TRA - Turners Automotive Group

[Waltzing]

Yep some bargains out there at the moment this might be one of them... its a much bigger company than your local second hand car dealership ...

There is a lot of money in scrap metal everywhere in the world

true in a few years you may not own a car as you dial up a hire electirc car if you need one.

[Basil]

Finally got around to reading Turners 2024 annual report this morning.  I'm a bit old fashioned and like to read the physical report.

A few thoughts.
It's clear the RBNZ pivot will directly translate into strong eps growth in the finance division in the years ahead as lower floating rate funding covers fixed rate lending previously undertaken at much higher rates and I expect significant NIM expansion on their circa $420m loan book.

A clear pathway to growth through branch expansion, driving increased market share and increasing brand awareness which translates to further growth in their insurance and finance book.  Interesting to note from the report as well as their known and already disclosed branch expansion plans, they have a "number of conditional offers in the market" which I presume relates to further land acquisition possibilities.

Their new initiative of direct-to-consumer insurance for mechanical breakdown and the like looks like a really interesting initiative given circa 50% of all sales are consumer to consumer direct.

Top 7 executives are all degree qualified, most at Auckland University, (ask me if I think that's a really high quality degree ), and it almost looks like an Auckland University alumni group, all very highly experienced and been in the industry and their current position for ages.  A very highly qualified, experienced and stable, high performing leadership team.

Trades cum the fully imputed 7.5 cent final divvy.  Gross yield about 9% for FY25 by my estimate and well worth noting they have grown the level of dividends by ~ 40% in the last 4 years. 

We all know Turners are multi award winning with their "Tina" marketing campaign, but interestingly they were finalists in the 2023 Effie Awards (Global best of the best marketing awards). 

Turners provides a pretty unique combination of very high dividend yield with strong growth.  Targeting $65m NPBT by FY28 which would see a 10 year CAGR of just under 10%.  Very impressive operation. 
Disc: My biggest NZX position by quite some way.

[Waltzing]

Will we see 4 again? hit 3.90 3 times and bounced....

 Growth  might slow in the future but its still under priced when the  OCR or if it gets back to a long run average...

[Basil]

Posted in retail stocks thread today but it really deserves better allocation and belongs in here.

Even those dumpster diving into the WHS have done okay lately, up a whopping 10.5% just on Friday !
Up nearly 25% from its low for the year of 93 cents.  (For the sake of clarity, I am not suggesting in any way that I think it's is a buy and I do not own any, nor am I intending on buying any)

What this does signal however is how forward looking the market is if a complete and utter train wreck like WHS can start to be repriced like that.  I think the market is already looking ahead to what impact the change in the Reserve Bank's tone suggests for interest rates and company profits in FY26, FY27 and beyond.  I am very comfortable with the tailwinds a much lower interest rate environment will provide for my big NZX positions in future years, namely TRA and HGH.  Interest rate cuts for TRA are like an immediate but also a sustained shot of adrenaline into its bloodstream with lower floating rate funding costs directly and immediately boosting profits with net interest margin expansion, (lower funding costs for previous higher fixed rate lending), but also boosting further retail demand, loan generation and insurance sales.  Lower interest rates are rocket fuel for profit growth for them and they've been amazingly resilient in super difficult financial times over the last 4 years.  Just watch them fly in the years ahead.

Better than watching them fly in the years ahead is being on board lol

[Waltzing]

CANT HAVE ENOUGH?

[winner (n)]

Turners Book Value after Tina Capitalisation is about $3.50

So current share price is dirt cheap ...should be 1,4 to 1.6 times that ....say about $5.25

Looking good

[Waltzing]

yes winner() but the economy just crashed ....

bit like the advert where the dog says the washing machine just broke....

Tink we might get soome at 3 when everyone thinks there will be a run on the banks...

[Basil]

Three something is a figment only in your imagination now mate.

[Waltzing]

DAMN!!! oh dear .....

[Basil]

You've nailed it though mate with your PM to me.  TINA - there is no alternative !
Bingo, you're a legend.

[Waltzing]

BV what were your numbers WR()

Assets liabilities or BV shares...

i mean Financial reporting is really accurate?

but what are the brokers saying ... 

 

[Basil]

Craigs have a target price of $5.02 (May 2024 research).

[Waltzing]

TINA .... there is ...

[Waltzing]

New Zealand 2024. Vehicle Market Collapses 59.9% In June

https://www.focus2move.com/new-zealand-vehicles/

[Basil]

That's new vehicles against record registration in June 2023 to beat the EV rebate decline. Used cars are holding up really well.  I have Turners latest year to date and June vehicle market stat's and am very confident they are doing well.