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#Strategy Update
Last edited 12 hours ago

26-May-2020:  Strategy Update

This "Strategy Update" is pretty short:

Thorn Group Limited (ASX:TGA) (“Thorn”) notes recent media speculation. 
Thorn has previously announced the expansion of its online presence and the closure of the Radio Rental stores. 
The Board’s intention is to continue to originate in Thorn Business Finance and in Consumer Leasing in accordance with tightened credit policies in the Covid-19 environment.

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However it was enough to cause the TGA SP to rise over 17% today (that's where they are as I type this anyway).  I don't hold TGA, but I do hold FOR shares (the Forager Australian Shares Fund (FASF) LIT - Listed Investment Trust) and TGA was FOR's 3rd largest position (6.8% of FASF) at April 30.  Forager own 16.15% of TGA.  I agree with Steve Johnson on most things but his foray into TGA was not one of those things.  I have long hated TGA as a company.  Hated is a strong word.  Disliked, with a passion?  I much prefer Steve's largest 2 positions in his FASF (ASX:FOR) fund, being RPM Global Holdings Limited (ASX:RUL, 14.9% of FASF) and Macmahon Holdings Limited (ASX:MAH, 7.9%).  I actually have holdings in those two myself.  My MAH position is larger than my RUL position, because I think Macmahon have greater near-term upside.  Not TGA however.  I hope it works out for him!  As a FOR shareholder, I REALLY do.  However, I maintain my opinion that lower tier lenders are fraught with risk, and that applies even more so during an economic downturn, particularly in a recesssion.

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#COVID-19 Update
Last edited a month ago

23-Apr-2020:  COVID-19 Update

TGA is up +48% to 12c (from yesterday's 8.1 cps close) - at 1pm Sydney time - on the back of this update.  I don't hold TGA shares, but I hold FOR shares and FOR (the Forager Australian Shares Fund) holds TGA as a top 10 holding, so I do have exposure to TGA indirectly.  

It's an indication of just how much money they were losing that they have risen so much on the back of announcing that they are going to close ALL of their Radio Rentals stores permanently and that Radio Rentals will continue into the future as an online retailer.


Closure of Radio Rentals Stores  
Thorn Group Limited (ASX:TGA) (“Thorn”) announces today the expansion of its online presence and the permanent closure of the 62 Radio Rentals stores and selected warehouses, amid the coronavirus-driven downturn in the retail sector. 
The closures and the resultant redundancies of approximately 300 casual and full-time staff at the outlets and head office will be undertaken over the next three months. 

Thorn will undertake the run-down of Radio Rentals’ loan book, worth approximately $123 million as at 31 March 2020, which will be value creating and not draw down capital. The run-down is expected to immediately generate significant cash, above the redundancy and other costs.  

Strategy Update  
The core of the Radio Rentals’ business will continue to operate and will be leveraged to develop a new, digital business model.  Radio Rentals’ online store ( will be enhanced with a relevant product range to more closely match the needs of our customer base. 
Thorn has also introduced new credit policies and collection processes, as well as cutting head office costs, to ensure our business model remains sustainable in the face of these adverse business conditions. 
Chief Executive Officer, Mr Peter Lirantzis, said “I am disappointed that we have been forced to make hard decisions regarding our staff and store network, however they have had to be made to ensure Thorn Group continues to operate and thrive in the future. We intend to re-develop both the Radio Rentals’ digital business model and Thorn Business Finance once the COVID-19 crisis has passed.  
“The group presently has circa $40 million cash at bank and is actively pursuing a range of cost-cutting initiatives and recoveries, through which we expect to generate increased cash flow over the next year”,
he concluded. 
The adverse business conditions created by the COVID-19 crisis are causing increased arrears in both Radio Rentals and Thorn Business Finance and will result in corresponding write-offs. 
These conditions are expected to continue to create a range of challenges and complex conditions for the Thorn business over coming months. 

--- click on link above for more ---

This business still has significant debt and plenty of headwinds as well, as they have outlined above.  While a +48% SP rise in a single day is welcome, it always pays to put that into some perspective.  At 12c (i.e. even after today's +48% rise), they're still -73.8% down from their $0.458 (45.8c) 12-month high (back in May last year) and -96% down from their $2.94 peak in early December 2014.  TGA has been an absolute disaster for shareholders - unless you purchased them in the last 7 weeks.

Update:  5:30pm, 24-Apr-2020:  TGA ended up +60.49% yesterday (at 13c) and rose another +19.23% today to finish the day at 15.5 cps.  Still -66% down from their 12-month high of 45.8 cps, and still -95% down from their $2.94 high in early December 2014.  It just goes to show how much of a gain you need in percentage terms to recoup losses of this magnitude.  It seems to me that they were priced earlier this week as though there was a 95% chance they would go broke, and now they've been repriced as though there is "only" an 80% chance they'll go broke.  I would think that the chances are still probably closer to 90%, but time will tell.

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#Bear Case
Last edited 8 months ago


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