dealership, finance, insurance, debt collection, with the best sourcing model in NZ, leading marketing, and property portfolio and site development programme) and a growing footprint allowing it to take share, management alignment with shareholders, focus on profitability and dividend distribution evidenced by being one of the few companies to make quarterly distributions, etc. So I retain my view that its a high quality stock and a high quality business, and am happily able to look through the 'used car veneer' into the underlying business and financial characteristics of the business.

But re your investopedia definition:
1) TRA have a dominant national position and brand within the used car segment
2) It has high customer satisfaction and sells widely accepted products and services
3) It does have a good and reputable brand that has been built and maintained over many years - has made great strides in developing the Turners Automotive brand over the last 5 years
4) It is operating very well despite adverse economic conditions (record year profits in FY23)

Seems like a tick against most of them?

[Jonette]

Yes I appreciate the irony of it being centred around used car sales and my view of it. Blue chip might be a smidge generous in that respect (IE not in the same externally viewed esteem as the likes of EBO, SKL, FPH etc) but I do believe its got a fit for purpose business model (integrated across dealership, finance, insurance, debt collection, with the best sourcing model in NZ, leading marketing, and property portfolio and site development programme) and a growing footprint allowing it to take share, management alignment with shareholders, focus on profitability and dividend distribution evidenced by being one of the few companies to make quarterly distributions, etc. So I retain my view that its a high quality stock and a high quality business, and am happily able to look through the 'used car veneer' into the underlying business and financial characteristics of the business.

But re your investopedia definition:
1) TRA have a dominant national position and brand within the used car segment
2) It has high customer satisfaction and sells widely accepted products and services
3) It does have a good and reputable brand that has been built and maintained over many years - has made great strides in developing the Turners Automotive brand over the last 5 years
4) It is operating very well despite adverse economic conditions (record year profits in FY23)

Seems like a tick against most of them?

Agree.

However I would put it differently in "fit for purpose" Yes they are, but it is more than that, each business supports the other businesses in their portfolio. ie it is an excellent example of running an "Ecosystem" of selling and supporting car ownership, including their new subscription business.

Note the release is clearly to allow Todd Hunter to comment more freely in his presentation/involvement in the NZX Virtual Investor event he is scheduled for in 10 minutes

[Rawz]

NZX Virtual Investor event he is scheduled for in 10 minutes

can someone please share the link for this?

[Muse]

can someone please share the link for this?

https://register.gotowebinar.com/register/7364748116393408861

[BlackPeter]

Yes I appreciate the irony of it being centred around used car sales and my view of it. Blue chip might be a smidge generous in that respect (IE not in the same externally viewed esteem as the likes of EBO, SKL, FPH etc) but I do believe its got a fit for purpose business model (integrated across dealership, finance, insurance, debt collection, with the best sourcing model in NZ, leading marketing, and property portfolio and site development programme) and a growing footprint allowing it to take share, management alignment with shareholders, focus on profitability and dividend distribution evidenced by being one of the few companies to make quarterly distributions, etc. So I retain my view that its a high quality stock and a high quality business, and am happily able to look through the 'used car veneer' into the underlying business and financial characteristics of the business.

But re your investopedia definition:
1) TRA have a dominant national position and brand within the used car segment
2) It has high customer satisfaction and sells widely accepted products and services
3) It does have a good and reputable brand that has been built and maintained over many years - has made great strides in developing the Turners Automotive brand over the last 5 years
4) It is operating very well despite adverse economic conditions (record year profits in FY23)

Seems like a tick against most of them?

Are you really sure about your ticks?

1) TRA have a dominant national position and brand within the used car segment

Last time I checked they had less than 10% of the market. They might be one of the bigger used car dealers - but dominant is something different.

2) It has high customer satisfaction and sells widely accepted products and services

Is this really true? Re customer satisfaction ... If you check their google reviews - they are at best a mixed bag. Not sure what widely accepted products and services means - yes, NZ is a country where its widely accepted to buy used cars (instead of new ones), but this has nothing to do with TRA.

3) It does have a good and reputable brand that has been built and maintained over many years - has made great strides in developing the Turners Automotive brand over the last 5 years

Not quite sure, how you measure that. Do you just go based on the company presentations? I can't remember that they feature as top dealer in the consumer magazine and I can't remember any of my acquaintances recommending to buy there.

If I am on the market - their cars never made it even on my shortlist, and the couple of times I went there just to see what people on this thread are raving about, I was disappointed and again - they never made it so far that I even wanted to test drive any of the cars I've seen there.

4) It is operating very well despite adverse economic conditions (record year profits in FY23)

True - last year (or couple of years) have been good for them economically (as for many other car dealers - have a look at CMO) -- but this was the Covid boom. In my view a bit thin a criterium to call them a "blue chip" ...

But anyway - no worries - I wish you luck.