TRA - Turners Automotive Group

[BlackPeter]

They advertise on SKY T.V. and the radio a lot as well.  Probably social media platforms too but I'm not on any. Surely you listen to your radio driving around in your car?

I do. However - the only NZ channel worthwhile listening to is thank fully ad-free: Radio NZ. Deutsche Welle (over the Internet) is ad-free as well, and BBC so far is tolerable (they do have some ads, but never heard Tina). If we happen to tune accidentally into a different channel (which is quite rare), than we switch the channel as soon as ads start.

Never heard Tina on Radio (despite listening a lot) and only once on the tele (I intentionally stopped to zip the ad to find out what the rave is about).

Debate about advertising platforms and effectiveness aside, it is clearly working with a significant steepening in the rate of market share growth since the campaign started several years ago. Market share has in fact climbed from 4% in 2017, per Winners graph to 9.5% in 1Q FY25.  That's ~ 2.4 times the market share they have now compared to 8 years ago, most of that gain since the Tina campaign kicked off.  Todd said in a recent analysts call that about 90% of the people that ring Turners to sell their car ask to speak to Tina lol.

I don't dispute he numbers. Just find it hard to understand the underlying motivator, but clearly - that's just me.

[winner (n)]

Wonder what the $118m of property at cost is really worth?

Good use of float and saves paying zillions in rent to 3rd parties

[Pierre]

I don't dispute he numbers. Just find it hard to understand the underlying motivator, but clearly - that's just me.

I suspect you may not actually be in Todd and Tina's target market.

[Dolcile]

A few investors keen on picking up some TRA 

[seaweed]

I can't remember exactly when the Tina campaign first kicked off but it seems from media reports it was 2021. https://nzmarketingmag.co.nz/lessons-from-turners-in-driving-fame-and-business-results/#:~:text=Since%20launching%20in%202021%2C%20it%20has%20picked%20up,%E2%80%93%20paying%20itself%20off%20within%20just%20one%20month.  What is crystal clear is the slope of the curve, (the rate at which they are gaining market share) has significantly steepened since then.

Interesting article about how the Tina campaign paid for itself within one month.
https://www.nzherald.co.nz/business/markets-with-madison/how-the-tina-from-turners-ad-paid-off-in-a-month/LAJ7NQFB4ZAKFJ3I6OEVSLL2J4/

The compelling forward metrics of Turners suggests to me the market doesn't yet fully appreciate the true brilliance of the Tina campaign and what a powerful influencer it's going to be on driving future growth.
Agree a $7 something handle is a good target for some time in the next 12-24 months.  I would prefer not to be too prescriptive on when.

They advertise on SKY T.V. and the radio a lot as well.  Probably social media platforms too but I'm not on any. Surely you listen to your radio driving around in your car?

Debate about advertising platforms and effectiveness aside, it is clearly working with a significant steepening in the rate of market share growth since the campaign started several years ago. Market share has in fact climbed from 4% in 2017, per Winners graph to 9.5% in 1Q FY25.  That's ~ 2.4 times the market share they have now compared to 8 years ago, most of that gain since the Tina campaign kicked off.  Todd said in a recent analysts call that about 90% of the people that ring Turners to sell their car ask to speak to Tina lol.

I like the radio

They advertise on SKY T.V. and the radio a lot as well.  Probably social media platforms too but I'm not on any. Surely you listen to your radio driving around in your car?

Debate about advertising platforms and effectiveness aside, it is clearly working with a significant steepening in the rate of market share growth since the campaign started several years ago. Market share has in fact climbed from 4% in 2017, per Winners graph to 9.5% in 1Q FY25.  That's ~ 2.4 times the market share they have now compared to 8 years ago, most of that gain since the Tina campaign kicked off.  Todd said in a recent analysts call that about 90% of the people that ring Turners to sell their car ask to speak to Tina lol.

I like the radio version where they sing in a real kiwi karaoke type catchy tune and lyrics and the memories of the car they are selling eg... something like... "You got too fat for the seat" and "your sister had a pash  in the back" and singing about all the different types of cars they selling.

[Basil]

A few investors keen on picking up some TRA 

New all-time high on solid volume today.  I'm expecting very good things in the years ahead.
Still not expensive by any means.  Important to look ahead to FY26 as we're only really one quarter away from starting that.  Forsyth Barr reckon eps for FY26 is 45.6 so 1 year forward PE is only 12.3.  Bloody cheap for such an exceptionally well managed company with a well proven business model that confers a very clear runway of growth in the years ahead.

