TRA - Turners Automotive Group

Started by Plata, Aug 10, 2022, 06:12 PM

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Waltzing

They dont work from home.....Old bach's ...Traditional holiday...

Basil

#1066
Forsyth Barr updated Turners on 19 Sept after their recent annual meeting the previous day where guidance was given of above $50m.  Might be worth having a look at the metrics given the share price has increased a bit lately to $4.60 and asking the question is it too late ?

FY25  FY26  FY27
41.9   46.4   51.4  EPS
27.0   30.0   34.0  DPS
37.5   41.6   47.2  Gross DPS
8.15   9.04   10.3  Gross Yield %
11.0   9.90   8.90  PE

RBNZ looking to cut this coming week, 50 bps ?
My opinion.  Its important to look ahead as for Turners half of FY25 is already over. 
I note the forward PE of 9.90 for FY26 is something normally associated with a no growth company despite Turners outstanding growth in recent years since the game changing Tina marketing campaign was created and the very plausible target of $65m NPBT for FY28 indicating ~ 10% CAGR going forward.

Buying a proven growth company with a gross yield of 9% next year on what amounts to a no growth PE of 10, it seems to me, you are getting their proven track record of growth for nothing.  Given the true brilliance of their marketing campaign, the proven management prowess of Todd, Aaron and the team and their well proven track record of growing across the economic cycle as well as the fact we are currently traversing the bottom of the economic cycle with well-known tailwinds to start accruing from RBNZ cutting interest rates, this still looks like excellent buying to me.

A good place to get high and growing yield in a falling interest rate environment with quite moderate risk?  You be the judge.
For me, it still boggles my mind that they've been able to achieve record profits four years in a row and yet another one forecast for FY25, since FY20 amid all the dramas of the Covid pandemic and more recently right through the depths of the recession and cost of living crisis.  How do they do it ?
Disc: My biggest position on the NZX.

Dolcile

I agree Basil.   I just wish I didn't have to pay that extra 11% tax top up to the highest marginal rate.

Dolcile

Picked up a few today.   Unless there has been some creative accounting going on, I'm expecting TRA to benefit from the lower interest rate environment and hopefully improving economy. 

Basil

#1069
Todd Hunter told me recently that for each 100 bps of cuts that feeds through directly to $1.2m per annum in extra net interest margin.
On top of that is the general improvement in the economy leading to more confidence, sales, insurance and finance agreements being written.
I think their FY28 target of $65m NPBT is quite plausible and its quite possible they could exceed that.
Todd and Aaron are good honest straight shooters.  I have complete confidence in them.

If there's any justice in this world, we should get a 50 bps interest rate reduction tomorrow and another one of the same size next month making high yielding growth stocks like Turners even more attractive.  A while back I posted we could look forward to the $5 share price party at next year's annual meeting but maybe that party might happen a bit sooner?

Waltzing

#1070
chair leading require here...

TRA TRA TRA TRA ... everyone shout together like at a match...

and with fast track coming will the NZ economy finally get some traction in the rest of the decade ....

could the little country actually out perform?

https://www.interest.co.nz/economy/130140/construction-boom-could-act-%E2%80%98circuit-breaker%E2%80%99-and-drive-new-zealand-economy-out

Notice the companies in this rear endorsement of government policy that are mentioned for a direct benefit...

but will this not also benefit the wider economy as the supply chain is tapped by the construction industries..


Basil

Quote from: Basil on Jul 15, 2024, 03:45 PMFinally got around to reading Turners 2024 annual report this morning.  I'm a bit old fashioned and like to read the physical report.

A few thoughts.
It's clear the RBNZ pivot will directly translate into strong eps growth in the finance division in the years ahead as lower floating rate funding covers fixed rate lending previously undertaken at much higher rates and I expect significant NIM expansion on their circa $420m loan book.

A clear pathway to growth through branch expansion, driving increased market share and increasing brand awareness which translates to further growth in their insurance and finance book.  Interesting to note from the report as well as their known and already disclosed branch expansion plans, they have a "number of conditional offers in the market" which I presume relates to further land acquisition possibilities.

Their new initiative of direct-to-consumer insurance for mechanical breakdown and the like looks like a really interesting initiative given circa 50% of all sales are consumer to consumer direct.

