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.