My #1 listed position on the NZX and its staying that way...until I match it for first equal with buying more HLG shares lol.

Hey Seeweed, it's not too late to join in the party mate.  7 cent fully imputed divvy due next month.

[Basil]

Waltzing sent me this Chat GPT comparison of TRA and HLG.  (All figures in my calculations below based on Friday's closing price of $5.27 and $8.30).  Calculations are based on Forsyth Barr forecasts for both companies.  My own opinion is that the TRA forecast is more likely to be upgraded than their HLG one.

Sorry I haven't had time to check it in any real detail other than to note one or two things, for example that the dividend yields mentioned do not pick gross up the worth of imputation credits.
To gross up full imputation credits multiply the yield shown by 1.39 and for 75% imputation credits multiply it by 1.27.

TRA is a more capital-intensive business because they own their own sites and there's also capital to be applied as part of the vehicle financing business.
Note both have quite different balance dates, March 31 for TRA and 1 August for HLG.

Just very quickly, at $5.27 I have TRA on a FY25 forward PE of 12.5 and gross yield of 7.25%
Note that of they hit broker targets of about 42 cps this year they have grown eps from 24 cps 5 years ago a CAGR of ~ 12% and if dps is 27.5 cps the have grown eps by a CAGR of ~ 15% over that timeframe.

Note for both these companies I use my standard 5 year approach to analysis despite this encapsulating the full Covid period, all the aftereffects of that and the deepest recession since 1991.

For Turners because we're only three months away from the end of the financial year I think it's best to focus on FY26 numbers.  Metrics that year are PE 11.5 Gross yield 8.0%.  (Note TRA have the best track record of any company on the NZX of growing their dividends over the last decade).

A forward FY26 PE of 11.5 and gross yield of 8.0% are exceptionally attractive metrics to me for a company growing at a CAGR of 12% with a very clear plan for ongoing growth in the years ahead.

Note TRA has paid out an average of 65% of eps in dividends and HLG with its lower capital requirements has paid out 85%.  (Recall my comment sin the HLG thread that for good stores than can recover fit out costs within one year.

Metrics for HLG
CAGR in eps for the last 5 years 9%
FY25 PE 11.5 FY26PE 11.1
Gross yield FY25 9.3% FY26 9.7%

I think both these companies still trade on exceptionally attractive metrics given their proven history of strong eps growth over the last 5 years and it boggles my mind that both have performed so well over this period of unprecedented challenges to the economy.  We have a very bright future ahead when the economy recovers.

Disc: I have increased the size of my HLG holding to be about the same as TRA, both about 16% portfolio allocation.  I have enough diversification with funds like Discovery, Barramundi and Kingfish to feel good about having a rather concentrated position of individual stocks that I pick myself and would rather have fewer very high conviction positions on compelling metrics with management that have well and truly earned my trust and respect than spread it around more.

Anyway, Chat GPT generated output is below in a separate post for what it's worth.  I prefer to use my own intelligence than the artificial kind, for as long as I have it lol

Apologies in advance for spelling and grammar errors in this post...at this time of year, sorry, I can't be bothered double checking it.

 

[Basil]

Chat GPT 4 comparison... may not be accurate.



Financial Comparison: HLG vs. TRA

Revenue and Profit Trends:

Hallenstein Glassons (HLG):
Revenue growth is consistent, projected to increase from NZ$435.6M in FY24 to NZ$515.6M in FY27.
NPAT is expected to rise by 24.5% in FY25, continuing at 3.8% in FY26 and 10.3% in FY27.
Strong performance in Australia is driving growth, with the Glassons AU segment leading profitability.
NZ operations face headwinds, but resilience in margins and market share are noted.
Turners Automotive Group (TRA):
TRA's revenue shows slower growth, expected to rise from NZ$361.2M in FY25 to NZ$431.7M in FY27.
NPAT is projected to increase at a steady pace, from NZ$37.1M in FY25 to NZ$46.2M in FY27.
The Finance segment has rebounded with robust growth due to improved net interest margins, but Auto Retail faces margin pressures.
Valuation Metrics:

