Thanks BP, you’ve summed up my confused thoughts !
Thanks BP, you’ve summed up my confused thoughts !
Doesn’t seem that long ago punters were paying a premium for the bonds because it seemed the hype was going to drive the share price way beyond 4 bucks.
Share price way off those expectations and about the same as it was a few years ago.
A casual observer would say something not quite right .....with the company that is
Not sure I would classify myself as a fully informed investor, but I do want another 10-20k of Turner’s stock. That’s why I took up the bonds as the SP at the time was running away a bit. I didn’t pay a premium for the bonds. So I am trying to decide whether to convert the bonds, or simply take the money and buy what I want on market. I think I am leaning towards the latter. Especially as we have an unknown month to work into the strike price.
You can't compare a company that's grown EPS 45% per annum on average for six years with Turners. You can compare Colonial Motors with Turners.
I think the issue is that Turners MUST stop issuing new shares to fund their growth. I calculated on the weekend just approx. 4.5% eps growth forecast for FY19 this year because the estimated weighted average number of shares on issue for FY19, (assuming half bondholders convert to shares) is considerably higher than FY18. Maybe in FY20 they can grow organically and generate some decent eps growth without even more shares on issue or maybe this government sends us down a rat hole into a deep recession, who knows, but I think that's why the shares are trading on a forward PE of just 9.75. Maybe a bit cheap but try telling Colonial Motors shareholders that.
Yes the underlying business is doing very well but they need to get tough on themselves and really commit to no more dilution.
Anyone knowhow difficult or what the chance of them improving their credit rating to get lower cost of capital is?
Okay I see you point now. Yes last November was a grim time. I clung on like a sick dog hanging in their by the skin of its claws to my SUM shares when things got really ugly and I'm really glad I did. Suppose Percy knows the feeling a bit seeing as this was $3.60 years ago and meanwhile the market has roared away....
The message at their presentation was that they had already got "tough on themselves and really committed to no more dilution." This has been borne out by the fact the new bond issue will not be convertible.
Credit rating.Always helpful,but in today's low cost of funding I think it is more important to concentrate on their very high NIM [net interest margin] which is over 9%.
Should TRA want to raise capital in the future, I think we will see a pro-rata rights issue,after their last capital raise attracted widespread criticism.
Thanks Percy. I was reading an article yesterday and was surprised to see Z energy bonds were 4% whilst TRA at 5% and whilst they’re obviously very different business a 1.5% differential is fairly substantial and even a small reduction in TRA cost of capital would surely be a huge gain to NPAT
forgive my ignorance but whats the advantage of a pro rata rights issue? Thats still issuing new shares isn’t it?
Yes/no/maybe.It is funny how rising interest rates actually do not hinder firms such as TRA.Yes borrowing at a lesser rate would improve profit,however they are still not paying over the top for funds.
SSP.Everyone can apply for $15,000 worth,whether you have a 100 shares or 100,000 shares.Last time those with 100 shares received very few,while those with 100,000 received $15,000 worth of shares.
Rights issue.Now a 1 for 10 rights issue,or whatever 1 for 5 etc means everyone has a fair go based on the number of shares they hold.
Should it be an renounceable rights issue you can sell your rights,should you decide not to take them up.
Both TRA and HBL received a great deal [rightly]of criticism from NZ Shareholders Assn when they did placements and SPPs.Both companies realised their mistake.