At $2.70 ps, Allensfords proposed takeover priced TRS at $77.92m.
With zero debt, some $14m cash at the bank, thats an actual bargain price of $63.92m for the enterprise, or about $2.20 a share. That for a net tangible asset of $5.23ps.
TRS produces some $25m net operating cash per year over the past 6 years; some $33m NOC past 3 years.
Free cash flow to the firm averaging $46m per year over the past 5 years.
Retail will no doubt get tougher in coming years, but TRS has been around a while, had proven itself to be one of Australias better retailer with established networks and wide footprints. Havent made a lost. Reasonable margins and returns over the years.
With some 1/3rd of its store leases due to renewal this FY19, underperforming stores can be close with minimal lost to profitability.
With economic condition expected to be difficult, leases that are due to renewal can arguably be to TRS benefit. i.e. close down undeforming stores, push for rental discounts on landlords.
While inventory nominally rises from $93m to $105m. And may be a concern in the coming year. Putting inventory into its context, against current assets or sales... and this increase is nothing out of the ordinary.
That is, inventory to c.asset averages around the 80%; inventory to sales show a 1perentage point increase since FY17, from 12% to 13%. So while the future might be bleak, these figures are within the normal range over the previous 6 years.
… and some quick notes on management and inventory ratios.