Yes, i did double down on my holdings at 2.25 after Director Martin bought 500k shares around that price. With dividends and capital gains I'm up more than 25% and could be more this year.
All that negative sentiment has stopped.............. Why has Percy been so correct for so long???
Spent far too much time answering groundless negative posts.
Percey, I've been amazed at the way you have occasionally lobbed an underarm right out of the field
Wellington site seems to be going gangbusters
Plenty of people and turnover of cars looks pretty high ...like looked like a lot of different cars on the site from what there was just before Christmas
Carly all go soon
As they say “It is better to take many small steps in the right direction than to make a great leap forward only to stumble backward.”
http://nzx-prod-s7fsd7f98s.s3-websit...148/315301.pdf
Carly has got to be an exceptionally good fit for Turners. I think board and management are beginning to “hit their straps”.
Love it going to hit 3 soon
Tracking in the right direction for several months, a fully imputed dividend of 17 cents and a yield of 8.2% (based on dividends from April 2019 - January 2020 and current SP of $2.88) - heck I might just put this back on my watchlist.
I will be interested to see how Carly pans out. From my understanding it's being going for nine months in Australia, but I can't seem to find any figures on how successful it is there.
I sold out of my TRA holding at $2.90 ending my relatively short involvement as a shareholder (former bondholder) in TRA - while the dividends are great and I came out with a pretty small capital gain, at this price (around $3) I see it 'pretty fully valued' (for now) with not much room to grow capital gain wise or dividend wise for the immediate period.
Good luck to all holders.
(note: despite my name, I am not actually a trader lol so I don't sell out often)
If it quacks like a duck and looks like a duck .... it clearly is car rental - just focusing on the time frame between short term rental (with plenty of competition) and long term car lease (with plenty of competition).
Expect significant setup cost if they want to be attractive (client interface, insurance interface, mechanical staff to keep the cars on the road) - and yes, margin squeeze from above competition to be expected.
As well - Turners normal clientele unlikely to go for the high end cars - i.e. just another car rental company renting out cheap old bangers. Just wondering who will insure these cars? If insurance is independent of the drivers history (as usual with rental cars), than it will be too expensive for people with a good driving record but people with poor driving record will be flocking in. Hope for S/H that it is not Turners providing the cover.
I think TJ timed his exit well ;);
I think you underestimate the subscription model appeal to younger generations.
As for insurance, it's included in the price, same as maintenance, road side assistance and certain amount of "free" kilometers.
So you get a car for $115/$133/$147(not NZ prices) a week and don't have to do anything. https://www.carly.co/subscription-plans/
This is not something I'd go for, but I can see a big market for this among younger generation.
Turners is licensing the concept from ASX-listed Collaborate (so I wonder how much the licensing costs??), a company it bought a 12 per cent stake in for $1 million in July last year (so you could argue that there's a $1 million setup fee straight off).
https://www.nzx.com/announcements/347148
https://www.nzx.com/announcements/336956
Agree it will mainly appeal to younger generation who don't want commitments. "I'm Carly, come use me" kind of has that "Tinder" feel about it to me.
Don't imagine for one second you're going to get a supermodel for that price though....pretty basic 5 year old car for the lead-in price suggested https://subscription.carly.co/belmor...n-Barina-14641
Quite a bit more for a decent car https://subscription.carly.co/homebu...ommodore-14936
You're right. But the licensing will provide them with the web interface. Arguably paying license is similar to working together sharing profit. On top of that they are paying licensing fee to a company that they have 12% stake in.
I think this is a very solid business model that could be used both by private users and businesses. I can imagine this as a great solution for Expats for example. Also looking at the listings in AU, it's not like they give you old banger as somebody mentioned, most of the cars are less than 5 years old.
OK - lets calculate that through. If we take the absolute basic plan for A$115 per week ($6000 per year), then this gives you 1,200 km per month (14,400 km per year). Insurance and on road cost included, I recon petrol is extra. Say the car consumes 8 l / 100 km and you use the 1200 km per month, than you need to buy close to 96 l per month - say $230 pm or roughly $2,800 per year (ignoring the A$).
Make that (including subscription) $9000 per year for 14,400 km. OK - not absolutely unrealistic, but not cheap either ... and given that hardly anybody will manage to exactly drive the km paid for it will be more expensive.
