TRA - Turners Automotive Group

[lorraina]

The land at Worsleys Road,Cashmere Hills owned by Turners' Oxford Finance Ltd has been sold to CDL Land [a CDL company]
for $5.53 mil.
The land is likely to be divided into 60 sections.
 

[winner (n)]

The land at Worsleys Road,Cashmere Hills owned by Turners' Oxford Finance Ltd has been sold to CDL Land [a CDL company]
for $5.53 mil.
The land is likely to be divided into 60 sections.
 

Good it's gone ...cash to build more productive stuff ....and put more Tina ads on the telly

[BlackPeter]

The land at Worsleys Road,Cashmere Hills owned by Turners' Oxford Finance Ltd has been sold to CDL Land [a CDL company]
for $5.53 mil.
The land is likely to be divided into 60 sections.
 

Sounds like a win-win.

Discl: hold both ;

[Basil]

Good it's gone ...cash to build more productive stuff ....and put more Tina ads on the telly

Agreed.  Todd and Aaron are very smart guys.  I am sure they would have made the decision believing the price achieved was most advantageous and they could use the capital more productively elsewhere.

[Mos]

Sounds like a win-win.

Discl: hold both ;

Agree. Like this land acquisition as a CDL and MCK shareholder and confident TRA will recycle productively.

[Hectorplains]

Agree. Like this land acquisition as a CDL and MCK shareholder and confident TRA will recycle productively.

RV (8/22) of $7,692,500... on that bare metric (28% under) it looks a good pick up for CDL. 

[Mos]

RV (8/22) of $7,692,500... on that bare metric (28% under) it looks a good pick up for CDL. 

Thanks for that information Hectorplains. Very interesting. Definitely has the hallmarks of a good value purchase in a good location.

[lorraina]

The land was mortgaged to Dorcester,and when the borrower defaulted Dorcester took possession of it.
So Turners have owned it for a very long time.
Ideal investment for CDL.Will cost a lot to develop,but on the hill over looking Christchurch the sections will command a hefty price.

[winner (n)]

Phew  ... at least they'll have the cash to pay upcoming dividend ...well timed eh       

[Basil]

RV (8/22) of $7,692,500... on that bare metric (28% under) it looks a good pick up for CDL. 

Maybe but according to one large developer I spoke with a few months ago the value of bare development land around Auckland has halved since the peak of the market, (no idea about Chch).  There are many reasons for this including the cost of developing bare land has skyrocketed in recent years, especially in hilly area's.

Just a little bit of further anecdotal stuff about how the market has changed this year that might be of interest to you guys, Todd recounted the story of their very recent Tauranga land acquisition at the recent retail zoom meeting, a summary of which as best I can recall is the vendor early in 2023 wanted $11m and Turners offered $10.5m  The vendor refused but then came back to them later in 2023 and said he would take their $10.5m but Todd said, not so fast, the market has changed a lot with higher interest rates and they eventually agreed, (and I am going off memory here) on $8.7m.  Turners own assessment of what they were prepared to pay reduced by more than 17% in less than a year.   

Turners are satisfactorily capitalized with plenty of headroom with debt facilities so don't need the money so I would wager they got a good deal relative to where they see current fair value for that property.

Anyway...changing gears to have another look at the bigger picture now the dust has settled a bit after index inclusion, what's been a bit interesting about Turners is how the share price has performed so far after the event.  Its barely changed, down just 8 cents.  Due to go ex a 6 cent fully imputed dividend in early January so sellers are really only getting a net $4.54 now if they sell at $4.60.

Based on ex divvy SP of $4.54 and average brokers estimates for FY25 of 42.3 cps, given FY24 is only 3 months away from being done and dusted, they trade on a forward prospective PE of only 10.7 times FY25 eps and 8.25% gross yield (27cps fully imputed = 37.5cps gross / $4.54).  Those are very attractive metrics for a company with a 10-year CAGR of 7% and an outlook for more of the same going forward.

More importantly looking further ahead, I think Turners are extremely well positioned to grow earnings in a falling interest rate environment with finance cost tailwinds in their loan book so the prospective FY25 PE looks compelling to me.  My base assessment, and I think there's widespread agreement on this on here and the other channel, is Turners should really have popped higher on index inclusion so it not falling much afterwards shouldn't really be a surprise.

Disc: I have been back buying at this price level as this is the most compelling GARP stock on the NZX in my opinion.
 

[Mos]

I see what you did there Basil with changing gears. Agree, TRA well positioned to motor ahead over next few years and represents good value at $4.60. The strong dividend yield and dividend growth profile is attractive.

[Basil]

Motor ahead, like it...but what sort of motor Mos?  My theory. I used to own a supercharged V8 as a younger man and when that supercharger was cranking...oh my goodness, forward progress was absolutely ballistic.

Being semi-retired and retiring at some stage in the not-too-distant future that dividend growth profile is incredibly attractive to me.  Heck, Jarden's estimating 39 cps in FY30!  That's supercharged growth for you as lower interest rates generate the high-octane fuel to boost strong earnings and dividend growth in the years ahead.  With Todd at the wheel and Aaron navigating, we're onto a Winner!

[winner (n)]

TRA said half year EPS up 7% on prior year

With CPI up 5.6% and population up 2.7% in real terms on a per capita basis TRA profits declined

Need to do better than that eh

Post inspired by Basil talking about real per capita stuff on another thread [\size)

[lorraina]

W69.
Take a trip to Timaru and marvel at Turners site.
All the time improving their retail positioning,resulting in real market share increases.

[Basil]

Been very resilient in incredibly tough conditions this year.   Really impressive. Wait till the lower interest rates supercharger starts cranking mate, then we'll see some serious growth.  Maybe RBNZ starts cutting in early to mid 2024 and as lorraina has mentioned above, all the time they're expanding their branch network, and also growing their market share with brilliant marketing.