TRA - Turners Automotive Group

[Waltzing]

yes it was an amazing moment when the reserve bank endorses TINA..

well it hasnt push to SP up but heres hoping ...

the RBNZ may disappoint on the next cut ...

"SLOWING DOWN
Reserve Bank Governor Adrian Orr says they will be more 'circumspect' with reducing interest rates relative to the speed at which they went up, which 'is the general idea'."

interest.co.nz

[winner (n)]

Turners bound to win

Deloittes Top 200 Awards ......Finalists for Company of the Year are Fonterra, Port of Auckland and Turners Automotive.

By the way Oceania finalist in Sustainability Leadership

[BlackPeter]

Turners bound to win

Deloittes Top 200 Awards ......Finalists for Company of the Year are Fonterra, Port of Auckland and Turners Automotive.

By the way Oceania finalist in Sustainability Leadership

Hmm - not quite sure whether it is good that they put our TRA into the same group as Fonterror (extremely cyclical company and always good for a bad surprise) and Port of Aucklands (badly managed infrastructure facility, high accident rate and low earnings rate). Hope they erred.

On the other hand - sustainability is good. Well, much better than the opposite ("not capable of being sustained"), isn't it? Hey, they can't get it always wrong, can they?

[Waltzing]

well they have lumped it in with the big boys...

national clearing house for transport...

do they sell small transport as well..

[Basil]

Dealer to public sales very strong in October, up 11.50%
https://www.turners.co.nz/globalassets/terms-and-conditions/market-report-cars---October-2024.pdf
Looking forward to Turners posting a new record interim profit later this month.  With the RBNZ cutting interest rates and that feeding directly through to higher NIM Turners appear very well positioned as they continue to expand their branch network in the years ahead.

Forsyth Barr commented in late Sept 2024
"TRA's 12-month forward PE of ~10x as undemanding in light of the robust earnings growth outlook and
building track record of execution. TRA has also expanded its service offering and addressable market with investments in
Quashed and My Auto Shop. Retain OUTPERFORM, with an increased target price of NZ$5.41".

I note gross forecast yield based on forecast dividends of 27 cps for FY25, fully imputed is 8.33% paid quarterly at $4.50 and is forecast to grow very strongly in the years ahead.

[Basil]

Looking forward to Turners half year report on Monday 25th. Have added a few more in the last few days because companies on the NZX with a compelling growth story on extremely attractive metrics like this are as rare as hens teeth.

[Dolcile]

The TRA sell side is looking very light. Nice as a holder but frustrating when you are trying to acquire some more!

[Waltzing]

blame the advertising ... beep beep

[BlackPeter]

Not wanting to rain on the parade ... I know TRA is doing amazing - they really are!

Quite sobering though to read the chairs notes from the CMO (Colonial Motors) AGM earlier this month. I know, different company, but similar industry - and hey - it sounds he sees the industry currently in a pretty bleak spot:

https://api.nzx.com/public/announcement/441607/attachment/431549/441607-431549.pdf

Near Term Outlook

I've given you a graphic and purposely negative picture of the trading environment our businesses have experienced and continue to face.  The six months we are currently in remains 'tough' as we sort our way through cost reduction requirements across the Group.  This is an over-supplied so over-competitive market, where some of our competition are 'moving the metal' just to keep cash flowing.  The market and the economy remain flat at best.  At our core, CMC is a 'new vehicle' retail and service business that rides the wave of consumer confidence and discretionary income.  Our view of the forward market is dominated by the immediate economic issues we can all see. New Zealand should not underestimate the potential disruptive influences that lurk off-shore and the potential for further supply chain disruption from global conflicts.  These could impact exchange rates and oil prices at any time – one gets the feeling we are inches from that in the Middle East.

So here are some comments you won't hear from me today:
- green shoots
- I think the worst is over
- lower interest rates will solve all our challenges

Maybe its just a case of "we (as TRA shareholders) don't know how lucky we are"?

anyway, lets hope its not a case of "the worst is still to come"

No doubt, Tina will fix it.

[Basil]

Comparing chalk and Cheese. New car market is a mess, especially Colonial motors brands with their lack of innovation and being thrashed by cheaper Chinese brands.

Turners will report yet another record result on Monday.

The brand power of Tina is amazing.

[Waltzing]

well if this is the big deep economic hole spot ...

then image how hard it will be to get the share in 2 to 3 years...

[Basil]

Just posting the headlines from the interim announcement last year to make it easy to compare to the result tomorrow.

22 November 2023

Turners delivers record HY result, driven by Auto Retail.
Turners Automotive Group (NZX/ASX: TRA) achieved a record result for the six
months to 30 September 2023, despite a challenging macro environment. This
demonstrates the resilience of Turners' diversified business underpinned by a
strong team culture and a focus on implementing an effective strategy for
organic growth.
Key HY24 financial metrics

o Revenue $214.2m (+16%)
o EBIT $30.2m (+16%)
o NPBT $25.7m (+10%)
o NPAT $18.5m (+8%)
o Earnings per share 21.2 cps (+7%)
o Q2 fully imputed dividend declared at 6.0 cps

[Waltzing]

will they need to do a share split in 10 years?

[Basil]

Tomorrow's result needs to be reviewed in the context of the prevailing economic conditions.
I think it's widely understood the 6 months to 30 September in the N.Z. economy has been exceptionally tough.  Many retailers have been saying it's been worse than the GFC.  Against a background of incredibly strong headwinds, and their previous acknowledgement of an unfavorable interest rate swap that rolled over in the first half, that they have previously signaled they expect yet another record result, quite frankly blows my mind.

I'm not expecting the levels of gains this half that you see in post #1106 above in last years' interim result because to achieve that in the extreme depths of the recession this last winter would be a superhuman performance that's simply not possible.  That's there's any gains from last year's result, itself a new record, at all is something to be celebrated in my opinion.

The RBNZ are widely expected to cut 50 bps cut on Wednesday and this will feed through directly into lower cost of funds for their finance book going forward and hopefully we will see the economy starting to improve in 2025.  Looking further out, I'm really looking forward to seeing how Turners perform when the economy eventually starts humming again.   $65m NPBT target for FY28 looks quite plausible to me, maybe even more.

[winner (n)]

H124 NPBT $25.7m
H224 NPBT.$23.4m. Giving full year $49.1m

If H125 is $26.6m ...a new record ....and rolling 12 month is $50m ...wow

No matter what it will be a great result