Our (well maintained, but not very new) cars do cost us significantly less to keep on the road (including fuel, RuC, licence, insurance, maintenance, repairs and a sensible devaluation) - make that $5k to $6k per year and car - and we used to drive for this money between 20 and 25 k km per year and car (will be less now, but I don't have yet new numbers).
Not quite sure whether people will queue up to line Turners pockets ...
It's an unfortunate fact that there are plenty of people out there needing or wanting a car but unable to front up 5 grand all in one go, and to hold that much in case of mechanical failure. A subscription might be a useful alternative. Similar to the solar power firms offering to install on your rooftop and keeping most of the profit, as an alternative to those who can't pay for the install themselves. Another case of 'the rich get richer'.
Ah, and this was stupid me assuming you could get a car for the advertised basic price ($115 per week). Just used the website, pretended to look for a car in Sydney and noticed that there are exactly zero cars for $115 per week available. The cheapest was a 2015 Holden Barrina for $133 per week. Any halfway decent car sets you on the cheapest plan (1200 km per month) back by roughly $200 to $250 per week - Jeez that's $12 k per year only to put the car into your garage (or driveway) and you have not even bought a drop of petrol .... Do your own sums, but if you add fuel we talk even under ideal circumstances more than $1 per km for the client. Under less ideal circumstances it will be much dearer.
If this is Turners next big thing and if it works (which I doubt), then there must be a lot of people around who can't do their numbers and have plenty of money to throw away ...
Turners supplying 200 cars to start with
I recall chatting to Rod Drury years ago ...and he was over the moon as they had just signed up their 100th subscriber
One needs to have a vision
I admit I went off the basic advertised price. But I still think the potential is there. Beagle is right about the new generation. No commitment approach with complete lack of financial education could make this a big hit.
Also this being a subscription, it seems good for people who just need a car for couple of months. Another point is an image thing, as you apparently can exchange the cars every month.
For me there is no point in slaving over the commerial effectiveness of this new arm to Turners business.
As managers of the business they must have some faith in it, and I allow them to enter that business and monitor its success (without over committing) and allocate resource appropriately, and provide shareholders with some view of how that is progressing over time.
It will become part of the evluation that we apply to management during the course of our decision making to invest or not. Based on the last year or two of performance , a short while ago I reduced my oversize holding as there had not been enough success , or clarity of vision , to justify that larger position. What I still have is now at 7% of my shrinking share portfolio though. So I remain interested and hopeful they know what they're doing. (Not that hope is a strategy)
Attachment 10953
TRA has significantly underperformed both the NZ50 and its vaguely comparable sector buddy CMO although some recovery has recently taken place. Is this just a return to mean though? I think that based on the above things I've said it is unlikely to become an out performer any time soon, and should this price recovery continue I will probably exit completely.
I do not understand how TRA can be fully priced on an 8% gross yield (ex divi) when you would be very lucky to get 3% with a bank deposit. In my opinion this should be the valuation focus for all yield stocks. In this case there is plenty of room for share price growth unless you don’t believe that the dividend can be maintained?
Agree. Over the years this company has consistently taken an "experimental" approach with a lot of what it does, multiple reviews, new start up's, anyone remember Cartopia which was supposed to be the all new frontier with car sales ? Multiple changes to the eligibility criteria for new customers wanting vehicle finance, (4 changes to this in 2018 were reported when I was a shareholder).
Structural reviews, lets sell off this division or that or the other...it just goes on and on and on and on.
The reality, that they never talk about is that used cars has always, and will always be an extremely competitive low margin business with very low barriers to entry and that Trade Me, (who now provide links for finance), is increasingly undermining the traditional car sales model. So too are private importers who can import and resell up to 6 vehicles per year from home with no overheads and no car sales compliance costs.
TRA has massively underperformed the NZX50 in recent years and my expectation is that they will continue to do so. This is just another exercise in seeing if they can squeeze a tiny extra drop of juice out of their existing business model and as you suggest, there is the real risk they lose focus and the tail wags the dog.
I am happy to continue to let them continue their experiments with other people's money.
“Tedious repetitive drivel” - I like that :)
Yes, I’m a happy holder, well into the black and will probably top up when funds permit.
