Transaction Capital worth R10 to R15 per share – Peter Armitage

Anchor Capital CEO Peter Armitage says even without SA Taxi, Transaction Capital is worth between R10 and R15 per share.

Last week, Transaction Capital’s share price plummeted following a poor trading statement and news that its CEO, David Hurwitz, stepped down.

In its trading statement, Transaction Capital said its SA Taxi business restructuring has continued to put pressure on its profits. WeBuyCars will see a significant decrease in earnings.

Transaction Capital expects its core, headline, and basic earnings per share to be even lower than the dismal expectations shared in March.

This means its net profits would, at best, be 152% lower than the 2022 financial year. Investors can expect at least a R648 million net loss from the company.

It also noted that WeBuyCars’ profits will be 20% down from 2022, and Nutun’s profits will grow at a lower rate than previously expected.

SA Taxi, WeBuyCars, and Nutun jointly contributed more than 99% of Transaction Capital’s net profits in 2022.

Transaction Capital’s share price plummeted around 40% on the news, declining from R7.00 per share to around R4.00 per share.

Despite the challenges associated with SA Taxi and WeBuyCars’ lacklustre performance, Armitage said the share has been oversold.

Armitage said the market is not prepared to “play the risk game” and preferred to dump the stock rather than holding on and waiting for the company to recover.

“However, if you look at it unemotionally, SA Taxi only has around R200 million reference to the head office,” he said.

“The other two businesses, Nutun and WeBuyCars, are valued between R10 and R15 per share, depending on how generous you are.”

The share is currently trading at around R4.00 per share. “If SA Taxi is worth zero, Transaction Capital’s shares are still worth between R10 and R15,” he said.

Armitage added that Transaction Capital has an excellent management team which can strike deals and turn the business around.

“If you have some risk appetite and have time on your hands, it is a good stock to take a bet on,” he said.