Top 7 executives are all degree qualified, most at Auckland University, (ask me if I think that's a really high quality degree :D ), and it almost looks like an Auckland University alumni group, all very highly experienced and been in the industry and their current position for ages.  A very highly qualified, experienced and stable, high performing leadership team.

Trades cum the fully imputed 7.5 cent final divvy.  Gross yield about 9% for FY25 by my estimate and well worth noting they have grown the level of dividends by ~ 40% in the last 4 years. 

We all know Turners are multi award winning with their "Tina" marketing campaign, but interestingly they were finalists in the 2023 Effie Awards (Global best of the best marketing awards). 

Turners provides a pretty unique combination of very high dividend yield with strong growth.  Targeting $65m NPBT by FY28 which would see a 10 year CAGR of just under 10%.  Very impressive operation. 
Disc: My biggest NZX position by quite some way.

I posted this a while back and expressed my confidence around the quality of the degree that laid the foundation for all the top executive's stellar careers.  I then had a good-natured debate, (I think it was with Fiordland Moose, who argued Otago was better), of course we are both biased lol.  I believe this settles the debate once and for all  :)
https://www.nzherald.co.nz/nz/auckland-otago-tumble-in-just-released-world-university-rankings/F5HHYWPNFBFXPC7YZV2HYZMKIA/

Basil

#1072
There's no thread for RNBZ announcements so I will post this in here seeing as cuts feed straight through to the bottom line.
RBNZ cuts by 50 bps, full announcement here https://www.rbnz.govt.nz/hub/news/2024/10/ocr-4-75-monetary-restraint-reduced-as-inflation-converges-to-target

Now for the really interesting thing I found out in my research today.  The last time economic conditions were this bad, (widely acknowledged by many economists and commentators as the GFC), interest rates were cut from 8.25% in June 2008 to just 2.50% by April 2009.  Maybe keep the very high speed of that fall front and central in mind when looking at locking in the opportunity to earn great dividend yields on proven performers, such as for example, TRA.

Put another way, and as Craigs recently said in an institutional research paper, this is the time to be fully invested.

winner (n)

Spot on Basil. ....rate cuts and punters seek good stocks with decent divies

And TRA shoots up to $4.78

OnlyvWednesday ...maybe 5 bucks Friday 

Waltzing

Oh what a wonderful day ....




Basil

#1075
Quote from: winner (n) on Oct 09, 2024, 03:45 PMSpot on Basil. ....rate cuts and punters seek good stocks with decent divies

And TRA shoots up to $4.78

OnlyvWednesday ...maybe 5 bucks Friday

Mate, you were spot on with HLG hitting $7 by the end of last week, (now even higher), so I wouldn't bet against that happening.  RBNZ should cut by another 50-bps next month and again in February.  That's circa $2m per annum straight onto TRA's bottom line for FY26 with increased NIM with some of that to accrue this year. 

winner (n)

The Salt Funds guy said on Market Close .... Turners Automotive was up 10c or 2.16% to $4.74, with the pressure coming off its finance book, which is funded on floating rates.

Cool eh

Basil

Quote from: winner (n) on Oct 09, 2024, 06:49 PMThe Salt Funds guy said on Market Close .... Turners Automotive was up 10c or 2.16% to $4.74, with the pressure coming off its finance book, which is funded on floating rates.
Cool eh
Proven growth company that still trades very cheaply at about 10 times next years earnings (FY26), with strong tailwinds accruing from lower funding costs.  What's not to love...I'll tell ya, the only negative I can think of is the fact that Tina doesn't dish out hugs at the annual meeting lol

Waltzing

#1078
slightly off topic..

employment expect to go over 6?

whooops ...

https://www.interest.co.nz/economy/130170/inflation-has-been-defeated-and-reserve-bank-moving-swiftly-normalise-interest-rates

cheap cars the way to go ...

price in hamilton area varied nearly 15 cents at the pumps...

75 cut? surely not ...

"Toplis said it would not be enough for the RBNZ to move rates to a neutral position and then stop there. It will need to stimulate the economy to prevent deflation and instability."

wow .. even the dog days of summer to come might be hot for the country ...

whats the weather doing this summer ... Droughts?

winner (n)

#1079
Was wondering if TRA was heading into 'overvalued' territory so updated an old chart

Maybe it is but looks OK at the moment. Based on trailing numbers.

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