HLG's PE ratio is more attractive at 10.4x for FY25 compared to TRA's 12.3x.
HLG's dividend yield is higher, offering 8.1% for FY25, compared to TRA's 5.4%.
Dividend Outlook:

HLG: Known for its stable and increasing dividend payout, with a projected FY25 dividend yield of 8.5%, rising to 9.3% in FY27.
TRA: A premier dividend grower in NZ, offering a gross yield of 7.5% for FY25, with expectations of continued growth.
Risk and Growth Drivers:

HLG:
Growth drivers: Expansion of Glassons Australia, consistent store openings, and a focus on resilience despite volatile margins.
Risks: Challenges in the NZ market and potential supply chain shocks.
TRA:
Growth drivers: Recovery in vehicle pricing, strategic initiatives in Finance, and a track record of effective cost management.
Risks: Dependence on macroeconomic conditions and challenges in the Auto Retail segment due to declining vehicle margins.
Summary

HLG exhibits stronger revenue and NPAT growth, driven by geographical diversification and ambitious store rollouts.
TRA, while stable, shows slower growth but boasts a consistent dividend growth track record.
HLG appears more attractive for growth-oriented investors, whereas TRA suits dividend-focused portfolios. Both companies demonstrate resilience in their respective sectors, but HLG's valuation and growth outlook currently position it ahead.
·  Financial Comparison: HLG vs. TRA

Revenue and Profit Trends:

Hallenstein Glassons (HLG):
Revenue growth is consistent, projected to increase from NZ$435.6M in FY24 to NZ$515.6M in FY27.
NPAT is expected to rise by 24.5% in FY25, continuing at 3.8% in FY26 and 10.3% in FY27.
Strong performance in Australia is driving growth, with the Glassons AU segment leading profitability.
NZ operations face headwinds, but resilience in margins and market share are noted.
Turners Automotive Group (TRA):
TRA's revenue shows slower growth, expected to rise from NZ$361.2M in FY25 to NZ$431.7M in FY27.
NPAT is projected to increase at a steady pace, from NZ$37.1M in FY25 to NZ$46.2M in FY27.
The Finance segment has rebounded with robust growth due to improved net interest margins, but Auto Retail faces margin pressures.
Valuation Metrics:

HLG's PE ratio is more attractive at 10.4x for FY25 compared to TRA's 12.3x.
HLG's dividend yield is higher, offering 8.1% for FY25, compared to TRA's 5.4%.
Dividend Outlook:

HLG: Known for its stable and increasing dividend payout, with a projected FY25 dividend yield of 8.5%, rising to 9.3% in FY27.
TRA: A premier dividend grower in NZ, offering a gross yield of 7.5% for FY25, with expectations of continued growth.
Risk and Growth Drivers:

HLG:
Growth drivers: Expansion of Glassons Australia, consistent store openings, and a focus on resilience despite volatile margins.
Risks: Challenges in the NZ market and potential supply chain shocks.
TRA:
Growth drivers: Recovery in vehicle pricing, strategic initiatives in Finance, and a track record of effective cost management.
Risks: Dependence on macroeconomic conditions and challenges in the Auto Retail segment due to declining vehicle margins.
Summary

HLG exhibits stronger revenue and NPAT growth, driven by geographical diversification and ambitious store rollouts.
TRA, while stable, shows slower growth but boasts a consistent dividend growth track record.
HLG appears more attractive for growth-oriented investors, whereas TRA suits dividend-focused portfolios. Both companies demonstrate resilience in their respective sectors, but HLG's valuation and growth outlook currently position it ahead.
·  You said:

Compare detail analysis of Profit and Loss performance please

·  ChatGPT said:

Detailed Analysis: Profit and Loss Performance of HLG vs. TRA

Revenue Growth:

HLG: Revenue shows a steady growth trajectory, with a compound annual growth rate (CAGR) of 5.8% from FY24 (NZ$435.6M) to FY27 (NZ$515.6M). Key contributors include:
Glassons AU, which is the fastest-growing segment, with revenue increasing from NZ$218.1M in FY24 to NZ$280.9M in FY27.
Hallenstein Brothers and Glassons NZ contribute modestly but are steady performers.
TRA: Revenue is expected to grow more modestly, with a CAGR of 6.1% from FY24 (NZ$361.2M) to FY27 (NZ$431.7M). Segmentation analysis highlights:
Auto Retail accounts for the majority of revenue but experienced margin pressures, limiting growth.
Finance and Insurance segments show consistent increases, with Finance expected to grow from NZ$62.4M in FY24 to NZ$83.5M in FY27.
Gross Margin:

