How many do you want to sell at $1.70.?
LOL Winner must be down at the beach again and sitting in the sun. Even I might be tempted at that price lol
Good post BP. I think the things you missed include Grant Baker showing disrespect while contemporaneously seeking a dramatic rise in his Chairman's director fee.
Too cowardly to face off against the snarling Beagle ? Deputy chair looked rattled for most of the AGM. Hospital pass to chair the meeting at the last minute ?
Board dysfunctionality ? Board seemed to have a real sense of entitlement to their dramatic fee increase, (arrogance I thought and I was near the front row at the annual meeting and felt in a good position to make an assessment) and simply aren't delivering the goods despite their massive fee increase.
Analysts are forecasting eps decreases of around 8% per annum this year and next. I think that SUM's up what you have missed...oh yes except KW's legendary advice NEVER buy in a downtrend. NO EXCEPTIONS !!
P.S. CMO forecasting tighter margins going forward is another thing I think you missed. I think the warning signs are there for those that choose to read the tea leaves.
Hits $2.25 and basically no buyers, that's the problem with this stock there's just no demand for it and untold large sellers lurking.
I am still waiting for an entry point and have said it before it keeps dropping.
Drop to 225 only on 2000 shares
No worries
Dum de doo. Dum de day. Each day a step closer to my stop loss.
My largest TRA 'purchase' was after that, when the TRAHB bonds matured and I elected to have those converted to shares. This was at the conversion price of $2.85 IIRC. This was in effect a 'cash issue event' for TRA. Statistically buying in at 'cash issue time' is usually good timing. My last purchase on market was just before the last dividend. Statistically, once again, this is generally a good strategy because I would have expected the share price to slowly recover the amount of the dividend paid.
In both instances there was no share price recovery. But 'playing the odds', which is what I try to do, doesn't always come out in your favour. When that happens you have to take it on the chin. I don't regret either purchase, except with the benefit of hindsight, which no purchaser can have when they buy their shares.
I have held TRA for a few years, but a significant stake for only a few months. Despite the share price decline over the last six months. I was never going to be 'shaken out' within a few months. My purchasing of TRA shares is not finished yet either. If 'averaging across' at the current price makes sense, then I will do it. Contrary to what you think I do care about what price I sell my TRA shares at. But I don't have to sell any so I won't. And as the business cycle works its way through, I expect any on paper capital loss to disappear anyway.Quote:
Some people are retired and have a focus mainly on income and have more capital than they need so whatever approach works fine for them is their business, but I would think the vast majority on here care quite a lot about movements in the share price. Worth noting that the shares have been in a pretty steady downtrend from just on $3.90 in May 2017 to the current price and it keeps making new multi year lows. You think there might be reason for this? Like others I see no point in getting dividends if your capital gets seriously eroded in the process.
A trend will continue until it reverses. There is no guarantee a new uptrend will not reverse again. I prefer to buy at bargain prices according to my best judgement, even if I have to rewrite my bargain price level later. I don't believe any of my purchases have been risky given what has happened since I bought. Remember, unlike HGH, there has been no profit projection downgrade at TRA. It is only some analysts who have said profits will shrink and I am not sure they are right. From Turners themselves, the only statement has been that if certain market conditions occur, then lower profits can be expected.Quote:
At the risk of being dogmatic, this will be a good yield investment for most people when a new uptrend is confirmed. To buy before that is risky and the risk of further capital erosion should be obvious to anyone with even a rudimentary understanding of charts and TA.
You mean like after I bought into HGH and the share price sunk down to $1.31 and various posters predicted a cash issue and/or a cut to the dividend? I wasn't one of those that smelt that happening and it didn't!Quote:
If all people care about is the dividend then yes absolutely no argument that you are right that the lower the price the greater the yield, (assuming the business is not going so badly that future dividends may be lower which may be what the share price is suggesting).
Something is not right here and I am a little surprised a dog with your nose can't pick up the scent of trouble ahead.
SNOOPY
I didn't predict a cash issue for HGH or a dividend cut either but did manage to get a few at $1.31 and quite a lot at $1.33 :)
OI now have a very modest number of divee shares, MEL, GNE, SPK, CEN but to get anywhere near a decent income from them I would need to have a s**t load more than I have and that would stress the Bear out! :mellow::huh:
Oh and well done on what you have achieved Percy, you have my respect :)
Snoops, you may be right that technically Turners haven’t downgraded F19 earnings guidance ....just indicated that they might be lower.Quote:
Snoopy
. It is only some analysts who have said profits will shrink and I am not sure they are right. From Turners themselves, the only statement has been that if certain market conditions occur, then lower profits can be expected.
Wonder what disclosure guidelines say about such vagueness?
So statistically there’s still a high chance of them delivering $34m-$36m npbt .....yes?
