You may be correct ...I don’t really know. Need to see the full constitution y
But if you are right well it sounds rather (what’s the word I need) ...can’t silence shareholders can we.
Not going this year either.
Went last year.
Found Byrnes bordering on confrontational and definitely defensive.
Baker, the Chairman, was listening in with full audio and the ability to speak but never announced he was there listening and could speak.
Creepy, deceptive and unprofessional.
Went to road show last year also. Share price was all down hill from there.
No longer a shareholder.
NUF said.
Hope it does well but have put my investment elsewhere.
The following table (from the respective Annual Reports 'Insurance Related Disclosures: Section C 'Surplus after taxation from insurance activities arose from') shows why profits from Turners insurance division, in the past, could largely be ignored in the overall profit picture. Yet over the last couple of years we certainly can't say the same. This is why I see 'insurance' as such an important piece of the profit puzzle to consider going forwards.
FY2019 FY2018 FY2017 FY2016 FY2015 Insurance Contracts: Change in Discount rate ($0.207m) ($0.120m) $0.164m ($0.119m) ($0.311m) Insurance Contracts: Difference between actual and assumed experience $5.745m $2.491m ($0.552m) $0.062m $0.138m Life Investments Contracts: Difference between actual and assumed experience $0.266m $0.294m $0.420m $0.599m $0.696m Total Insurance Profit Contribution (after tax) {A} $5.804m $2.664m $0.032m $0.542m $0.523m Declared Turners NPAT {B} $22.329m $23.192m $17.609m $15.573m $18.069m Insurance Adjustment/NPAT {A}/{B} 26.0% 11.5% 0.18% 3.48% 2.89% Insurance Return on Assets (NPAT) above Contract Liailiities $1.022m $0.823m $0.383m $0.307m $0.243m
There is a reason for this. On 31st March 2017 the 'Autosure' vehicle insurance business was acquired. That means that FY2018 and FY2019 include results from 'Autosure', whereas previous years did not.
I previously wrote:
"I consider that $5.804m (for FY2019) not repeatable and a figure that should be removed from operational profits,"
But I am not sure that my opinion on that score is right.
Particularly interesting, I thought, was that Turners separated out 'Investment returns on assets in excess of insurance contract and investment contract liabilities' (AR2019 p86). I read this to be the insurance profit that can be pocketed by Turners shareholders. Fair enough and this was just over a million dollars, $1.022m, for FY2019 out of a grand total of NPAT attributable to insurance activities of $6.990m: nice.
However, if you then move forwards to 'note I' the 'Disaggregated information' (AR2019 p90), you will see the insurance profit of $6.990m split up into 'Statutory' profit of $2.834m and 'Shareholder' profit of $4.156m. This seems to contradict the information presented in section C. Is the profit we shareholders can book $1.022m or $4.156m? I don't know the answer. But it gets worse.
If you look at the 'Operating Segments' part of the Annual Report (p53, AR2019), you will see total operating profit for insurance is $8.227m. This doesn't quite tie in with the information under the 'Insurance Related Disclosures: Disaggregated Information' section of AR2019' where profit before tax is quoted to be $8.577m (The explanation for the $0.350m difference may be found on p91 of AR2019: The $350k represented a revaluation of an investment property that had already been disclosed under 'Property Plant & Equipment). Of the declared insurance earnings of $8.577m (AR2019 page 90), only $5.099m of 'shareholder earnings' -before tax- occurred over FY2019. So how is it that Turners can claim a larger $8.227m worth of insurance earnings over FY2019 in the 'Operating Segment' earnings on page 53?
The only answer I can come up with is that Turners are claiming profits that actually belong to the likes of life policy holders as their own. I hope someone can tell me that I am reading these figures the wrong way. Because if I am right, then these 'insurance profits' claimed by Turners look very dubious.
SNOOPY
Well I am doing a Grant Baker this year.
Not attending the agm.Was going to watch it live,then our neighbour asked me to collect her from the airport, when she returns from her travels.
You gussed it 11.05 am Wednesday 18th.!!!
Will watch later on Youtube.
I have tabulated below these important debt statistics over the last four years.
