2CC - 2 Cheap Cars Group

[Snow Leopard]

Probably a New Zealand company that does something in the Automobile (aka Car) space given the name.

This document (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/368073/340979.pdf) confirms the above and fleshes it out to 12 car yards selling Japanese imports under the 2 Cheap Cars (really?) name plus a finance bit.

Anyway they have their own thread on ShareTrader now so that is good.

[nztx]

Good one - Snow Leopard

I was looking at the documentation filed earlier today

There are also a Japanese Buying Company & Car Rental Company which appear to be part of the group

The group looks profitable from the accounts, is paying dividends from recent accounts but like many other
retail businesses has been affected by Covid here, and offshore in Japan

Imports processing congestion & delays may or may not be an issue - if they use Ports of Auckland

As far as I can see the main Car Retail company with $200 paid capital was established in Jun 2011 (coming up 10 years ago)
and there appears to be elements of the original entities sold into the holding company in books @ circa $35 million
similar to other offering's pre IPO restructuring.

Shareholder advance accounts of $20 million each were converted to additional equity in Nov 2020 after most recent Sep accounts
provided to us. (It is assumed these arise from restructuring the companies into holding company ownership umbrella.

In common with other IPO's there are some shareholders wishing to sell down

Without in depth running the ruler over things, $1.30 start price looks reasonable IMO for what is on offer

(Compare against $1.85 - My Food Bag ; NZ $3.70 - Harmoney ; $1.25 - NZRL )

Where it goes from there - who knows..

Nothing really stuck out to be of major concern with this IPO IMO

NZA presents a fairly mature profitable business paying dividends with established brands

It may not fly to the moon, but in normal times in it's game may be very likely to be consistent
with capacity to produce results & generate good turnover levels without the lead times
& initial loss years other IPO's looked at record and project forward..

Knowing the sector - I didn't see much one couldn't like with this one

Sure there are risks / Vehicle standards, Electric Vehicles , reducing Fossil fuel dependency as we go on
industry risks / Risks in Japan / Covid effects etc etc all may apply

Just how sexy a Car Retail / Importing operation with Financing / Procuring / Rental Car arms is to potential investors
at large remains to be seen .. there isn't the grandiose puffed up promotionals with this IPO which seems
as a Compliance listing quite happy to quietly slip onto NZX boards with minimal noise & fuss .. ;)

There is ton of supplementary accounts & information released as part of initial filing - which they have filed
(all 35,300 kb of it ;) )

I see one of our mates starring in other listed NZX Co's (A certain Colin) seems to have found his way onto Share Register
pre-IPO, if not mistaken .. ;)

Refer not too far down list of existing shareholders at the link under

https://coys.co.nz/:entity?no=6134438&nzbn=9429043375523&name=NZ+AUTOMOTIVE+INVESTMENTS+LIMITED


Note: NZA is currently not included in Sharesies listed Companies on their platform


( None of the aforementioned is intended or to be construed as advice of any kind, but are merely back of the card notes from reading & digging through presented info. You must do your own due diligence & where/if necessary seek your own professional advices, if in doubt or considering proceeding)

Discl: Not a holder / but may be interested

[Marilyn Munroe]

I understand the rental part of the business is defunct or no longer being actively pursued.

One of the principals of this business at one stage was publicly musing about setting up an airline.

Boop Boop de do
Marilyn

[ThaiJohn]

Mike Pero ??

[nztx]

I understand the rental part of the business is defunct or no longer being actively pursued.

One of the principals of this business at one stage was publicly musing about setting up an airline.

Boop Boop de do
Marilyn


Maybe why Mr Neal was interested .. got his own slice of Juicy, hasn't he ? ;)

[epower]

Scouring through the NZX listings, came across NZA.

How much growth realistically is there for a company like this? They have 12 locations, a decent whack of the domestic Jap import market already.

Only growth (and a large reason for listing on the NZX) is the finance division taking off really.

[iceman]

I understand the rental part of the business is defunct or no longer being actively pursued.

One of the principals of this business at one stage was publicly musing about setting up an airline.

Boop Boop de do
Marilyn

They were a major (25% from memory) shareholder in Kiwi Regional Airlines, which folded after 7 months of operations in 2016. No doubt they learned from that sidestep.

[nztx]

Scouring through the NZX listings, came across NZA.

How much growth realistically is there for a company like this? They have 12 locations, a decent whack of the domestic Jap import market already.

Only growth (and a large reason for listing on the NZX) is the finance division taking off really.


Interesting posting

How about growth by acquisitions ?

Note the 1 March 2021 Earnings Guidance release:

https://www.nzx.com/announcements/368363

[traineeinvestor]

How does NZA compare with (i) CMO and (ii) TRA?

[Grimy]

I see they are paying a dividend this month.

[nztx]

I see they are paying a dividend this month.

Yes - 5.04 cps + Imp Credits = 7.0 cps Gross

XD 8 June & Payable 17 June

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/372998/347163.pdf

[arekaywhy]

dividend landed...healthy

[nztx]

Not much post-IPO love being shown for NZA either is there ? ;)

similar to HMY MFB & other new IPO listings .. ;)

[arekaywhy]

did they get a bump today because of a glossy presentation?...

https://www.nzx.com/announcements/375191

or does the announcement just make them noticeable?

[Rawz]

I got the sharesies email as well and thought, who the heck would buy into that! especially after they just downgraded earnings.

Additionally I reckon their finance book is full of toxic loans to tier 3 and under consumers.

Not for me. Would rather invest in TRA- the leaders of used car + finance operators

[nztx]

Got the email too - TRA looked better so passed on this one

A fairly deep discount & very short notice of offer time to close IMO

Why do I get the feeling that this sell-down was done in a bit of a hurry ? ;)

[JSwan]

They could’ve done this sell down any time before or when this was first listed, seems sus to me

[winner69]

A bit of a struggle - New Zealand based integrated used automotive group NZ Automotive Investments Limited (NZAI / the Company) (NZX:NZA) advises of lower than expected revenue, as a result of lower car, finance and insurance product sales during the December and early January period.

https://www.nzx.com/announcements/386438

[nztx]

https://www.nzx.com/announcements/389954

FY2022 Market update

On that it looks like Future dividends might be rationed & slightly done like a dinner
until things improve :)

I'd be surprised to see a buck back on the SP graph for a while

[Sideshow Bob]

NZ Automotive full year results for FY2022 - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/392893)

Summary:
• Revenue and income of $66.0 million, down $0.1 million from last year
• Actual net profit after tax (NPAT) of $2.6 million down from $3.2 million last year
• Underlying net profit after tax of $1.7 million down from $3.8 million last year
• Net operating cashflow (excluding loan book lending) decreased by $6.8 million
• Underlying earnings per share of 4.0 cps (actual eps 6.0 cps)
• Final gross dividend of 0.88 cents per share bringing full year FY22 gross dividend to 3.1 cps

[Rawz]

Trading halt for NZA...

[nztx]

Time to be unfloated now ? :)

[winner69]

Nothing better than big **** fight in the Board room

Most gone

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/395537/374881.pdf

[Rawz]

Not surprised. What a disaster. This is a toxic company. I would stay away.

[Rawz]

Not surprised. What a disaster. This is a toxic company. I would stay away.