BP, good post you made yesterday
One comment you made was - Consensus earnings for the next 3 years average to 27 cents. Not too bad for a $2.30 share with growth potential (all CAGR's I take are well above 15%).
I assume you are saying in a round about way that TRA’s current PE is too low relative to company growth ....ie TRA is ‘cheap’
I often look at the chart below to remind myself not to put too much reliance on PEs because EPS growth has almost no bearing on valuations, at least in the USA. Might try to extract data for the NZX but I would hazard a guess that it’s much the same here.
Still trying to make sense out of the TRA trend. Beagle likes to compare it (unfavourable) with CMO - and while I didn't thought that this is a valid comparison (second hand car dealer with insurance and finance vs new car dealer with service) - actually, if we look at the charts the trend at least used to be quite nicely correlated (i.e. markets thought its a valid comparison):
Attachment 10338
I know - didn't manage to get the time axis into the pic, but this is a 5 years comparison starting Feb 2014 and ending Feb 2019. Pretty nicely correlated until May / June 2017. At this stage TRA (blue) started its mercyless decent ... and CMO SP (yellow) kept growing.
What changed in the mid of 2017 uncorrelating these two companies?
Other thing above chart shows is that TRA's SP well might be a cyclical ... with it currently being on a 5 year (cyclical) low. Obviously - given that revenue and earnings don't seem to by cyclical (this is the lower graph) is it difficult to see where the cycle would come from.
Attachment 10339
Blue line: revenue in $m (obviously - 2019 - 2021 are analyst estimates)
Red line: EPS in tenth of cents (just to allow me to use the same Y-axis)
ah yes - and 2012 - 2014 are combined TNR + DPC revenue and income (borrowed from one of Snoopy's posts - cheers!);
Here is one observation: growth was 5 years ago (2012-2014) quite weak (restarted 2014/15) and it is now again quite weak (following potential profit warning and analysts forecasts). Maybe the low SP is just a reflection on low (current) growth?
Who knows ...
That's the riddle to solve. If we go back further CMO's outperformance looks even better.
I have a number of theories.
1. The second hand vehicle industry is a very very tough one with no meaningful barriers to entry whereas the new vehicle distributor needs to hook into a well recognised manufacturer to establish itself.
2. Colonial motors have been doing very well with the Ford Ranger and the Mazda SUV range which is best in class in my view as well as their heavy truck division.
3. Turners have been struggling with the delinquent loan problem from non recourse lending through MTF and this will continue into FY20.
4. I think Turners will struggle a bit with the new IFRS9 requiring more prudent bad and doubtful debt provisioning from the get-go.
5. I think more and more people are buying second hand cars through Trade Me and other digital platforms whereas new vehicles must generally be purchased through franchised dealerships.
I would reiterate that the average analyst forecast is for declining eps of ~ 8% FY18 to FY19 and FY19 to FY20.
I really don't know how you get your average growth figures...perhaps a little "convenient" taking a 3 year forward view ?
The market is concerned with the here and now for TRA in terms of the eps decline for FY19 and FY20.
My view, (flame suit is on) is that at present it is clear Turners is a no growth company. They have a LOT to prove to the market that their business plan will generate eps growth. After Baker's major mistake of not attending the annual meeting I am not surprised that the market is calling TRA out in terms of its credibility.
No growth companies are worth a PE of 8.5 in my book, (Ben Graham core figure for no growth) so 8.5 x FY20 eps of 24.8 cps https://www.marketscreener.com/TURNE...14/financials/ gives a fair value later this year as we head into FY20 of $2.11.
Momentum is a powerful thing though and I would not be the least bit surprised to see it go under $2, in fact I would go further and say I will be surprised if this doesn't happen. The market hates uncertainty and that's exactly what Turners is exuding at the moment.
BP ...your mystery re why TRA and CMO share prices have diverged has little to do with ‘fundamentals’. It’s all about how they’ve treated the market per se.
TRA share price started falling when the market woke up and noticed that the much touted eps accretive growth acquisitions weren’t really working. Add to that a delusional Board who have sucked millions out of investors pockets and who then keep crying all the way to Mummy complaining the market doesn’t love them it’s no surprise the TRA share price is where it is today.
CMO on the other hand have just quietly kept on doing what they do well. They’ve said very little and investors remain pretty happy with them as the share price continues to trend up and is not too far it’s all time high
I conclude it’s all about how the market perceives the Board and management of each company
Hmm - that's not what the company says in its 2018 annual reprot:
OK - So Turners says they expect a roughly $1.2m to 1.7m impact in provisioning. Big deal. .. or do you think they are wrong?Quote:
The indicative impacts of implementing NZ IFRS 9 are as follows:
Classification and measurement of financial instruments:
The Group's financial assets and liabilities include only those measured, at amortised cost, at fair value through profit or loss; and at
fair value through other comprehensive income. The Group anticipates that the classification and measurement of its financial assets
will remain unchanged under NZ IFRS 9.
