TRS - The Reject Shop

[bigdog]

Very bad news and day today for TRS (my tip in 2018 yearly tipping)

https://www.aussiestockforums.com/posts/999754/delete
ASX ANN 7/10/2018 8:30:30 AM Pre AGM Trading Update

 

[luutzu]

Very bad day
I had some shares which I fortunately sold 1 week ago!

I added some more today. At $2.61.

Retailers will have some tough time ahead. But at that price, I can wait.

I did my maths about one and half year ago and put its long term price at $8 to $10. But that's me.

 

[notting]

I added some more today. At $2.61.
Retailers will have some tough time ahead. But at that price, I can wait.
I did my maths about one and half year ago and put its long term price at $8 to $10. But that's me.

You may need to go back to Math school....


Mastered the art of shockers since 2011 Yes it's the Reject shop, true to it's name in more ways than one!! -

Let's hope that it's just a badly managed company rather than their excuse which is basically - “The continuing absence of real wage growth and increases in the cost of many basic expenses (incl. mortgage rates) ensures that competition for the discretionary spend of consumers remains high."

If this excuse is the real reason then this really does indicate that we are on a knife edge.
The Reject Shop is kind of the last place you shop before going to the Salvos and if it's feeling these relatively insignificant problems and tweaks so heavily then we must be so overstretched with mortgages and utility costs that we could be in for a huge crash. One suspects it's not this bad, fortunately!

 

[luutzu]

You may need to go back to Math school....


Mastered the art of shockers since 2011 Yes it's the Reject shop, true to it's name in more ways than one!! -

View attachment 89872

Let's hope that it's just a badly managed company rather than their excuse which is basically - “The continuing absence of real wage growth and increases in the cost of many basic expenses (incl. mortgage rates) ensures that competition for the discretionary spend of consumers remains high."

If this excuse is the real reason then this really does indicate that we are on a knife edge.
The Reject Shop is kind of the last place you shop before going to the Salvos and if it's feeling these relatively insignificant problems and tweaks so heavily then we must be so overstretched with mortgages and utility costs that we could be in for a huge crash. One suspects it's not this bad, fortunately!

Seems the market just look at the missed H1 earnings by some 40% and marked the share price down by a similar drop.

Just to be sure I didn't read the figures wrong...

TRS have about 30M shares outstanding. At $2.50 or about that's $75M for the entire shop right?

Zero debt.

Net cash flow from operations about $30M a year.

Historical net profit about $15M a year.

Business is still profitable, not losing money. Its cost control from previous year's report looks like cost is being handled pretty well.

Just added a bit more.

 

[notting]

If you compare the chart to MYR it's not much different accept MYR did it in a much smoother fashion.
So you could argue it's a particular way of doing retail that just doesn't have any kind of future growth attached to it. MYR has bucket loads more debt and rent commitments so you'd have to say it's OK at this level.

 

[luutzu]

If you compare the chart to MYR it's not much different accept MYR did it in a much smoother fashion.
So you could argue it's a particular way of doing retail that just doesn't have any kind of future growth attached to it. MYR has bucket loads more debt and rent commitments so you'd have to say it's OK at this level.

I haven't looked at MYR.

Yea, bargain hunting isn't always pretty but it might pay the bills.

Its big growth initiative is to sell storage solution. People have things to store in a recession or will they offload them off on eBay and Gumtree?

 

[peter2]

Wait a minute. Did I read that someone mentioned that TRS was "interesting"? TRS is one sick chart at the moment, about as interesting as the walking dead. I didn't see the TV series of the same name, but that must have been interesting to have lasted for so many seasons. I see The Walking Dead is into it's final season, just like TRS.

 

[luutzu]

Takeover offer at the low, low price of $2.70.

TRS is worth a whole lot more than that. At least $5.00, and a lot more if the holding is longer (for when the retail condition "normalises").

 

[luutzu]

Wait a minute. Did I read that someone mentioned that TRS was "interesting"? TRS is one sick chart at the moment, about as interesting as the walking dead. I didn't see the TV series of the same name, but that must have been interesting to have lasted for so many seasons. I see The Walking Dead is into it's final season, just like TRS.

TRS's share price hasn't been good. That's obvious. But as a business it's quite good. Not remarkably great... but for an Australian retailer it's quite impressive.

 

[bigdog]

XMAS sales approaching!!

Thank you luutzu for making me aware of

I hold and TRS was included in my 2018 yearly tipping comp.

ASX ANN
21/11/2018 9:32:14 AM Intention to Make Takeover Bid

 

[Clansman]

Takeover offer at the low, low price of $2.70.

TRS is worth a whole lot more than that. At least $5.00, and a lot more if the holding is longer (for when the retail condition "normalises").

No it isn't. It's struggling in an environment it should be excelling in. It will go, if not after the first offer, but definitely the 2nd, which won't be anywhere near the figure you are talking about.

 

[luutzu]

No it isn't. It's struggling in an environment it should be excelling in. It will go, if not after the first offer, but definitely the 2nd, which won't be anywhere near the figure you are talking about.

All retailers are struggling, so in the sense that sales are down, will remain down... yes TRS is struggling.

But its margins, costs are pretty well controlled. It's not losing money. Its net operating cash flows is some $34m last year, averages about $33m per year past few years.

