CMO - Colonial Motor Company

[Beagle]

CMO's foray into Euro cars is not proving successful. It's a different paradigm than selling Trucks and Ford's. Not one person on the Board has any Euro experience. Who would set up Euro brands in South Auckland ? Time to freshen up the Board boys.... the next couple of years will need a new set of skills.

Yes I agree with that. Sime Darby that own Jerry Clayton BMW and a whole host of other Euro brands have been restructured more times than I've had hot dinners this week, (which shows its not easy), and as the established payers they already have a good hold on the best staff that are required to execute European vehicle sales. I'm something of a curious car consumer having owned a Mercedes and Ford, (now Chrysler SRT8), at the same time for many years. Coutts Cars (Mercedes-Benz) and Jerry Clayton (BMW) have their stuff fairly well sorted....the less said about the standard of after sales service at Ford dealers the better. (Just find a good local mechanic to fix your Ford is the best advice I can give). The currency dropping won't help CMO's cause and neither will the consumer and business confidence plumbing multi year lows. Not really the sort of environment dairy farmers and other customers go rushing out to buy a new vehicle is it !! Stock is now in a downtrend and looks cheap from a PE perspective but I think its a classic value trap. Avoid.

[Plutus]

Yes I agree with that. Sime Darby that own Jerry Clayton BMW and a whole host of other Euro brands have been restructured more times than I've had hot dinners this week, (which shows its not easy), and as the established payers they already have a good hold on the best staff that are required to execute European vehicle sales. I'm something of a curious car consumer having owned a Mercedes and Ford, (now Chrysler SRT8), at the same time for many years. Coutts Cars (Mercedes-Benz) and Jerry Clayton (BMW) have their stuff fairly well sorted....the less said about the standard of after sales service at Ford dealers the better. (Just find a good local mechanic to fix your Ford is the best advice I can give). The currency dropping won't help CMO's cause and neither will the consumer and business confidence plumbing multi year lows. Not really the sort of environment dairy farmers and other customers go rushing out to buy a new vehicle is it !! Stock is now in a downtrend and looks cheap from a PE perspective but I think its a classic value trap. Avoid.

Interesting comment re Sime Darby - I was a Continental Cars customer for a long time, but now go to Giltraps for much better service. I counted up how many brands Sime Darby have lost in the last few years - let me see if I get this right... Skoda, Fiat, Alfa Romeo, Chrysler, Jeep, Dodge, Maserati, Suzuki and read yesterday they have walked away from Peugeot and Citroen in Greenlane as well. They had Kia too at one stage I think. If car retailers can't make it work in the record sales years 2014 and 2015, god help them in 2016 and 2017. Agree, avoid motor retail for the next year at least.

[blackcap]

Trucking along, (pardon the pun) so to see.... happy to be a holder of this not so sexy but well performing company....

HALFYR: CMO: Half year report & results 04:09p.m.
CMO
19/02/2016 16:09
HALFYR
PRICE SENSITIVE
REL: 1609 HRS The Colonial Motor Company Limited

HALFYR: CMO: Half year report & results

Results for announcement to the market
Name of listed issuer The Colonial Motor Company Limited
Reporting period Six months to 31 December 2015
Corresponding reporting period Six months to 31 December 2014

This report has been prepared in a manner which complies with New Zealand
equivalents to International Financial Reporting Standards and gives a true
and fair view of the matters to which the report relates.

This report is based on unaudited financial statements.

Consolidated Statement of Financial Performance
Current half year " Up/(down) " Previous corresponding period $
million % $ million
Trading revenue $438.784 7.1% $409.665
Total operating revenue $438.989 7.0% $410.446
Operating profit $13.844 8.8% $12.730
Adjustments to value of property & investments $1.072 - $-
Net profit before tax $14.916 17.2% $12.730
Taxation $3.794 1.6 $3.735
Profit after tax $11.122 23.6% $8.995

Net profit for period attributable to shareholders $10.572 25.3%
$8.440
Profit attributable to Non-controlling Interest $0.550 (0.9)%
$0.555
Profit for the period $11.122 23.6% $8.995

Basic earnings per share (cents per share) 32.3 cps 25.2% 25.8
cps
Diluted earnings per share (cents per share) 32.3 cps 25.2% 25.8
cps
Net tangible assets per share $4.61 8.0% $4.27

INTERIM DIVIDEND
Fully-imputed dividend cents per share 13.000
Imputation credit cents per share 5.056
Supplementary dividend (where applicable) 2.294
Payment date 18 April 2016
Record date 08 April 2016

The Directors are pleased to advise you of the unaudited results for the six
months ended 31 December 2015. The trading profit after tax is a record high
for the first half of the year at $9.429m. It exceeds our previous record in
2013 by 10%.