2 cheap cars is one of the largest used car dealers in the country. And the leading car financiers (Marac and UDC) pulled their services from them long ago. Only one reason why.... reputational risk

[percy]

2 cheap cars is one of the largest used car dealers in the country. And the leading car financiers (Marac and UDC) pulled their services from them long ago. Only one reason why.... reputational risk

An incredible train wreck to watch from a safe distance.

[Muse]

An incredible train wreck to watch from a safe distance.

aye, trouble in paradise eh?

[ralph]

aye, trouble in paradise eh?
Aye two cheap now

[nztx]

Aye two cheap now


Wonder if there are any morsels that may interest Tina in the Cheap Sheds of disarray ? :)

[Getty]

All Directors except Sena jumping overboard.

Is this 2 Cheap. or the next QEX?

[sb9]

All Directors except Sena jumping overboard.

Is this 2 Cheap. or the next QEX?

Probably gone in 2 seconds...lol

[samjaynz]

The Fast & Furious sequel they didn't want you to see:

​2 Cheap 2 Furious

[Getty]

The Fast & Furious sequel they didn't want you to see:

​2 Cheap 2 Furious

Ah so!

I wondered where I'd seen Yusuke before.

His surname is Sena, but he drives like Senna.

[nztx]

SP is being driven fast .. backwards

jumped clear some time back, when things started developing the wobbles

How long till this wildly outa control thing gets suspended ? :)

[nztx]

https://www.nzherald.co.nz/business/stock-takes-how-to-wipe-10-million-off-the-value-of-a-company-in-just-a-week/ZUKN2VLDGCV2HMZMAAOJMCE2FA/

Stock Takes: How to wipe $10 million off the value of a company in just a week

[Paywalled]


How are Car sales going in the midst of a rather public sh*tfight being played out across the car lots ? ;)

[Sideshow Bob]

Banks not happy......

Funding arrangements following Board changes - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/396623)

NZ Automotive Investments Limited (NZA or the Company) has been advised by the commercial bank that provides its Trade Finance and Motor Finance facilities that it is currently unable to give any assurance of support for those facilities beyond their current expiry dates. This advice is in understood to relate to recent announcements with respect to changes in the leadership and governance of the Company as opposed to the current or forecast financial position of the business.

[Rawz]

Banks not happy......

Funding arrangements following Board changes - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/396623)

NZ Automotive Investments Limited (NZA or the Company) has been advised by the commercial bank that provides its Trade Finance and Motor Finance facilities that it is currently unable to give any assurance of support for those facilities beyond their current expiry dates. This advice is in understood to relate to recent announcements with respect to changes in the leadership and governance of the Company as opposed to the current or forecast financial position of the business.

Must be ASB? ASB are their bankers. Or MUFG bank

[whatsup]

Trading ann out

[Sideshow Bob]

Trading ann out

Struggling....

Microsoft Word - Market update Aug-22_v7 (nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com) (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/397208/376871.pdf)

[whatsup]

Struggling....

Microsoft Word - Market update Aug-22_v7 (nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com) (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/397208/376871.pdf)

Why is this outfit even a listed company, a petrol station has more T O !!

Im picking that with the current shanaghans that it will delist, back to the suburbs !

[Sideshow Bob]

Experienced new Board appointed - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/397323)

[Sideshow Bob]

https://www.nzx.com/announcements/403188

Integrated automotive group, NZ Automotive Investments Limited (NZAI) (NZX:NZA) has today reported
revenue and income of $40.2m, an increase of 29 percent, for the half year to 30 September 2022 (HY23).
Summary of key results
(Figures quoted are in NZ dollars. Comparisons are made against HY22.)
 Revenue and income: $40.2m, increased 29%1.
 Vehicle sales: Up 11% to 4,281.
 Underlying EBITDA2 including finance income: $2.9m, down $0.3m.
 Net profit after tax (NPAT): $0.6m, down $0.8m (including $0.7m of restructuring costs)
 Underlying NPAT: $1.0m, a decrease of $0.4m.
 Underlying earnings per share (EPS): 2.3 cents per share (cps) against 3.1cps for HY22.

[Getty]

$40.2M of revenue to make $600K NPAT.

Is this business a charity?

It's not as if they have a backroom of R & D personnel to support, or creating some other asset.

All that endeavor for so little return.

All seems 2 cheap to me.

[Sideshow Bob]

$40.2M of revenue to make $600K NPAT.

Is this business a charity?

It's not as if they have a backroom of R & D personnel to support, or creating some other asset.

All that endeavor for so little return.

All seems 2 cheap to me.

Its no Turners.....

[Getty]

At $140 npat per car, it's the cheapest car storage & cleaning facility in town.

Their customers must love 'em.

[Rawz]

looks like they are giving up on their internal finance co.

[Getty]

I don't think they will feature on Wheeler Dealers (Sky TV) anytime soon.

Yasuke needs to reconsider his margins.
He too kind.

[Getty]

Interesting to note 23% of sales are online.

I take that to mean that while the cars may be mechanically tested on behalf of the buyer, they are not test driven by the buyer, but despatched on a transporter or picked up by a third party.

That means @1000 cars were sold this way.

Trusting private buyers?

I suspect it's more likely other dealers are using 2 Cheap as a wholesale supply, and they make a better margin.

[blackcap]

Three announcements today. A trading update, seems positive on the face of it and an auditor, that has to be good. Wonder if the SP will bottom out. I have taken a nibble.

[nztx]

$40.2M of revenue to make $600K NPAT.

Is this business a charity?

It's not as if they have a backroom of R & D personnel to support, or creating some other asset.

All that endeavor for so little return.

All seems 2 cheap to me.


probably after the charities have all been through :)

anyone seen an expensive charity visiting ?

[percy]

Three announcements today. A trading update, seems positive on the face of it and an auditor, that has to be good. Wonder if the SP will bottom out. I have taken a nibble.

Still what looks to be a rather large obstacle to over come.
 Seeking to secure replacement finance facilities for retail trade, post 30 April 2023 and NZ Motor
Finance, after 1 October 2023

PS.I was looking at Nissan Tiida prices.
2cheapcars had one at their Palmerston North branch, a great deal cheaper than elsewhere.

[percy]

45,554,500 shares on issue.
Market Cap at 32 cents $14.577,440
eps 3.85 cents
PE 8.31
NTA 33 cps
Div 0.63
Yield 1.97%

Thought this was interesting:
Sales of EVs and HEVs have almost doubled year-on-year to 41% of total sales, ensuring 2 Cheap Cars
continues to lead the market in this competitive and increasingly valuable segment.

ps I bought a few at 32 cents yesterday.

[Recaster]

$40.2M of revenue to make $600K NPAT.

Is this business a charity?

It's not as if they have a backroom of R & D personnel to support, or creating some other asset.

All that endeavor for so little return.

All seems 2 cheap to me.

The non-recurring restructuring charge for terminations when added back gives a NPAT of $1.3m which is down under 10.0% on the pcp. What is of more concern is the gross margin squeeze which occurred in the FY22. Gross margin could not be calculated for HY23 as revenue is from multiple sources and only the annuals give a breakdown. GM fell from 11.0% to 8.8% in the annuals FY21 vs. FY22.

Company will get a boost from vehicle replacement because of Cyclone Gabrielle.