Impairment model change from incurred losses to expected credit losses:
The introduction of the expected credit losses impairment model is expected to involve a change in the timing of when impairment
losses are recognised.
Trade and other receivables
With regards to the Group’s trade receivables, the Group's incurred credit losses from these financial assets have historically not been
material. Consequently the introduction of the expected credit losses impairment model is not expected to have a material impact on
the Group’s financial statements, given the Group’s low exposure to counterparty default risk as a result of the Group’s credit risk
management processes that are in place.
Finance receivables
With regards to the Group’s trade receivables, the Group's incurred credit losses from these financial assets have historically been
material. Consequently, the introduction of the expected credit losses (‘ECL’) impairment model is expected to have a material impact
on the Group’s financial statements. The Group has undertaken a preliminary assessment on the possible impact that the introduction
of the ECL impairment model will have on the Group’s finance receivable impairment provisioning. The preliminary analysis indicates
that as at 31 March 2018 it would have resulted in an increase in finance receivable provisioning between $1.2m to 1.7m. The Group is
continuing to undertake further analysis.
Hedge accounting
The Group has hedging arrangements, however these are immaterial and the recognition and measurement of these arrangements
under NZ IFRS 9 will remain largely unchanged
The Group will adopt NZ IFRS 9 for the accounting period beginning on 1 April 2018.
I have not seen evidence that TradeMe is taking business away form traditional second hand dealers. Yes, it is a platform to advertise, used as well a lot by second hand dealers (like Turners). Buying a second hand car from private (no matter whether through TradeMe or otherwise) is just much more risky ...
You forgot to mention that EPS in FY21 is growing again.
I am taking 3 year forward / 4 year backward. Convenient? Not sure - but this is one of my standard measures, i.e. not specifically made up for TRA. Pick any other window and I will show you some companies for which these would be "convenient".
Convenient you moved just for TRA back to the original Grahams formula? I remember you worked for other companies with a factor of 10 plus one times growth, but hey ...
Winner, that R^2 = 0.0006 in your diagram is the overall correlation value right? An R^2 value of 0 means no correlation at all. And 0.0006 is pretty close to zero anyway.
It is investors who set the PE ratio. It is they who decide what price they will pay for any hoped for earnings growth. So really what you are saying, in a very discreet collective way, is that we investors have the forecasting skill of someone who forecasts their investment growth rate by throwing darts at a dart board? Is that sobering or insulting? Maybe a bit of both?
On closer inspection of your chart, perhaps we aren't quite so bad? If you look at those really high PE shares, around a PE of 50, then only a couple had a negative growth rate after five years. It is actually the companies that had a PE ratio of 10 to 25 (within the more normal range) where:
1/ the 'eps' growth up to 2014 AND
2/ the PE ratio paid in 2010
show the most similar pattern (in this case, the least correlation).
My interpretation of that chart is that, as an investor, you should target companies with a current PE of 10 or lower. Because that way, you are not paying a high price for future 'eps' growth. Yet there is an average chance you will get it anyway.
SNOOPY
Is an 'If'/'Then' prediction vague? I thought Turners communicated the possible profit weakness appropriately.
Not sure what the source of that $34m - $36m NPBT prediction is. From my post 3984 on this thread, my annualised operational NPAT prediction for FY2019 is $17.370m. At a 28% tax rate, that would represent a NPBT of $24.125m. Add back in the property sale profit from Wiri of $3.4m and the earn out payment adjustment for Autosure of $0.8m and I get NPBT of $28.325m. Can the gap be bridged further?Quote:
So statistically there’s still a high chance of them delivering $34m-$36m npbt .....yes?
I think there are more property deals in the second half that could do it. I further think that there might be more ticket clipping across the sales/finance/insurance 'cross clip'. Yet I prefer to look at the operational NPAT and, by my definition, that doesn't include the income from "in house property development".
So as of now, $17.370m remains my 'go to' NPAT profit figure for FY2019. That is equivalent to an 'eps' figure of 19.4cps. At $2.20, that means the share is currently trading on a projected PE ratio of 11.3 for FY2019. If you look back over the years from an operational NPAT perspective, the PE ratio has come down from a high of 19.4 in FY2015. Growth has probably been on track over that time period. But the less well publicised figure of 'eps Growth' has been far less impressive, as the shares on issue have ballooned from 63m to over 89m.
You can blame sub optimal management and a softening used car market for TRAs share price woes. But to look at the biggest reason for the share price decline, shareholders might do well to look in the mirror. The biggest reason for the share price decline is that four years ago investors were too optimistic and were willing to pay too high a multiple for the shares. And yes I blame myself too as part of that investor overoptimistic group, even though I harbour a secret feeling that maybe some of those promised triple ticket clipping gains are still to be fully realised.
