Fund Manager Summary on NTAW Holdings Ltd (ASX:NTD)
NTAW Holdings Ltd (ASX:NTD) presents a compelling opportunity, as fund managers highlight its strong positioning as the largest distributor of tyres and wheels in Australia and New Zealand, alongside effective capital allocation by management. Recent commentary underscores the company's ability to navigate logistical challenges and cost pressures, ultimately suggesting a recovery in profitability with projected earnings of 7.5 cents per share next year at a low Price to Earnings Ratio of 7.7x. While risks remain from rising costs, a weakening Australian dollar, and the impact of tumultuous markets, the management's successful operational strategies and investment in growth bode well for future performance. Fund managers express confidence in NTD's intrinsic value, indicating potential for dividends or capital management actions, enhancing shareholder returns as market conditions stabilize.
Commentary From The Managers
There are 3 insights from 1 fund managers regarding their investment in NTAW Holdings Ltd (ASX:NTD) available on Thesis Tracker.
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Updates are made available to members within 12 hours of being released. The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Collins St Asset Management
30 June 2023
$0.57
Summary
- Collins St Asset Management believes National Tyre and Wheel (NTD) presents a classic value investment, originally purchased at around 40c with 50c in inventory.
- During the downturn caused by Covid, Collins St Asset Management seized the opportunity to increase their stake at lower prices.
- NTD has a strong operational history of over 30 years as a private entity, now transitioning to the ASX.
- Collins St Asset Management praises NTD's management for its strategic growth through both organic and acquisitive methods.
- Despite management's solid performance, NTD's share price has not reflected this improvement.
- In 2022, NTD faced challenges such as logistical issues, a weaker Australian dollar, and rising shipping and oil costs.
- The outlook for NTD is optimistic, with potential growth as prior hurdles begin to reverse.
- Consensus predicts earnings of 7.5c per share for NTD next year, resulting in a Price to Earnings Ratio of just 7.7x.
- Collins St Asset Management concludes that given the quality of NTD's business and promising future, its current valuation appears undervalued.
Collins St Asset Management
30 Sept 2022
$0.72
Summary
- Collins St Asset Management highlights that National Tyre & Wheel (NTD) is the largest distributor of tyres and wheels in Australia and New Zealand.
- The company operates in a non-discretionary industry, providing stability amidst economic fluctuations.
- Recent challenges include rising costs and a weakening Australian dollar, but these costs are typically passed on to consumers.
- NTD is recognized as a high-quality company with a management team adept in capital allocation.
- Management has aligned interests with shareholders by investing significantly in NTD shares.
- The current Price to Earnings Ratio is just 5-6 times, with an anticipated drop to 4x in 2024, signaling undervaluation.
- The share price decline is viewed as an overreaction in volatile markets.
- If share prices do not recover, there may be a dividend or capital management initiative to highlight the company’s intrinsic value.
Collins St Asset Management
31 Mar 2021
$0.82
Summary
- Collins St Asset Management notes a recent announcement regarding the sale of Cooper tyres to Goodyear.
- NTD is contracted to distribute Cooper Tyres in Australia for the next six and a half years.
- There is potential for the distribution agreement to be extended beyond 2027 due to NTD's track record.
- Market reaction led to a significant share price drop from $1.14 to 78c, reflecting concerns over 25% of profits being tied to Cooper tyre sales.
- Collins St Asset Management engaged with management to clarify that NTD will at least continue trading with Cooper until 2027.
- Post-discussion, Collins St Asset Management increased their exposure to the business, becoming a substantial shareholder.
- The business has since provided a positive trading update, with shares trading at 97c.
The completeness, accuracy or current status of the investments referenced are not guaranteed.
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Frequently Asked Questions
Who is investing in NTAW Holdings Ltd (ASX:NTD)?
Fund managers including Collins St Asset Management have invested in NTAW Holdings Ltd (ASX:NTD).
Why do fund managers invest in NTAW Holdings Ltd?
Fund managers invest in NTAW Holdings Ltd due to its strong market position as the largest distributor of tyres and wheels in Australia and New Zealand. The company has demonstrated consistent growth through strategic management and capital allocation. Despite facing challenges like rising costs, it maintains a solid profit base, with key products contributing notably to earnings. The low Price to Earnings Ratio highlights its perceived undervaluation, while potential for dividend payments and capital management enhances its attractiveness as an investment.
What happened to NTAW Holdings Ltd (ASX:NTD)?
There have been no recent updates from fund managers regarding NTAW Holdings Ltd although fund managers including Collins St Asset Management have previously commented.
What is the short interest in NTAW Holdings Ltd (ASX:NTD)?
According to ASIC filings, there is negligible or no short interest in NTAW Holdings Ltd (ASX:NTD).
What does NTAW Holdings Ltd (ASX:NTD) do?
NTAW Holdings Ltd. is a tyre and wheel wholesaler carrying on business through subsidiaries and controlled entities in Australia, New Zealand, and South Africa. The company was founded by Terence Smith and Susanne Smith in 1989 and is headquartered in Moorooka, Australia.