TRA - Turners Automotive Group

[Waltzing]

please note for those wanting to use AI to run over reports Anthropic have increased  document project sizes - this annual report took about 12 percent of a project..

AI is actually better for general reports than for software projects which it finds very difficult..

Ai will not be replacing programmers but it seems to be better at consuming reports ...

have sent the summary for reading...

[Basil]

Many thanks for sending it to me mate.  I reckon A.I. is getting bloody good !!  I think if it could value stocks on the NZX it would rate TRA as a BUY !

AI Research of TRA (Turners Automotive Group) financial performance since 2019 and their 2028 profit targets, here's the analysis:

Current Performance vs 2028 Target

2028 Target: $65M Net Profit Before Tax (NPBT)

Historical NPBT Performance:

FY19: $29.0M ($33.6M excluding one-offs)
FY21: ~$34M (upgraded guidance range $33-35M)
FY22: ~$43.0M
FY23: $45.5M (+6% growth)
FY24: $49.1M (+8% growth)
FY25: $54.3M (+11% growth)
Growth Trajectory Analysis

Required Growth to Target:

From FY25 ($54.3M) to FY28 ($65M) = $10.7M increase needed
Average annual growth required: ~6.5% over next 3 years
Historical Growth Performance:

FY19-FY25 compound annual growth rate: ~10.1%
Recent 3-year average growth (FY23-FY25): 8.3%
Most recent momentum: 11% growth in FY25
Probability Assessment: HIGH

Supporting Factors:

Consistent Track Record: Turners has delivered record financial results in FY25, with the company describing this as "a decade of sustainable growth" NZXNZ Autocar
Strong Current Position: The company expects to meet or exceed its FY28 goal of $65m NPBT ahead of schedule Turners Automotive Group posts record $38.6m net profit - NZ Autocar
Diversified Revenue Streams: Multiple business segments performing well:
Auto Retail: Strong market share growth with branch expansion
Finance: 31% profit growth in FY25
Insurance: 13% profit growth
Credit Management: 11% profit growth
Strategic Initiatives: The company is in a "build phase" for its next growth push with new branch developments and market expansion NZX, New Zealand's Exchange - Announcements, Turners Delivers Record Fy24 And Lays Out Future Road Map
Market Position: Turners is "increasingly seen as the leading brand in the used car market" with strong competitive advantages Autofile - News / Record earnings for Turners
Risk Factors:

Economic uncertainty and interest rate environment
Used car market cyclicality
Consumer spending pressures
Conclusion: The probability of TRA reaching their $65M NPBT target by FY28 is VERY HIGH (85-90%). The company has demonstrated:

Consistent historical growth exceeding target requirements
Strong recent momentum with 11% growth in FY25
Management confidence in achieving targets ahead of schedule
Diversified business model providing earnings resilience
Clear strategic roadmap for continued expansion
The required 6.5% annual growth to target is well below their historical performance, suggesting the target is achievable even in more challenging economic conditions.







FINANCIAL PERFORMANCE REVIEW - TURNERS AUTOMOTIVE GROUP FY25

Profit & Loss Variance Analysis: Despite revenue declining 0.8% to $412.9m, Turners delivered strong profit growth with gross profit up 2.7% and operating profit surging 10.8% to $54.5m. Net profit after tax increased 17.1% to $38.6m, demonstrating effective cost management and operational leverage.

Profitability Ratios - Significant Improvement:

Gross margin expanded 200 basis points to 59.4%
Operating margin improved 140 basis points to 13.2%
Net margin increased 140 basis points to 9.3%
Return on equity strengthened from 11.8% to 12.9%
Return on assets improved from 3.8% to 4.2%
Balance Sheet Growth & Strength: Total assets grew 6.0% to $918m, with finance receivables (core lending business) expanding 3.9% to $447m. Cash position strengthened 25.8% to $22m, while total equity increased 7.3% to $298m.

Capital Structure Enhancement:

Debt-to-equity ratio improved from 1.53x to 1.49x
Equity ratio strengthened marginally to 32.5%
Interest coverage improved from 1.8x to 2.0x
Borrowings increased 4.9% to $446m, maintaining controlled leverage
Shareholder Returns:

Earnings per share grew 15.0% to 43.4¢
Dividend per share increased 13.7% to 29¢
Payout ratio remained stable at 66.9%
Key Observations: The financial results demonstrate Turners' resilience through economic downturn, with margin expansion offsetting revenue decline. The company maintained disciplined capital allocation while growing its core finance receivables book and strengthening its balance sheet position. Strong cash generation supported both dividend growth and capital investment.

[Dolcile]

Very happy to be participating in the drp and picking up more shares at $6.61

[Basil]

Very happy to be participating in the drp and picking up more shares at $6.61

Likewise. 

[Dolcile]

I wish I was able to attend, it should be a good event.

The one question, I wouldn't mind posing though, surrounds the auditor tenure.  Baker Tilly have been in the seat for a long time and presumably this is one of their larger audits.

[Bev]

I wish I was able to attend, it should be a good event.

The one question, I wouldn't mind posing though, surrounds the auditor tenure.  Baker Tilly have been in the seat for a long time and presumably this is one of their larger audits.

Can you clarify Dolcile? What is your query re the auditors?

[Dolcile]

I guess the question is, when was the last time Turners went through a competitive audit tender process? I understand outside of NZ, most countries have a limit on the number of consecutive years an audit firm can be appointed - and that audit firm rotation (within reason) promotes quality.

[Bev]

Thanks Dolcile

[winner (n)]

I wonder if people associate Chair Baker with Baker Tilly? Of course there's no connection

[Pierre]

The downward trend in dealer numbers continues:

https://autofile.co.nz/dealer-numbers-at-13-year-low-

[winner (n)]

The downward trend in dealer numbers continues:

https://autofile.co.nz/dealer-numbers-at-13-year-low-

What's the definition of a dealer in this repor - anindividual or a business

[Basil]

Its hard to compete with Turners.  My understanding Winner, which is out of date so may no longer apply, is that if you buy and sell more than 6 vehicles a year you have to register as a car trader / dealer.

[Pierre]

What's the definition of a dealer in this repor - anindividual or a business

In New Zealand, any individual or company whose business involves trading motor vehicles must register on the Motor Vehicle Traders Register (MVTR). This includes importers, car auctioneers, car consultants, wholesalers, and even companies like insurance or finance companies that sell vehicles directly to the public.
Selling more than 6 vehicles in a 12-month period will require registration.

[winner (n)]

So Turners is 1 of 2,633 dealers

And they have >10% market share

Cool

[Pierre]

So Turners is 1 of 2,633 dealers

And they have >10% market share

Cool

A search of the MVTR shows Turners Fleet Ltd and Turners Group NZ Ltd are both registered Traders.
So, 2 Turners entities out of 2633 dealers hold ~10% market share.
That definitely is cool.
Individual branches don't appear to be counted in the total # of dealers.