National Tyre & Wheel (ASX:NTD) is a wholesale importer and distributor of car tyres and wheels throughout Australia, New Zealand and South Africa. No tyres are made locally in Australia and NTD has the exclusive import rights to the Cooper Tyre brand. NTD has over 2,300 customers who include tyre retailers, car dealers and repair shops. The focus has been largely at the premium end of the 4WD market, but have recently added a SUV and passenger range thus targeting a broader market.
The tyre market in Australia is growing circa 1% pa but NTD are growing at more than 5% driven by increasing shelf space in underrepresented channels, new ranges, increasing customer engagement and acquisitions in adjacent segments such as trucks, buses, agriculture, mining. The SUV/4WD market in particular are growing above trend, and NTD remains engaged with a number of parties to further accelerate the inorganic growth strategy.
We remain positive about NTD as an investment opportunity, given its strong history of earnings and dividends, solid market position, net cash balance sheet, and undemanding valuation metrics. NTD recently reported its 1H18 financial results and remains on track to meet or exceed pro forma Prospectus forecasts.