Cheers and more beers.
"Carly"'s a pretty dull name! I would've gone for a popular Japanese girl's name - Kazumi :t_up:
WTF - Turners share price down about 4% since the announcement about Carly
Great timing.
Turners' dividend goes into my bank tomorrow,and my Bankcard automatic payment goes out tomorrow ..
No doubt Turner’s management (and Baker) had an enjoyable and fun weekend at the races
Liam did OK ...even though the #1 car didn’t win
I would expect a great number of people will be concerned about their jobs with the threat of The Corona Virus.
May stop them looking to upgrade their car using finance.Instead of buying a $25,000 used car, they will settle for a $10,000 one.In which case Turners will do OK.
Perhaps with market uncertainty, Turners may have timed their entry into The Carly subscription model perfectly.
I'd avoid these at auction if I were you
https://www.bbc.com/news/business-45191874 Beagle
Decided this afternoon to have a look at TRA interim report covering the 6 months to the end of 30 Sep 2019.
However I was unable to find this on the TRA website. Found a ph no to contact them, no luck with that either nobody answering phones at TRA.
Normally interim and full year reports are freely available online 3 months after the period of reporting, why is TRA different???
Try this:
https://m.nzx.com/announcements/344980
I saw that announcement, found it confusing and therefore like to read the interim report. I was of the understanding that it is an requirement of public companies to make them available.
TRA got an investors section on their website, the latest interim report is missing. Why ??? Phoned them and left message, no reply. Mmn, does not help with investors or potential investors confidence in this company.
For TRA's interim go to NZX.com and put in TRA and then go to announcements,2019 27tNov.
or www.stocknessmonster.com TRA,then on right hand side,news,2019 then 27th Nov.
or try this link
https://www.nzx.com/announcements/344980
Just had a call back from TRA, interim report will be put on their website soon.
I managed to top up today. Not at the low closing price of $2.20, but I bought enough shares to reduce my average holding cost price to $2.64. With my TRA investment, I am buying a 'dividend yield' as calculated above. Buying at any price that will produce a gross yield of greater than 7.5% makes me happy, but good on those who late in the day got an even better deal than I did. I am well aware that in times of uncertainty, splashing out big on a large capital purchase (like a car) is something that can be delayed. But stepping back, and looking at the big picture, I can see some compelling tail winds that makes investing in TRA at 'bargain prices' today, a good idea.
1/ The NZ vehicle fleet is still aging and the need for more replacement vehicles in the medium term has not gone away.
2/ The depreciating currency means that second hand motor vehicles will increase in price in the medium term. Putting off that purchase is likely to have a cost. ( => downturn in vehicle sales in the short term not as great as expected).
3/ The reduction in the price of fuel at the pump from the 25% 'oil price crash', means that less fuel efficient second hand cars are likely to become more attractive 'value wise' compared to a super fuel efficient new car, even one on attractive payment terms.
4/ The push for more electric cars will have to come via the used market. A new electric car is simply too expensive for the average bloke/blokess. Turners seem ideally placed to step in here.
5/ There is a dividend due next month.
6/ At less than $2.44, we are only paying for the income, so any growth we shareholders get is 'for free'.
7/ High company debt levels are mitigated by interest rates grinding even lower.
I don't know how Carly shared ownership of vehicles will work out. I still think the insurance profits are opaque, although that risk is offset for me by buying my new TRA shares at a discounted price. I may have been able to wait and get my TRA shares even cheaper. But I did save money by not chasing up my 'next' Turner's purchase all the way up to $2.70 in the last TRA rally. And my early in the day purchase price meant I was a little under my yield target purchase price even so. All in all, a most satisfactory day on the market for me, for my Turners holding at least!
SNOOPY
another company which could find itself in serious strife , warned while back on the thread of there debt levels and if sales drop off they are very exposed and what did they do spent money on a buyback lol
Any company that spent money on a buyback over the last couple of years will look silly now. And yes, I get your point about debt levels. But Turners have the ability to get cash quickly by selling stock if needed. It won't do much for profitability if they have to do this, but it will get them out of trouble. Also with Adrian Orr lowering interest rates, this will take the pressure off companies like Turners that operate with significant debt. Aside from al this, the big picture story remains the same. NZ's car fleet is ageing and there is no company better placed than Turners to update it (except perhaps Toyota NZ, and there is room for two).
