Our opinion on the current state of WEBBUYCAR(WBC)WeBuyCars was separately listed on the JSE on 11th April 2024, following its unbundling from Transaction Capital (TCP) to raise capital and shield it from TCP's challenges in the taxi division. The company has 417.2 million shares in issue, which began trading at around R20 per share, giving it a market capitalisation of just over R8.5 billion. The free float is approximately 57.5% of its issued shares, with notable institutional participation.
In its results for the year to 30th September 2024, the company reported a 16.5% increase in revenue but a 62.6% decline in headline earnings per share (HEPS). The drop in HEPS was due to a once-off R45 million listing cost and the de-recognition of a R425 million call option. Buying and selling volumes increased by 17.8% and 16.4%, respectively. The company stated, "WeBuyCars is well-positioned to benefit from lower interest rates, higher levels of consumer confidence, an improvement in new vehicle sales volumes, and cost efficiencies driven by economies of scale."
Core headline earnings rose by 23.4%, while core HEPS increased by 9.9%. Despite its current P/E ratio of 43.18, which seems high, the share has potential for steady growth over time. It was added to the Winning Shares List (WSL) on 3rd May 2024 at 2085c and has since increased to 3960c. While the valuation may appear stretched, the company must grow into the high expectations set by investors.
WBC trade ideas
Our opinion on the current state of WEBBUYCAR(WBC)WeBuyCars was listed separately on the JSE on 11th April 2024, having been unbundled from Transaction Capital (TCP) to raise capital and shield itself from the challenges TCP faces in its taxi division. The company issued 417.2 million shares, which began trading at around R20 per share, giving it an initial market capitalisation of just over R8.5 billion. WeBuyCars has a free float of about 57.5%, with significant institutional investor participation, signaling confidence in the stock.
In its financial results for the six months ending 31st March 2024, WeBuyCars reported impressive growth:
- Revenue increased by 15.9%
- Core headline earnings per share (HEPS) rose by 26.1%
The company highlighted its strong balance sheet, which is conservatively geared, and its high cash conversion rates. Net cash generated by operating activities stood at R267 million, representing a 96.6% increase over the comparable period.
In a trading statement for the year ending 30th September 2024, WeBuyCars estimated that HEPS would rise by between 7% and 12%. Given its strong performance and steady growth outlook, WeBuyCars is viewed as an excellent blue-chip share with the potential to grow consistently over time. Its conservative gearing, cash flow strength, and institutional backing further reinforce its position as a solid long-term investment opportunity.
Our opinion on the current state of WEBBUYCAR(WBC)WeBuyCars was recently spun off from Transaction Capital and listed separately on the JSE on April 11, 2024. This move was designed to raise capital and shield the company from the financial challenges facing Transaction Capital's taxi division. At its debut, WeBuyCars issued 417.2 million shares, opening at about R20 per share, which values the company at just over R8.5 billion. The public owns approximately 57.5% of the company’s shares, with substantial institutional investment.
The company issued a trading statement for the first half of 2024, projecting that headline earnings per share (HEPS) could range from -19.7c to -21.7c, a significant drop from 20c in the corresponding period last year. However, core headline earnings are anticipated to increase by 24% to 29%. This forecast includes R45 million in one-time costs associated with professional, legal, and JSE listing fees due to its recent public offering. Despite these initial expenses, the share price responded positively to the earnings forecast.
WeBuyCars is considered a strong blue-chip stock with potential for steady growth over time, especially given its successful market entrance and solid institutional backing.
Our opinion on the current state of WEBBUYCARS(WBC)WeBuyCars was separately listed on the JSE on 11th April 2024. It was unbundled from Transaction Capital (TCP) in order to raise capital and to protect it from that company's difficulties in its taxi division. The company has 417,2m shares in issue which began trading on the JSE at around R20 per share giving it a market capitalisation of just over R8,5bn. The company's free float is about 57,5% of its issued shares with significant institutional participation. Read this article for more information.