They will also get a boost from improving NZD/YEN currency pair if they haven't messed up their hedging again.

[percy]

The following comments "FORCED' me to add to my NZA holding this morning..lol

Turners Cars' chief executive officer Greg Hedgepeth told RNZ's Checkpoint the supply of used cars coming into the country had been down for quite sometime.

"Over the last year, I think it's going to be down approximately 30 percent."

Hedgepeth said there were less used vehicles coming into the country right now and they were anticipating up to about 10,000 vehicles due to the recent weather events that would be coming off the roads, being written off.

"There could be a short-term imbalance of supply and demand."

[Sideshow Bob]

The following comments "FORCED' me to add to my NZA holding this morning..lol

Turners Cars' chief executive officer Greg Hedgepeth told RNZ's Checkpoint the supply of used cars coming into the country had been down for quite sometime.

"Over the last year, I think it's going to be down approximately 30 percent."

Hedgepeth said there were less used vehicles coming into the country right now and they were anticipating up to about 10,000 vehicles due to the recent weather events that would be coming off the roads, being written off.

"There could be a short-term imbalance of supply and demand."

Haha - it didn't FORCE you to buy more TRA??

[Rawz]

The following comments "FORCED' me to add to my NZA holding this morning..lol

Turners Cars' chief executive officer Greg Hedgepeth told RNZ's Checkpoint the supply of used cars coming into the country had been down for quite sometime.

"Over the last year, I think it's going to be down approximately 30 percent."

Hedgepeth said there were less used vehicles coming into the country right now and they were anticipating up to about 10,000 vehicles due to the recent weather events that would be coming off the roads, being written off.

"There could be a short-term imbalance of supply and demand."

Where do NZA source their vehicles?

Unlike TRA i dont think its within NZ. So isnt TRA saying the used car importers (NZA) wont have the stock selection we have?

[percy]

Where do NZA source their vehicles?

Unlike TRA i dont think its within NZ. So isnt TRA saying the used car importers (NZA) wont have the stock selection we have?

The Company noted that its 2 Cheap Cars brand market positioning is increasingly relevant in the tough
economic environment, resulting in its estimated market share of used vehicle registrations growing 0.4%
year-on-year. 2 Cheap Cars also strengthened its position as the largest Japanese used vehicle retailer
in New Zealand in terms of total used imports.

[Recaster]

Might be turning the corner. NCFO is positive. Revenue up.

NZA Note (https://recastinvestor.substack.com/p/note-nz-automotive-investments-nzanzx)

Are gross margins on vehicles still falling?

[percy]

Positive seeing a director buying,even if it is not a huge amount.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/407729/389990.pdf

[nztx]

Positive seeing a director buying,even if it is not a huge amount.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/407729/389990.pdf


Interesting - along with another NZA director Michael Stiassny (the well known former Insolvency Practitioner) - both are on the NTL board as well :)

[percy]

Looking forward to NZA's next update.
Would think they are doing well replacing flood damaged vehicles.

[Sideshow Bob]

https://www.nzx.com/announcements/410544

Market update
NZAI agrees terms for new finance facility, appoints new CFO and provides trading update

NZ Automotive Investments Limited (NZAI or the Company) (NZX:NZA) advises that it has agreed terms for a replacement trade finance facility for retail brand, 2 Cheap Cars.

Finance facility

NZAI has agreed terms and is awaiting final documentation, having reached an agreement with a long-term strategic finance partner to provide a trade finance facility. This facility will replace NZAI’s current arrangement with ASB and will be in place by mid-May. ASB will extend the current facility to ensure a seamless transition.
FY23 trading update

The Company expects unaudited underlying net profit after tax for the year ended 31 March 2023 to be $2.0m, against $1.7m in FY22. Unaudited actual net profit after tax (NPAT) – including one-off restructuring costs of $1.0m – is expected to be $1.3m. This compares with FY22 NPAT of $2.6m which included one-off gains of $0.8m.
‘Our new leadership team has been razor-focused on prudent cost controls, accelerating penetration rates on finance and insurance, and managing price and promotions more effectively whilst tailoring inventory to specific locations. This has seen gross margins improve significantly in the last quarter,” Millward says.

February and March results alone make up approximately 35% of FY23 underlying NPAT, indicating a swift and marked impact.

The Company will provide a detailed trading update when its full results are released at the end of May 2023.

New CFO
The company is pleased to announce the appointment of Angus (Gus) Guerin as Chief Financial Officer from 26 June 2023, replacing Haydn Marks who leaves at the end of June.

Mr Guerin is currently CFO of ArchiPro. Prior to that, Gus enjoyed a long and successful international career with British American Tobacco culminating in his role as Director of Finance NZ. He has strong experience in New Zealand and abroad with blue-chip multinational companies including Fonterra, Wyndham Exchange & Rentals (part of Wyndham Worldwide) and Treasury Wines.

“Gus will be a great addition to the leadership team. He has broad commercial experience, combined with energy, passion and a proven track record in leading finance functions that assist in delivering enhanced bottom- and top-line performance,” Millward says.
[ends]

[winner69]

Lots of feel good buzz words eh Bob

Like the ‘razor-focused’ and ‘swift and marked impact’

Seems ‘well positioned’ is losing its popularity

[Sideshow Bob]

Lots of feel good buzz words eh Bob

Like the ‘razor-focused’ and ‘swift and marked impact’

Seems ‘well positioned’ is losing its popularity

I did note the "razor-focused" comment. :p

Don't worry, I'm sure young Percy remains "well-positioned". :)

[Sideshow Bob]

Here you go W69....

14563

[winner69]

I did note the "razor-focused" comment. :p

Don't worry, I'm sure young Percy remains "well-positioned". :)

Shame ABs won’t be razor-focused with swift and marked impact this coming RWC (will we even get into semis)

Long wait to 2027

[ralph]

I did note the "razor-focused" comment. :p

Don't worry, I'm sure young Percy remains "well-positioned". :)

That Razor focusing sure seems to have cut a deep chunk of the sp .

[nztx]

That Razor focusing sure seems to have cut a deep chunk of the sp .


Some focusing on a privatisation must be on the cards soon ? :)

[percy]

Of interest to me is market share.
According to NZA's 31st January announcement 2Cheap Cars ) advises it has increased its used
car market share to 7%, in the third quarter to 31 December 2022, despite the overall New Zealand used
car market dropping by 9.5%2. Also EVs made up 41% of their sales.
Turners in their 10th May presentation state they hold 8%.They do not state what % of sales are EVs.I would expect under 10%.

[ralph]

I know percy someone must think different to us ,with the big drop in the last few days. As previously stated its the add on moneyspinners that are letting them down turners do better with car Insurance finance etc .
But nzai cars are to cheap, price wise they could go up a notch:confused:

[percy]

I know percy someone must think different to us ,with the big drop in the last few days. As previously stated its the add on moneyspinners that are letting them down turners do better with car Insurance finance etc .
But nzai cars are to cheap, price wise they could go up a notch:confused:

From NZA's 28th April update;
‘Our new leadership team has been razor-focused on prudent cost controls, accelerating penetration
rates on finance and insurance, and managing price and promotions more effectively whilst tailoring
inventory to specific locations. This has seen gross margins improve significantly in the last quarter,”

Turners are the NZ leaders in second hand cars.
While the number of used car dealers closing up shop is increasing,both TRA and NZA are seeing their market share increase.
Turners have a market cap of $298 mil and are the 54th largest company on NZX by free float,NZA is one of the smallest with a market cap of just over $11 mil.