There are other tailwinds here that you may not fully appreciate Bull. NZers may not be able to take themselves away on an overseas holiday. But they can spend their holiday money on updating their car. Perhaps time to trade in that old 'Toyota Corona' and get this 'Corona' thing out of their system for good. Food for thought?
SNOOPY
Finance companies do very poorly in a recession as the tens of thousands of newly unemployed workers can't pay their bills. Expect an impact on Oxford Finance.
Most people will stick with their existing vehicle BUT Turners sells lower value vehicles so there will always be demand as people who come up against end of life issues with their existing vehicle have to buy a replacement.
Turners also still have their rescission hedge, the credit management company EC Credit. Increased earnings here will help offset falls elsewhere as well as be useful in chasing bad debts.
Sell off looks over done to me.
This could be an opportunity to sell EC Credit, as COVID -19 highlights the value of a business that does well in bad times. Todd Turner has made it known that EC Credit is 'on the block', and this could be a path to company debt reduction. Personally I would prefer that EC Credit is retained, but Todd does seem determined to sell.
SNOOPY
Most people need a car to get to work or to find work.
Former CFO at HGH, told me people paid their vehicle payments before their mortgage.
Firms and leasing firms making staff redundant will pass on their company cars to Turners to sell.
And yes some annual overseas holiday money will find its way to Turners.
Launch of Carly subscription model may be very timely.
Recent Turners buying experience....
Someone pulled out in front of me a month or so back and wrote off our Mitsi Outlander. Insurance went fine, got paid out enough to go car shopping again...
Found the model we wanted on Turners Chch (another Outlander) and called up to arrange a purchase (I'm out of town). Got messed arround for 4 days between the sales guy (who still didnt get me the info I asked for), an online form, a PDF and the finance manager.....
Got annoyed, called up Toyota Chch and bought the model I wanted in less that 2 hours from some very helpful staff.
Be wary of cultures of complacency, it can be hidden when times are bad and decimating when the market turns.
Just my recent experience, DYOR.....
I recently went to look at selling through Turners. I got told to make an appointment and come back at a time that suited Turners. Too hard basket at this stage, but might still happen. They are really pushing "agreed value" at this stage rather than auctions.
Last time I sold thru them same thing Arthur - have to make an appointment then they push "we will give you X$ now" or before auction we have someone interested in paying X$ do you wnat to sell - no went to auction got more than both amounts offered - extra $800 odd after commissions I think it was
No word from Todd Turner since late November about financial performance
Everything must be going tickety boo
Shame share price down about 50% from recent highs
i am struggling to see how they will pay there debts back if car auctions decline. who wants to buy a car for starters in this environment ( you have to assume there biggest market is lower paid people and they are the ones to be affected the most at the moment) and who wants to be in a crowd of people sweating and yelling and possibly spraying corona spray every where why they bidding for there car
fair point , still the market served is probably more based at the lower end of the income spectrum hence the most affected in this environment.
I think in hindsight not doing the share buyback for the benefit of the largest s/h's would have been better. repaying high levels of debt would have been the best option in hindsight
It quite clear that directors are not necessarily good investors/speculators.
but its not just Turners is it? Share buybacks have been massif. bro.
I was always a bit uneasy about them as a financial engineering tool that seemed to create money from nothing (no one mention Dire Straits) , but they became such a common thing that one got inured to them.
That's what 11 year bull markets do they gradually desensitise you to risk. Of course a company shouldn't buy its own shares until at least it has no debt at all.
There is a thread on Share Buy Backs.[Thought there was?]
It is in The Newbie's Corner .
I think that is a better place to discuss them,rather than in this thread.
turners caryards having to close down in level 4 lockdown? , debt wont be serviced in that case . please tell me im wrong
Not a pretty picture comparing TRA (blue line) with the NZX50 (brown line). Market seems to have little confidence that this one might shine. It didn't even properly bounce back on the current dead cat bounce (aka bear market rally)
Attachment 11155
Question is - will they survive?
I remember that high unemployment rates are one of the killers for their finance business, and economists warn now to expect unemployment rates between 15% and 30%. No money, no job, no repayments. Easy as that.
