Should be a good one for TRA as well, finally they may break the $3 mark with good commentary and outlook. Bid side stacking up nicely in anticipation and another juicy quarterly dividend to come our way in new year :t_up:
Any reason for the bump in share price today? Just people getting in before earnings on Wednesday?
Retail sales data for the Sept quarter out yesterday was stunning. From memory, spending in the motor vehicle sector was up 47% in line with vehicle registrations up 50%...or were those two figures the other way around, I forget and it doesn't really matter. Bottom line, this sector is booming.
Looks like it going settle around 2.80 for now until what gets unveiled tomorrow which will determine further course of sp direction. Well at least as at today's price I've made good losses from my previous lot into this one and handsome more on current lot. Overall pretty stoked!!!
Where's the HY21 results announcement? Supposed to be before 9am today (25 Nov 2020)...
Turners delivers robust HY21 earnings, despite COVID disruption
• Group revenue 14% lower at $148m
• Reported NPBT increased 26% to $18.7m
• Underlying NPBT down 11% to $13.1m
• Reported NPAT increased 25% to $13.4m
• Used car market proved resilient, rebounding strongly for `high trust’ Turners brand
• Robust annuity earnings from Finance and Insurance validates diversified business model
• Diversified business with ‘high trust’ brands supported robust earnings
• Progress accelerating for transition to digital offering, reducing costs, increasing resilience and enhancing the customer experience
• NPBT guidance for FY21 to be toward the upper end of guidance of $28m to $31m, conditional on no significant further lockdowns
• Projected FY dividend 17.0 cps at mid-point of guidance
Turners Automotive Group (NZX: TRA) delivered robust earnings in HY21 despite a disrupted operating period, with the used car market rebounding after COVID-19 lockdowns, and the Group’s diversified annuity businesses in Finance and Insurance supporting resilience and contributing to strong and sustainable yield.
Todd Hunter, CEO, said: “Given the tumultuous start to the year with a Level 4 COVID-19 lockdown, and high levels of uncertainty, we are delighted with how our team responded to improve our ability to operate in pandemic conditions, as well as improving the resilience of the business to sustain strong yields. Our diversified business, and the quality of our trusted brands, proved robust in the face of market uncertainty, and enabled us to accelerate our strategic plan to lead in the digital space and strengthen our national position in Auto Retail.”
Financial results
Reported NPBT, which is the basis for Turners’ full year guidance, increased 26% to $18.7m with net profit after tax (NPAT) of $13.4m, up 25% on the same period last year. Underlying NPBT was down 11% to $13.1m, with a reconciliation of reported and underlying numbers available on slide 9 of the investor presentation, also published today.
Earnings per share for HY21 were 15.7 cps, up 27% on the previous year. Following the suspension of dividends during lockdown, the Board resumed dividend payments with a Q1 dividend of 4.0 cps. A further 4.0 cps has been declared for Q2, taking HY21 dividends to 8.0 cps. This reflects the dividend policy adopted by the Board last year to pay-out 60-70% of net profit after tax (NPAT).
Grant Baker, Chairman, commented: “Our commitment to delivering strong and sustainable yield to shareholders remains a clear focus for the company. It is pleasing to see the benefits from our strategy of a diversified business showing results and our focus on building a quality business for our team, our customers and our shareholders. Despite some real challenges this year so far, we have not only built further resilience, but made progress with plans to strengthen our position in our key markets in the long term as well as reducing cost and improving our systems and operations. Obviously, market conditions remain somewhat uncertain as the COVID-19 pandemic continues around the world, but this necessity to stress test our business has not been without reward.”
Results by division
All parts of the business contributed to the first half profit, and this diversity means the company is well-placed, assuming no further major COVID-19 disruption, to achieve NPBT toward the upper end of guidance provided at the annual shareholders meeting.
Auto Retail: Revenue $96.1m – 17%, NPBT $7.8m +6%
The Automotive Retail division revenue was 17% lower at $96.1m, reflecting suppressed activity during lockdown, but also a strong rebound since. A focus for the half was on COVID-19 recovery and cost management. Volumes have recovered since, but the main driver of improving profitability in the months since lockdown has been margins. Margin expansion is due to a number of buying initiatives and by tight supply of cars nationally, due to the supply constraints in “New” cars.
