TRA - Turners Automotive Group

[Basil]

Yeah... from memory in the last call they explained there was some pressure on the NIM in the lending book with funding rates being floating and all previous loans made being fixed and as interest rates have jumped dramatically in the last year NIM was 100-150 basis points compressed from memory.  If I recall correctly this is an approx 12-18 month issue and NIM should be restored after that.  Suppose they will get tailwinds from the reverse of this in due course as we come out the other side of this higher interest rate cycle.

Given motor vehicle finance was their biggest divisional earner for FY22 their most recent outlook statement was more than satisfactory.  Like the ol Mainland cheese advertisement jingle says "Good things take time"

[winner (n)]

I loved that slide of a couple of years ago

Roadmap to $5/share ...
,,,,,by 2024

Was a slide from middle of 2021 so not long ago - be good if we get to $5 by then - I think mentioned that it would be on a undemanding PE

But if you keep changing the targets punters might forget what the previous ones were eh

[Basil]

$5 by 2024...I'm pretty confident Tina and Todd will get us there mate.  When they do you have to promise me you'll fly up for the Annual meeting and if we're really lucky, (apart from the usual lukewarm sausage rolls), we might get a hug from Tina 👍

[winner (n)]

OMG ...I've had to change stations on the radio now.

That woman screaming her head off at 6.38am is just too much ...and then again 10 minutes later

Remembered why I left the RNZ National  a while ago ....it  sucks ...does she pop up on Rhema?

[winner (n)]

Another solution maybe is listening to these things called podcasts

Are they ad free and TINA free?

If so any recommendations

[BlackPeter]

OMG ...I've had to change stations on the radio now.

That woman screaming her head off at 6.38am is just too much ...and then again 10 minutes later

Remembered why I left the RNZ National  a while ago ....it  sucks ...does she pop up on Rhema?

I can happily confirm that RNZ is still Tina free. Maybe you should return? I guess really, who wants to waste their time with listening to ads anyway?

Much better though (for international affairs) is the Deutsche Welle, just book a Duolingo course and listen in ...

[Basil]

Strength and Resilience despite the headwinds.  Solid result.
Note 3 new branches planned for FY24.
Just a brief explanation on the finance side of things.
Their funding is floating but previous lending has all been fixed for the life of the loan so as interest rates go up as they have a lot in the last 12 months their margin on loans previously made at fixed rates declines.  I expect this to flow though into FY24 a bit too but to wash through by FY25.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TRA/402756/383897.pdf
Metrics look sound to me.  9% gross yield on yesterday's closing price.
If they can do 38 cps this year up from 36.4 cps last year the shares are on a forward PE of 355 / 38 = only 9.3
With clear plans for growth in the years ahead they look like a good hold to me.
I expect used cars to be far more resilient than new cars in tougher economic conditions and I expect they will keep gaining market share up towards 10% in the foreseeable future.

Please read and learn BP - Page 24 is a must read for you.

[winner (n)]

A used car salesman always good at spinning a good story

This is an uninspiring result but if you rave on about resilience, challenges blah blah and all that sort of crap it is a fantastic result eh .... often happens that purchasers get sucked in by used car salespeople and Todd has done that here. Well done Todd

Last year they used a 'normalised' NPBT to say good they were - this was $24.5m and this year they are reporting $23.4m - that's 4% less/down in my books ..... and thats even after a 11% increase in revenues

Pretty uninspiring and somewhat disappointing to me

[Basil]

Fair enough mate I respect your point of view. For my money and in their defense, they made it crystal clear in the call for their annual result in May 2022 that headwinds regarding floating funding costs existed in the finance book (which is all fixed rate lending).  We've had a dramatic increase in interest rates this period compared to the PCP so comparing results when funding costs for the receivables book were about 3% lower last year was always going to be a challenge.

If you normalise the result for that there would have been very nice profit growth in the lending division.
Keep in mind that this mis-match between floating funding and fixed price lending creates a tailwind when interest rates fall again.

Given this headwind this period and other obvious headwinds around Omricon in the first quarter, inflation and cost of living pressure on consumers I think its a solid and resilient result and I'm happy to hold.

They have plans for 3 more branches next year.  I'm happy with the (at $3.50), 9.1% gross yield, the low PE, marketing, market share growth and management and think their growth plans are soundly based.  I'm on the bid for more at $3.50.   Multi award winning marketing with Tina gives me a lot of confidence they can build on market share gains going forward.

[Left Field]

A used car salesman always good at spinning a good story......
......This is an uninspiring result .. and somewhat disappointing to me

The market seems to agree with you Winner.

Much better investments out there IMHO.

[Basil]

The market seems to agree with you Winner.

Much better investments out there IMHO.

How so ?  Share price closed up 4 cents at $3.58 (1.1%), on a day the market was down 0.2%.  Not that many companies on the NZX with genuine growth prospects on a PE of 9 with a gross yield of 9%. I managed to get a very small top up of several thousand more at the low price of the day, $3.50.  Happy with that.  I am happy to invest with companies with good yield that are executing well with the current headwinds in the knowledge that those headwinds will abate in due course.

[Basil]

Got chatting with a good friend yesterday about how you successfully build a brand.
Its strange how people identify with a person or a dog or something else and it really build the brand strongly over time.
Who remembers the old Spot the Telecom dog advertisements and how successfully Telecom built their business using that star dog ?
Everyone will already be aware of how Rod Duke has built his fortune off the back of the super positive and vivacious Tammy starring in Briscoes advertisements.
We are on to a real winner with "Tina".  Judges in the marketing awards said "WE LOVE TINA"
I am very hopeful that Tina will be our golden lady and build the Turners brand strongly in the years ahead.  In the meantime the gross yield of 9% is very rewarding.
Disc: Happy holder.

[Basil]

"Hounded" up some more this morning, couldn't help myself because I love Tina and I am sure she's the secret sauce to ensure the growth momentum continues in the years ahead.

https://www.autocar.co.nz/turners-auto-retail-optimises-auckland-network/

[Beau]

Topped up a few more at $3.35, makes sense for future dividend Retirement shortly in next few years those regular dividends quarterly to help us along the way.

[Basil]

Welcome to the forum Beau.  I'm in much the same position as you, looking to retire a few years from now and I have been investing with the primary goal of growing reliable dividend income to ensure a comfortable retirement.