The second half of calendar 2015 was a national record six months for new
vehicle registrations, up 4% on the first half of the year. While much of
the industry growth was driven by rentals, our dealerships benefited from a
desirable mix of in demand vehicles. The Ford Ranger, a light commercial,
was the top selling vehicle for the full year, and Mazda sold over 10,000
vehicles for the first time. Our dealerships benefited from the strong
market, with increased volumes flowing into trading profit after tax. There
was a distinct lift in the December quarter. The first quarter to September,
as reported at the AGM on 6 November, was tracking close to the previous
year, 2014, and below the record 2013 year. The lift came from new vehicles
and a late recovery in tractors. Southpac Trucks had another strong six
months, despite a slightly smaller heavy truck market.

Total profit for the period, at $11.122m benefited from the strong trading
profit, plus a $1.072m realised gain on the sale of the Taranaki Street
property. This is the difference between the carrying value and the sale
price of the property. The sale was settled on 1 September 2015.

There has been a change of accounting policy for new vehicle bailment
inventory to align with international industry practice. Previously new Ford
and Mazda inventory, financed by a bailment agreement, was shown by way of a
note to the accounts. Bailment stock and the associated vehicle floorplan
finance liability are now shown on the balance sheet. The accounts for the
previous periods have also been adjusted, and the impact of the change is
shown in Note 3 to the accounts.

In January 2016, South Auckland Motors new airport service facility at
Timberly Road opened for business. South Auckland Motors has its main sales
and service facility at Manukau, a full sales and service branch at Pukekohe
and service only facilities at Botany and now at the airport, and is now
looking to develop another service only facility in the Takanini/Papakura
area.

Following the redevelopment of the Southpac Trucks site at Manukau, the
Company is purchasing a site at Te Rapa, Hamilton, to be developed as a parts
and service centre.

At Nelson, BP has decided not to renew MS Motors fixed term license agreement
for the three BP service stations which will expire over the next three
months. BP is redeveloping the stations to become its own 'Wild Bean'
operated sites. MS Motors has operated these service stations for 15 years
and they have been a significant part of its business.
End CA:00278005 For:CMO Type:HALFYR Time:2016-02-19 16:09:35

[BlackPeter]

Yep, quite respectable result ... and the golden cross they just passed is (again) a dead sure indication that it would have been a good idea to buy in late February some of their shares for a nice discount. Boy - are these lagging indicators useful!

Still feel that this industry is at current in the top half of its cycle - and the other thing which puts me off from buying them is that I am suffering under the customer service of one of their companies (Team Hutchinson Ford, Christchurch) ... and I find them (despite a pretty customer interface) often quite inefficient and unresponsive if I have a real problem with the car they sold me (and I had already too many of them - problems, this is, not cars). On the other hand are they not really bad, just mediocre ... and there is not really a better alternative around as long as warranty issues need to be resolved.

I guess in a way its an interesting observation that quite mediocre organisations can make good profits ... but maybe the rest of their portfolio of companies is more switched on ...?

[blackcap]

Yep, quite respectable result ... and the golden cross they just passed is (again) a dead sure indication that it would have been a good idea to buy in late February some of their shares for a nice discount. Boy - are these lagging indicators useful!

Still feel that this industry is at current in the top half of its cycle - and the other thing which puts me off from buying them is that I am suffering under the customer service of one of their companies (Team Hutchinson Ford, Christchurch) ... and I find them (despite a pretty customer interface) often quite inefficient and unresponsive if I have a real problem with the car they sold me (and I had already too many of them - problems, this is, not cars). On the other hand are they not really bad, just mediocre ... and there is not really a better alternative around as long as warranty issues need to be resolved.

I guess in a way its an interesting observation that quite mediocre organisations can make good profits ... but maybe the rest of their portfolio of companies is more switched on ...?