Whilst there was a substantial disruption early in the half, the used car market has demonstrated resilience, not just rebounding after lockdowns, but through the economic cycle as customers consider lower cost options. The company continues to benefit from a diverse geographic footprint (which was well demonstrated during the recent partial lockdown in Auckland.) Turners diversified sources of supply and trusted brand position is proving highly valuable in times of uncertainty.
Finance: Revenue $23.2m +2%, NPBT $7.6m +18%
The Finance division contributed strongly to the first half, with annuity earnings helping during lockdown. Finance sales also showed a solid rebound following lockdown. Revenue for HY21 was $23.2m, up 2% on last year. NPBT was $7.6m up 18% of the year prior, as Oxford benefitted from higher margins, lower accruals and greater cost efficiencies.
Remarkably, less than 70 customers (0.29% of customers) are currently in hardship status. The division’s focus on high quality borrowers has seen record low levels of arrears reflecting the risk-pricing strategy over recent years, and the business is well-placed for the second half of the year to continue its expansion. Oxford has built a material buffer in arrears provisioning to allow for any unemployment increase in future months.
During the period, premium risk tier lending increased to over 50% as shown in the presentation also released to the market today. Finance continues to be a strong performer within the group, and it is notable that Finance’s profit contribution over recent years has grown significantly, from 24% in 1H19 to 33% in 1H21.
Insurance: Revenue $21.1m -5%, NPBT $4.5m +74%
Insurance revenue decreased 5% to $21.1m due to the impact of lockdowns. However, NPBT was up 74% to $4.5m on higher margins, reducing overhead costs and the finish of amortising the acquired premium portfolio as part of the Autosure acquisition from Vero in 2017.
The division contributed to the overall result and cashflow via annuity earnings during lockdown, with premiums taken up front. Progress was made on building out distribution, as well as continued investment in digital and system integration. As with Finance, the division continues to focus on quality, as was evidenced with combined claims ratios improving, from 69% in 1H19 to 59% in 1H21 and AM Best upgrading its credit rating and financial strength rating for Insurance.
Credit Management: Revenue $7.0m -29%, NPBT $3.0m -17%
Credit management revenue decreased 29% to $7.0m, and the impact of COVID-19 was visible in market-wide conservatism with respect to debt collection actions during the first phase of the pandemic. NPBT was also down 17% to $3.0m
The division remains an important part of the diversification strategy, offering a hedge for any potential cyclical downturn ahead. The division has been successful in managing cost in a reduced debt load environment and maintains strong relationships with debt lenders. The business expects to load more debt over coming months, following a hiatus period during and post lockdown, during which lenders prioritized managing reputation over collections. A similar pattern was experienced post the GFC, before a busy collection period began.
A transition to a digital-based business is continuing. The division is working closely with referrers to manage and improve customer outcomes as we go forward into an environment where bad debts are likely to increase and debt collection services will see increasing demand.
Digital strategy bearing fruit
Right across the Group, the expansion of the digital strategy over several years is bearing fruit and contributed greatly during the period under review. This was accelerated as part of the COVID-19 response where no or low contact transactions and customer service was required. COVID-19 added useful impetus to momentum within the business to move to digital platforms and lower-cost, easy-to-use self-provisioning models for customers. We see an opportunity to achieve market leadership in digital across all business sectors, further increasing resilience, lowering cost, and improving customer experience.
Outlook and Guidance
Although the strong market rebound post-lockdowns has been pleasing, the business remains focused on agility and the ability to manage uncertainty while the COVID-19 pandemic remains rife throughout the world. The stress test that COVID-19 provided has proved the benefits of the Group’s strategy of diversification, digital leadership, national distribution and the development of trusted brands.
For every month since June, group operating profit has been well above levels in FY20. Meanwhile, a number of reductions to the fixed cost base will deliver ongoing benefits over the years to come.
In terms of Q321, key themes have continued, including:
• Auto: continued supply constraints, better-than-expected demand contributing to margin improvement on owned inventory,
• Finance: strong new lending, with arrears at historic lows,
• Insurance: strong sales of new policies, and claims ratios improving; and
• Credit Management: debt loads to increase as corporate customers reinitiate collections actions
Building on continued robust performance thus far in Q321, the Board expects to achieve toward the upper end of its FY21 NPBT guidance of $28m to $31m, as supplied to the market at September’s ASM. This assumes that there are no significant further lockdowns in New Zealand in FY21. At the mid-point of the guidance range, this could yield a full year dividend of 17.0 cps, according to the Board’s dividend policy.