Leverage Ratio Averaged Gross Bank Debt (Estimate) EBITDA Gross Bank Debt/EBITDA Maximum Standard FY2019 1/2 x (($251.177m - $163m) + ($230.459m - $133m)) $49.786m 1.86 2.00 FY2018 1/2 x (($230.459m - $133m) + ($191.708m - $69m)) $51.304m 2.15 2.00 FY2017 1/2 x (($191.708m - $69m) + ($109.327m - $0m)) $38.844m 2.99 2.00 FY2016 1/2 x (($109.327m - $0m) + ($95.151m - $0m) ) $35.131m 2.91 2.50
In each year I have subtracted the 'securitized debt' from the 'gross bank debt'.
The above table indicates a 'triple fail', up until FY2019. However there are difficulties for investors in determining what the average gross bank debt is over the year. My 'arithmetic average' using the year start and end figures will overestimate the average debt if more of the incremental debt is acquired over the second half of the year, for example. So in this instance, the trend is of perhaps more interest that the absolute value.
The indicative securitised debt for FY2018 and FY2017 may be found on p15 of AR2018. I am assuming these are representative over the year figures. That is because they do not match up with the end of year securitized debt figures on p57 AR2018.
Unfortunately these indicative securitised debt figures have been dropped from the FY2019 report. However I did note that over FY2019, the end of year securitised loan balance increased from $145m to $175m. I have used this $30m increment to get the indicative securitised debt over FY2019 of:
$133m + $30m = $163m.
I have used this $163m estimate figure in the table above.
Interest Ratio EBITDA Total Net Interest EBITDA/Total Net Interest Minimum Standard FY2019 $49.786m ($14.952m-$1.791m) 3.8 3.5 FY2018 $51.304m ($14.344m-$1.343m) 3.9 3.5 FY2017 $38.844m ($11.350m - $0.206m) 3.5 3.5 FY2016 $35.131m ($11.436m - $0.353m) 3.2 3.5
It does seem that the financial position of Turners over the last few years is becoming stronger, not weaker as some may think. However these are all minimum standards. Whether these statistics are strong enough for investors putting their money into Turners today is a matter for each individual investor to decide.
SNOOPY
Just wondering whether the apparent "improvement" of their financial position (measured in in Debt / EBITDA) has anything to do with them peddling back from the finance business? If they do less finance they need less (borrowed) capital ...
Not sure yet whether this is good for shareholders, though ... for a used car sales yard they still have plenty of liabilities on their balance sheet
Turners have stated they are looking for expressions of interest for Oxford Finance.Should the price be right they will sell it.Otherwise they will retain it.
However they are still growing the business.In the year ended 31st March 2019 Oxford Finance loan book grew 9% to $254 m.
Another A$ 250k into the CL8 black hole. CL8 bit desperate for funding.
For sure it was a pathetic uptake from punters and underwriters, leaning on the underwriters guarantee and still way short of target, quite concerning actually.
Don't know if a mockup is needed, just go see it here. Easy to add a new 'Select your location', namely Turners locations. Anyway, obviously TRA aren't concerned dropping another 1/4 mill$ into CL8, so soon after the buy in.
Subscription vehicle ownership will either work or not work in NZ.
If it does, Turners will have first mover advantage at very little cost.
Turners/Carly are far from "first mover" in NZ. Need to do a bit more research there.
You're right though, it will either work or not and a couple of A$mill for Turners is chump change. More worrying is not whether Turners can make a fist of car sharing, but whether Collaborate will survive long enough for them to do it. There is an ugly backdrop to Collaborate, numerous failures to generate any significant growth in any of their products. Carly is just the latest and is very new and unproven. Constantly holding out their hand for new money from investors.
It's not the idea that Turners explore car subscriptions (or rental if they do) that is worrying, even though it was never forecast in strategy except in loose terms like 'digital opportunities', it's more about their choice of platform, country, and the company that owns it.
Basically they're investing their shareholders money in an Oz penny share with a checkered history of non-performance, well ... less than a penny.
I should be clear, Collaborate have never had a problem obtaining cars on the supply side (rental or lately car subscriptions), punters and car companies have been supportive. Many have come and gone though.
The BIG problem is that they have never found the key to driving the demand side.
No point having a few thousand cars available, Turners will need to teach them how to advertise and drive demand growth. Shareholders should expect significant further costs in delivering a car subscriptions platform and particularly sustained advertising.
haha yeh good point Baa Baa , just as with driving a second hand car, its not the cost to buy but the cost to keep running.
So you're are suggesting the CL8 venture will become an unrewarding money soak. hmm sounds familiar lol.
