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  1. #11
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    I own some ... I have alway struggled with a valuation methodology (are they an automotive company, are they a property company; is it really an equity investment, is it a type of fixed interest pref).

    However, with the yield and commercial property backed NTA ... I don't struggle too hard.
    Do not consider my postings as investment advice. I am here to share research and to speculate on what might be. The boundary between fact and conjecture might not always be clear - best to treat all comments as speculation.

  2. #12
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    Quote Originally Posted by Enumerate View Post
    I own some ... I have alway struggled with a valuation methodology (are they an automotive company, are they a property company; is it really an equity investment, is it a type of fixed interest pref).

    However, with the yield and commercial property backed NTA ... I don't struggle too hard.

    To judge the relative worth of investments, I always think it is worth looking around at the alternatives. The car market has never been more dynamic. In the next few years, who knows whether Toyota, Hyundai, Ford or even former bankrupt GM will emerge with the leading market position in this country? However, there is one NZX auto market investment you can make where you don’t have to second guess which way the market will go: Turners Auctions.

    Turners are the only nationwide sales network that deals in all makes and models. In recent years TUA have recovered from the delusion that they could take the West Coast of the United States by storm. They have weeded out fraud in their senior management with new procedural systems. And they have got back to their basics: the NZ pre-owned vehicle market. TUA are probably one of the dullest investments on the NZX you can make. Yet being boring is often a flag to me of an under the radar investment opportunity.

    Unlike Colonial, Turners have sold and leased back their premises. There is no property to add comfort to a TUA investment. However, I would question some of that Colonial Property value. A property only has contestable value equal to its best alternative use. I am not sure if aging ex car showrooms have a great alternative value. Alternative car franchises tend to bulldoze and rebuild when setting up a new car sales franchise. And it is doubtful that Ford would let a significant part of its dealer network disappear off to a competitor anyway. IMO the break up value of CMO is a moot issue. The underlying Ford dealer land certainly has value though.

    Ironically while Brierley couldn’t unlock any hidden value that might have existed within Colonial, he is almost certainly going to be responsible for unearthing any hidden value that exists at TUA. This is thanks to Brierley’s vehicle GPG, which is in the process of being broken up, holding a strategic (19.4%) stake in TUA.

    According to some newspaper summaries, TUA has the highest gross dividend yield of any share on the NZX. In fact this is an historical distortion, because of a 6cps bonus special dividend paid out on 7th April 2011. Even so at $1.37, TUA is on an historic normalized dividend (11cps) gross yield of 11.5%. Pretty useful.

    In summary, what is wrong with CMO as an income investment proposition? In the grand scheme of things not much. But why would you invest when there is an alternative out there which is just that bit more attractive?

    SNOOPY
    Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7

  3. #13
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    Be int to know what % of the car market Trade Me controls,surely a threat to Turners.

  4. #14
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    A property only has contestable value equal to its best alternative use. I am not sure if aging ex car showrooms have a great alternative value.
    I don't think the value lies in the buildings though. I don't know what values CMC shows in its books for properties but if their Taranaki St, Wellington property is typical, it's the land, and its location - largely utilised for the used car yard - where the real value lies.

    Disc: Not holding CMC.

  5. #15
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    Market update the other day did not cause much interest, but worth a note:
    On 20 February 2012, when the board announced the company’s result for the six months to 31 December 2011, we commented that we did not expect the result for the next six months to be as good. Trading in the second half of the year has been better than we anticipated when we made this comment.
    If they match first half as implied, they'd be looking at somewhere near $12m NPAT in trading profits, or about 50% increase over prior year. Maybe forward PE of 8.5 at offer of $3.15 per share. A good chance of an increase to the dividend to a yield of around 7% plus imputation.

  6. #16
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    Quote Originally Posted by Lizard View Post
    If they match first half as implied, they'd be looking at somewhere near $12m NPAT in trading profits, or about 50% increase over prior year. Maybe forward PE of 8.5 at offer of $3.15 per share. A good chance of an increase to the dividend to a yield of around 7% plus imputation.
    The share price has made a good gain from the start of the year, up from around $2.65 to $3.15. Maybe sales in the second half in line for an Ecoboost? Read one article saying it is the Falcon that should have been when the current model was released.

    Mind you Turners Auctions are up a similar percentage amount over the same time period. So it might just be a 'motor industry' thing.

    SNOOPY
    Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7

  7. #17
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    Came in pretty close to that $12m NPAT at $11.83m trading NPAT. Balance sheet and cashflows not all that well laid out, so difficult to be sure on net debt, but think it has reduced. Sale of the Porirua site this year is likely to further improve cash position. Dividend up to 25cps on share price of $3.45.

    All in all, a great result. There aren't too many clues to outlook, although strong sales in the June quarter probably bode well for the start to first half 2013. I'd expect them to head towards the $4 - $4.20 range over next 9 months.

  8. #18
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    Great result from CMO out yesterday at $14.80m NPAT. Debt has increased though due to $16m increase in working capital combined with dividend payouts.

    Still paying a great div, with total annual div of 30cps + imputation on current $4.50 share
    price.

    Not a lot of insight on outlook, but general undertone seemed positive and has been a well-run operation in recent years.

    (Just re-read my last post a year ago and I said something very similar then)
    Last edited by Lizard; 21-08-2013 at 06:12 AM.

  9. #19
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    Quote Originally Posted by Lizard View Post
    Great result from CMO out yesterday at $14.80m NPAT. Debt has increased though due to $16m increase in working capital combined with dividend payouts.

    Still paying a great div, with total annual div of 30cps + imputation on current $4.50 share
    price.

    Not a lot of insight on outlook, but general undertone seemed positive and has been a well-run operation in recent years.

    (Just re-read my last post a year ago and I said something very similar then)
    I agree. Their 2nd half operating profit was 8132 (or 25c per share). Annualise that and you get eps of 50c. That puts CMO on a pe of less than 10 with a dividend yield to envy.

  10. #20
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    MTA stats out this week. New Fords are up 59%! As CMO owns mostly Ford dealerships, this should bode well for FY14 earnings.

    http://www.mta.org.nz/f3758,125880/1...tats_Jan14.pdf

    I am eagerly awaiting 1H14 results in the next few days. Hopefully it will be as good as TUA.

    I'm holding CMO.
    No advice here. Just banter. DYOR

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