Are you or one of your network one of those customers? :p
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Well I've been buying a few more with the recent weakness.. we are still on for a 15% dive return regardless!
So the to cheap tittle lives up to its name? Surprise surprise surprise.
Have bought previously and would again.
https://www.nzx.com/announcements/429880
Executive changes at 2CC
2 Cheap Cars Group Limited (NZX:2CC) today announced the resignation of CEO, Paul Millward, with founder and majority shareholder, David Sena taking over as CEO from 1 June 2024.
At the September 2023 Annual Shareholder Meeting, shareholders voted overwhelmingly in favour of a transaction which saw David Sena and his Family Trust increase its shareholding to approximately 76%.
2CC Chair, Michael Stiassny noted that with such a significant shareholding, it was logical that Mr Sena would eventually step into the CEO role.
“David is deeply invested in this business, seeing the share price perform and dividends delivered. He has already played a vital role in transforming the business and increasing profitability through his focus on operations.
Paul Millward joined in January 2023 and in less than eighteen months has fundamentally reset the foundations of the business.
“I cannot overstate the tremendous contribution Paul has made to 2CC. Under his leadership the business has achieved record profits, reinstated dividend payments and was 2023’s top performer on the NZX. These are phenomenal results, even more so because it was his first CEO role.
“Paul has a great leadership career ahead of him and I have no doubt he will excel in the future. He leaves with our sincere thanks and our best wishes,” he said.
I wish Paul Millward all the very best for his future.
Achieved incredible results in just 18 months.
I wonder if Sena is going to look to takeover 2CC in the next year is so?
Takeover at $1.40 probably do it
Didn't he say he was not going to use the creep provisions for 3 years?
Anyway, the way I read the announcement, this is not good for 2CC. Paul had the correct strategy for this business. If Sena decides he wants to run it like he used to, then its not good for shareholders.
I think Paul has done a great job as a short term CEO. But let’s be real here, it was master Stiassny who came on the board when NZA was in very troubled waters. He led the turnaround including hiring Paul.
Between Sena and Stiassny the strategy should continue on as is. Steady expansion.
Eugene was the main reason for the failures in the past. Sena was looking after the Japan operation if I recall correctly. The one unknown is will Sena have an eye on costs like Paul did.
The question is will Stiassny have any control or oversight on Sena? It's pretty much a one man band now and if Sena does not like anything, he can just get rid of Stiassny.
That is why I was so opposed to the buyout by Sena of Eugene. If other parties purchased Eugene's stock, then we would not have this issue.
Ya back the jockey here, I suspect Sena knows this business intimately and will do a good job. I do think a buyout is probably the way to go considering he owns so much already. I'm happy getting the very decent dividends and hopefully some capital growth in the meantime.
290,000 shares traded at $0.78. Dont often see volume like that with ole 2CC
Looks an exciting promotion from 2CC;
Win a Car in May!!
Buy your dream car this May’24 and go into the draw and you could be getting your car purchase for FREE*!! Whether you're looking for a sleek sedan, a spacious SUV, or a zippy hatchback, we've got you covered.
Sale details:
· Every completed purchase in May goes into a lucky draw
· Promo valid from 1st May’24 to 31st May’24.
Any idea who might put through an on-market buy (or sell) for 287,436 + 2,564 (both exactly at 3:33:16pm)? That's a $226,200 buy/sell right there. Average daily volume is about ~20k.
The seller was the 8th largest shareholder.He is a Christchurch investor, who has a lot of large holdings in a number of small cap companies.He invests in his own name, as well as two finance companies he owns.This holding was in one of his finance company's name.
I am now guessing he sold via a Christchurch broker to another Christchurch investor, who also invests in small cap companies.
I expect we will know the new owner's name when 2CC's annual report comes out in June.
From Autotalk.
Despite the challenges of fewer selling days due to public holidays and school breaks, the surge in registrations of imported used passenger vehicles by 10% in April 2024, reaching 8731 units, is a significant trend to note.
This figure marks a notable increase from the 7939 units registered in April 2023.
Positive for 2CC.
Handy info thanks Percy. Glad I'm topped up.
Is it just me or is this great buying at these levels?? Wait it is just me, no one else seems to be buying.... something on the horizon or just general worry around recession and car sales dropping. Or the recent management changes? 10%+ yield for the upcoming div alone
If you compare 2CC's chart with TRA's you can see 2CC have held up better than TRA,.
