How WeBuyCars’ R10 billion JSE listing stacks up against competitors

WeBuyCars’ planned listing on the JSE at a value of between R8.7 billion and R10 billion appears to give the company a relatively expensive valuation compared to similar companies listed on the JSE. 

WeBuyCars revealed in its pre-listing statement that it aims to list at a market capitalisation of between R8.7 billion and R10 billion.

WeBuyCars will have 413.7 million shares when listed, resulting in the listed share price being between R21.03 and R24.17 per share. 

The company reported a profit of R778 million in its latest annual results. At these profits and anticipated market cap, WeBuyCars would be listed at a P/E ratio of between 11.18 and 12.86 and a price-to-sales ratio of between 0.43 and 0.5. 

This stacks up favourably compared to its soon-to-be peers on the JSE, Motus and Combined Motor Holdings (CMH). 

It must be noted that these companies are not directly comparable to WeBuyCars as they also sell new cars and do not just purchase and sell used cars. However, they are the listed companies with the most similar business to WeBuyCars. 

Motus operates car dealerships across South Africa, as well as a rental service, and sells some of the most well-known brands in the country, such as Hyundai, Kia, and Renault. It also has a used car business and imports spare parts. 

CMH is a similar business, operating dealerships across the country for brands such as Nissan, Toyota, Chery, and Jaguar Land Rover. As with Motus, it also sells used cars. 

While Motus is significantly larger than CMH in terms of its market cap, both companies are valued similarly by the market, with price-to-earnings ratios of around five times and price-to-sales ratios of around 0.15 times. 

WeBuyCars, in comparison, will have a significantly more ‘expensive’ valuation when it is listed on the JSE. 

With an expected market cap of between R8.7 billion and R10 billion, it will have a price-to-earnings ratio of between 11.18 and 12.86 times and a price-to-sales ratio between 0.43 and 0.5 times. 

This valuation may be explained by the company’s impressive growth track record. 

Since 2019, WeBuyCars has seen an average growth in its profits of 25% per annum and an average growth in sales of 38% per annum.

It has also begun trading over 14,000 cars a month and only expects to grow further once it is listed. 

The table below compares the valuation of Motus, CMH, and WeBuyCars. 

Motus CMH WeBuyCars
Price-to-earnings ratio5.324.8711.18 to 12.86
Price-to-book ratio0.911.64.7 to 5.4
Price-to-sales ratio0.140.160.43 to 0.5
Market capitalisationR15.98 billion R1.96 billionR8.7 billion to R10 billion