All systems go for WeBuyCars R10 billion JSE listing 

Transaction Capital has announced that all the unbundling conditions relating to WeBuyCars have been fulfilled, and the company will list separately on the JSE on 11 April. 

This was revealed in a finalisation announcement by Transaction Capital as one of the final steps before WeBuyCars shares will be traded on Africa’s largest stock exchange. 

The last day to trade shares in Transaction Capital to participate in the unbundling is 10 April, with WeBuyCars’ shares beginning to trade on 11 April. 

Since its founding in 2001, WeBuyCars has shown tremendous growth, from two employees selling a handful of cars monthly to 2,800 employees selling over 14,000 cars monthly. 

Most impressively, its growth has been entirely organic – not once did the company raise debt to fund its growth. Rather, it relied entirely on the profits generated by the business.

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. 

Approximately 169.4 million shares will be held by non-public shareholders on the JSE, comprising approximately 41% of all issued shares. Public shareholders will hold the other 59% of the shares. 

The founders, Faan and Dirk van der Walt, will retain 10% of the company’s shareholding after the listing. 

Transaction Capital will have no shares in the company after it is listed separately. All of Transaction Capital’s shares in WeBuyCars will be unbundled to its shareholders. 

WeBuyCars’ co-founders, Dirk and Faan van der Walt

How WeBuyCars stacks up

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