Numbers look pretty good, dividend in tact and more importantly NPBT for FY21 revised to be at the upper end of $28m to $31m. Onwards and upwards to $3+...
Very solid result. Difference between reported profit and underlying profit is mainly the ~ $5m Covid subsidy. (Please...lets not go there again on the whole should companies repay this endless moral debate)
• Overall restructure costs relating to people and
property will reduce FY22 fixed cost base by $4m+
• Operating profit results for each month June to
October have tracked well ahead of same month
for FY20
Hmmm - I really like the above cost control measures for FY22 in light of the very strong operating environment. Its really refreshing to see a disciplined and strong cost control approach being taken. A lot to like in this result and in the foreseeable outlook in the years ahead. (Further comment to come when I have fully digested the presentation materials).
http://nzx-prod-s7fsd7f98s.s3-websit...850/335937.pdf
unless I'm mistaken, looks like company is trading at less than 10x projected forward earnings, is that right??
Top end of year end guidance at $31m before tax, assuming full tax is paid at 28% = $22.32m = 26 cps. Forward PE at $2.82 = 10.8
This is very positive as well....straight on the bottom line in many ways.
"Remarkably, less than 70 customers (0.29% of customers) are currently in
hardship status. The division's focus on high quality borrowers has seen
record low levels of arrears reflecting the risk-pricing strategy over recent
years, and the business is well-placed for the second half of the year to
continue its expansion. Oxford has built a material buffer in arrears
provisioning to allow for any unemployment increase in future months."
First half npbt 18m full year projection 31m therefore approx 13m for 2nd half... i would have thought that summer months would be far more profitable for them
SO around $3 for a no growth company is about right
NPBT last 4 years - 31.1m / 29.0m / 29.1m /say 30.0m in F21 (Turners preferred profit figure)
Seems to me that TRA is a stock just for the dividend (even more so if one buys at the lows of the cycle) and trading the inevitable swings in the share price according to market sentiment of the day
What gets me is that the hype over the last few years never seems to impact the bottome line -- lots of hype --> flat bottome line
Webinar done and dusted via ZOOM. Punters seem very happy overall as not many questions except from one guy who had bunch of questions, not difficult ones.
17 cps fully imputed = 17 / 0.72 =23.61 cps gross. 23.61 / 290 = 8.1% Gross Yield
Disc: I topped up a few more this morning. I am very pleased to see them stripping $4m+ from overhead costs. Augers extremely well for the future and I think its highly likely that yield is sustainable going forward.
Yes I think that's fair comment. Stripping $4m+ from overhead from FY22 onwards along with the trading outlook provides solid encouragement for profit growth in FY22 and beyond.
I see they are digitizing their loan application processes. I haven't had time to read the whole presentation yet. Have they mentioned the fintech buzzword in there somewhere ;)
Is there a replay of the Zoom webcast available anywhere?
finding resistance at these levels after good gains in the last six months and returning to pre-covid levels.
note this level was initial support back in early and mid 2018 until it succumbed and broke down at the end of that year.
declining volumes a negative also.
Attachment 12114
I would be ignoring technical analysis for dividend stocks in the new long term near-zero interest rate environment. It's a whole new ball game now. And with companies like TRA which have both high dividend and growth I wouldn't be touching TA with the proverbial 10 foot barge pole.
in March when the share price touched $1.13 we were in the midst of a global crash in share prices, and many commentators were suggesting that the crash was going to continue. You could have bought almost anything about that date and done well, but hindsight is easy and the response by governments, and subsequent impacts on markets weren't obvious.
My favourite share of comparison is SKL, mostly cos a mate told me to put $10k into it at $1.60, he bought quite a lot more than he recommended that i invest, and got it at $1.53. I bought nil due to a distrust of some of his theory. Yeah. Oops.
TA is just one investment tool which can help you to identify trends and trend changes. It can't predict unforeseeable events (nothing can :):, but it can help you to see and understand what the market is seeing at a certain point in time. In parts it provides as well self full filling prophecies given that other investors are using this tool as well and coming to the same conclusions.
Any tool able to predict the future with a likelihood better than random is useful, even if this said tool is part of the causes for the future development.
I don't see how a low interest rate environment would change the usefulness of TA ... it is just one of the factors the market will consider when pricing a share.