SNOOPY
Snoops - only posted that chart in response to BP who implied that with EPS growth about 15% a PE of <10 isn’t fair/reasonable or whatever you want to call it. I was just showing that eps growth almost has no bearing on markets
1- yes investors (if you want to punters who don’t hold forever investors) set the PE
2- not insulting anyone about their ‘forecasting’ skills ...just suggesting PEs aren’t much help in doing valuations
3- many things drive PE ratios. In Turners case it is current much lower than a year or so ago. I think it’s investors (oh that word again) have given the one finger salute to Turners Board and management for emptying their pockets, those non eps accretive acquisitions and the constant bleating about how nobody understands the business and the shares are undervalued.
4- sort of agree with your last paragraph but there is still implied hope in what you say in that maybe there’s a good reason it trades on low multiples and high yield (implying high risk)
I still hoping for that takeover to come ....soon I hope
Snoops the $34m to $36m npbt was original company guidance for F19
They talked about if/maybe and 10% less. Not very specific was it = ‘vague”
I think it was you who suggested it wasn’t really guidance as the if may never happen.
Wouldn’t it have been less vague and a firmer guidance if they had just come out and said ‘Because of if (reason) F19 npbt is now forecast to be 10% less than our previous guidance of $34-$36m’
BP ...good copy and paste from AR re IFRS9 and bad debts
Have you noted the words prelimary, expected, model assessesment, would have etc.
I think they are still learning how to drive their model and hoping that a bad number doesn’t pop out
Turners don’t seem to be very good at learning how to ‘fix’ things they didn’t really understand. From memory they mentioned at least 4 times they have struggled to weed out and control bad loans ..,and raised that issue in the half year report. Doesn’t give you much confidence does it.
Even the bright sparks at Heartland didn’t get their first run through of IFRS9 reporting correct.
[QUOTE=winner69;748696]
Turners don’t seem to be very good at learning how to ‘fix’ things they didn’t really understand. From memory they mentioned at least 4 times they have struggled to weed out and control bad loans ..,and raised that issue in the half year report. Doesn’t give you much confidence does it.
Turners have a very low % of bad motor vehicle loans,as do HGH.Motor vehicle lending is a good sector to be in.
The "learning how to fix things" happened when they offered MTF originators the option of non-recourse loans.[remember this was the attraction to MTF of HGH taking them over,which TRA stopped with their clever blocking holding]
Going from MTF announcement last year, Turners woke up to the fact the MTF non-recourse loans were of a much lower standard than Turners own loans.
Turners then acted straight away, tightening their non-recourse criteria for MTF non-recourse originated loans.
One problem quickly identified,and fixed.What we do not know is the cost it came to.A one off cost?
With TRA board having such a strong background in finance, it came as no surprise to me they acted so quickly.What was disappointing was they let it happen in the first place.[However I guess if TRA had not been caught HGH would have been].
The outcome is Turners now get involved at the very start of any loan origination.HGH now have the same policy.
The big losers would be to the MTF originators TRA weeded out.
Turners also diverted a lot of the loans they usually put through MTF to their own Oxford Finance Company,with a resulting increase of margin to Turners..
HGH.At the same TRA had issues with MTF originated non-recourse loans,Heartland had issues with their new operating systems."Two months of Hell" is how they discribed it.The out come was loans arrears were not chased up and therefore blew out.
So both HGH and TRA had issues.Both acted quickly and limited the amount lost. However there were losses.These losses I feel should be regarded as "one offs". HGH got their new system up and running,while TRA sorted out their non-recorse lending with MTF.
Well, yes - I did notice these words. It would be brave (or more likely stupid) if they wouldn't use some qualifiers when predicting an outcome of an exercise they hadn't done at that time - wouldn't it?
Not sure how to read your comment "Turners don’t seem to be very good at learning how to ‘fix’ things they didn’t really understand. From memory they mentioned at least 4 times they have struggled to weed out and control bad loans" comes from. As far as I recall - they identified the issue, identified a strategy to fix it and are implementing it now. And yes, it takes more than 6 months to fix the problem and changing the goal post (implementation of IFRS9 on half way) did not help. Actually - they use the new numbers already in the HY report, so yes, it is a bit worse than anticipated in the FY report (something like 1.9m instead of the max of 1.7 m they forecasted). Should have checked the latest HY report in the first place ...
Not a bean counter, but from my impression Aaron Saunders appears to be pretty switched on. I am sure he makes mistakes as everybody else, but I would expect he is learning from them as well. Don't you?
For investors it comes down to hold or fold?,buy or sell?
A decision to make one way or the other with the available information.If in doubt .........