With some 100 stores due to renewing their leases this FY19... those that's doing poorly will be exited with minimum expenses. i.e. no need to just stick around because the lease says you have to. Play around with stock level etc., and things won't be as bad.

Sure, sales volume will likely drop... but that's business. With zero debt, 1/3 of the stores can be shut down if management decided they need to pull back a bit during the downturn. Not likely to go broke or lose money, just making less of it.

Inventory level rises, but putting that into context, it's quite normal with the increased sales. So a 1 percentage point increase in inventory/sales... With inventory to sales at 13%, to current asset at around the historical average of 80s... Not desperate situation at all.

You can see this in it not permitting laybys or other delayed payment incentives to move stocks and increase sales. DickSmith, and other struggling businesses, would do these kind of stuff when they're struggling.

 

[luutzu]

No it isn't. It's struggling in an environment it should be excelling in. It will go, if not after the first offer, but definitely the 2nd, which won't be anywhere near the figure you are talking about.

As to the TO price... it's a joke.

IF the board of TRS recommend that, they'll be sue.

$2.70 for a company with some $0.51 in cash [about $14m], with NTA at $5.23... This is not a company in dire financial distress. You can't pay half the price of its assets, get all the infrastructure and IP etc. for nothing.

btw, you can download this research from my little app for free.

I've also put up other retailers you can get for free to compare against.

It's currently in beta mode. So some link might not work. But the main module are all good.

 

[Clansman]

As to the TO price... it's a joke.

IF the board of TRS recommend that, they'll be sue.

$2.70 for a company with some $0.51 in cash [about $14m], with NTA at $5.23... This is not a company in dire financial distress. You can't pay half the price of its assets, get all the infrastructure and IP etc. for nothing.

View attachment 90424

btw, you can download this research from my little app for free.

I've also put up other retailers you can get for free to compare against.

It's currently in beta mode. So some link might not work. But the main module are all good.


View attachment 90425

No thanks, I don't need an app to know that this will fly in the way that I said. $5 is laughable.
Watch it go for nowhere near that.

 

[luutzu]

No thanks, I don't need an app to know that this will fly in the way that I said. $5 is laughable.
Watch it go for nowhere near that.

Why would $5 be laughable?

With some 30m shares, that's $150m.

Sales of $800m. Free cash flows some $40m; operating cash some $30m; reported profit some $15m. Zero debt, reasonable margin for a retailer. etc. etc.

No one, and no app, knows how (a few) market participant will appraise any business... but if you have a business of similar qualities, you can sell them to me for the equivalent prices at any time.

Geez man, takes out the cash TRS has at the bank.. the offer price is ~$2.20, or $64m. With net operating cash of $30m+ per year, you're practically guaranteed your return in about two years.

Of course no one can predict takeover offers, or know the extend of any potential downturn coming up. I'm not pretending that I can predict and all that... but honestly, if you took a look at TRS accounts and were not the least interested...

 

[galumay]

Looks like a lifeline for any punters unlucky enough to be caught holding. Take it and run!

 

[luutzu]

Looks like a lifeline for any punters unlucky enough to be caught holding. Take it and run!

I'm betting that the eventual offer will be no less than $5. Not by this clown maybe... but it shouldn't go for less than that.

 

[Clansman]

I'm betting that the eventual offer will be no less than $5. Not by this clown maybe... but it shouldn't go for less than that.

If you think that, then you are even dumber than I thought. Are you going to bet $5 on that like you said about APA being bankrupt withing a year? You've no hope of ever seeing a $5 offer, it will not even have a 4 in front of it. Low $3's at best I'm afraid. It's pertinent to note that it's an all in cash offer and right now... cash is well.. you know the rest.

 

[sptrawler]

If you think that, then you are even dumber than I thought. Are you going to bet $5 on that like you said about APA being bankrupt withing a year? You've no hope of ever seeing a $5 offer, it will not even have a 4 in front of it. Low $3's at best I'm afraid. It's pertinent to note that it's an all in cash offer and right now... cash is well.. you know the rest.

One thing I've found is never knock another persons opinion, he could be the one buying the shares, you want to offload.

 

[luutzu]

If you think that, then you are even dumber than I thought. Are you going to bet $5 on that like you said about APA being bankrupt withing a year? You've no hope of ever seeing a $5 offer, it will not even have a 4 in front of it. Low $3's at best I'm afraid. It's pertinent to note that it's an all in cash offer and right now... cash is well.. you know the rest.

I control like diddly of TRS stocks. So I obviously cannot decide what the high and mighty will sell the entire shop for.

Simply saying what I reckon they're worth... and over the medium term, assuming tougher trading conditions, quite a few store closures, reduced sales... TRS is still worth at least $5.

Over the longer term, say over 5 years to 10... it's worth at least $10 even if earnings just "normalises". ie. chugging along as it has the past decade or so.

Mate, you can pull my arguments apart and laugh at it. I'm cool with that. But to just say you reckon it's this and that without any reason behind it... just doesn't add any weight you know.

And yes, APA will need a massive bailout - bailout from the gov't or from shareholders/debtors extending terms etc. Without it, the entire empire will collapse. I've discussed APA at length some tme ago... I do check in and out of it now and then, its constant fund raising "for growth and expansion" just confirm it.