Up to you whether you choose to use this tool or whether you prefer to fly blind ... but no reason to rubbish it.
TA still relevant in low interest rate environment ....even if yield seeking seems to dominant
TA will give early signals when share prices have got too stretched (and seeking yield for the sake of yield has become a folly) and thw wise ones start abandoning the market.
Doesn’t look like share price going to push through 3 bucks any time soon.
well you spoke loudly and confidently about a subject that you are clearly ignorant about so yeh its a forum I say what I think without regard to charming you.
and yeh I do get ratty because there are so many people who bag TA when they dont know excrement and have probably spent 5 minutes reading about it on Wikipedia
even the venerable Beagle is prone to this and I bite at him too.
I'm very happy for people to ask questions about anything and I will respond nicely but if you just bag my 40 years of experience in this area in your 56th post I will call you out.
3 bucks is also a psychological threshold that investors may feel is too high esp after a big advance. That might have something to do with the pullback as opposed to innate consciousness of a previous resistance level. I dont know you take your own TA advice Peat if you're a TRA share holder??
the psych threshold is not opposed to the innate consc. resistance level. mate
it is it.
people will remember they should 've sold when it was that price but they doggedly hung on and now they can escape pain free. I reckon its a powerful force in markets.
I'm not buying any more ....
still showing your ignorance (or maybe you're just a bit loose in what you write I dunno ) There are no guarantees ! FA included - just keep buying that deep value - refer Phaedrus thread
And the thing is with TA is that you know when you are wrong. and then you're out. So yes the market makes fools of us all at times. Thats why we have portfolio's and risk/reward ratio's (esp for forex ) etc etc.
So I think what this forum seems to have no disagreement with is that a combination of the two can work pretty well. But after 15 years if you dont think the price action is telling you anything then hey who am I to tell you otherwise.
( And in any case TA is multi-faceted and I hate it being genericised )
TA a very valuable tool. Ignore it at your peril I reckon and speaking of this I see a nice uptrend has developed confirming my fundamental analysis that the tide has turned and is coming in for Turners for the foreseeable future.
When TA and FA really line up I get GA (greedy as), because there's almost always decent share price appreciation that follows.
Hey Winner - Directors always thought the shares were worth around $3.20 - $3.50 and it would appear they are right...just got their timing wrong by a few years eh ;)
The latest Retail NZ Sales Index, shows that spending through November remained strong, and that total spending since March is now ahead of last year.
“The Retail NZ Sales Index for November reports that spending through the month was around 25.7 per cent higher than last year, and that total spending since March is now 3.4 per cent higher than for the same nine months last year,”
Also Geneva sees a car sales increase:
https://www.stuff.co.nz/business/123...s-expectations
I did too.30 day moving average was hard to work out so I did Friday's close as being 5 days average, then ten weeks gave me 50 day moving average,which made things easier.Did my charts every Saturday morning.Would never have managed an EMA.
Trouble was too often getting false signals because of low volume of trades.
I think today with so many more people following TA, it has become more self fullfilling.
Does TA give any indication the share price is going to get back to $3.80 .... like it was back in early 2017
Jeez, that's a long long time ago and recent punters would say unbelievable
Try this percy, hopefully it works, a TRA Yahoo chart with the 30 and 50 EMA's.
We did not have Yahoo in the 80s or 90s.
Yes I use Yahoo charts.Fantastic with all the indicators too.
So simple that is why so many people use it, and why I said TA is often becoming self full filling.
Works great until it does not work. The best chart was the chart showing the growth rate of a turkey being fattened up for thanksgiving.
Yes you are right, a fabulous uptrend until the turkey had his head removed.So some times when putting your faith in TA it pays to make sure you too are not a turkey..lol.
I do not really have an opinion on Turners at present,other than to say directors/management ,with such large holdings, have managed the business through Covid 19 extremely well.No stock right downs, and impairments minimal.
I think the market would welcome them repaying the Govt hand outs.Would certainly add value to their trusted brand name.
Hopefully I will be in a position to buy back into Turners early to mid next year,depending on how the daughter's house buying goes.
Has been quietly building momentum and I have been quietly building a bigger position. Very strong tailwinds in this sector. Gross yield of 8% and still trades cum dividend.
What's the point of having cash in the bank at less than 1% ?
Fundamentally this looks very sound and the chart looks highly attractive too.