Standard valuation methodologies are used on sunset industries at one's absolute peril !
I believe they mentioned at the annual meeting that they'd changed their lending policies to try and weed down bad loans. IIRC they mentioned they'd changed them 4 times. It all had a rather "experimental" feel to it...you know...trial and error...and more trail and more error and so on...
Watch for bad and doubtful debts and provisioning for them to be a real feature of FY19 and FY20 reporting along with a much larger retail footprint generating a very similar amount of sales and we all know what that does to profitability.
Personally I feel one is best to be quite conservative at this stage and take an average eps of 26.68 cps, the last 2 years and the next forecast 3 off market screener, forget about all this talk of growth because the only thing growing fast is directors fees and the number of a certain person's posts telling us all is fine and dandy and then start with a no growth PE of 8.5 and take something off for this being a long term sunset industry. I think that gives us around 7.5 - 8.0 x 26.68 = $2.00 - $2.13.
I expect with all the downward momentum it will overshoot on the downside of that in the near term. That's how I see it anyway but I am sure others will see it differently and that's fine. I'm interested once a new uptrend has been proven (minimum indicator is a break back above 30 day MA) but where's the bottom with all the present uncertainty is frankly anyone's guess.
I also am projecting 'normalised' earnings growth of 15% for FY2019. But if you consider 'normalised earnings' then at $2.20, I have TRA on a forecast PE for FY2019 of 11.3. Perhaps that PE makes a bit more sense for a company growing earnings at 15%? (I have stripped out all of the property redevelopment profits out of my normalised figures).
I think your chart showed that forecast eps growth (for in effect that is what a PE is, because a punter must estimate a future 'eps' when buying to get a forecast PE Ratio) did not correlate with actual eps growth. It did not show that actual eps growth had almost has no bearing on markets' pricing of a share. But then I haven't read the wider text of the article behind that chart.
SNOOPY
For the record.
There has been some conjecture, in some quarters that Percy Corp has also incured a rather large loss, due to a big drop in the paper value of my stocks, similar to the NZ $36.5 billion [paper] loss, Warren Buffett's Berkshire Hathway suffered in the fourth quarter.
This conjecture is with out foundation, and Percy Corp remains "well positioned," as my stocks are performing well overall,and have the capacity to pay increasing fully imputated dividends...............................lol.
Can I buy one share in Percy Corp....is it listed on the NSE lol;)
I'll be pleased when the share buy back ends. The longer it goes on the lower the SP seems to get.
Yes trying times for all Turners shareholders including directors who have a lot of skin in the game.
However as we all know NZders love to buy cars [even suspect Holdens]...lol.
I suspect Milford are reducing their 4.99% further
Jeez $2 .....that’s almost half price from last year (needs doubling to get back there)
PEs don’t mean much ....maybe value as a divie stock ....as no growth likely could treat it like a bond. Maybe should price it like a ‘bond’ with an expected 10% pre tax return to compensate for risk (based on performance and even this sunset industry talk)
Couta 13.8 % PA over 10 years ,there will be a lot of people on here who would be happy with that .
https://www.nzherald.co.nz/business/...ectid=12151576
Was thinking about that too. You know when HLG was really out of favour and retail was like a hot potato that nobody wanted to own and HLG was $2.70 in August 2016. It was paying a gross yield of 15% back then and I commented that the metrics were truly compelling and it must be a buy.
TRA would need to get down to 17 / 0.72 = 23.61 cps gross divvy / 0.15 = $1.57 to be as compelling. Hmmm... Maybe $1.57 is the floor ?
Interesting exercise - what would a bond with a return of 10% AFTER tax (cum imputation credits) be worth these days given that the market prices other higher risk bonds (like e.g. NZR010) at currently 4.6%? Maybe this "TRA bond" is currently trading at a more than 50% discount compared to other bonds?
Clearly shows that the market either misprices this share or that it seems to think they won't be able to continue paying the dividend at this level. Question is - how high is the risk really given the current "discount" rates?
And not so sure about the "sunset industry" either ... I know we talked on this thread a lot about the threat of electrical cars ... however - so far this seems to be just that: talk. And if we think about it - electrical cars are not really a threat to their business model ... somebody needs to sell them as well (so - why not Turners?), however self-driving shared vehicles run and maintained by Uber (or whoever else) might be.
On the other hand - looking at NZ's geography - with the exception of Central Auckland I would not think that we have anywhere the required population density to make a vehicle sharing model economical. I can't get an Uber at our place (less than 40 km into Christchurch) ... and if I book currently only twice a month a taxi into town, than I pay already more for the fare than for owning and driving my own car every day.
Which means - as long as people need to buy their own ride with or without combustion engine do I see no reason why Turners could not stay in business. The only thing stopping them would be if they screw up their business by providing bad service or not competitive pricing ... nothing to do with any disruptive technology.