I too have been adding a few..lol
Cash of $6mil at the interim,no debt,and their cars being in the right price range,makes 2CC a great buy for me at current prices,as they did say this about the next divie. “A decision regarding dividends will be made by the board when full year results are approved. Provided the market remains stable, the strong performance to date indicates that a dividend at the highest end of the policy range is likely,” .
David Sena taking over as CEO. ? Well he has the most at stake.
A lot of stocks are being sold down lately, looks like a pull back by investors that need their cash. 2CC cars look like they are in a fine situation and should be able to weather a recession since they do offer the best price point during hard times. Under Sena there should be an emphasis on extra growth.
Thanks for the info. Always get a bit nervous when things drop but also quite illiquid. So I have been topping up. Results due relatively soon so they will make interesting reading
What's the final div going to be ? 8.5-9c per share?
thanks Percy, my calculation was a bit high looking at yours... I better re-check mine. Looking forward to reading results regardless!
A Stunner.
FY24 results - Record profit and dividend declared
24/05/2024, 8:30 am, FLLYR
24 May 2024
Market announcement
NZX:2CC
FY24 results
Record profit and dividend declared
2 Cheap Cars Group Limited (NZX:2CC) has today reported a record $6.2m net profit after tax (NPAT) for the full year to 31 March 2024 (FY24), an increase of $4.9m over FY23.
Summary of key results
(Figures quoted are in NZ dollars. Comparisons are made against FY23.)
• Revenue and income: $86.8m, increased 5% .
• Gross margin: $20.3m up 39%.
• Vehicle sales: Down 2% to 8,169.
• Underlying EBITDA including finance income: $11.4m, up 105%.
• Net profit after tax (NPAT): $6.2m, up $4.9m.
• Underlying NPAT2: $6.2m, up 213%.
• Underlying earnings per share (EPS): 14 cents per share (cps) vs 4.4 cps.
• Final gross dividend: 5.78 cps.
• Total FY24 gross dividend: 11.56 cps vs 0 cps.
The Company achieved full year revenue and income of $86.8m, an increase of 5%, driven by higher prices and improved finance and insurance (F&I) penetration rates which have offset slightly lower volumes for the full year.
2CC’s gross margin expansion strategy has been extremely effective, strengthening 6% to 23% for the full year. This has been achieved through optimised pricing, effective promotional activity, improved finance and insurance penetration and the continued insourcing of compliance activities. The full year gross margin is up 39% to $20.3m.
Operating costs have risen marginally by 1% to $8.9m, significantly below the rate of inflation. Management continues to be strongly focused on both minimising cost increases and reducing reliance on third parties throughout the value chain.
The Company’s focus on gross margin and tight control of operating costs has seen underlying EBITDA including finance income increase 105% to $11.4m in FY24.
Underlying NPAT, excluding last year’s non-recurring costs, increased by 213% to a record $6.2m in FY24.
Interest costs, excluding those associated with leases, were down 52% on FY23, reflecting changes in finance facilities and prudent capital management.
Net operating cash inflow was $6.9, down $6.3m year on year, largely due to the strategic decision to maintain stronger inventory levels. The Company is well positioned with inventory valued at a healthy $13.9m, (up $5.5m over FY23 which was impacted by shipping constraints).
As at 31 March 2024, the Company is in compliance with all banking covenants and has cash of $4.7m, no net debt and total equity of $20.4m.
Not a shareholder but own TRA. Was listening to a podcast yesterday about "you don't have to pick sides" ie like Buffet owning shares in Visa, Mastercard & AmEx.
I know Percy is 'well positioned" and owns both. Can pick a sector/industry and not just a company within that industry.
Well done to all holders. :)
good result. well done 2CC.
Let the dividends flow.
Inventories probably the only fail. Maybe $2-$3m too high.
Overall its a nice little business making good money trading cheap as chips.
2CC and MFB
Same NPAT
Same market cap
2CC has considerably better dividend
Yes 2CC enterprise value far superior than MFB who is still carrying a lot of debt.
Congrats to all fellow holders and especially Percy who has championed 2CC.
Respect to Percy for his impeccable research on 2CC and backing himself to be “well positioned” You’re a legend Percy :)
FND tick
2CC tick
TWR you’re up next
At todays price of 88 cents its trading on a P/E of 6.42 with $3.1m net cash on the balance sheet.
