WeBuyCars share price surges after strong interim earnings growth

IN ITS FIRST published results since listing, WeBuyCars Holdings said it drove core headline earnings a share up 21.1% to 119.9 cents in the six months to March 31, despite the overall weak vehicle trading market.

WeBuyCars listed on the JSE on April 11, following the unbundling by Transaction Capital of all the shares it owned in WeBuyCars.

The share price increased 4.35% to close at R22.07 on the JSE yesterday, a strong performance considering the All Share Index was up only 0.03% at the same time – WeBuyCars’s share price opened at R20 when it listed.

Directors said yesterday they anticipated the difficult local market conditions to continue where there was low consumer confidence, high interest rates, and lower new vehicle sales volumes.

This, and political uncertainty ahead of the elections this month may impact the market in the next six months, they said.

“We believe our business model is robust and should be able to overcome most of these vagaries,” they said.

WeBuyCars has grown its headcount and its physical footprint over the past three years. In 2021 it sold about 7 000 vehicles a month, and this had grown to more than 14 000 a month.

“We plan to continue on this growth journey. Our ambition is to grow monthly volumes to 23 000 and double market share by 2028,” they said.

The most recent initiatives in this regard includes a lease agreement signed last month to secure a location in East London.

This would allow the display of about 300 vehicles for sale, with the first trading anticipated in June, 2024.

Property sale agreements had also been signed recently to purchase land in Lansdowne in Cape Town, and in Rustenburg in North West for future development.

These initiatives were being funded from available banking facilities.

They said key drivers of the interim earnings growth were higher volumes, higher average selling prices, improved margins, operational efficiencies, higher inventory turns, and cost efficiencies.

The company bought 81 785 vehicles over six months, 13.7% higher than at the same time a year before. It sold 80 538, a 13.4% increase from the same time last year.

The directors said an agile business model and quick inventory turnover enabled the company to respond to the market changes quickly by re-aligning inventory profiles to lower-priced vehicles to match consumer demand.

WeBuyCars revenue increased by 15.9% at R11.4bn.