HLG:
Group gross margins have been stable, hovering around 58.6% to 59% over FY25–FY27.
The Glassons AU segment enjoys the highest EBITDA margins, reaching 26.7% in FY27.
Resilience in gross margins is notable despite industry-wide discounting pressures.
TRA:
Gross profit margins range between 7.3% and 7.4% in FY25–FY27, significantly lower than HLG's retail-driven margins.
Gross margins in the Auto Retail segment faced challenges due to declining vehicle pricing but were partly offset by recovery in Finance and Insurance margins.
Net Profit After Tax (NPAT):

HLG:
NPAT grows from NZ$34.5M in FY24 to NZ$49.2M in FY27, reflecting a CAGR of 12.6%.
Growth drivers include:
Expanding store presence, particularly in Australia.
Stable operating costs relative to revenue growth.
TRA:
NPAT increases from NZ$33.0M in FY24 to NZ$46.2M in FY27, reflecting a CAGR of 11.9%.
The primary drivers are:
Recovery in Finance and Insurance segments.
Cost discipline across Auto Retail despite declining pricing.
Operating Expenses:

HLG:
Operating expenses (OPEX) are stable as a percentage of revenue, highlighting efficiency in managing costs during expansion.
Notable investments in store rollouts and marketing are offset by operational efficiencies.
TRA:
OPEX as a percentage of revenue is slightly higher, driven by increases in system maintenance, claims, and depreciation.
TRA maintains strong cost management, but declining margins in Auto Retail require tighter control.
EBITDA:

HLG:
EBITDA grows from NZ$92.8M in FY24 to NZ$119.3M in FY27, with margins increasing from 21.3% to 23.1%.
Glassons AU is the largest contributor, accounting for most of the EBITDA uplift.
TRA:
EBITDA shows a decline in FY25 (NZ$27.3M) due to Auto Retail margin compression but recovers to NZ$31.8M by FY27, with margins stabilizing around 7.4%.
Finance and Insurance segments drive the recovery, while Credit Management remains stable.
Dividend Payouts:

HLG:
Dividend payout is consistently high, with DPS expected to increase from 61.0cps in FY25 to 70.0cps in FY27.
The payout ratio is approximately 85%, supported by strong free cash flows.
TRA:
TRA is a standout dividend grower, with DPS increasing from 27.5cps in FY25 to 34.5cps in FY27, representing a CAGR of 10%.
Fully imputed dividends are backed by steady earnings and disciplined capital management.
Summary:

Metric

HLG

TRA

Revenue Growth (FY24-FY27)

Steady, CAGR 5.8%

Modest, CAGR 6.1%

Gross Margin

~59%

~7.4%

NPAT CAGR

12.6%

11.9%

OPEX Management

Stable, efficient

Slightly pressured

EBITDA Growth (FY24-FY27)

From NZ$92.8M to NZ$119.3M

From NZ$27.3M to NZ$31.8M

Dividend Yield (FY25)

8.5%

5.4%

HLG demonstrates superior margins, consistent profit growth, and higher dividend yields, underpinned by strong retail operations and expansion strategies. TRA shows resilience with diversified income streams and a robust dividend growth track record but faces profitability constraints in its Auto Retail segment.

Balance Sheet Comparison: HLG vs. TRA

Total Assets:

HLG (Hallenstein Glassons):
Total assets grow steadily from NZ$147.9M in FY24 to NZ$176.8M in FY27.
Key contributors include:
Fixed assets increase from NZ$58.8M in FY24 to NZ$70.7M in FY27, driven by store expansions in Australia.
The right-of-use asset (ROU), related to lease accounting, rises from NZ$67.0M in FY24 to NZ$80.7M in FY27, reflecting new leases from store openings.
TRA (Turners Automotive Group):
Total assets expand significantly, from NZ$799.8M in FY24 to NZ$976.4M in FY27.
Notable contributions:
Working capital grows from NZ$414.3M in FY24 to NZ$555.6M in FY27, reflecting higher inventory and receivables tied to auto retail and finance operations.
Fixed assets increase from NZ$113.9M in FY24 to NZ$146.3M in FY27, driven by branch expansions and investments in operational infrastructure.
Current Assets:

HLG:
HLG maintains a lean structure with limited current assets, focusing on optimizing working capital.
Working capital grows modestly from NZ$8.5M in FY24 to NZ$12.8M in FY27, demonstrating efficient inventory and receivable management.
TRA:
TRA's current assets are significantly higher, dominated by inventory and receivables in the Auto Retail and Finance segments.
Working capital sees robust growth from NZ$414.3M in FY24 to NZ$555.6M in FY27, underscoring the capital-intensive nature of TRA's business model.
Intangible Assets:

HLG:
Intangible assets are minimal, reflecting the company's focus on tangible retail operations. Intangibles decrease from NZ$1.0M in FY24 to near zero by FY27.
TRA:
TRA's intangibles remain stable at around NZ$162.5M over FY24–FY27, primarily reflecting goodwill and brand value associated with acquisitions.
Total Liabilities:

HLG:
Total liabilities increase modestly, from NZ$90.6M in FY24 to NZ$98.9M in FY27.
Key components include:
Lease liabilities growing in tandem with ROU assets, from NZ$79.2M in FY24 to NZ$86.7M in FY27.
Other liabilities remain stable at ~NZ$12.2M.
TRA:
Total liabilities increase significantly, from NZ$521.6M in FY24 to NZ$628.1M in FY27.
Key drivers:
Net debt increases from NZ$407.8M in FY24 to NZ$514.8M in FY27, reflecting capital demands for inventory, branch expansion, and financing activities.
Lease liabilities decrease modestly from NZ$24.9M in FY24 to NZ$21.8M in FY27.
Shareholders' Equity:

HLG:
Equity grows from NZ$103.2M in FY24 to NZ$132.6M in FY27, driven by retained earnings and consistent dividend payouts.
TRA:
Equity rises from NZ$278.1M in FY24 to NZ$348.3M in FY27, supported by reinvested profits and growing retained earnings.
Key Ratios:

Metric

HLG

TRA

Total Assets (FY24-FY27)

NZ$147.9M → NZ$176.8M

NZ$799.8M → NZ$976.4M

Current Assets Growth

Modest

Significant (Working capital-heavy)

Fixed Assets Growth

+20% (Store expansion)

+28% (Branch expansion)

Total Liabilities Growth

+9%

+20%

Debt/Equity Ratio (FY27)

0% (net cash)

1.48x (net debt-driven)

Shareholders' Equity (FY27)

NZ$132.6M

NZ$348.3M

Summary:

HLG: Displays a balanced and efficient asset structure with limited reliance on debt. Focused on tangible retail assets and operational efficiency.
TRA: Operates a more asset-heavy model, with higher working capital and intangibles. Growth is funded by significant debt, reflecting its capital-intensive nature.

[Basil]

Topped up with a few more Turners this morning.  (Have also lifted my stake in HLG by 50% since the annual meeting two weeks ago).
Turners trade cum a 7 cent fully imputed divvy in January.  Backing that out from the share price this morning of $5.29 gives a net price of $5.22
FY26 starts in ~ 3 months
Over the last 5 years eps and dps have grown at a 12 and 15% CAGR.
On Craigs numbers for FY26 @ $5.22 Turners trades on a forward PE of only 11.1 and Gross yield of 8.1% which in my opinion are truly compelling metrics for such an incredibly well managed company.
For what it's worth, I think broker targets for FY26 and FY27 and going to come in for significant upgrades next year.
TRA and HLG, are the gifts you give yourself this Christmas, in my opinion.

[Waltzing]

SP bouncing up and down to the high's no break out yet...

still pretty good on an economy that is a dead cat not even bouncing...

[SCOTTY]

Trading ex dividend today

[Dolcile]

Jeepers. I didn't even realise there was another juicy dividend about to hit the accounts

[Basil]

Every time I get a big juicy quarterly dividend, (fully subscribed to the DRIP so its extra shares for me), I just want to give Tina a big hug.  Now with the shares over $5 I want to have a group hug with Todd and Aaron as well lol

[Sideshow Bob]

Jeepers. I didn't even realise there was another juicy dividend about to the accounts

Love a quarterly dividend.....

Although I'm in the DRP also.

[SCOTTY]

Last year they paid a 3rd interim dividend on 27th March 😋