Fair multiple got to be min 8x so target SP is $1.10.
Happy to hold and collect a 13% div yield.
FY25 outlook:
The property strategy is a key growth factor for 2CC, with positive steps being taken to identify and develop new or better retail locations which benefit its scale model, particularly in Auckland.
Assuming favourable supply, currency and trading conditions, NPAT is expected to grow in FY25 by focusing on gross margin expansion, prudent cost management, increasing direct control of the value chain and sensible expansion in Auckland.
2 Cheap Cars Chair, Michael Stiassny said the FY25 outlook is strong, with the Company extremely well positioned in the prevailing economic climate.
I understand your position but with TRA trading 11x i think 2CC at 6x is unfair and especially considering earnings are expected to grow 8x is more fair.
The high div yield will help the SP and when we start going down the interest rate cycle the dividend yield will naturally contract as people search for income. Thus SP should appreciate with demand.
Its a solid hold with upside during these tough economic times.
Since I started buying I have never stopped.
Even buying today.
No debt,cash on hand,equity ratio 59.28% strong balance sheet, positive cash flow from operations,stock they can increase or decrease quickly,selling right priced used cars they source themselves from Japan.Current assets 2.7 times current liabilities.Simple profitable business model,with growth prospects.
At 88 cents.Low PE ratio [6.28]and high dividend yield [gross 13.14%] beats every other NZ listed company.
At $1.25 share price the current PE would be 8.928 while the gross yield would be 9.248% and net yield of 6.65%
Deserves a PE ratio between 10 and 12 in my opinion.ie share price between $1.40 and $1.68.
I wonder what steady state inventory is? Last year they said $10m is their target.
This year they finished with $13m. However they have expanded so need to carry more stock of course.
Any guesses what a normal stock level would be?
Yes I think that’s part of it but surely cannot account for the full $3m difference. Maybe just got stuck with an overhang of hybrids after the subsidies finished? I’m not concerned, just trying to figure out true operating cashflows.
By memory last year they finished with $8m inventory so it’s quite incredible how they have pumped that up to $13m and managed to pay out a huge dividend and remain in a net cash position. Just goes to show how much cash this business generates.
Nb. They are still collecting cash from the old loan book being repaid
2 Cheap Cars continues to be well positioned to meet the ongoing demand for electric and hybrid vehicles (EV/HEVs). Despite regulatory changes and removal of the clean car discount, the number of EV/HEVs sold as a proportion of total vehicle sales increased to 56%, up 14% on the year prior. Demand – particularly for cost effective HEVs – remains stable, accounting for 54% of total vehicle sales in the last quarter of FY24.
The Company is well positioned with inventory valued at a healthy $13.9m, (up $5.5m over FY23 which was impacted by shipping constraints).
NZ Motor Finance loan book remains in run down mode, reducing from $3.9m at 31 March 2023 to $1.8m at 31 March 2024 and making a profit of $0.05m for the year.
A few things to look forward to;
a] News on new branches or upgrades of existing branches.[Auckland].I would like to see them own and develop their own sites,as per Turners.
b]Update on EV/HEVs sales %.
c]Inventory level compared to sales,ie stock turns.
d] Love to know how well the "win a free car" promotion went.
Thanks Percy, I missed that part.
I wouldn’t be in favor of them owning their sites. Especially in Auckland where land is terribly expensive. Prefer capital lite model with leased premises
ASB have updated.2CC.
52 week high $0.930 52 week low $0.260
Dividend CPS 8.32 Dividend yield (Net) 9.24%
EPS 13.70 P/E ratio (Adjusted) 6.57
NTA 44.00
Market capitalisation $40,999,050.00
Low PE ratio
high NET dividend yield.
sharesies showing gross dividend yield of 14.10% based on current price.
jarden showing 13.6% based on previous close
amazing yield AND PROFITS EXPECTED TO GROW IN FY25
Can’t wait for the juicy divvy to hit the bank a/c tmrw.
OUTLOOK
FOR FY25
With the transformation now complete, the
Company’s focus remains on delivering gross
margin over market share, continuous BAU
improvement and profitable, sustainable
growth through its property strategy.
