2CC - 2 Cheap Cars Group

[Rawz]

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.

[NZSilver]

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

[Rawz]

Bought a few more at 87cents. With only $1.5m debt on the balance sheet at 13% div yield in what is now a confirmed interest rate declining market i thought it was a,,, too good to be true, safe yield play thingy.
I know profits are forecast to be flat this year. Its all about the dividend yield vs risk free rate

Happy Friday

[percy]

Tougher market conditions;
the Company remains committed to delivering a result close to its stable year-on-year profit guidance.
We have increasing control of the value chain at our Auckland hub and some exciting property developments to be announced shortly when finalised. While it’s a tough trading environment for many New Zealand businesses right now, we are working hard to ensure we deliver steady net profit after tax (NPAT),” he said.

https://www.nzx.com/announcements/436780

[bull....]

feeling the consumer slowdown. no surprise

[Rawz]

My original thinking was 2CC will go alright with a slowing economy. I.e. buyers of mid tier used cars would drop down into their bucket for a cheaper option. Guess it goes to show everyone out there feels the pinch.

In saying all that we need to remember last year was an exceptional result and so far it sounds like they are going to get pretty close to it. A lot of other retailers are down double digit.

[alokdhir]

Final domino is always retail consumer oriented businesses ...always happens and will happen again ...late cycle retail wallets are tightly closed and all capital expenditure is avoided / postponed ...austerity is top of agenda . Migration played a role in entry level car sales which is also waning if not becoming headwind .

Costs have risen and margins compressed which surely will lead to NPAT dwindling .

It will become WORSE before better . Downgrades come in triples ....I learnt here only ...first one we have seen already ...more to follow ???

PS : P/E being low can cushion some SP pressures while multiples expanding to keep it sideways ??

[percy]

“Our focus remains on delivering gross margin expansion and prudent cost management. We have
increasing control of the value chain at our Auckland hub and some exciting property developments to
be announced shortly when finalised. While it’s a tough trading environment for many New Zealand
businesses right now, we are working hard to ensure we deliver steady net profit after tax (NPAT),”
.

[Rawz]

as long as they can maintain the dividend the SP is protected.
With the balance sheet carrying little debt they should utilise their banking facilities for the property expansion and use more of the op cashflows for the dividend.

Then when they cycle back through to the good times they can maintain the div and pay back the banking facilities. Stiassny likes a stable div

[percy]

as long as they can maintain the dividend the SP is protected.
With the balance sheet carrying little debt they should utilise their banking facilities for the property expansion and use more of the op cashflows for the dividend.

Then when they cycle back through to the good times they can maintain the div and pay back the banking facilities. Stiassny likes a stable div

At 31st March ;
Cash and cash equivalents of $4.673 mil.
Loans receivable of .990 mil.
Inventories of $13,873 mil.I expect they were carrying approx $4mil or $5 mil higher than usual to cover for logistic issues.[since sorted]
Borrowings Retail trade finance facility $1.5 mil
A very strong financial position.