Reasonable sized orders going through today.
Whoopee - a pay rise likely later this year
And hopefully such a big increase in guidance will make shareprice rocket to new highs soon
Profit upgraded from about $30m to about $35m ---- that's huge and $35m will be a record result (I think)
http://nzx-prod-s7fsd7f98s.s3-websit...363/338954.pdf
Posted 25/11/20 - Good to see the guidance upgrade today and recall that the stripping of $4m per annum of overhead will come into effect in FY22. (Possibility of $40m per annum for FY22 in my opinion which could see a further dividend uplift). Increased dividend presently to 18 cps will be welcomed by the market. I ended up with more of these than I thought I ever would due to the encouraging looking chart.
Maybe we get 19 cps dividend in FY22 = 26.4 cps gross / $3.20 = 8.25% gross yield
P.S. Agree sb9 and was just thinking about the possibility of a "4" handle myself.
so share price will be 4 bucks soon
Improved profit might have been baked in already but surely not 16% more than expected
Hope punters get in soon ..... longer you leave it less the gains
20 cps quite possible next year, maybe even 21 cps ?
Mid point of guidance is $34m and they are suggesting that at the mid point of dividend range 60-70% that equates to 18 cps in annual dividends
If they can do $40m before tax next year that suggests 40/34 x 18 = 21cps is possible ! 21 / 0.72 = 29.16 cps / $3.20 = 9.1%.
What a beautiful surprise. Love this company. Strongly held by management is the best thing about TRA. Already sitting on 100% gain since buying in April, then topped up some more in May.
High dividends + growth, the best combination.
A corresponding response in the share price. Great, am a happy holder.
Excellent management. Bravo to the Turners Team.
Marvelous that Todd took the time to share some insights in late October 2020 with us. The only CEO of a listed company (that I am aware of) that makes the effort to do so. My nose for a feed was giving a solid reading as early as October that FY21 was going to be a great year and I expect the tailwinds to continue into FY22 and ultra low interest rates could persist for many years.
Indeed Winner69.
Just one other random thought. https://www.nzherald.co.nz/business/...GDM26OL7TWE4Y/
More lending and lower loan delinquency might have positive implications for Heartland Bank as well.
As the boarders opens to travel remains uncertain (mainly if anyone going to overseas holidays having to count two weeks and the cost of quarantine) and unlikely to open this year given all the current news, I wonder if in the view of the CEO this could be another reason on increase in car sales.
Craigs added 10.5% to their target price of TRA to $3.29
Diversified and well-managed business with all divisions contributing well and regular divvies.
What is there not to like?
18 cent divvy for the year and 2 x 4 cent divvies paid points to the next two quarterly dividends being 5 cents each. Likely to continue at 5 cps each quarter in my view as dividends increase to 20 cps in FY22. I'm a little surprised the market hasn't embraced the upgrade more enthusiastically.
That's a good point Beagle.
I'm glad you're back.
If I was a long-term investor which I was not in this company, I would have been a bit disappointed with a 10% gain in the last 10 years. Everyone can see it's been a nice steady gain in this last year and may continue. Thanks to all for you're continued entertainment knowledge and wisdom. Better late than never and I bought some today.
Its is a bit. Last year they paid the full 28% tax rate so at the mid point of their FY21 forecast of $34m, (which is a solid uplift from the $29.1m last year) before tax this suggests $24.5m after tax which on 85.54m shares = eps of 28.64 cps. At $3.35 that's a forward PE of 11.7 which with interest rates where they are is basically a "no growth" PE. Whether they can grow from $34m then becomes the key question. I think tailwinds of ultra low interest rates persist for many years and the Turners brand is doing okay and vehicle margins could remain elevated for quite some time.
I am happy to hold and enjoy the high fully imputed quarterly dividends. I've bought so many vehicles over the years and paid dealers so much money its nice to be investing on the other side of the ledger and making money from others vehicle purchases for a change !
Director Roberts bought a modest amount. Take that SALT!
Profit upgrade + director buying. Is there a better sign to accumulate?
I couldn't resist and got some more from the $3.35 wall.
Stock at shelf 335 keeps getting replenished, wonder how much more to go....
I like it how the seller(s) has set the $3.35 price as their limit sell and isn't pushing the stock down
As expected, Salt have been selling their stake and they have further 6mln odd shares at their disposal.