The property strategy is a key growth factor
for 2 Cheap Cars, with positive steps being
taken to identify and develop new or better
retail locations which benefit its scale model,
particularly in Auckland.
2 Cheap Cars has a very clear value proposition
and strategy that compares favourably to
many competitors, particularly in the prevailing
economic environment. Having said that,
market conditions and foreign exchange rates
remain unpredictable and are – as always –
beyond any Company’s control.Affordable cars are a necessity, and we are
confident the Company is well positioned to
take advantage of increases in immigration and
the more general consumer flight to cheaper
vehicles. However, the business is under no
illusion that to remain profitable it must
continue to be vigilant and diligent with costcutting and supply chain efficiencies.
Assuming favourable supply, currency and
trading conditions, NPAT is expected to
remain steady in FY25 by focusing on gross
margin expansion, prudent cost management,
increasing direct control of the value chain and
sensible expansion in Auckland.
Flat profit vs increasing profits at last commentary.
Kind of a downgrade? Lol
Flat profit still means the 14% div yield is safe
Reason why i say "kind of a downgrade" is because in todays tough economic climate it isnt really.
This is a DOWNGRADE form fellow automotive retailer CMO:
Ahead of the December half year result we advised the decrease in annual net profit before tax would be in the vicinity of 30%. The announced result proved to be 36% down for the half year. The expected downward trend continued, such that the combined economic and market effects on second half trading indicate the full year result will see a year-on-year decrease of closer to 40%.
It will be interesting to see what TRA's next commentary is like. 2CC are doing all good imo, have a strong balance sheet and are operating in the right end of the market (affordable cars). The dividend yield is safe imo as they are carrying maybe $2-$3m too much stock and have $1.8m of the old loan book to be repaid. These items can transfer to the cash item on the balance sheet. So if the dividend is safe one would think the SP safe. I mean, how much higher can a dividend yield go? 14% is itself crazy high
"and
sensible expansion in Auckland."
Been on the cards for awhile now.
TRA expecting small uplift in npbt
form their AR:
There is no doubt that trading conditions got harder in the final quarter of the FY24 year. Looking ahead, we anticipate a further deterioration in economic conditions during the first half of our financial year (HY25) but expect to see the economy start to recover in the second half. Our near-term focus remains on exceeding the $50M NPBT goal in FY25, despite the economic backdrop, however there remains some obvious risks with the level of interest rates impacting the overall economy and consumer demand
2CC's 8th Auckland site;
Wairau Road GRAND OPENING ⚡
Come check us out at our GRAND OPENING this weekend only — 98 Wairau Road, Wairau Valley! We’ve got a fleet of cool rides for you to check out, FREE sausage sizzle and HEAPS of cool prizes* to be won on our spinning wheel!
Come down and see us from 10am — 6pm, this weekend only!
As at 31st March their inventory was $13.873 mil compared with last year's $8,377 mil.
Last year's was low.
I take it this year's was a lot higher,because they wanted to stay ahead of shipping issues, and with the view to open more Auckland sites.
They have talked about further expansion in Auckland. How many more sites they have not stated,but this one at 98 Wairau Road should be a cracker, as it is right in the thick of things.
It will be interesting seeing what their inventory is at the half year.
At a wild guess I am thinking around $12 mil.ie down nearly $2mil on 31st March.
We must remember even with the near $14mil stock level at 31st March they were sitting on $4.673 mil of cash and their underlying cash from retail activities was a very strong $4.925mil.Their equity ratio at 31st March was a very healthy 59.28 %.
they also have $1m of loan receivables to be paid in the next 12 months.
If you add back the inventory gain of $5.5m the op cashflows are over $10m same as previous year.
With clean balance sheet and simple business model its a high degree of probability that the 14% dividend yield is safe imo.
with all signs pointing to rates dropping a 14% div yield will be too high. 10% dividend yield would be more appropriate. If the 11.56dps can be maintained the SP would need to increase 40% to $1.15 to bring the yield down to 10%
The current payout ratio is 84%, well above the div policy of 50-60% of npat. However i am not sure why they have this policy set so low? maybe it was put in place when they were self funding the loan book. Even paying out 84% of profits they have enough cash to expand in auckland.
This has quietly up over 10% after dropping back to 78c, IR yield related or a few more people uncovering both the highest div yield at undemanding multiple founder led growth stock you can buy on the nzx