TRA - Turners Automotive Group

[Waltzing]

well are there any shares on the sell side?

truly the living incarnation of TINA ...

https://www.youtube.com/watch?v=DdUpeXwDRoQ

[winner (n)]

Mmh - 10 year US federal bonds close to 4.5%. I wonder whether the gamble of putting Trump back on the throne was like throwing a hand grenade into any economical recovery? Bond market expects interest rates to stay high for a long time. Ignore them at your peril.

Seriously - while the RB might this time still go down a bit, I don't expect them to make a huge step ... and it might well be the last step down in some time to come.

On same page as you BP .....NZ economic commentators can on only bleat and hope for better times for so long until reality hits home

At least Turners have shown a degree of resilience so if the economy doesn't recover until 2027/2028 a dividend will still be forthcoming

Came across this chart this morning with comment .... Making the GFC look like a blip

You cannot view this attachment.

[Waltzing]

how did it all come down to this ...


https://www.youtube.com/watch?v=VdLVmL_c4H8

[Basil]

Wonder what'll happen to share price today

And it's one of those Adjust Trading days ......strange things happen on these days

Deserves to be $5 +

[winner (n)]

Deserves to be $5 +

With dividends and big rate cuts over next year deserves to be $7.50 this time next year

What's that +50% plus dividends

[Waltzing]

5 dollar ...

[winner (n)]

TRA share price over 5 bucks

We always get to Todd's targets.....eventually...even if takes longer than he said 

[Dolcile]

I hope he's got a higher target now :-)

[Basil]

There's a very clear path to significant earnings growth in the years ahead in addition to the extremely rare achievement of 5 years of record profits right through Covid and the resulting deep, protracted recession.

I'm not sure if any other company on the NZX has performed in such a remarkable manner.

With earnings growth coming from both finance and insurance as well a s a rebound in automotive both from better economic conditions and branch expansion my preliminary thinking is $65m before tax for FY28 looks likely to be an easy beat. Maybe $70-75m is a more realistic target.

[Waltzing]

oh hes going to be completed vindellated at this rate...

5.10

[Dolcile]

It is remarkable how the buy-side depth has changed since the interim announcement.

[Basil]

Talk on the call that if they can get about 2% of the highly fragmented vehicle servicing market with their new my auto shop nvestment that could be worth $60-70m in annual revenue. Going to use their muscle in the industry to drive growth. They're not ruling out taking a bigger stake in that venture, currently 50%.

Staff levels have already doubled and they are gearing up for huge growth . There's very good margins in vehicle servicing.

I will give you one guess who is going to front the new vehicle servicing marketing campaign

[Waltzing]

nothing much left on the sell... if that cut is 100 ...well..

surely not 125..

[Basil]

A friend sent me this today.  Gives a good insight into what was discussed on the analysts call. 

Turners shifts gears: Automotive group eyes $70m revenue in repairs and servicing
Rebecca Stevenson | Tue, 26 Nov 2024

My Auto Shop now has 21 employees, with 15 mechanics, Turners says. (Image: My Auto Shop)

Turners Automotive Group says a 2% share of the auto repairs and servicing market could bring in up to $70 million in revenue.

The New Zealand Exchange-listed firm reported its result for the six months to Sept 30 on Monday and despite tough trading conditions for its car sales business reported a rise in profit to $19.3m.

This was Turners' first result since it took a 50% stake in online booking platform and auto repair business My Auto Shop.

Turners said on Monday after five weeks of ownership that My Auto Shop had opened in Hamilton, Tauranga and Wellington and doubled its full-time employee count.

My Auto Shop now had 21 employees with 15 of them mechanics. Six new staff were hired in the past eight weeks, Turners said.

The company has more than 300 Motor Trade Association-approved repairers on its website and its own branded vans and repairers.

Turners said confidence was building that there was a significant opportunity to develop a scaled player in the $3 billion, highly fragmented auto repair market.

2% slice

Turners Automotive Group chief financial officer Aaron Saunders told analysts on Monday that mobile repairs and servicing were a massive growth segment internationally. 

My Auto Shop picking up 2% of the NZ market would mean revenue of between $60m and $70m, he said.

Turners currently had about 9% of the used car market in NZ.

It planned to leverage its footprint, customer databases and brand to grow the My Auto Shop business, including using its iconic advertising character Tina from Turners.

"We see a geographic rollout of that business underpinned by our branch network," Saunders said.

Turners paid $3.35m for its stake in the repair and booking platform.