[Sideshow Bob]

https://www.nzx.com/announcements/412150

Summary of key results
(Figures quoted are in NZ dollars. Comparisons are made against FY22.)
• Revenue and income: $82.7m, increased 25% .
• Vehicle sales: Up 6% to 8,367.
• Underlying EBITDA including finance income: $6.0m, up 26%.
• Net profit after tax (NPAT): $1.3m, down $1.3m (including $1.0m of restructuring FY23, $0.9m non-recurring income FY22)
• Underlying NPAT: $2.0m, up 18%.
• Underlying earnings per share (EPS): 4.4 cents per share (cps) against 3.7cps for FY22.

[Habits]

2 Cheap Cars stakeholder opens competing business with similar name adjacent to car yards | RNZ News
https://www.rnz.co.nz/news/business/490935/2-cheap-cars-stakeholder-opens-competing-business-with-similar-name-adjacent-to-car-yards

Poor form

[percy]

2 Cheap Cars stakeholder opens competing business with similar name adjacent to car yards | RNZ News
https://www.rnz.co.nz/news/business/490935/2-cheap-cars-stakeholder-opens-competing-business-with-similar-name-adjacent-to-car-yards

Poor form

Thanks for the link.
Most probably a win win situation..
Think McKenzies always opened next to a Woolworths.Work well for them.

[Rawz]

Just another character test fail for a stakeholder of NZA

Investor beware

[blackcap]

Just another character test fail for a stakeholder of NZA

Investor beware

Can you explain your statement? It is well known that Eugene has set up competing business.
His selling out can only be beneficial to NZA long term.

[Rawz]

Can you explain your statement? It is well known that Eugene has set up competing business.
His selling out can only be beneficial to NZA long term.

It has been discussed on this thread before (have a read back if really interested) but basically i mentioned that UDC and Heartland pulled their finance systems from 2cheapcars because they failed the good character tests. This business from day 1 has been run rough and fast... the culture is terrible. Compare NZA to TRA and its night and day, good vs evil lol..

Anyways one of the major shareholders opening up dealerships across the road just shows the character of the individual who was once heavily involved in the business..

[silverblizzard888]

I think the recent performance has been quite positive in transitioning the business from toxic to promising. I've just done a deep dive and have to say it looks like a decent reward vs risk proposition based on the points made below.

Massive turnaround for the business:
Management has done a good job so far in turning things around by focusing on margins over market share, they’ve learnt they can sell a lot of cars and make bare minimum, or they can sell less with higher margins and make a good profit everyone is happy with. Probably works better on a customer service aspect too because you’re not overwhelmed by serving too many people at the same time.

Improving margins to 21% from 17% has done wonders for the bottom line. February and March delivered 33% of the underlying profit ($660K), if they can keep that momentum up, they have a very profitable business. I’m assuming that’s how they have come to their $3.8m - $4.2 m NPAT guidance, which is a massive return on a business with a market value of $14.3m. Assuming a midpoint NPAT of $4m that’s a 28% return or 3.5 pe.

Rogue Shareholder:
Of course, there are concerns of their rogue majority shareholder in Eugene Williams who appears to be selling down his shareholding and opening a competing business (New Zealand Cheap Cars) in similar locations, though not necessarily a problem because car yards generally compete and open locations next to each other anyway. You might even say it’s a better way to attract consumers as they will most likely go to places where there’s more cars for sale. Of course it does mean more competition, but given April and May is trading as planned, it seems the impact has not been as significant as many may worry about, especially if they are trading according to their guidance.

Other notable improving factors:
Improving compliance inhouse to have more control on importing timeframe, which helps them maintain a lower level of inventory, helps achieve a quicker turnover, and uses less capital and lowers overall capital use costs. New financing facilities with lower cost has been arranged. They've been simplifying the business by getting out of financing and simply being agents who clip the ticket for financing deals they sign, which lowers risk and means pure profit with no overhang.

Great focus and economics in their favour:
Their big focus on HEVs with rebates of about $1000 - $1500 gives an advantage on pricing over ICE vehicles. Recent natural disaster events have cause up to 10,000 cars to be damaged, which means a lot more demand for used cars this financial year. High interest cost and lower consumer purchasing power means they have a good pricing proposition in the current economic climate for price conscientious consumers who of course want fuel efficient vehicles. Their EV/HEV focus is a big tick in the right direction for consumers in this environment. I’ve also noticed a lot of people around me thinking about EV/HEV lately, so taking a Peter Lynch approach it’s the type of stock you want to buy.

[percy]

NZA's result presentation.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/412150/395357.pdf

[percy]

https://www.nzx.com/announcements/412367

New Trade Finance agreement confirmed.
Pleasing that they are on better terms..
Finance Now owned by SBS.{Southland Building Soc].

[percy]

In their presentation in out look they are picking a huge increase in NPAT.Here are some figures I worked out.
Increase in NPAT – NPAT expected to increase to $3.8m to $4.2m by
concentrating on gross margin expansion, prudent cost management and
increasing direct control of value chain.
On 45,554,500 shares on issue.
NPAT of $3.8 mil is eps 8.34.......PE 3.6..
NPAT of $4.2 mil is eps 9.22........PE 3.25
Payout half of eps in divie 4.17 cent at share price of 30 cents yield is 13.9%
""""""""""""""""""""""""""""4.61 cent '''''''''''''''''''''''''''''''''''15.37%
Here is the presentation
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/412150/395357.pdf

Disc.I own shares in this company. .

[Habits]

Will you top up your holding Percy.

[percy]

.
Perhaps,although I am happy with what I have managed to buy for myself, and the smaller holding for the wife.
It appears it is former director Eugene Williams selling his holding to fund his new business..I would think he feels the capital is better employed there.
It is up to us to help him out...lol.

[silverblizzard888]

A comparison of 2 Cheap Cars and the opposing shareholders New Zealand Cheap Cars shows they aren't exactly something to worry about yet at least not with their stock numbers and slightly different price targets for their car mix.

Stock numbers for sale:
2 Cheap Cars : 468
New Zealand Cheap Cars:47

Target market:
2 Cheap Cars : Nearly all cars sell below $20k with majority below $15k and nearly half below $12k.
New Zealand Cheap Cars: Pricing target is one third of cars below 10k, a third between $10k-20k and the other third sells around $20k-35k

[silverblizzard888]

Director Samantha Sharif buying another 30,000

Http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/412761/396160.pdf

[Fortunecookie]

Director Samantha Sharif buying another 30,000

Http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/412761/396160.pdf

Any idea what why the founders parted ways? I have an idea. I am just wondering what your thoughts were.

[silverblizzard888]

Any idea what why the founders parted ways? I have an idea. I am just wondering what your thoughts were.

Based on Eugene Williams (EW) actions of starting a new business after leaving NZA probably demonstrates a disagreement over how the business was run and the strategy that was used. It seems David Sena (DS) wanted to pursue a high growth, high profit business selling low cost cars, while EW wanted a business that stocked cars at every price range with a customer oriented focus (I'm speculating of course) with slower growth and lower profits.