Turners brand strength was recently shown,when they openned at New Plymouth.Without any advertising their new site went "gangbusters" straight away.
So to make Carly subscription model work you need three things,
1] Customers..............As NZ largest seller of used vehicles Turners have the customers.
2] Vehicles..................Turners have the vehicles.
3]Operation model.......CL8 have this.Turners by taking a shareholding in CL8 Turners will not be held ranson,and will be able to modify the model to suit NZder's requirements.
From the Turners Roadshow we learnt Carly should start operating at the end of the year.I think it is fair to say Turners know their customers,are close to them, and have a record of achieving customer statisfaction.
Will it work?.Don't know.Either will or will not.
That said I think it is well worth Turners trying it. Soak up money.I don't see how,as Turners will be only operating it from Turners sites for Turners customers.
Don't forget though that the "sub" does include insurance, licence and car maintenance while a purchase would not. From the FAQ:
Not clear to me what "non-routine" maintenance would be and who would pay for repairs (cam-belt, engine blow up), but if that's not the risk of the dealer, than the sub is worth nothing at all - i.e. pretty sure that the dealer would need to pay for these as well.Quote:
The weekly price includes insurance, roadside assist, registration and routine maintenance. That’s pretty much everything, apart from fuel and road user charges of course!
You certainly can't compare the value of an annual sub with the purchase price ...
I don't know for sure but I would has at a guess that the weekly figure quoted is for a 12 month subscription as it stands to reason that 3 months would involve more risk and administration. 2019 Kia Stinger is quoted as "from $483 per week" Lets assume that's a 52 week subscription and I can say that a friend of mine just bought one as a demo for $59,990. $483 x 52 = $25,116 per annum so the sub will eat up 42% of the initial capex in the first year. What a deal ! Sign me up right away LOL
My friend expects to get 10 years use out of his Stinger so over that timeframe would pay $251,116 in rental payments. Hmmmm
No point guessing, check the t&c’s at www.carly.co
For those in their early 20s insurance is expensive. It might actually be relatively cost effective. Could also be useful if you just need a car for a few months, say over the summer holidays.
You can hire for a month in Australia. You could get a pretty flash car for about $1000 a month or a fairly basic one for $500, might be worth looking into for longer self drive holidays.
Would also work well for a number of share traders.
When the market is up,drive a BMW/Merc,when the market is down swap for a Toyota or Nissan.
Wonder whether the Ferrari is avaliable.?
The rebranding of 'Buy Right Cars' has lead to the write off of $4.300m in intangible brand value. However, the rest of the intangible assets acquired with the purchase of 'Buy Right Cars' remains on the Turners books.
The amount of 'Buy Right' goodwill on the Turners books is still $10.860m (AR2018 p60). This is tested annually by the auditors, who check whether such value can be justified. But there is a divergence of growth assumptions for this acquisition going forwards. See notes in AR2019 p64 and AR2018 p65. I tabulate these results against the equivalent assumptions from AR2017:
FY2018 FY2019 FY2020 FY2020-FY2021 FY2021 FY2021-FY2022 FY2022 FY2023 Year 1 Forecast Cashflows Year 2 Forecast Cashflows Year 3 Forecast Cashflows Year 3-4 Forecast Cashflows Year 4 Forecast Cashflows Year 4 to 5 Forecast Cashflows Year 5 Forecast Cashflows Year 6 Forecast Cashflows Terminal Cashflows FY2017 Perspective 10% 7.5% 5.0% 2.0% FY2018 Perspective 60% 8.0% 5.0% 2.0% FY2019 Perspective 14.6% 11.0% 9.3% 12.8% 1.5%
The note(s) start "The year 1 forecast cashflows were extrapolated...". I think 'year 1' means the 'current reporting financial year', but am not 100% sure. If I am right then from an FY2018 perspective 'Year 2' means FY2019 and 'Year 3' means FY2020 (the current financial year). This table is telling us that Turners were budgeting for an increase in cashflows from Buy Right cars of 60% over FY2019. The actual increase in revenue for 'Buy Right Cars' from FY2018 ($62.021m) to FY2019 ($63.546m) was an increase of 2.2%. This 'miss' seems disastrous, yet no effect on the earnings goodwill acquired has been recorded. But could it be that this 'missed FY2019 growth' has been reassigned to other future years?