Their balance sheet does not look that healthy either - their liabilities (70% of assets last FY, and I wonder whether their assets are still worth what they used to be at that time - i.e. real ratio might look much worse) go through the roof - maybe the share buyback around $2.50 was at the end of the day not the best idea since the invention of sliced bread ... and now they can't even realize whatever value might be stored in their stock due to the lock down situation.
Wondering why they don't even bother to update the market? Other companies do. Clearly the lack of sales and cash flow during the lock down creates a material change for their business.
Scary ... but then - it might be just a high risk, high reward game, but clearly 2 hot 4 me :scared:.
I prefer to 'zoom out' and look at the bigger picture. Here are some questions to consider:
1/ Will there be a need for second hand vehicles in the NZ market in the future?
2/ If YES, then who in New Zealand is in the second best position to supply them? (I would argue that Toyota New Zealand with their 'Signature' second hand brand is number one).
Now consider what the jobscape is liable to look like in the future. Rural is not going away and even some displaced city workers may need a reliable car for a long commute to the countryside to their new job.
Next think about all those helicopter parents who are ferrying their children back and forth to school. With social space rules being rewritten, suddenly all those four seater cars will become two seaters. A pent up demand for an upgrade? What about those workers who are left in the city. Will they still be keen to cosy up on public transport? Probably 'safer' to buy a little commuter car. And with many workers working from home permanently, they might even get a park in town!
I fully get the idea that we are headed for difficult economic times. But I think the need for replacement vehicles will remain and I think that demand for second hand vehicles will be less affected than demand for new vehicles. I think Turners are in a good position to meet the coming demand for vehicles. The fact they already conduct many of their auctions 'on line' mean they are in a good position to 'go electronic' in the short term if required.
I hear your concern about no COVID-19 Upgrade being issued. No doubt Todd is in discussion with his bankers and maybe negotiations are tough. We may even have a cash issue as a short term fix. That will hurt, but as a shareholder I would certainly support it if it gets the Turners business through this difficult patch.
SNOOPY
discl: holder
Not a bad update from company, seem to be hanging in there and obviously divvy is deferred, sensible decision under current scenario.
Largely agree sb9. Given Turners have promoted themselves as a 'dividend company', with a regular quarterly dividend coming in for those that sought income, I would have preferred to see a 'token dividend', even as low as 0.5cps, with a DRP option to reduce even further the modest cash drain such a dividend would cause. That wouldn't keep the dividends hounds happy, but it would keep them interested. Suspending the dividend completely could create panic selling by pensioners. And that is not good, as it would put downward pressure on the share price in an environment when more shares might need to be issued.
In market disrupting situations like this, I find it informative to look at what companies are doing rather that what they are saying. The fact that the dividend has been suspended indicates that Todd Turner is worried about the future funding of the company. The fact that Todd notes that no debt is due to be refinanced until 2021 should be some relief for shareholders is IMO hogwash. No company that has a choice would let their refinancing go right down to the wire. My take on this is that Turners is in urgent need of sorting out its future funding right now. It is good they are:
".... working proactively with landlords to reduce rent payments over the time of the lock down which has largely been received positively by property owners."
I must say their 'site redevelopment model' looks very good with hindsight.
1/ Buy land at rock bottom price.
2/ Plonk a container on the land and start charging themselves virtual above market rent.
3/ Sell the property to a hapless property investor based on yield, so that the 'virtual above market rent' changes to 'real above market rent' that is instantly capitalised in the Turners balance sheet in the sale from 'property sold at above market value'.
4/ When business suffers a downturn, negotiate to stop paying rent.
A great cash generating exercise for Turners shareholders. Not so much for the hapless landlord who is also faced with the capital loss implied by lower rent payments in the future.
I also find it interesting that suddenly the counter cyclical earning ability of EC Credit is now highlighted when just a few months ago it was effectively 'on the block' as a non core asset. If this crisis results in TRA retaining EC Credit, then I for one would regard that as a good thing.
The continuing income stream from
"...annuity revenues from finance and insurance."
was also mentioned. Way back when Turners Automotive Group was Dorchester, they did have a life insurance business. It has gone so far into the background that I don't recall it being mentioned in the text of last years quite comprehensive annual report. It is there if you look at the accounts section though. Unlike the PGW in house pension plan, the TRA plan is IIRC in surplus. So maybe a revival in this 'behind the curtain' side of the business is in order?