DS looks like he was at the back end organizing the logistics of shipping cars from Japan, while EW was in charge of the sales. The final straw came last year on consistent decline of the business for consecutive years and DS probably getting frustrated with EW's mid way strategy of selling low cost cars at low margins and low growth. The two probably had a lot of disagreements to the point they had had it with each other. The board seemed to have sided with EW and so DS decided to force a overhaul of the whole board, so everyone left and he has since appointed a management team that is pursuing his strategy.

The comments made in this article seems to suggest a difference in strategy being the main point. https://autotalk.co.nz/former-2-cheap-leader-to-head-used-car-startup/

"Well-known as one of Eugene Williams’ key lieutenants at 2 Cheap, Yang left soon after Williams, following the fallout as Williams’ relationship with David Sena, the fellow founder of 2 Cheap, collapsed."

"Yang states that his strategy for the new business is to prioritise customer satisfaction, staff care, and working with excellent suppliers."

“Profits are important, but doing the right thing is even more crucial,” says Michael. He is committed to always prioritising quality over profits, even if that means growth may be slower.

“We believe that honesty, transparency, and treating our customers with respect is the only way to do business,” says Yang. “We are excited to bring a new kind of used car business to New Zealand and change the industry for the better.”

All these comments seem to be directed at NZA who in the past has been caught out for doing the opposite.

2 Cheap Cars fined nearly $438,000 over 'deliberately misleading' ads, documents (2019)

https://www.rnz.co.nz/news/national/394057/2-cheap-cars-fined-nearly-438-000-over-deliberately-misleading-ads-documents


Watchdog received 16 complaints against 2 Cheap Cars (2017)

https://www.stuff.co.nz/business/97691765/watchdog-received-16-complaints-against-2-cheap-cars

2 Cheap Cars to pay more than $320,000 (2017)

https://www.nzherald.co.nz/business/2-cheap-cars-to-pay-more-than-320000/FPE5ZWSMONT6ND4UJB45VTZJ5M/

Of course that was in the past and the hope is that the new management team are running the business in a more professional and upright way.

[percy]

Will you top up your holding Percy.

I bought more today.

[Fortunecookie]

Based on Eugene Williams (EW) actions of starting a new business after leaving NZA probably demonstrates a disagreement over how the business was run and the strategy that was used. It seems David Sena (DS) wanted to pursue a high growth, high profit business selling low cost cars, while EW wanted a business that stocked cars at every price range with a customer oriented focus (I'm speculating of course) with slower growth and lower profits.

DS looks like he was at the back end organizing the logistics of shipping cars from Japan, while EW was in charge of the sales. The final straw came last year on consistent decline of the business for consecutive years and DS probably getting frustrated with EW's mid way strategy of selling low cost cars at low margins and low growth. The two probably had a lot of disagreements to the point they had had it with each other. The board seemed to have sided with EW and so DS decided to force a overhaul of the whole board, so everyone left and he has since appointed a management team that is pursuing his strategy.

The comments made in this article seems to suggest a difference in strategy being the main point. https://autotalk.co.nz/former-2-cheap-leader-to-head-used-car-startup/

"Well-known as one of Eugene WilliamsÂ’ key lieutenants at 2 Cheap, Yang left soon after Williams, following the fallout as WilliamsÂ’ relationship with David Sena, the fellow founder of 2 Cheap, collapsed."

"Yang states that his strategy for the new business is to prioritise customer satisfaction, staff care, and working with excellent suppliers."

“Profits are important, but doing the right thing is even more crucial,” says Michael. He is committed to always prioritising quality over profits, even if that means growth may be slower.

“We believe that honesty, transparency, and treating our customers with respect is the only way to do business,” says Yang. “We are excited to bring a new kind of used car business to New Zealand and change the industry for the better.”

All these comments seem to be directed at NZA who in the past has been caught out for doing the opposite.

2 Cheap Cars fined nearly $438,000 over 'deliberately misleading' ads, documents (2019)

https://www.rnz.co.nz/news/national/394057/2-cheap-cars-fined-nearly-438-000-over-deliberately-misleading-ads-documents


Watchdog received 16 complaints against 2 Cheap Cars (2017)

https://www.stuff.co.nz/business/97691765/watchdog-received-16-complaints-against-2-cheap-cars

2 Cheap Cars to pay more than $320,000 (2017)

https://www.nzherald.co.nz/business/2-cheap-cars-to-pay-more-than-320000/FPE5ZWSMONT6ND4UJB45VTZJ5M/

Of course that was in the past and the hope is that the new management team are running the business in a more professional and upright way.

Thanks for the thorough response.

I was aware of the past incidents and reputation. I didn't think the dispute would be over the pricing and customer service strategy. You make a good point.

I actually they thought it may had something to do with the loan origination operation and them trying to replicate Turners. It appeared to be making a loss. They have since decided not to continue with it and let it run down.

I am aware this industry is cyclical. However I did note the number of dealers have dropped 20% since 2017. Perhaps this will help to counteract this. It's good to read they will be focusing on margin.

I decided to take a small position. It is currently trading at book value or there abouts. They have little debt. Personally I think there is little downside. I have relied on a conservative npat which should generate a satisfactory return. If they exceed that, even better.

[Sideshow Bob]

I bought more today.

Have you told Tina.......?? :laugh:

[percy]

Have you told Tina.......?? :laugh:

Not brave enough to....lol

[silverblizzard888]

Thanks for the thorough response.

I was aware of the past incidents and reputation. I didn't think the dispute would be over the pricing and customer service strategy. You make a good point.

I actually they thought it may had something to do with the loan origination operation and them trying to replicate Turners. It appeared to be making a loss. They have since decided not to continue with it and let it run down.

I am aware this industry is cyclical. However I did note the number of dealers have dropped 20% since 2017. Perhaps this will help to counteract this. It's good to read they will be focusing on margin.

I decided to take a small position. It is currently trading at book value or there abouts. They have little debt. Personally I think there is little downside. I have relied on a conservative npat which should generate a satisfactory return. If they exceed that, even better.

I'm glad they've actually exited the financing business because things are about to get tough on that front, better to just clip the ticket on each deal they get.
"Vehicle loan arrears were also up 39 percent in April over the year earlier"

https://www.rnz.co.nz/news/business/490493/credit-cards-vehicle-loan-arrears-point-to-greater-financial-pain

Yeah thats true there's been a massive consolidation on secondhand car dealers. The smaller ones can no longer compete with the larger ones that have a cost advantage.

They should be fine in this environment with their price range, most people can afford their cars. The bonus is their cars are New Zealand new as well, which given the current risk of buying a flood damaged car on the market these days, they are a pretty safe bet since its fresh from Japan.

The value its trading at is pretty fair for the risk you take, if they can beat their last financial year performance then you're already getting a good return, never mind their current guidance of $3.8m - $4.2 m. They would have to perform exceeding worse than the last financial year to see a downside.

