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.