Hi Blackpeter.... as a shareholder why not let CMO know of your concern about what you are facing? That way they at least will know or be made aware of something that they may not be aware of.

Or if you like you can PM me your concerns as my partner sees Jim Gibbons (the chairman) on a monthly basis and I can pass this on if you like.

[In4a$]

Yep, quite respectable result ... and the golden cross they just passed is (again) a dead sure indication that it would have been a good idea to buy in late February some of their shares for a nice discount. Boy - are these lagging indicators useful!

Still feel that this industry is at current in the top half of its cycle - and the other thing which puts me off from buying them is that I am suffering under the customer service of one of their companies (Team Hutchinson Ford, Christchurch) ... and I find them (despite a pretty customer interface) often quite inefficient and unresponsive if I have a real problem with the car they sold me (and I had already too many of them - problems, this is, not cars). On the other hand are they not really bad, just mediocre ... and there is not really a better alternative around as long as warranty issues need to be resolved.

I guess in a way its an interesting observation that quite mediocre organisations can make good profits ... but maybe the rest of their portfolio of companies is more switched on ...?

The Truck division is pretty good. ( Southpac )They sell top line products and their service is up there with the best.
Disc: Was a share holder but sold thinking getting to high but they have gained a $ since. ( Bugger)

[BlackPeter]

Hi Blackpeter.... as a shareholder why not let CMO know of your concern about what you are facing? That way they at least will know or be made aware of something that they may not be aware of.

Or if you like you can PM me your concerns as my partner sees Jim Gibbons (the chairman) on a monthly basis and I can pass this on if you like.

Not a share holder (for the mentioned reasons). I still could send the chair a letter, but than - I wrote two letters to John Hutchinson - after noticing that they do absolutely nothing with the "feedback" they love to collect from customers at any possible opportunity (well, they probably put it into nice glossy presentations nobody wants to see). He never even bothered to acknowledge that he received my letters ...

As I said ... they are not hopeless but often quite thoughtless ... and given that the warranty on my car ran out in January (and I don't own their shares either) is it probably easier for me to look for a different workshop (someone who cares ....) and invest my money somewhere else ...

Anyway - thanks for the offer ...

[blackcap]

Originally posted by Beagle on another thread.

https://www.nzx.com/files/attachments/263575.pdf

Not sure if there's a thread already for this or not but anyway if you're stuck trying to find any value left on the NZX then this might fit the bill.

Not a bad company at all. Reasonable growth and solid outlook. Historical PE 11. Historical dividend yield (44 / 750) / O.72 = 8.15%.
Nice steady uptrend in SP over the years. Outlook looks fine to me. Presently trades cum a fully imputed final dividend of 31 cps.
Good value hold for dividend yield and dividend growth.

Disc: Hold.

[Beagle]

Originally posted by Beagle on another thread.

https://www.nzx.com/files/attachments/263575.pdf

Not sure if there's a thread already for this or not but anyway if you're stuck trying to find any value left on the NZX then this might fit the bill.

Not a bad company at all. Reasonable growth and solid outlook. Historical PE 11. Historical dividend yield (44 / 750) / O.72 = 8.15%.
Nice steady uptrend in SP over the years. Outlook looks fine to me. Presently trades cum a fully imputed final dividend of 31 cps.
Good value hold for dividend yield and dividend growth.

Disc: Hold.

Thanks Blackcap Solid result don't you think ? I guess looking back its hard to make the case its not a cyclical hence the low PE but population growth and the strong currency and rebound in confidence in the dairy sector and agriculture generally should bode well for the foreseeable future.

[blackcap]

Thanks Blackcap Solid result don't you think ?

Yep real solid, I like it, and have held for a few years now. What I like about this company is that it is not sexy. Not flavour of the month, they just get on with it. One caveat is that they are tightly held, with family (the Gibbons family) owning about 2/3's of the company. So illiquid but if you are in for the long haul no worries.
Another caveat may be the same as I mentioned on the TRA thread. How are they able to cope with the changing face of the automotive market and are they able to adapt to survive. Another question I may ask Jim at the AGM.
No sneezing at the 31 cent imputed dividend though and stellar capital gain these last few years.
Interestingly revenue down and profit up. SO the sell off of Jeff Gray BMW last year justifiably warranted.