[percy]

On 45,554,500 shares on issue.
NPAT of $3.8 mil is eps 8.34 cents.......PE 3.6..
NPAT of $4.2 mil is eps 9.22 cents........PE 3.25
NPAT of $3.8mil..Payout half of eps in divie is 4.17 cents and at share price of 30 cents the yield is 13.9%
NPAT of $4.2 mil .Payout of half eps in divie is 4.61 cents and at share price of 30 cents the yield is 15.37%

[Fortunecookie]

I'm glad they've actually exited the financing business because things are about to get tough on that front, better to just clip the ticket on each deal they get.
"Vehicle loan arrears were also up 39 percent in April over the year earlier"

https://www.rnz.co.nz/news/business/490493/credit-cards-vehicle-loan-arrears-point-to-greater-financial-pain

Yeah thats true there's been a massive consolidation on secondhand car dealers. The smaller ones can no longer compete with the larger ones that have a cost advantage.

They should be fine in this environment with their price range, most people can afford their cars. The bonus is their cars are New Zealand new as well, which given the current risk of buying a flood damaged car on the market these days, they are a pretty safe bet since its fresh from Japan.

The value its trading at is pretty fair for the risk you take, if they can beat their last financial year performance then you're already getting a good return, never mind their current guidance of $3.8m - $4.2 m. They would have to perform exceeding worse than the last financial year to see a downside.

I totally agree, they don't need to hit guidance to generate a reasonable return.

With regards to the previous boardroom disagreement. This is me speculating, but I believe the issues were around growth and the finance arm.

They wanted to write loans at a percentage of vehicles that were sold through their dealership. Sounds fine in principle. I imagine they figured a certain percentage of customers would require an loan, so why not offer this inhouse. Pre IPO, I believe they sold on average 11,000 vehicles per annum. I think the numbers dropped, even in the last financial year they sold just over 8,000 vehicles. So loan volume wise the numbers would have dropped too. The other issue that I see is the funding risk. They offered loans at fixed rates, however I believe their funding was at a variable or short term rates so there is a mismatch. In the last forty odd years, this is probably the second time the rates went up this fast. So this put pressure on interest margin. I think some of the existing loans they may have been losing money because the interest income barely covered the interest costs and once you factor in operating expenses they wouldn't be making anything.

So this essentially put pressure on interest margin. Normally to mitigate this, you write more loans. But the issue I see is loans are only derived from their dealership. They cannot generate more loan volume without compromising on loan quality. I looked at the segmentation again, the finance arm was either breaking even or generating a loss but I think there was some plenty of headwind at the time. Part of the reason for the IPO was to help build the finance arm. In hindsight, you could say they were abit unlucky in terms of timing. But randomness is a part of business. I did note they issued $3mill in dividend which was more than they earned in the year and questionable given they were focusing on growth. I don't think that was a good move.


I think we are in agreement the good news is that they are no longer writing loans and focusing on their core business.

Shaw said the board was "carefully examining and re-calibrating the core business"

https://www.rnz.co.nz/news/business/474029/nz-automotive-investments-shareholder-grilled-by-investors-at-annual-meeting

We have no way to know what happened in the boardroom. But if it is the case, I do respect Sena for taking action.

[silverblizzard888]

I totally agree, they don't need to hit guidance to generate a reasonable return.

With regards to the previous boardroom disagreement. This is me speculating, but I believe the issues were around growth and the finance arm.

They wanted to write loans at a percentage of vehicles that were sold through their dealership. Sounds fine in principle. I imagine they figured a certain percentage of customers would require an loan, so why not offer this inhouse. Pre IPO, I believe they sold on average 11,000 vehicles per annum. I think the numbers dropped, even in the last financial year they sold just over 8,000 vehicles. So loan volume wise the numbers would have dropped too. The other issue that I see is the funding risk. They offered loans at fixed rates, however I believe their funding was at a variable or short term rates so there is a mismatch. In the last forty odd years, this is probably the second time the rates went up this fast. So this put pressure on interest margin. I think some of the existing loans they may have been losing money because the interest income barely covered the interest costs and once you factor in operating expenses they wouldn't be making anything.

So this essentially put pressure on interest margin. Normally to mitigate this, you write more loans. But the issue I see is loans are only derived from their dealership. They cannot generate more loan volume without compromising on loan quality. I looked at the segmentation again, the finance arm was either breaking even or generating a loss but I think there was some plenty of headwind at the time. Part of the reason for the IPO was to help build the finance arm. In hindsight, you could say they were abit unlucky in terms of timing. But randomness is a part of business. I did note they issued $3mill in dividend which was more than they earned in the year and questionable given they were focusing on growth. I don't think that was a good move.


I think we are in agreement the good news is that they are no longer writing loans and focusing on their core business.

Shaw said the board was "carefully examining and re-calibrating the core business"

https://www.rnz.co.nz/news/business/474029/nz-automotive-investments-shareholder-grilled-by-investors-at-annual-meeting

We have no way to know what happened in the boardroom. But if it is the case, I do respect Sena for taking action.


In general they were under pressure on all fronts and it looked like they couldn't figure there way out so they got frustrated with each other. We'll never know what really happened, but as long as they've learnt there lessons and they build a good company going forward, all is forgot. If you look at the stats in the last few years it will actually surprise you that they've been selling around 8k cars for the last few years and still managed to generate good profits. They usually made $3-4million every year so, they must of though paying a few million in dividends was fine.

The stats for the Cars sold are:
2023: 8367
2022: 7882
2021: 8207
2020: 11020
2019: 10919



FY
Revenue
NPAT


2023
$82,737,000.00
$1,292,000.00


2022
$65,956,000.00
$2,594,000.00


2021
$66,125,000.00
$3,199,000.00


2020
$76,316,000.00
$4,229,000.00


2019
$78,400,000.00
$3,400,000.00


2018
$73,700,000.00
$4,400,000.00

[silverblizzard888]

Eugene Williams still constantly selling. His holding has dropped from 15.1 million shares to 14.6 million shares. Looks like the share price will be under pressure for a while yet. He seems more interested in getting his money out than what price hes getting per share.

https://www.nzx.com/announcements/412839

[percy]

Eugene Williams still constantly selling. His holding has dropped from 15.1 million shares to 14.6 million shares. Looks like the share price will be under pressure for a while yet. He seems more interested in getting his money out than what price hes getting per share.

https://www.nzx.com/announcements/412839

What I/we do not know is how much Eugene's shares cost him, or how much he thinks they are worth [ selling them to finance his new business.]
What I/we do know is how much they are worth to me/us...

[DarkHorse]

Based on Eugene Williams (EW) actions of starting a new business after leaving NZA probably demonstrates a disagreement over how the business was run and the strategy that was used. It seems David Sena (DS) wanted to pursue a high growth, high profit business selling low cost cars, while EW wanted a business that stocked cars at every price range with a customer oriented focus (I'm speculating of course) with slower growth and lower profits.

DS looks like he was at the back end organizing the logistics of shipping cars from Japan, while EW was in charge of the sales. The final straw came last year on consistent decline of the business for consecutive years and DS probably getting frustrated with EW's mid way strategy of selling low cost cars at low margins and low growth. The two probably had a lot of disagreements to the point they had had it with each other. The board seemed to have sided with EW and so DS decided to force a overhaul of the whole board, so everyone left and he has since appointed a management team that is pursuing his strategy.

The comments made in this article seems to suggest a difference in strategy being the main point. https://autotalk.co.nz/former-2-cheap-leader-to-head-used-car-startup/

"Well-known as one of Eugene Williams’ key lieutenants at 2 Cheap, Yang left soon after Williams, following the fallout as Williams’ relationship with David Sena, the fellow founder of 2 Cheap, collapsed."