FY2018 Cashflow Growth Assumptions (Years 2 to 6) : 1.6 x 1.08 x 1.05 x 1.05 x 1.02 = 1.94
FY2019 Cashflow Growth Assumptions (Years 2 to 6): 1.022 x 1.146 x 1.11 x 1.093 x 1.128 = 1.60
Some growth looks to be reassigned. But there does seem to be a lot less cashflow coming when compared to the forecast from FY2018.
Remember that as a brand, 'Buy Right Cars' no longer exists. I think that means that all of that $10.860m in intangible 'on the books assets' from the 'Buy Right' trading operation is now attached to those individual sales sites acquired in Turner's 'Buy Right cars' acquisition. No land was acquired with the 'Buy Right' acquisition (AR2018 p60). Does this mean that the $10.860m of goodwill is, by a process of elimination, attached to the leases on these 'Buy Right' properties? If so, doesn't that make this $10.860m of goodwill extremely vulnerable?
In FY2017 eight 'Buy Right Cars' retail sites were acquired across Auckland. If the $10.860m in goodwill was distributed equally across each site, then that means each site incorporates goodwill totalling:
$10.860m / 8 = $1.358m
Now consider the case of a lease ending or Turners just deciding they want to move to a better site. Would such a move mean that Turners would have to write of $1.358m in goodwill, even though they were ostensibly moving to a site with improved business prospects? I think it does. Turners make much of their ability to develop retail sites and pocket the development margin. Quite rightly so. But I don't recall Turners mentioning anything about the 'million dollar moving loss' that would be incurred when they eventually have to leave those old 'Buy Right' sites.
Under note 32 AR2019, the site lease terms are between five and ten years, with rights of renewal in accordance with market rates.
SNOOPY
A very good question. The only intangible value still attached to this purchase is clearly the location of the once "Buy Right" sales outlets.
Though I am sure Turners might argue that "Turners" have a higher brand value than "Buy Right" (otherwise they would not have rebranded) - i.e. the non tangible value of these premises might have even increased miraculously by putting a more respectable brand on it.
Which means the the attached Intangibles might even have increased through the rebranding (assuming a Turners outlet is more worth than a Buy Right outlet). Turners might have found a new method to generate money out of nothing .... buy a crap brand for too much money and re-brand.
Their future opportunities must be endless ... and maybe I should consider a career in creative accounting ;);
There are a couple of flaws I can see in your creative accounting plan BP.
To realise the higher 'brand value of Turners' and book those 'goodwill profits' from someone else acquiring those ex Buy Right now Turners sites, Turners would actually have to sell them. And since Turners core strategy is to build on their core strength which they see as their 'Turners brand value', selling off their own Turners outlets to others who would retain the Turners branding and compete with them doesn't seem likely.
Secondly, however you slice it, the Turners brand will remain an intangible asset, not a tangible one. So even if Turners sites were able to have their rebranding reflected in company asset vales, it would only improve net assets, not net tangible assets (NTA).
SNOOPY
A friend bought a car at the local branch today; man were they busy, very healthy.
We haven’t had to think much about car sharing until TRA dropped cool A$1.25 mill into an Oz penny share and announce their launch of the online car subscription service in NZ this year. Far from a prescient decision it seems to have ignored or been ignorant of who is making hay in this emerging sector (hint, it’s not Collaborate)
Look how far advanced this sector actually is and the weight behind it, albeit a new concept for us old buggers who actually own cars, then reflect on the wisdom of TRA to drop into the market they have no understanding of, into a penny dreadful share platform that could go bust anytime.
https://www.dbusiness.com/daily-news...line-platform/
The more you post about car subscription, the more I think Turners are very wise trying it.
Turners have 85,778,678 shares on issue which at $2.32 gives them a market cap of $199,006,533.
They pay 17 cents per share dividend,which amounts to $14,582,375.
"Dropped a cool A $1.25mil"....? Peanuts for what will work or will not work.
I think if they did not try it,we would all be posting they should have.
Don’t forget we are in the digital age - as Turners say of all internet users in NZ 86% use You Tube and 85% use Faceboook. percy uses Facebook?
Turners are in a good place in this space .....like 20 million web searches and 29 million page views a year ....along with zillions of other interactions collecting data.