What happened to the people selling carts and horses in the early 1900's? I suppose they replaced the haybarn with a petrol station and started to sell cars with combustion engine ...
One thing that this reporting season has again highlighted to me for is the importance of a well diversified portfolio. Yes, one might miss out on the “highs” of an overweighted position in ATM on the valuation of your portfolio, but...it’s nice to have a steady stream of dividends coming in, many of which are increasing year to year. Like Percy I am relying on my market investments to provide dividends for our living expenses. So when a single stock like Turner’s goes South, it really is only affecting 5%, oops...now 4% of my capital. And as long as the dividend is maintained....well, do I really care that much as long as they stay in business ? (the answer is yes, I hate it) Most of of my portfolio positions are in the 3-6 % range, with a few a wee bit higher...but not more than 10%. Yes, I hear some of you say, diworsification at its best....but when something heads south...well, it sure eases the pain.
I think some Turners shareholders might have forgotten that this iteration of 'Turners' is a finance company. They were a car sales business once, back in the old 'Turners Auctions' days. But 'Turners Automotive Group' is actually the old Dorchester with a good lick of paint over the old name.
It is nice for a finance company to have a vertically integrated car sales chain as it provides a useful channel through which to solicit business. But actually 'Turners' could sell off the whole vehicle sales business, after tying up an exclusive finance deal of course, and turn a lot of that goodwill on the balance sheet back into cash and grow the business via 'Oxford Finance' building dental surgeries (we found out at the road show they built one last year). Sunset industry? Show me the day that every kiwi buys all their stuff with cash and I will believe you.
SNOOPY
Every manufacturer has the odd lemon that comes off the production line not right. Some manufactures like Ferrari xray the castings of each engine to ensure they're cast to specification and produced right but we're not talking Ferrari prices here, this is mass production. The brand new replacement Holden is going fine so far and I see Holden had the third highest number of registrations for 2018 so hardly a tin pot brand that's ignored by the public...but speaking of possible pups, another new multi year low for TRA today...I think I'd rather take my chances putting my money in a new Holden at least there's only a small chance of a pup there lol
Speaking of strange things mate. What I find incredibly strange with this one is the absolute paucity of depth on the buy side. This is not a now and again thing, its basically all the time. I would go so far as to say there is no proper market in these securities, buyers just aren't interested. If this is such a bargain as some on here suggest, why aren't buyers lining up left right and centre ? This stock appears to have no institutional support whatsoever and now that Percy and you have finished buying and the buy-back will conclude in due course what hope is there ? Maybe BP will come to the rescue with a private equity buy-out or maybe its a conspiracy and Grant Baker et al wants it to go lower so he and his mates can take it private at a dirt cheap price ?
A very good post that I think some on here should read more than once.
Saw the depth just before the end of day shenagins and though hell’s bell it’s going to close at 220
Phew but it held at 220 ....maybe divine intervention held it up.
I don’t think fear has anything to do with it. Probably pissed of ‘investors’ giving the one finger salute to a delusional Board and Management who has emptied their pockets and have not delivered on the promise of increasing eps from acquisitions etc etc etc
Old hackneyed Buffett phrases make some feel comfortable ..... but quotes like ‘Radix malorum est cupiditas’ may have more meaning
Hmm - not quite sure I understand. The only logical reasons to sell these shares at this point in time I could see are
1) if people are (rightly or wrongly) concerned that the company might go belly up (I don't see that, but it would not be the first time where companies did that and I did not foresee it) or suffer a permanent drop in earnings ...
2) if not diversified investors need their money at this point in time (Ouch ...).
3) Investors following beagles forecast and selling them now to buy them back at a predicted $1.60 (or was it $1.57?) bottom. But than - given the market depth it would need to be a small number of cunning investors with not too deep pockets and lots of luck ... (with all due respect - nobody ... not even beagles can predict bottoms ;))
I understand as well that people might want to give a signal to a greedy (here is the word!) board ... but selling now might be a quite expensive signal (and would it really hurt the board ...?);
So - how does greed as the root of all evil come into this discussion?
Is that you bidding for 5000 at $1.60 Beagle, the only live bid.Lol
Wonder if guru management will do another round of Investor Roadshows soon?
Mind you 'Investor' per se isn't really appropriate word for Turners
I believe what you see on the screen in terms of depth to the sell side is a just a mere fraction of what's really for sale.
FCNZ as the broker tasked with the buyback are keen to maintain the charade of an orderly market.
Nothing criminal about it. See the Direct broking thread. The selling is relentless. As soon as a sale order is filled the sellers come back and load more to the sell side. There's simply no end to it whereas in terms of buying depth, there has been an absolute paucity of interest for many months now. Better get used to it making new multi year lows on a regular basis mate. The trend is clearly not your friend with this one.