"Yang states that his strategy for the new business is to prioritise customer satisfaction, staff care, and working with excellent suppliers."

“Profits are important, but doing the right thing is even more crucial,” says Michael. He is committed to always prioritising quality over profits, even if that means growth may be slower.

“We believe that honesty, transparency, and treating our customers with respect is the only way to do business,” says Yang. “We are excited to bring a new kind of used car business to New Zealand and change the industry for the better.”

All these comments seem to be directed at NZA who in the past has been caught out for doing the opposite.

2 Cheap Cars fined nearly $438,000 over 'deliberately misleading' ads, documents (2019)

https://www.rnz.co.nz/news/national/394057/2-cheap-cars-fined-nearly-438-000-over-deliberately-misleading-ads-documents


Watchdog received 16 complaints against 2 Cheap Cars (2017)

https://www.stuff.co.nz/business/97691765/watchdog-received-16-complaints-against-2-cheap-cars

2 Cheap Cars to pay more than $320,000 (2017)

https://www.nzherald.co.nz/business/2-cheap-cars-to-pay-more-than-320000/FPE5ZWSMONT6ND4UJB45VTZJ5M/

Of course that was in the past and the hope is that the new management team are running the business in a more professional and upright way.

In terms of pursuing an aggressive sales strategy, wasn't Williams the CEO when all those complaints and rulings against the company arose? (with Sena focused on procurement)
Of course he'd say he's committed to honesty and transparency for his new business, but I'd be inclined to pin the blame primarily on him rather than Sena.

I've only invested because they now have an entirely new CEO, CFO and board - including the former head of Waka Kotahi and the Deputy Chair of the shareholders association, both of whom will be very cognisant of the strict governance legislation now in place.

[silverblizzard888]

In terms of pursuing an aggressive sales strategy, wasn't Williams the CEO when all those complaints and rulings against the company arose? (with Sena focused on procurement)
Of course he'd say he's committed to honesty and transparency for his new business, but I'd be inclined to pin the blame primarily on him rather than Sena.

I've only invested because they now have an entirely new CEO, CFO and board - including the former head of Waka Kotahi and the Deputy Chair of the shareholders association, both of whom will be very cognisant of the strict governance legislation now in place.


You're right Eugene Williams was the CEO up to 2019 when he was replaced by Huffer founder Daniel Buckley. Eugene was directing the ship behind the company's messy history, either he was directly involved or at least he wasn't a very good manager of the company to have those issues pop up.

The current management team and board seem like a level up, which should hopefully help NZA shine!

[percy]

Director Sharif buying.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/412903/396319.pdf

[winner69]

Director Sharif buying.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/412903/396319.pdf

Always a good sign Directors buying

She's been buying pretty regularly this year

[percy]

Always a good sign Directors buying

She's been buying pretty regularly this year

I had a laugh.
On the form the buyer has to state if they know the seller.
Off course this one showed brought on market,seller unknown..
I would think she too would have had a laugh,and thought "thanks Eugene"..

[winner69]

I had a laugh.
On the form the buyer has to state if they know the seller.
Off course this one showed brought on market,seller unknown..
I would think she too would have had a laugh,and thought "thanks Eugene"..

Does that mean you’ve sold out?

Surely not

[silverblizzard888]

Director Sharif buying.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/412903/396319.pdf

Some real strong confidence shown by the director, the constant buying is a pretty good sign things are going well in the new financial year.

[percy]

https://www.nzx.com/announcements/413216
Change of listing name and ticker 2CC happening on 26th June.
“This change marks a new beginning. A reset was needed and that is what has happened. It’s now about accelerating performance to new heights. The new board and CEO are well established now and working exceptionally well together. We’ve made tremendous progress in the recent months with the appointment of new Auditor UHY Haines Norton Sydney, successfully changed over trade finance providers to strengthen our access to funds. There is almost an entirely new leadership team in place and their progress on results over the last quarter in particularly is a great start. We’ve done a reset, the past is past and we want to be judged on our performance from this point forward,” Stiassny says.

[Rawz]

https://www.nzx.com/announcements/413216
Change of listing name and ticker 2CC happening on 26th June.

from the annoucement:

“This change marks a new beginning. A reset was needed and that is what has happened. It’s now about accelerating performance to new heights. The new board and CEO are well established now and working exceptionally well together. We’ve made tremendous progress in the recent months with the appointment of new Auditor UHY Haines Norton Sydney, successfully changed over trade finance providers to strengthen our access to funds. There is almost an entirely new leadership team in place and their progress on results over the last quarter in particularly is a great start. We’ve done a reset, the past is past and we want to be judged on our performance from this point forward,” Stiassny says.

the past is the past. Flush the dunny and move on

[Sideshow Bob]

Another 1.6% gone.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/413274/396726.pdf

[winner69]

Another 1.6% gone.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/413274/396726.pdf

Another 13.8 million to go

Just as well percy is being active

[percy]

Another 13.8 million to go

Just as well percy is being active

I am not alone..lol.

[Sideshow Bob]

CEO on the register.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/413350/396821.pdf

[percy]

CEO on the register.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/413350/396821.pdf
I am in good company in a good company..lol.

[silverblizzard888]

CEO on the register.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZA/413350/396821.pdf

If that isn't the biggest sign of confidence in the company, nothing is.

[percy]

Ticker code change and name change 0n 26th June.
2CC.2 Cheap Cars Group ltd.

https://www.nzx.com/companies/2CC

[Rawz]

Start of a new era aye Percy

[winner69]

If that isn't the biggest sign of confidence in the company, nothing is.

Have you and percy bought ALL those guys shares yet?

[percy]

Have you and percy bought ALL those guys shares yet?

No.I do not think he sold any over the past week.
Only 21 traded on Friday.
I am getting concerned..lol

[silverblizzard888]

Have you and percy bought ALL those guys shares yet?

Well who can resist a bargain. The ironic thing about the company is they don't just sell cheap cars, their shares are pretty cheap too. Should have called the company 2 Cheap Shares!

[Baa_Baa]

Well who can resist a bargain. The ironic thing about the company is they don't just sell cheap cars, their shares are pretty cheap too. Should have called the company 2 Cheap Shares!

Maybe. It's more concerning to me that this is all NZX can put up for investors.

Our market is becoming, or maybe already is, a joke. If we're forced into to considering investing in a two-bit vehicle low-end cost sales company, what hope is there for the market overall. Better just to pick a few of the sustainable earners and get into them when the market decides they're 'cheap as'. And hold for the earnings, whether or not they make any capital gains.

I refuse to get excited about a low-cost vehicle sales company who markets themselves as 'cheap'. I really don't like the association with 'cheap', but this is what our NZX is serving up to us, is this as a good as it gets? It seems so.

[percy]

Maybe. It's more concerning to me that this is all NZX can put up for investors.

Our market is becoming, or maybe already is, a joke. If we're forced into to considering investing in a two-bit vehicle low-end cost sales company, what hope is there for the market overall. Better just to pick a few of the sustainable earners and get into them when the market decides they're 'cheap as'. And hold for the earnings, whether or not they make any capital gains.