They have hired social media experts and working with data analytics companies ...wow
This subscription business will take off like a rocket (hope more money in it than buying and selling cars)
The best known and most trusted used car dealer in NZ is indeed well positioned to win in this space.
thl’s venture into digital space hasn’t harmed their share price
To answer my own question first:
$8.227m - $5.804m = $2.423m (Underlying Insurance Profit for FY2019)
The equivalent figure for the previous year is:
$3.645m - $2.664m = $0.981m (Underlying Insurance Profit for FY2019)
Turners is the first insurance company I have ever invested in. I didn't set out to invest in insurance. I arrived here when my old 'Turners Auctions' shares morphed into 'Turners Automotive Group' with the attached insurance baggage that new company contained and has now expanded with the addition of 'Autosure'. What I have learned is that insurance is complicated.
A key phrase in my 'normalised profit adjustments' is the one I have emboldened above:
'Difference between actual and assumed experience'
This term is further explained in AR2019 p93 under the heading 'sensitivity analysis'. The conceptual problem I have with this phrase is that it seems to encapsulate both things that are part of normal business practice and those that aren't. Specifically with the five sub-categories this phase apparently encapsulates:
1/ Expense Risk: If your costs go up because of inflation more than you plan for then your profits will decrease - Rather obvious I think
2/Interest rate Risk: Investment income will decrease as interest rates on the underlying fixed interest vehicles decrease. However, this can be offset by the capital value of underlying bonds increasing. - Not rocket science here
3/ Mortality rates: Death triggering the cashing out of life insurance policies means lower profits (less premiums being paid) and reduced shareholder equity. - I question this one because, if I interpret this correctly, the shareholder equity paid out in settlement of a life insurance policy was always going to be paid out eventually. Thus calling it 'shareholder equity' smacks of taking someone's life insurance actuarially based entitlements and calling that 'company money'. Can an insurance company really claim a policy holders entitlement as their own?
4/ Discontinuence: This seems to be used in the sense of people stopping payments towards their life insurance policy. Turners say this is generally negative. That makes sense if you consider that as a result of discontinuence Turners loses an income stream to invest. But how can they lose 'shareholder equity' if the money they were holding to support these life insurance policies was never theirs in the first place?
5/ Market Risk: For fixed future payouts that are supported by market investments, if the market goes down then Turners may have to stump up cash to make up the difference. - That is a fair point. But markets tend to go up and down. So should annual investment volatility be included as a profit ingredient when the underlying profits or losses are accumulated and may not be paid out for years or even decades?
In summary, while some 'Difference between actual and assumed experience' risks are immediate and legitimate to feed into annual profits, some are not. In particular the implied 'mixing of customers entitlement' with 'company money' should not in my view be any reflection of the operational performance of the business.
My position on 'Difference between actual and assumed experience' adjustments has thus far has been to ignore them. But by doing so I could be ignoring genuine gains or losses that should accrue to shareholders.
However, if I include them, then it seems I am including gains that will accrue to policyholders for which shareholders will have no ultimate entitlement. Thus no matter which of these two decision paths I choose to take I will end up with the wrong answer. And there is my dilemma.
SNOOPY
Now you managed to surprise me. I thought the only insurance Turners is offering is Autosure - an insurance covering the cost of car repairs. But you seem to talk life insurance - i.e. people dying and Turners paying, do you?
How do they call this product and how can people subscribe to it?
Oops found it: https://www.turners.co.nz/Finance/General-Insurance/
Question - I never realised (while I was a shareholder) that Turners is offering general insurance. Is this something new? Sounds frightening to me for a company of that size ... but probably underwritten by somebody else?
Perhaps, despite it never having been part of the strategy except in loose terms alluding to digital.
It's not the notion of branching into car subscription per se that is of concern, it is the choice of the company that delivers it. Carly is a brand spanking new service, with zero proven performance in the car subscription market or revenues to speak of. Collaborate itself is performing dismally overall (going backwards) and has all the 'going concern' risks you'd expect of a sub-penny share. One could argue that they are only good at raising funds, but even then the recent raising was a dismal result.
Have a decent read about Turners new 'strategic' partner Collaborate Corp ... https://www.asx.com.au/asxpdf/201908...1bvmjnpk67.pdf . The language itself is interesting because it's why Collaborate think Turners investment is good for them, looking through the eyes of Collaborate. Ask yourself, would you invest in CL8 based on this performance?