Do you think leaving just 60 shares on the bid at $2.20 is a bit contrived ? Hoping someone doesn't have access to depth information and bids $2.21 ?
Are we sure we are talking about the same stock? Daily trading volumes for TRA have been in recent days typically around 10k shares traded per day. Admittedly - today it is already a stunning 66.9k. Must be for this stock close to capitulation volumes?
As well, not seeing what advantage NZFC would have in pushing the SP up - their client would no doubt prefer to buy as cheap as possible ...
But anyway - TRA is clearly at this stage not the markets darling - and a big fund selling without another fund buying creates clearly some assymetrie in the trading of an illiquid stock. Question is - is Milford right to sell? I don't know - sometimes they are, sometimes they are not.
If they are not, than the current SP is clearly a pretty good deal ... though obviously - it might be still better tomorrow.
Just imagine - the share market closes down for the next 5 years. Would my TRA investment continue to pay dividends and still be around and stronger when it reopens? Based on the currently available public information - I would have no reason to doubt this.
Was just thinking that they wouldn’t need to keep paying divies to keep the share price up and pay down debt .. ...but then Baker and his mates might need the cash so you might continue to get yours as well.
I was just imagining that there might not be much left when the market reopens
14/9/2017 - Management raises $25m from institutions at $3.02 and a derisory $5m from shareholders in a SPP one month later for:
27/11/2018- Just over a year later, management announce a share buyback programme, of up to 5% of its issued share capital (4.474m shares). Around $12m at the then share price of $2.72 because:Quote:
• Continued growth of the Turners finance book, which is currently expanding at approximately $10 million of receivables per month; and
• Strategic dealer and property acquisitions to grow the distribution network and capabilities of the Automotive Retail Division.
26/02/2019 - Share price closes at 2.20.Quote:
Chairman of Turner’s, Grant Baker, commented that the Board continued to believe that the share price did not appropriately reflect the fundamentals of the business.
“The Board believes that the purchase of shares, at current market prices, provides a return above the company’s cost of capital and will be value enhancing for shareholders. Turners is in a strong financial position and the buyback is seen as an efficient use of capital while the share price remains below the intrinsic value of the business. It provides a means to return capital to shareholders, while benefiting those who continue to hold shares in the company.”
Not been great capital management has it?
Good to see Australia instos supporting Turners ....keeping the share price up
The ASX listing was a blessing in disguise after all
On 28th November 2018, TRA announced a buyback of up to 5% of the company's shares. That amounts to a maximum of 4,474,000 shares.
The buyback is due to end on 31st March 2019, in 33 days time. The buyback actually started on 2nd December 2018, so has been running for 86 days. So far, 2,086,567 shares have been acquired and cancelled. If the rate at which shares are acquired remains constant, how many will have been acquired by TRA before the 31st March 2019 balance date?
Maximum Bought Actual + Projected Bought Shares on Issue 01-12-2018 89,442,154 89,442,154 less Actual Shares bought to 26-02-2019 (2,086,567) less Projected Shares bought to 31-03-2019 (800,659) less Maximum Shares bought to 31-03-2019 (4,474,000) equals Shares Outstanding to 31-03-2019 84,968,154 86,554,928
Of course, there is no reason in particular why Turners should keep buying their own shares at the same rate as they were doing before. They may increase their buying rate to bring the total shares acquired up to the maximum. If Milford owned 6,777,710 shares representing 7.995% of TRA shares on 03/03/2018 and they now own 6,021,281m representing 6.850% shares on 13/02/2019 then Milford still retain a lot more shares they can sell back to Turners on market.
SNOOPY
P.S. If Milford held that many shares last year, can anyone explain why they were not listed as a substantial holder on page 87 in the FY2018 annual report?
Answer: It has now emerged that the Annual Report was changed some date after the hard copy was sent out to shareholders. In the revised edition available on the TRA website, both Milford and Salt Funds are listed as substantial shareholders.
Disintermediation. A long word that is wrecking the furniture in the used car sales world.
Back in the day when a movie star wanted to travel by plane to promote her films she would go to a travel agent, now she would bypass the agent and book directly with the airline on the internet.
Same thing is happening in the used car business. For a while it was assumed the new efficient model was an ordinary Kiwi joker wanting to buy a used car would bypass the used car dealer and their margin by raising his finger at a vehicle auction. Hasn't worked.
Nowdays this kiwi joker is more likely to look on the internet to find the used car of his dreams.
https://en.wikipedia.org/wiki/Disintermediation
Boop boop de do
Marilyn
The internet has replaced newspaper classified ads.
Turners have a strong internet sales chanel.
Buy your car online with 7 day money back gurantee.
Finance and insurance arranged too.
