NTAW Holdings Ltd

Collins St Value Fund continues to hold NTAW Holdings Ltd (NTD) after the company’s recent announcement regarding the sale of Cooper Tyres to Goodyear. While the market initially reacted negatively, fearing the impact on profits from the loss of Cooper Tyres, Collins St Value Fund took the opportunity to engage directly with management. The company reassured the Fund that NTD would continue distributing Cooper Tyres through at least 2027, with a strong possibility of extending the agreement beyond that. Satisfied with this clarification and the company’s solid track record, the Fund significantly increased its exposure to NTD, becoming a substantial shareholder. Since then, NTD has provided a positive trading update, with the share price recovering to 97c. Collins St Value Fund remains confident in NTD’s future prospects, supported by its strong management and established market position.

Collins St Value Fund continues to hold National Tyre & Wheel (NTD) because they believe the company remains significantly undervalued despite recent challenges. As the largest distributor of tyres and wheels in Australia and New Zealand, NTD operates in a non-discretionary industry, making it well-positioned for steady demand. While rising costs and a weakening Australian dollar have impacted margins, the company is capable of passing these costs onto consumers. The Fund values NTD for its high-quality management team, which has aligned its interests with shareholders by investing a substantial portion of its wealth in the company. Currently trading at a Price-to-Earnings ratio of just 5-6 times (falling to 4x in 2024), Collins St Value Fund sees NTD’s share price as too cheap, impacted by market volatility. If the share price does not improve in the near term, the Fund anticipates that a dividend or capital management strategy could unlock NTD's intrinsic value, benefiting shareholders.

Collins St Value Fund continues to hold National Tyre and Wheel (NTD) with confidence, believing the company remains significantly undervalued despite recent challenges. Initially purchasing shares at around 40c, reflecting the value of NTD’s inventory, the fund took advantage of even lower prices during the Covid downturn to increase its stake. Since then, NTD has made substantial strides in expanding its footprint through both organic growth and acquisitions. Although the company faced headwinds in 2022, including logistical issues, a weaker Australian dollar, higher shipping costs, and rising oil prices, Collins St Value Fund remains optimistic about its future prospects. With these disruptions behind it, NTD is well-positioned to benefit from both its expanded presence and the reversal of these negative factors. Consensus estimates suggest NTD will earn 7.5c per share in the upcoming year, implying a Price to Earnings Ratio of just 7.7x. Given the company’s growth and strong fundamentals, Collins St Value Fund sees the current valuation as far too low and continues to hold its position, expecting significant upside as conditions improve.