TRA - Turners Automotive Group

[winner (n)]

TRA has been rewarded over the years with multiple expansions

Question is how high can it go

That P/B multiple is looking a bit high for a outfit doing 10%/12% ROE and pretty high dividend payout at 70%

But BV could go a bit higher if they put a lot of property they holding at cost in the books at market value

Here's how multiples have gone over the years .....month closes and past twelve months eps.

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[Basil]

Best peer group comparison is Briscoes with as mentioned, declining earnings in recent years and very limited apparent growth ahead so really does deserve to be on a much lower PE than Turner's but their PE is nearly 18 and tangible book value per share off Jarden website is only $1.34 but their share price is north of $4.90.  Also well worth noting Rod Duke's age and that Todd and Aaron have a lot more high octane gas in the tank than he does in terms of their working lives ahead of them.

[Ferg]

I was updating my model yesterday....some updated graphs for the latest TRA result.

From 2015 to 2025:
~ Sales have gone from $90m to $414m
~ NPAT has gone from $11m to almost $39m
~ NPAT as a % of sales has gone from 12% to 9.3%
~ shares on issue have gone from 63m to 90m
~ EPS has gone from 17.4c to 42.9c
~ cash dividend has gone from 9c to 27.5c

The reason for looking at sales/share is to remove the impact of share issues on topline sales expansion.  That way I can assess the impact of the 4 drivers for the SP being: sales, NPAT%, share count, P/E multiple to see what has driven the SP change.  2015-2025 the SP has gone from $3.25 to $5.82; most of this was driven by topline sales expansion rather than P/E expansion.  This is a different time period to winner's analysis so will have slightly different results.

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[Basil]

Thanks Ferg.  Well worth noting the share price is up 79% in the last decade but eps is up 147% so the PE has actually contracted a lot despite TRA proving up their business model very successfully. ! Dividends have tripled in the last decade !  Is there any other company on the NZX that can come anywhere near that track record of dividend growth ? 

[winner (n)]

They don't seem to have included the cool chart of market share they usually put in the presentations

Always like that one

[Basil]

Yeah I noticed that too.  Usually leave it out when its not quite as good as they were hoping for lol
What's impressive though is how many more branches they are opening up this year and a great pipeline coming as well.  Additionally,  there's three live conditional offers for new sites currently in play and other prospects further down the pipeline as well.

On the call Todd says the new Tina 2.0 advertisement has already had over 1 million hits on YouTube and the 1 minute add had on average. 57 seconds playtime which basically means the vast majority of people listened to the whole advertisement.

Forward PE of 12.7 very good value for a company with a 10 year CAGR in EPS of 10% and 10 year CAGR in DPS of 14% don't you think ?
Final divvy of 9 cps was a very nice surprise, (I was hoping for 8 cps).  I'm almost temped to take the cash this time instead of DRIP and have a big mid winter party.

[Ferg]

I'm almost temped to take the cash this time instead of DRIP and have a big mid winter party.

Your shout at Oyster & Chop? 

[Alekhine]

HI Basil

I asked Todd about this, as well as the unrealised property gains, after the meeting and he sent me the graphs of the market share and the number of auto dealers (I am having difficulty posting it- so get in touch with me if you want me to send it to you).

His reply:

"Market share hovering around 8.5% - 9.5% depending on the month. Overall trend is still very much up.
We want to focus people more on unit growth to be honest as market share is not something we can control directly.
Here are the dealer numbers...still heading down."

"Unrealised property gains around 10%. Obviously the properties we have had for a while show much bigger gains than that, but the developments we have done over the last 3-4 years no real gains at all."

[Alekhine]

Dealer registrations dropped to 2765 as of April 2025

[Dolcile]

Wow Turners closed at $6.50.   Although the weighted average was $6.27. 

[Basil]

Mr Market is slowly waking up to what I have been talking about for quite some time now...the fact that TRA has proven it has a decade long blue chip track record of both EPS and DPS growth despite the extraordinary economic challenges over the last 5 years.  Its remarkable that they keep growing strongly despite the persistent economic adversity.  I'm really looking forward to seeing how they perform in the years ahead with better economic conditions.  Turners in my opinion is a blue chip growth stock fully deserving of a significantly higher multiple than it currently trades on and I foresee both strong earnings growth as well as significant multiple expansion going forward.    Management are doing a brilliant job. 

[Dolcile]

I wish i had more

[Max]

TRA has been rewarded over the years with multiple expansions

Question is how high can it go

That P/B multiple is looking a bit high for a outfit doing 10%/12% ROE and pretty high dividend payout at 70%

But BV could go a bit higher if they put a lot of property they holding at cost in the books at market value

Here's how multiples have gone over the years .....month closes and past twelve months eps.

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Yes good question.
Ive knocked the top off my holdings whilst the Tina,Turner:) lovefest is in full swing and bought my first MFB.

[Basil]

Forsyth Barr at forecasting EPS of 48.0, 52.9 and 57.4 cps over the next 3 years. $6.50 / 0.48 = forward PE of 13.5 which seems very reasonable indeed for a company that has a proven track record of growing eps by a 10 year CAGR of 10% per annum and is forecast to continue doing the same.  Ticks all my boxes and I am very happy to continue to hold my #1 listed investment position and enjoy all the growth in the future.

Turners wins most trusted used vehicle brand for the sixth year in a row.  Maybe they should also win the award for the most trusted share investment lol
https://www.drivencarguide.co.nz/news/nzs-most-trusted-new-car-and-used-car-brands-revealed-in-readers-digest-survey/?lid=c6z8l2z91bua&utm_source=dcg_newsletter&utm_medium=dcg_email&utm_campaign=20250530_EDM_WEEKLY_WRAP&uuid=4507e39e-a4ef-4120-aa89-7ee4be15d16c

[Waltzing]

its that song..and the rather shy take off of men at work.... YMCA...

bare chest's in all....

some marketing departments joke... the song could be worth 100's BPS..