It is part of the old Dorchester business BlackPeter. Most of it is what Turners call 'legacy business' which they aren't going all out to promote any more. But some of it, in particular the life insurance bit, may run for decades so they can't really forget about it.
'Autosure' as you say is much more recent and is only part of the FY2018 and FY2019 business results. But because it is part of the 'Insurance Segment', it gets mixed up with all these legacy insurance operations come reporting time.
As for being underwritten by somebody else, I don't think the legacy business is, and neither is Autosure. But Turners do seem to be in the position of having far more cash than is needed to satisfy any likely policy payouts, so I don't think we shareholders should worry.
In the 'Disaggegated Information' summary (AR2019 p90), the insurance business is split into 'Statutory' and 'Shareholder' columns. The asset split is 1:3 in favour of shareholders. If you go back to the first 'Turners Limited' branded report from 2015 the split in favour of shareholders is similar in proportion. But how the accounts got into this position is something I do not understand. I guess it must relate back to the Dorchester days? If someone could fill us in on this history, I would love to know!
SNOOPY
Cheers. Always learning :);
They also did Reverse Equity loans.
The 26.8 hectacres residentially zoned land at Sanctury Hill,358 Worsleys Road,Christchurch, value looks a little on the light side at $5.650 mil.
How much were goodwill and intangibles valued at,or were they even included, in Dorchester's balance sheet when they brought Turners Auctions.
Sale of Oxford Finance,should it go ahead, will see their value realised.A nice bonus.
What is Oxford Finance worth $100mil or $200mil.?
Remember it's really Dorchester ,,,,,still have many things ...annuities and even reverse mortgages
Took a look at the TRA Presentation NZX Retail Investor evening document last night.
http://nzx-prod-s7fsd7f98s.s3-websit...232/306840.pdf
As usual looks OK. So if we assume they are a going concern and continue to be, that they continue to sell cars at more or less the same volume and profitability as they currently do, and they continue to pay a dividend of 17c....then surely the share price must rerate a bit higher ?
17c @ 2.30 7.39%
@ 2.75 6.18%
@ 3.00 5.67%
@ 3.40 5.0%
Maybe it might make $2.75 ?
Disc... Hold...more than ideal
NZ government bonds come pretty close.
I guess you are saying the market is wrong and undervalues TRA. That's what the TRA board says as well, and so far they have been wrong.
What are the risks? You might lose a lot of your capital chasing these amazing dividends. Ask percy - he knows what I am talking about, and I experienced it as well first hand. Trust me - getting 10 % in dividends and losing in the same timeframe 30% in capital does not feel like a good deal - and this process might continue for some years to come.
Lots of dark clouds at the horizon ... and so far the board was busier increasing their fees than bringing the boat into safe waters.
Market certainly seems to think the risks are high ... but who knows - maybe the market is wrong? Sometimes it is - but more often it is not.
Those of us who attended Turners' presentations, know there are only "Blue Skies" ahead.
ps I have never lost any money on TRA as I have not sold any shares.
Market certainly seems to think the risks are high ... but who knows - maybe the market is wrong? Sometimes it is - but more often it is not.[/QUOTE]
so who are the wise heads that control the market and most of the time get it right?
Fund Managers ?
Insiders ?
Brokers advising clients.
Individual investors?
Who has the best track record?
All investors in my assessment (limited That may be) seem to wear blinkers at times.
Never had anything to do with Fonterra.
Another one of your's.?
I am with you BP on the capital loss....I don't like it at all either. But that's happened and to date I've decided not to crystalize the paper loss (23.6%) into a physical one. Hence my musing over where the share price might get to should they continue more or less as they are. Clearly 10% dividend is to high....IF the risks are low. And I believe the shareprice should re-rate higher.
It might take a few cycles of decent results for this to happen tho. Alternatively...maybe the market has it right and the price could drop further once it stops being supported by the Company.
RTM
PS....I was underwater for years with Contact Energy....I see they hit $9.00 today. Now my 3rd biggest holding.
Yes should TRA achieve good results then the share price will recover,and should TRA show they have the capacity to continue paying a high, and possibly increasing dividends then $2.75 to $3.25 will be achievable.
The agm on the 18th will hopefully give both a trading and a strategic review update. I would not be surprised to hear they are trading very well.
Nope - but logic is the same.
https://www.stuff.co.nz/business/ind...wing-complaint
10m Fonterra shares but they have not lost 1 cent.
