CMO - Colonial Motor Company

[macduffy]

However it is worth noting that they have forward currency contracts in Australia, US and Euro. So I'm guessing they source outside Australia already

They sell a lot of Mazdas too, I believe. Do they publish sales figures of individual brands?

Disc. Never held CMO, but often wish I did!

[westerly]

They sell a lot of Mazdas too, I believe. Do they publish sales figures of individual brands?

Disc. Never held CMO, but often wish I did!

They sell Kenworth and DAF trucks , tractors in Southland, and have 12 dealerships selling Ford cars 7 of which sell Mazdas. As ford hve assembly plants in Thailand the loss of Aust. sourced vehicles may not be too bigger deal.
Westerly

[noodles]

Just released 1H14 results...

Up 50% on 1H13. EPS 26.3c

No guidance given, but given recent Ford strength, Fy14 eps should be well over 50c.

[noodles]

http://www.stuff.co.nz/business/indu...as-high-profit

[Lizard]

They are looking great, aren't they noodles? One of the better results reported so far and still cheap here at $5.05 (although maybe difficult to buy!)

[noodles]

They are looking great, aren't they noodles? One of the better results reported so far and still cheap here at $5.05 (although maybe difficult to buy!)

The result beat my expectations. They usually have a weaker 1st half. This was stronger than 2H13. During 2H13, Ford sales were negative YOY.

So looking forward, with Ford sales up 59% in Jan, we could easily see 50% profit growth on the 2H13 result as well.

This would translate to eps of 26.6(1h14) plus 37.3(2H14) = 63.9c (FY14)

Even after the recent rise(sp 5.05 at time of writing), that puts CMO on forecast FY14 pe of just 7.9.

My target pe on this stock is 13. Therefore my target is 8.30

If it reaches my target, I may be able to buy one of the Ford Rangers.

WARNING: These estimates are purely based on historical profit growth. This is not a recommendation to BUY. DYOR

[Lizard]

Thanks noodles. I'm a bit more conservative than you - only working on $6.50 as value for now, but there are not many companies trading below my valuations at present.

Also, strong balance sheet and good yield at 6.73% plus imputation - good for a long term hold.

[noodles]

Thanks noodles. I'm a bit more conservative than you - only working on $6.50 as value for now, but there are not many companies trading below my valuations at present.

Also, strong balance sheet and good yield at 6.73% plus imputation - good for a long term hold.

I can see them paying a 40c div this year (based on last years % of profits). That's a 10.8% gross yield.

[Snoopy]

Thanks Snoop. If your time frame is 3-5 years is right, I guess it gives time to rearrange the deck chairs on the Titanic.

Jonu, the question I answered was what I believed would be the effect of the closure of Australian vehicle manufacturing. I don’t think Ford, and by implication CMO, is going down in 3-5 years. There is certainly time to rearrange things!

The Ford Ranger Utility vehicle range for example, from Thailand, is a huge hit, which is purportedly giving Toyota with their Hi-Lux, a real run in the light commercial market. Although, I do note that much of the design work on the Ford Ranger was actually done by Ford’s engineering staff in Australia! I guess the ongoing unrest in Thailand is a worry for the medium term. The use of Thailand as a source of vehicles for the Pacific is helped by free trade arrangements between Thailand and NZ/Australia. For Ford fans, I guess they are hoping the blue shirts will ultimately pacify those militant red shirts! Other emerging pacific rim Asian nations will no doubt come on stream as an alternative lower cost vehicle production sites.

Cost and quality hurdles are there for all car brands. These hurdles are certainly jumpable by Ford, looking three to five years out. The problem I have with the loss of Falcon and Territory is that Ford will be losing their two ‘halo’ vehicles down under. A ‘halo vehicle’ is something that buyers want to buy over and above any objectively comparative product. A halo vehicle has to earn its halo, with a story. That story could include a motor sport heritage. It could be something to do with ‘little old Australia’ able to produce a home grown world-class vehicle, teaching the might of Europe, the United States and Japan a lesson in the process. Longevity itself can create loyalty. The Falcon badge is one of the longest running in the automotive world. There are Falcon families out there where granddad, dad and grandson have only ever owned Ford Falcons.

In purely objective terms a Ford Mondeo is probably a cheaper to manufacture more economical better engineered vehicle than a Ford Falcon that will deliver a cheaper better product for the consumer. But who ever grew up wanting to buy a Ford Mondeo? A halo product can attract a premium price. I am not sure that Ford fully appreciates what they are killing off here.

SNOOPY

[noodles]

Some good news coming out of the sector
http://www.radionz.co.nz/national/pr...n-june-quarter
http://www.mia.org.nz/news.asp

CMO report on Wednesday. Ford sales are up 15% on the previous half year. While they now sell a lot more than Ford, I have high expectations for the result. I'll also be interested to know how the purchase of the 4 BMW dealerships will impact earnings for FY15.