TRA - Turners Automotive Group

[winner (n)]

Thanks for posting that piece Basil ....Turners doing a lot good things eh

Deserve to be COMPANY OF THE YEAR winner at Deloittes big piss up next week

[Basil]

Thanks for posting that piece Basil ....Turners doing a lot good things eh

Deserve to be COMPANY OF THE YEAR winner at Deloittes big piss up next week

Can only post that thanks to you for sharing it with me, so thank you mate.  Agree 100%.  The skill with which management have navigated all the extraordinary challenges of the last five years is second to none. 

[Basil]

Forsyth Barr's latest note out.  Rating OUTPERFORM Price target $5.84
FY26 PE only 11.1  Gross yield for FY26 8.3% rising to 9.4% in FY27
Both Craigs and Forbar clearly articulating that Turners is one of the premier dividend growers on the NZX with ~ 10% CAGR in dividends in the last decade and that's expected to continue.
My comment, Important to look forward to FY26 and beyond because there's only ~ 4 months of FY25 left.
Those are still extremely attractive metrics when you look at their stellar eps and dps growth rates.

Both Craigs and Forbar seem confident of Turners meeting or beating their NPBT target of $65m in FY28 with one of them forecasting $64m NPBT in FY27!
Dividends forecast, (average of both brokers) are FY25 27.75, FY26 30.25, FY27 33.25cps.

[Waltzing]

finished the day at ? 5.39 ...bets on 6 dollars and when?

April 2025 ? or SOONER?

[Dolcile]

Hi Basil, are these research notes available to the general public? Thanks

[Basil]

finished the day at ? 5.39 ...bets on 6 dollars and when?

April 2025 ? or SOONER?

I'm reluctant to get too specific about price targets when and how high but brokers are forecasting very solid earnings growth in the years ahead and the metrics even at $5.39 look compelling to me considering their extraordinary track record in the last 5 years.

One thing I will say is that I don't think the market really appreciates the power of the marketing the Tina brand has become.  I picked their marketing as truly extraordinary long before the Tina campaign started winning multiple awards.

I think its highly likely we will see both some earnings multiple expansion and strong eps growth in the years ahead.  Based on $5.39 and estimated average broker dps of 30.25 cps fully imputed for FY26 = 42 cps gross that's 42/539 = 7.8% yield next year, (FY26).  Dividends have grown at a 10% CAGR for the last decade and forecast to continue doing so in the years ahead.  You can increase that to 7.8% / 0.98 = 7.95% by taking the shares in lieu of dividend at a 2% discount.  The way I see it, that's as good as 8% gross yield, growing at 10% per annum for the foreseeable future.  In any interest rate environment that's a compelling opportunity but as rates get lower, it becomes truly compelling.

I think the brokers are being very conservative and I expect another valuation upgrade to six dollars something when Turners report their full year result in May 2025 and further upgrades six monthly after that.  Winner could well be right with his price target of $7.50 this time next year.  I wouldn't bet against it !

[winner (n)]

With more rate cuts to come and lower term deposit rates along with increasing dividends surely $7.50 on cards by this time next year

[BlackPeter]

Hi Basil, are these research notes available to the general public? Thanks

These research notes are for Fobar clients. However - anybody (as far as I know) can sign up with them. Just need to pay the dues.

https://www.forsythbarr.co.nz/research-library/research/

There seems to be some free access (if you sign up), but this well might be limited (I don't know).

[Basil]

With more rate cuts to come and lower term deposit rates along with increasing dividends surely $7.50 on cards by this time next year

RBNZ talking about another 50 bps cut in mid February and targeting getting the OCR down to 3% by mid 2025.  That's 175 bps lower than the start of this week.  Further cuts might be necessary in the back half of 2025 to stimulate the economy, and we could see an OCR as low as 2.25-2.5% this time next year.  That'll make a 8% dividend yield from TRA very attractive especially seeing as it has a decade long proven history of growing at a CAGR of 10% per year!

[Waltzing]

Is this going to be the NZX most loved stock? could it soon demand a SP handle well above its actual return.

10 dollars by 2031?

[Basil]

If they keep their track record of the last decade intact of growing dividends at a 10% CAGR by FY31 they will be paying 49 cents per share in dividends fully imputed = 68 cps gross.  Not sure what part of the interest cycle will be in by then but if we use the currents years gross yield of (27.5 / 0.72) / $5.38 = 7.1% gross as a proxy for what it will be then, that suggests on a dividend discount / yield model the shares will be 68 / 0.071 = $9.58 by 2031, perhaps $10 towards the end of 2031 as investors look forward towards FY32's dividend, so yes, I think $10 by then is quite plausible.  I plan to hold long term and find out. 

An even higher share price would not surprise me in the slightest because not many people truly understand the power of "Tina", with what's been independently acclaimed as the best marketing campaign of the last 50 years.  In much the same way as the famous T.V. personality "Tammy" has driven huge value for Briscoes shareholders over the years, I think the same will happen for Turner's shareholders.  I'm so confident in that and Turners management I bought even more shares yesterday despite Turners already being my biggest NZX individual stock position and the shares being at an all-time high.  A company growing like this, with very high-quality management and such a well-articulated plan for growth in the years ahead and a forward PE for FY26 of only about 11.5, are not normally numbers that go together, and I expect some pretty decent PE expansion going forward as well as strong earnings growth.    Go Tina and Todd ! 😊

[Pierre]

The Turner's effect?

This published today in Autofile:

Latest industry figures show nearly 40 traders disappeared from register in the past month.

The number of dealers in New Zealand has hit a new low after tumbling to 2,833 at the end of November, according to figures from the Motor Vehicle Traders Register (MVTR).

The register's total eclipsed the previous low of 2,852 set in June this year and fell by 39 from October's tally of 2,872.

November's figure for registered dealers was also 88 fewer than the 2,921 recorded at the same stage a year ago.

Since peaking at 3,536 in November 2017, the number of dealers has largely been falling and has not surpassed 3,000 since August 2022.

[Basil]

Nice, it's very tough to compete with Tina and Todd.  Jarden's quite a while back predicting 12% market share for Turners by FY30, currently 9.5%.
To put the modesties of this expectation into perspective, it's important to note that in the period since the Tina campaign began a few years ago, Turners have roughly doubled their market share, so such a modest 2.5% further increase over the next 5 years does seem VERY conservative.  A ~ 14% market share by FY30 or FY31 wouldn't surprise me.

[winner (n)]

Big piss up at Deloittes awards tonite

TURNERS will be COMPANY OF THE YEAR

[BlackPeter]

Big piss up at Deloittes awards tonite

TURNERS will be COMPANY OF THE YEAR

Hmm - wasn't Vulcan Steel the 2022 winner? Anybody remembering what happened with their share price in the last 2 years?

Just checking some other winners - FPH made it in 2020, and yes - what a company they are. However - they had a pretty rough stretch after their 2020 award as well. SP just recovered now to its 2020 glory.

So - maybe - lets hope this cup passes from us.