I will leave it there. I don't want to be too tough on Todd and the team in difficult times and I think with the cloud of uncertainty swirling, he is making the right noises and , behind the scenes, probably making the right moves. My previous post on the relative strength of the business (see this thread post 6059) still holds (except for the bit about the imminent dividend payment!) I have no problem continuing to hold my TRA shares in 'suitable portfolio weighted position'.
SNOOPY
Maybe I am the only one underwhelmed with we have $20m cash, (really not a lot), and no debt refinancing until 2021, (not far away really).
Email I have just sent to Todd.
Todd,
Trust you and your family are safe and well.
Thank you for a very full and frank update.
To re-affirm profit guidance in these circumstances says a lot!
:)
Agree with that. If it is true, then TRA would be an amazing business, on par with stars like A2M, FPH, GXH and the gentailers.
Still - didn't they say some time ago in one of the AGM's that a high unemployment rate would be bad for TRA? Lets hope they made some realistic assumptions about unemployment rate, peoples ability to pay back loans and peoples ability to lend money for a new pre-loved car when they confirmed their guidance.
Would be nice to know what working assumptions they made about the macroeconomic parameters.
Turners update today.
https://stocknessmonster.com/announc...ra.nzx-350973/
Cars breaking down and needing to be replaced with another car will continue. It is possible that people will think it a better idea to drive to work then risk public transport. Tourism,hotels,hair dressers ,and any other close contact business eg chiropractors and knocking shops will all struggle for a while - particularly the knocking shops. By comparison Turners could be a safe bet.
First paragraph - Despite a heavily disrupted March, Turners still expect the FY20 result to be within previously stated guidance of $28-$30m net profit before tax. Prior to the emergence of COVID-19 the group was on track to report at the high end of its earlier market guidance.
To me that reads as March was about $2m behind forecast ....probably running at a loss.
Then this bit -Turners expects adverse impacts on 1H21. It is too early to quantify these impacts.
To me that reads that from tomorrow things are not going looking too flash and they’re too scared to say how bad ....but a certainty they’ll be losing money or at best make a few bob.
But no worries ... our people steered us through the GFC. That’s good experience.
I would hazard a guess no divies for a while.
The group continues to operate well within its bank covenants. Turners just confirmed an extension of
its securitisation warehouse facility with BNZ to $250 million (previously $200m) and has unrestricted
cash of $20m+ and further funding headroom if required. There are no renewals on debt until 2021.
Turners benefits from being a purposefully diversified business, with different business cycles. For
example, annuity revenues from finance and insurance help offset the short-term decline in the activitybased revenue businesses of auto retail and credit management.
Three of the group’s four businesses (Oxford Finance, DPL Insurance, EC Credit Control) are confirmed as
“Essential Services” under the financial institutions classification and are largely operating remotely.
Turners are working proactively with landlords to reduce rent payments over the time of the lock down
which has largely been received positively by property owners. Government stimulus programs will also
make a substantial difference. All opex and capex plans are being reviewed.
As well as the clear risks, this new dynamic environment could offer opportunities for the group, given
its leading position in the used vehicle ecosystem, the potential for rationalising of company fleets postlockdown, and activity from customers reducing vehicle costs. EC Credit Control will prosper during this
time given its counter cyclical features.
Not really as I see it. The COVID scare only became apparent in the last month of the business year for TRA (year ended 31st March). Todd has told us that they were trading ahead of budget until that time. So it stands to reason that with 11 months of performance already locked in, the single disrupted last month will not affect the annual result that much.
No such buoyant predictions have been made for FY2021....
SNOOPY
Good point. I assumed falsely their FY is going through to June. But you are right, it ends already today - this means most of the COVID-19 impact will hit their FY2021 (and FY2022).
Loans will still be served this month - people still get paid, redundancy payments and / or the increased benefits.
The unemployment marathon starts in April / May ...
Lots of cheap cars soon through forced sales. I wonder if they will go back to auctions where they make a cut much quicker and do not care what the price is so much as long as they get it sold. I guess they will slow their Japanese import business.