Will leave Fonterra to you.
New car dealers lamenting continued slowing down of new vehicle purchases — could be 8% or more down for the year
Good news for the likes of Turners though
Govt Bonds currently less than 1% .....risk free
Turners Bonds quoted at 4% .....an indication of ‘company risk’. Quite high as a lot of corporate bonds around the 2% mark (+/-0.5%)
Equity Risk Premiums are more subjective but currently many have the ERP in NZ at 3%-4% — which implies a reasonable yield for TRA shares is say 7%-8% ....hmmm
So maybe market is about right (won’t say efficient) at the moment ....but this is all theoretical stuff and doesn’t take into account blue skies and generally the sun shines bright when the sky is blue ......and even the full moon plays its part.
Int comment on car sales rate in Aus.
"Whilst the market for new cars has been challenging, the
used car market has continued to grow. During the year we recorded growth in used car lead volumes, a decline in average time to sell and excellent growth in traffic to the carsales site."
The current share price is $2.38.
It has moved ahead of the 100 day moving average $2.36, and the 200 day moving average $2.35.[yahoo finance chart]
There are 419,142 shares yet to be brought in the current share buy back.
Currently buyers want 11,293 shares at $2.36, while the seller of 5,999 wants $2.38.
The agm is one week away.
www.carly.co.nz is now active, though currently it redirects to www.carly.co in Ozzieland. Looks like Turners won't have an 'own brand' online car subscription service and are positioned solely as a supplier and administrator of cars for the Carly service like the current business model in Australia. Makes one wonder how Turners will market this. Still saying launch this year. Should be some financial results due soon from CL8 on how the very new Carly subscription service is performing.
https://www.asx.com.au/asxpdf/201909...lb3sq9xb8g.pdf
I note there hasn't been any daily buying of shares under the buyback since Monday... potentially intriguing reasons why this is the case I reckon.
And despite lack of buyback, the share price still managed to rise from $2.36 [Tuesday open] to $2.40 (well, up to $2.40 - hopefully the share price will stay there this time!... still, at $2.37, it is up a notch and outperformed NZX 50)
When my friend bought their car from Turners recently they also took out $600 mechanical insurance, great ticket clipping there! They have definitely outgrown the yard in Tauranga but told me they havn't yet found premises in a suitable location,big enough to expand to .A nice problem to have.
Definitely an undervalued stock, particularly when the market currently values it for little or no growth, yet theres plenty of growth coming. They have 9 new sites opening in the next 2 years.
They will be flushed with cash given they earn a great net profit, will be selling oxford finance and later EC Credit Control. Paying a 7% dividend and on top of that doing a share buyback, not to mention getting into car subscription that will utilize their assets in a more advantageous way. This should be a $4-5 stock on present earnings and potential, so I'd agree with the CEO this stock is terribly undervalued.
Full moon does funny things to people ...clouds their judgement ...and gets some punters over the xcited
Of course TRA is horrendously undervalued
Taking out all the one off property deals and one off insurance windfalls (my post 5575) I am looking at underlying 'eps' earnings of 15.4cps for FY2019. At Fridays closing price of $2.36 this equates to an historical PE of 15. To my way of thinking considerable growth will be required to justify a price of $2.36 as a PE of 15 definitely does not imply 'little or no growth' (for a retailer). There may be nine new sites planned to be opened in the next two years. But not all of these are greenfields expansions. Some are effectively upgrades of existing sites.
There is a net $300m of bank borrowings on the balance sheet at EOFY2019. Selling Oxford finance and EC Credit may only reduce debt from 'concerning' to 'high'.Quote:
They will be flushed with cash given they earn a great net profit, will be selling oxford finance and later EC Credit Control.
If the finance division is sold I would expect dividends to become more irregular. The predictable regular cashflow from all those finance deals would be gone. By my calculation the dividend now exceeds the underlying earnings of the company. I think future property sell downs may allow the dividend to be maintained for a while. But ultimately I think the dividend will have to be reduced.Quote:
Paying a 7% dividend and on top of that doing a share buyback, not to mention getting into car subscription that will utilize their assets in a more advantageous way.
