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WE BUY CARS HOLDINGS LIMITED

WBC JSE Listed

Investment Analysis: We Buy Cars Holdings Limited (JSE: WBC)

Date: 9 January 2026 Share Price: ~R47.63 (4,763c) Analyst Role: Senior Equity Analyst, JSE

Step 1: Data Gathering & Source Verification

I have reviewed the most recent financial disclosures and SENS announcements. The company listed in April 2024 and recently released its first full-year results as a listed entity.

  • Annual Results: Reviewed the Audited Consolidated Annual Financial Statements for the year ended 30 September 2025 (Released 17 November 2025).
  • Interim Results: Reviewed the Unaudited Interim Results for the six months ended 31 March 2025 (Released 19 May 2025).
  • SENS Activity (L12M): Key announcements include the Annual Dividend Declaration (November 2025), a R2.5m settlement with the National Consumer Commission (NCC) regarding CPA compliance (December 2025), and trading updates detailing the volume impact of Chinese brands.

Data Sources:

  • Annual Results (Nov 2025): https://senspdf.jse.co.za/documents/SENS_20251117_S513279.pdf
  • SENS (NCC Settlement): https://www.webuycars.co.za/investors/sens (Ref: Announcement dated 24 December 2025)

Step 2: Metric Extraction

| Metric | Value | Notes | | --- | --- | --- | | Market Cap | ~R19.9 Billion | A large-cap consumer discretionary stock, already larger than many established retailers. | | Dividend Yield (L12M) | ~1.26% | Low. Total FY2025 dividend of 60 cents (Interim 30c + Final 30c). The low yield reflects the company's "growth" classification and high reinvestment rate into inventory and new supermarkets. | | Liquidity Check | Highly Liquid | Average daily value traded exceeds R15m - R20m. Since listing, it has become a favorite proxy for the SA consumer. | | P/E Ratio | ~21.2x | Expensive. Based on FY2025 Core Headline Earnings Per Share (HEPS) of 224.6 cents. This rating implies high growth expectations, which contrasts with the single-digit (3.3%) per-share earnings growth delivered in 2025. | | Price/NAV | ~7.6x | The stock trades at a massive premium to its Net Asset Value (~R6.30/share). Investors are paying for the brand, proprietary data, and inventory turnover speed, not the tangible assets. |

Step 3: Operational & Strategic Analysis

Business Overview We Buy Cars (WBC) is South Africa's dominant trader of pre-owned vehicles, operating a vertically integrated model of buying pods, supermarkets, and finance (F&I).

  • Scale: Bought 180,576 vehicles and sold 179,006 in FY2025.
  • Revenue Model: High-volume, low-margin arbitrage. They aim to turn stock roughly 12-13 times a year.

Performance Trend

  • Volume vs. Value: While Revenue grew 13.1% to R26.4 billion, Core HEPS only grew 3.3% to 224.6 cents. This dilution was partly due to the issuance of shares at listing.
  • The "Chinese Brand" Headwind: Management explicitly flagged margin pressure in H2 FY2025. The influx of affordable new Chinese vehicles (Chery, Haval, GWM) has capped the pricing power of used cars. Why buy a 3-year-old Polo when you can buy a new Haval Jolion for similar money? This forced WBC to reprice inventory, hurting margins.
  • Strategic Pivot: In response, WBC has shifted its buying focus to "lower price point" older vehicles that do not compete directly with cheap new imports.
  • Expansion: New supermarkets opened in Rustenburg and Vereeniging, with volume records broken in November 2025 (>16,000 units/month).

Sector Context

  • Interest Rates: The cutting cycle (late 2025/2026) is a double-edged sword. It helps consumer affordability (Good for WBC sales), but it also makes new cars cheaper to finance (Bad for WBC relative competitiveness).
  • Regulatory: The December 2025 settlement with the NCC regarding the sale of defective vehicles ("koevoet" clauses) removes a reputational overhang, but strict CPA enforcement raises compliance costs.

Step 4: The Verdict

Bull Case (Why Buy): The "Category Killer." WBC has won the war for used cars in SA. Its proprietary pricing data allows it to price risk better than any dealer, and its 100+ buying pods give it a sourcing moat that is impossible to replicate. As the SA economy recovers in 2026, higher disposable income will drive volume through their fixed-cost base, creating massive operating leverage. The expansion into "finance-light" older cars protects them from the new car price war.

Bear Case (Why Sell): Valuation Mismatch. You are paying a "Tech P/E" (21x) for a "Retailer" growing earnings at 3%. The influx of cheap Asian imports is a structural, not cyclical, change that permanently lowers used car margins. If WBC cannot pass on inflation to customers because new car prices are falling (in real terms), the earnings growth will stall. At 21x earnings, any disappointment will see the share price punished severely (as seen in the Oct 2025 volatility).

Fair Value Estimate: R38.00 - R42.00 Implies a derating to a more realistic ~17-18x P/E, aligned with high-quality retailers.

Final Rating: SELL / REDUCE The company is excellent, but the stock price is too high relative to the single-digit growth delivered. The risk of margin compression from Chinese competitors is not fully priced in.

AI Generated Analysis Last Updated: 2026-01-14