Saunders confirmed Turners could increase that stake in the next few years.

Group chief executive Todd Hunter said the company was already pushing vehicle repair work from its branches to My Auto Shop.

That was a large efficiency gain because My Auto Shop vans coming to the branches saved Turners dropping off and picking up vehicles for repairs or for servicing.

"It is such a time killer."

Cars cars cars

Turners' result saw increased profit from its insurance, lending and credit management arms while its auto retail division felt the economic pinch, with auto retail profit falling 18% to $14.7m. 

Turners said auto sales were particularly affected in Auckland and Wellington due to Aucklanders' higher levels of household indebtedness and government cutbacks in Wellington.

The South Island was a standout, Turners said.

With interest rates starting to ease and another interest rate decision this week from the Reserve Bank,  Turners said it expected to see a recovery in metro markets.

For the six months to Sept 30, retail division revenue fell 6% to $146.3m.

Overall revenue fell 2% to $209.9m for the period. Net profit before tax was a record $26.9m for the period and 5% higher than the same period last year, "proving resilience through the cycle during a significant retail downturn".

The retailer said weaker consumer sentiment put pressure on vehicle prices and reduced margins during the period, but margins now showed signs of recovery.

Discounting

Turners had materially discounted car prices to meet the market during the period.

Retail auto margins fell 28% in cars it owned, Turners said.

The average margin on vehicles owned and sold fell to $695 in the six months to Sept 30 compared with $1,026 in the prior comparable period.

The average sales price for owned vehicle stock decreased by 11% to $11,600 compared with the first half of the 2024 financial year.

Turners said used car volumes were resilient, despite new car demand plummeting.

It sold 10,050 cars via auction, an increase of 3% on the prior comparable period, while retail sales increased 9% to about 11,050.

Cheaper cars

Saunders said Turners had priced higher-value cars aggressively.

"We really didn't want to own many of them unless it was at the absolute right money for us or pricing. The line we drew was around about $20,000 and in the last two months, we've released some of those shackles a little bit on the branches. We're now much more confident buying cars in that $20,000 to $40,000 price bracket because we've seen some green shoots of demand."

Cheaper cars were currently more appealing to consumers and Turners said it had been repositioning its inventory.

"In the first quarter, we went through quite a transition in vehicle pricing, all related to demand. You need to discount cars more because cars aren't being sold, and to meet where the market is," Hunter said.

He said prices and margins for vehicles had stabilised or increased and Turners was "climbing out of that price transition".

The portfolio effect

Analysts were positive about Turners' result against a backdrop of rising unemployment and economic weakness, with all congratulating Hunter and Saunders on the analysts' call.

Hunter said the result proved the merits of Turners' diversification strategy and that the business could still return profits in tough times.

Hunter said it was very rewarding to produce a record result in a tough environment.

He had received feedback from institutional investors that the business hadn't been tested through a down cycle.

"Here's the proof point."

The "natural stabilisers" of Turners' annuities businesses in finance and insurance demonstrated the strategy to build a business that could grow and deliver value through the cycle was paying off, he said.

Turners' finance arm reported an 11% revenue increase to $33.6m while profit rose 59% to $8.1m. 

Turners' total lending ledger increased to $430.9m from $418m.

Lending for commercial vehicles had decreased while consumer lending increased.

Turners said it had tightened its credit policy to focus on cars, vans and utes rather than trucks or machinery lending.

Arrears

Turners said arrears were substantially below industry norms.

Loan arrears were 2.8% while Centrix data showed industry arrears were 6.4%, Turners said.

Hunter said the results in the finance division were a result of repricing its lending book over the past 18 months and making hard decisions to focus on margin, repricing new loans and credit quality.

He said Turners had made 12 price increases over 18 months.

Net interest margin on lending had stabilised and was about 5.4% compared with less than 5% in the prior comparable period.

Revenue for its insurance business increased 4% to $23.7m, profit rose 8% to $7.7m and credit revenue and profit increased 2% to $5.4m and $1.8m respectively.

Forsyth Barr analyst James Lindsay said it was "good to see the portfolio effect kicking in nicely".

Turners will pay a 7 cents per share (cps) dividend for the second quarter and said it expected to pay a full-year dividend of at least 27 cps.

It paid a first-quarter dividend of 6.0 cps.

[Waltzing]

Oh my my ... lots of money in scrap metal ...soon they will be high tech mobile computers.. they already are..what ever happened to all those Holdens...