Turners are NZ largest used car seller,and their most trusted "brand" has been earnt by offering great ease of tranactions either from their yards or online.
With no other possibilities I can see, I guess your answer is right Peat! But something still stinks here.
In the 'Substantial Positions ' List:
1/ 'Bartel Holdings' is is shown as holding 7.95% of Turners Automotive Group shares, and holding 7.95% on the Principal Ordinary Shareholders list (p86) as well. This is what I would expect.
2/ 'The Business Bakery' was listed as holding 9.98% of TRA shares on 15th June 2018, yet there is no such entry in the Principal Ordinary Shareholders list. I can only assume 'The Business Bakery' shareholding is held under different nominee entities, none of which exceed the 5% threshold substantial security threshold individually. However in aggregate these holdings do add up to more than 5%. In fact when aggregated, these holdings total 9.98%. So, quite correctly, the registry have been aggregated 'The Business Bakery' holdings so that all shareholders are aware that they are substantial shareholders.
3/ There is no mention of 'Milford Asset Management' being a substantial holder on either list. Yet we know they were from Milford's own declarations made either side of the 15th June 2018 list publication date. We also know they did not sell some of the 7.995% shares they owned on 03/03/2018 after 03/03/2018 to get below the substantial share threshold of 5% on 15/06/2018 (the shareholder list publication date). We know this because any such a change in shareholding from a substantial shareholder must be notified to the market.
So why were shareholders not told that Milford were substantial shareholders in the FY2018 annual report? It wasn't Milford's fault, because they made all the legal declarations they needed to make to the NZX. Shareholders were entitled to be given Milford's shareholding status up front. Milford have a known track record of selling down aggressively under some circumstances (like right now). Who was it that 'dropped the ball' on publishing Milford's shareholding?
SNOOPY
I agree with Peat.
At the 31st January NZ Central Securities Depository Ltd held 24,874,642 shares or 24.6599%.[which would include Milford's]
The next largest shareholder is Bartel holdings ;who have a director] with 9,552,642 or 10.7715%.
Bartel were Turners Auctions shareholders.
Snoops ..if you think something dodgy going on you had better sell your shares
Interesting.
If I look at Turners most recent financial report (2019HY) , than yes, they made 2/3 of their revenue with automotive retail, but only (roughly) 1/3rd (well - 34.9%) of their operating profit.
The other contributors to their operating profit have been:
Finance - 23.6%
Insurance - 27.9%
Credit dep - 13.5%
The automative retail is clearly not their cash cow but their (so to speak) vehicle to give them access to clients in need of finance and insurance. Their business is the package deal.
I don't know how many of their cars they sell as pure cash sells and without Motorsure (which would be in direct competition to TradeMe), but I would expect it is quite a small number.
But you are right - this trend will definitely be a problem for the smaller dealers who need to live of a shrinking automotive retail margin without the option to make the gains with insurance and finance. Expect a market consolidation - this could be a prime opportunity for Turners to increase their footprint.
Possibly because Milford Asset Management do not own the shares but the following entities:
Milford Active Growth Wholesale Fund (3.606%), (Custodian - NNL Custodians),
Milford NZ Equities Wholesale Fund (2.520%), (Custodian - NNL Custodians),
Milford
Income Wholesale Fund (1.339%), (Custodian - NNL Custodians), Milford
Australian
Absolute Growth Wholesale Fund (0.194%), (Custodian - NNL Custodians),
Milford
Australian Absolute Growth Fund (0.336%), (Custodian - NNL Custodians)
They may be listed in a variety of nominees. Although Milford the Fund manager do know that they need to aggregate these for reporting purposes.
I do not have a problem with this at all. I as a shareholder can see by announcements to the NZX that Milford is a SSH!. The Annual Report is 2 months out of date anyway so has little relevance to me the investor.
I agree with you Marilyn. CEO of Trade Me told NZ shareholders presentation late last year that they have well over 90% of all vehicle listings in the N.Z. market. Quite a number of things result from this.
Customers ability to search by make, model and type and make direct price comparisons across the whole of N.Z. is greatly enhanced
Private sellers without overheads are able to compete much more freely
Private dealers operating at a low scale and ultra low overheads can compete much more efficiently
Second hand vehicles dealers margins get compressed.
Trade Me now has a partnership with Motor Trade Finance removing the need to go to a dealer to get finance. Note this is a relatively new initiative so the full effect of this is yet to make itself felt in second hand car dealers yards around the country.
Disintermediation - Interesting term, thank you for sharing.
She's going lower.
Retailers such as Briscoes and HLG have adapted to online.{including overses competition].
Big part of their business.
So is the case with Turners.
HGH,and other finaniers also offer car/appliances etc loans online.
The big difference is TRA offer the "whole" package including a 7 day money back gurantee.They are the leaders in their field,and I think I read they were growing market share..
.