Another concern I have is that, capital requirements aside, 'car finance' has always been more profitable than selling the cars. And that is adjusting for backing all the residual finance business from Turners into 'Oxford Finance'. But I guess when Turners own the retail company and the finance company it is hard to distinguish between real underlying divisional profit and possible cross subsidisation (transfer pricing) between divisions. Is selling finance equivalent to selling the golden goose? The way the accounts are presented in the segmented breakdown by divisions suggests the answer is 'yes'.
SNOOPY
We should respect silverblizzards view of Turners valuation
After all he/she is in the top 5 in the picking competition ...doing heaps better than most of us
Well done silverblizzard
Thanks Winner, just a bit more lucky in this competition than most, but I believe there a lot of good investors that the results in the competition won't reflect. Your efforts and contributions are always very respectable.
Exactly Percy! Getting 'well positioned' for what I believe is a big capital inflow to the business and what I believe will be a large payout to current shareholders in the next 3-6 months.
I'm expecting Oxford Finance to sell in the region of $60 million with majority returned to shareholders in one form or another, if not a big acquisition would make things interesting too. Oxford generate about 26% of the underlying earnings for Turners, so the impact vs capital returned isn't too bad.
Regarding the debt of the company, there is a borrowings of $312 million (annual report), but you have to consider that Oxford Finance's loans amount to $254 million, and in total consumer and commercial loans amount to $291 million. So once Oxford is sold off, the borrowings don't actually look that bad.
Agree with Snoopy..... why cut the hand that feeds you by selling Oxford finance and EC Credit.
No disrespect meant to Silverblizzard Winner, and I sincerely hope none was taken. It is just that when I see a superbullish post, I like to remind investors there is another window through which we can look at TRA. I hope Silverblizzard is right, because I am a TRA shareholder! But I think it was you who pointed out that hope is not an investment strategy.
The quote below is from AR2019 p86.
The big issue I have with TRA's 2019 profits is the figure I have emboldened above. What does that mean? A partial explanation contained in the annual report is reported below.
I think the $5.745m I am principally concerned about mostly (totally?) relates to 'Autosure'. This is because the equivalent life insurance policy figure is listed separately. I also think that $5.745m is an amount of money that Turners now have 'on paper' over and above what they thought they would have a year previously. But where has this on paper gain come from? And will it ever really be realised as cash?
Because it doesn't relate to life insurance, I think we can ignore 'Difference between actual and assumed experience' points 3 and 4 when discussing 'Autosure'. For the remaining points:
1/ We know that Turners have readjusted their 'Autosure' premiums to charge relatively more for European cars and less for Japanese cars. So could it be that the 'Autosure' insurance payout fund has swelled by $5.745m because Autosure have decreased their payout ratio?
2 and 5/ These are both concerned with how 'changes in markets' affect insurance floats. 'Autosure' is relatively short term product, which means it is unlikely to be supported by equity market investments. That's because Equity Investments are too volatile to fund reliable short term pay outs. But what if TRA had had a really good investment come good over the year? Has putting the insurance float into a company internal property build and lease back deal provide the confidence that such deals can continue to be done into the future, for example? Could the $5.745m gain just be the result from a change in future earnings assumptions?
SNOOPY
I think this definition insurance companies use will help:
The Difference Between Actual and Assumed Experience — Experience profits/(losses) are realized where actual experience differs from best estimate assumptions. Instances giving rise to experience profits/(losses) include variations in claims, expenses, mortality, discontinuance and investment returns. For example, an experienced profit will emerge when the expenses of maintaining all in-force business in a year are lower than the best estimate assumption in respect of those expenses"
It more or less recognized premiums that were factored into claims, but not claimed and could be recognized as profits. Seems every insurance company uses this way of reporting both in NZ and internationally.
The company does cite "IMPROVED INSURANCE LOSS RATIOS: Insurance claims loss ratios have improved from 78% to 72%."
(A loss ratio is a ratio of losses to gains, used normally in a financial context. It is the opposite of the gross profit ratio. For insurance, the loss ratio is the ratio of total losses incurred in claims plus adjustment expenses divided by the total premiums earned.)
Less losses more money able to be recognised as profits, seems simple enough.
On a high end European car (e.g. JLR, BMW or Mercedes) your friend might well end up having the last laugh. Obviously if it's a Toyota Camry Turners have clipped a good one.
As a side note, during the last recession ('09 or '10?), I seem to recall many zero mile late model cars being cleared by auction at reduced prices. There was no "cash for clunkers" in New Zealand to keep inventory moving I suppose.