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- TRA - Turners Automotive Group [previously TNR - Turners Limited]
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05-12-2018, 10:42 AM
#3771
Originally Posted by bull....
i have tra gearing at 65% they really are leveraged hope sales dont fall of too bad
Actually - At last report time liabilities to assets was 69%. But maybe you use a different formula.
However - don't forget that they are not just a car dealer. For a finance company 65 to 70% leverage would be quite low. Have a look at Heartland - they sit at 85% (and ANZ well above 90%) and nobody seems to worry ...
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"Prediction is very difficult, especially about the future" (Niels Bohr)
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05-12-2018, 10:44 AM
#3772
Originally Posted by Ggcc
I still remember being in this position a few times, my arrogance got the better of me (definitely not calling Percy Arrogant) and I lost big time. I really appreciate both sides of whether a share is good or bad and do understand people need to do their own research. I lost by not listening to some comments on this site concerning different shares. Sometimes it pays to listen.
I too have been in this position a few times,however I was lucky to read the book Billionaire,The Life and Times of Sir James Goldsmith,a number of years ago.
He wrote at length about buying Caversham Foods,putting in good managers and more cash.Took time for the turn around,but he knew putting the right ingrediants into the business he would get results.Caversham Foods went on to be a great business.
My first big win that set me up was buying Smiths City shares, when they delisted and went into receivership.Their share registry stayed open,and brokers were keen to clear up clients estates' SCY holdings.Sold them to me.So when SCY came out of receivership I was "well positioned."I made my money,however I no longer hold any SCY shares.
When Heartland was formed I went to every meeting,presentation,agm etc until I felt I fully understood where they were,and where they were going. Took time for their reverse equity loans to get traction,but are now flying.HGH is my second largest holding after Turners.
My third largest holding I have been slowly adding to over the past 7 years seven years,and I expect it will be my largest by value holding in a few years time.
I do my own research,buy into a company and if they do as they say they will do,or I like the progress they are making I will buy more shares.
Should I find the reasons for buying in change,or I am unhappy with the progress or direction the company is taking, I sell.
I would recomend people to read the history of Mainfreight.Great management taking set backs as opportunities.
My own research into Turners confirms I like the directors,management and their business strategy.Vertically integrated,vehicle sales, finanace/insurance/service,property development,end of life vehicle disposal, makes sense to me.All sectors have been bulked up in a very short period of time,issues sorted, and therefore I see Turners as "well positioned."
Last edited by percy; 05-12-2018 at 10:56 AM.
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05-12-2018, 10:53 AM
#3773
Originally Posted by BlackPeter
Actually - At last report time liabilities to assets was 69%. But maybe you use a different formula.
However - don't forget that they are not just a car dealer. For a finance company 65 to 70% leverage would be quite low. Have a look at Heartland - they sit at 85% (and ANZ well above 90%) and nobody seems to worry ...
they are a car dealer that uses an integrated model , less sales means less income right thru the business. they shouldnt have this gearing level for the business they have.
12m spent on debt servicing imagine the divs they could pay if debt levels were brought down. and just to be funny they say they are looking to expand more in an environment where credit is contracting and numerous commentators are warning companies with high debt will get caught out.
one step ahead of the herd
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05-12-2018, 11:15 AM
#3774
Originally Posted by bull....
they are a car dealer that uses an integrated model , less sales means less income right thru the business. they shouldnt have this gearing level for the business they have.
12m spent on debt servicing imagine the divs they could pay if debt levels were brought down. and just to be funny they say they are looking to expand more in an environment where credit is contracting and numerous commentators are warning companies with high debt will get caught out.
I think they have much more flexibility than many other companies if they are unhappy about the liabilities to asset ratio.
They easily can reduce stock (and they have done that previously when times got rough).
They easily can reduce the number of sites they sell from. Most are only leases anyway, and the others they can sell - and even make a nice additional buck this way (like last period).
Compared to some other retailers they are not heavily invested in bricks and mortar. Flexibility is king.
Not saying that they can't go lower - I am sure, they can. But I don't see them as a candidate to go down the drain in the next recession (which might start as we type, who knows?). Quite the opposite - the largest NZ used car dealer with an integrated finance, insurance and service of the car life-cycle model is in my view most likely to come out stronger than the competition out of any downturn.
Last edited by BlackPeter; 05-12-2018 at 11:17 AM.
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"Prediction is very difficult, especially about the future" (Niels Bohr)
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05-12-2018, 11:23 AM
#3775
weird thing about the excitment/hype of the buyback is that we will never really know if it was successful and enhanced shareholder value. So many other variables in place that whatever happens re the buyback will just get lost in the big scheme of things.
Full year report will have a sentence like ‘Turners achieved a successful buyback of 5% of the company’s shares which enhanced shareholder value’
Easy said but not really provable
Best to forget about this buyback ...just let it take it course.
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
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05-12-2018, 11:24 AM
#3776
Originally Posted by Beagle
Those numbers make somber reading mate but no worries for Percy as he's married to this company and his infatuation is insatiable.
Just moved by Turners Analysis/workings into my special folder called ‘Impending Train Wrecks’
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
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05-12-2018, 02:01 PM
#3777
Originally Posted by bull....
they are a car dealer that uses an integrated model , less sales means less income right thru the business. they shouldnt have this gearing level for the business they have.
You are recalling the old 'Turners Auctions' (TUA) days Bull. And back then, they didn't have the debt levels they have now - you are quite right.
However the current 'Turners Automotive Group' is more 'Dorchester' than 'Turners Auctions'. They are a finance company with an integrated automotive sales arm. And for that business model a higher level of debt is not unexpected. Nor is it a problem. If you look at 'Chapter 8' (post 21) in the 'Investment Story' thread you will see that for repayment purposes the debt level is very similar to Heartland. But the cashflow is much better, because they have fewer reverse mortgages on the books in comparison to HGH.
12m spent on debt servicing imagine the divs they could pay if debt levels were brought down. and just to be funny they say they are looking to expand more in an environment where credit is contracting and numerous commentators are warning companies with high debt will get caught out.
The act of taking 'corporate debt' and repackaging it as 'securitized debt' will reduce the interest rate paid by Turners by a whole percentage point. With interest rates so low, this is akin to a 20% reduction in Turner's interest payments. At some point Turners will probably flick off the debt collection business. That should shore up the balance sheet significantly. I don't think the debt at Turners is the critical issue that some think.
SNOOPY
Last edited by Snoopy; 05-12-2018 at 02:08 PM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
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05-12-2018, 02:33 PM
#3778
Originally Posted by Snoopy
You are recalling the old 'Turners Auctions' (TUA) days Bull. And back then, they didn't have the debt levels they have now - you are quite right.
However the current 'Turners Automotive Group' is more 'Dorchester' than 'Turners Auctions'. They are a finance company with an integrated automotive sales arm. And for that business model a higher level of debt is not unexpected. Nor is it a problem. If you look at 'Chapter 8' (post 21) in the 'Investment Story' thread you will see that for repayment purposes the debt level is very similar to Heartland. But the cashflow is much better, because they have fewer reverse mortgages on the books in comparison to HGH.
The act of taking 'corporate debt' and repackaging it as 'securitized debt' will reduce the interest rate paid by Turners by a whole percentage point. With interest rates so low, this is akin to a 20% reduction in Turner's interest payments. At some point Turners will probably flick off the debt collection business. That should shore up the balance sheet significantly. I don't think the debt at Turners is the critical issue that some think.
SNOOPY
i think doing the share buyback is good , but reducing the debt levels would make tra a much more appealing company.
Cash flows is what the market wants to see , if sales are declining so will there cash flow. 12 mil int exp is huge and not something you want to tackle in a declining market.
one step ahead of the herd
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05-12-2018, 02:41 PM
#3779
Originally Posted by bull....
i think doing the share buyback is good , but reducing the debt levels would make tra a much more appealing company.
Cash flows is what the market wants to see , if sales are declining so will there cash flow. 12 mil int exp is huge and not something you want to tackle in a declining market.
With 120 "new dealers" added in the past 6 months, finance and insurance will most probably increase,and help to improve cash flow,while Turners moving $4mil of their own originated deals to their Oxford Finance, rather than MTF, will improve margins.
Insurance reserves are being used to fund developments,rather than outside debt.
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05-12-2018, 03:18 PM
#3780
Snoopy
However the current 'Turners Automotive Group' is more 'Dorchester' than 'Turners Auctions'.
Maybe that’s why most don’t love Turners or want to avoid it ......the association with Dorchester
Weren’t Dorchester one of those finance companies perceived to be a bit dodgy?
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
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