I refuse to get excited about a low-cost vehicle sales company who markets themselves as 'cheap'. I really don't like the association with 'cheap', but this is what our NZX is serving up to us, is this as a good as it gets? It seems so.

Great post Baa Baa....


Siverblizzard88.We may get our orders filled a little cheaper tomorrow when their listing name changes to 2 cheap cars..Fine thing to invest in The Colonial Motor Company or New Zealand Automotive Investments ,but 2 cheap cars.??.
Bring on tomorrow..May have to increase our buy orders.?...lol.

[silverblizzard888]

Maybe. It's more concerning to me that this is all NZX can put up for investors.

Our market is becoming, or maybe already is, a joke. If we're forced into to considering investing in a two-bit vehicle low-end cost sales company, what hope is there for the market overall. Better just to pick a few of the sustainable earners and get into them when the market decides they're 'cheap as'. And hold for the earnings, whether or not they make any capital gains.

I refuse to get excited about a low-cost vehicle sales company who markets themselves as 'cheap'. I really don't like the association with 'cheap', but this is what our NZX is serving up to us, is this as a good as it gets? It seems so.

The NZX has been a concern for a long long time now, their failure to draft up a good number of IPOs is laughable at this stage. They know they have this problem and they’ve tried firstly to reinvent the exchange itself by having an alternative exchange, then they gave up and tried restructuring fees and listing rules. I’m not sure if they do it or not but it seems what they never tried was engaging with companies when they’re young or form partnerships with companies that do do that. How does Snowball Effect have over 100 companies they’ve raised capital for and not one single one has gone on to be a listed company on the NZX.

These days we lose more companies from takeovers like Pushpay and quite possibly Eroad soon than we get in new listings. Even the ASX gets more NZ listings than NZX does, which when you consider the initial listing fee for the NZX is roughly $38k and the initial listing fee for ASX is $56k AUD, companies prefer to go to the ASX even when it cost more, usually with the assumption that its easier to raise capital there and they might be right. Though I feel like platforms like Sharesies has actually changed the landscape for investing in NZ as its made it easier to raise money. During the Infratil capital raise recently people on sharesies were outraged that they only got 5% of the shares they wanted, I think the demand for investing in companies is there, what never changed during that time was the companies wanting to raise money on the NZX and NZX’s engagement with these companies.

It is true that it should be a concern that one of the highest potential for a good gain in this market isn’t a top tier innovative high growth company, but one of the most straight forward businesses around, that is in the middle of a turnaround with a majority shareholder having a hissy fit and trying his best to throw all his shares out the window. What can I say, I wish it was better, but in honesty I’m not sure the NZX knows how to turn this around given how much time they’ve been trying and I’m surely no influence on them, so I’ll just make the most of whats available and buy some cheap shares in a company selling cheap cars!

[silverblizzard888]

Great post Baa Baa....


Siverblizzard88.We may get our orders filled a little cheaper tomorrow when their listing name changes to 2 cheap cars..Fine thing to invest in The Colonial Motor Company or New Zealand Automotive Investments ,but 2 cheap cars.??.
Bring on tomorrow..May have to increase our buy orders.?...lol.

It seems your sophisticated high premium portfolio maybe be tainted with the word cheap now.

Indeed I may just have to increase the buy order or am I 2 Cheap to do so.

In a way the name aligns with their brand and that will probably help a good few interested investors find their stock. However it may lower their chance of getting a movie date.

[percy]

Well well well.
Which company is the first company on NZX list of companies.?
Which company is the first company on my Stocknessmonster.com watch list.?
Which company is top of the list of my ASB share trading platform watch list.?
2CC Number One on all lists.

Brilliant.

[silverblizzard888]

Well well well.
Which company is the first company on NZX list of companies.?
Which company is the first company on my Stocknessmonster.com watch list.?
Which company is top of the list of my ASB share trading platform watch list.?
2CC Number One on all lists.

Brilliant.

Top stock on the NZX today the name change works!

I can imagine the AGM now, "Welcome to all the 2 Cheap shareholders" haha

[percy]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/2CC/413832/397373.pdf

[winner69]

Wow what a start to the new year ..going very well …just look at those margins

Love the bits about being ‘being ‘super focused’ and ‘ahead of the curve


http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/2CC/414313/398016.pdf

percy failing in his duty to keep this thread on first page …had to go to page 4 to find it

[percy]

Wow what a start to the new year ..going very well …just look at those margins

Love the bits about being ‘being ‘super focused’ and ‘ahead of the curve


http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/2CC/414313/398016.pdf

percy failing in his duty to keep this thread on first page …had to go to page 4 to find it

Yes a big WOW..!!
Most probably time for a "well positioned".
Good to see over 500,000 wanted at 28 cents.
The strong trading should see 2CC in a lot stronger position to upgrade and expand their foot print.
New business strategy is proving to be very successful very quickly.
.Pleasing seeing how strong they are in EVs and Hybrids.
• EV/HEVS leadership is further strengthened moving to 52% of total sales for Q1 (up from 41% for FY23).

[Fortunecookie]

Yes a big WOW..!!
Most probably time for a "well positioned".
Good to see over 500,000 wanted at 28 cents.
The strong trading should see 2CC in a lot stronger position to upgrade and expand their foot print.
New business strategy is proving to be very successful very quickly.
.Pleasing seeing how strong they are in EVs and Hybrids.
• EV/HEVS leadership is further strengthened moving to 52% of total sales for Q1 (up from 41% for FY23).

Percy you are a neon sale sign. Are you employed by 2CC as a spokesman haha.

On a serious note, this is a commodities business and they are well positioned. From I can see they have been a profitable business since 2016 and presumably much earlier.

[winner69]

NPAT this year forecast $5m …..eps of 11 cents

Jeez …..deserves a share price over $1 on that performance

Well over $1 if you take into account the growth/expansion they are talking about

[percy]

NPAT this year forecast $5m …..eps of 11 cents

Jeez …..deserves a share price over $1 on that performance

Well over $1 if you take into account the growth/expansion they are talking about

Growth/expansion.
Currently 12 sites.
$5 mil NPAT would enable to add a further 3 to 6 sites.
Foot print growth.3 sites 25% growth.6 sites 50% growth.
Therefore it may be possible to grow eps by 20% to 30% over the next couple of years..Logistics improvements will help.

[Rawz]

the horse has bolted eh Percy. bugger for the 28 cent bid lol. Ah well at least got a few thousand

[percy]

the horse has bolted eh Percy. bugger for the 28 cent bid lol. Ah well at least got a few thousand


I bought most of the ones traded so far today at an average of 37.37 cents..

[Rawz]

Sorry about that.
I bought most of the ones traded so far today at an average of 37.37 cents..

Well done.

Come on Eugene, we need your liquidity

[percy]

Well done.

Come on Eugene, we need your liquidity

Be interesting seeing where the share price goes now ,and whether Eugene will hit the market again.

[silverblizzard888]

Good job everyone that managed to get some 'cheap' shares!

Massive update, they have exceeded my expectations!

Gross margins at 24% way ahead of the 21% they were aiming for.

EV/HEVS moving to 52% of total sales, shows a clear focus where the business is heading and thats probably where they are getting their good margins too.

They continue to make good head way on cost cutting and saving initatives.

[silverblizzard888]

Be interesting seeing where the share price goes now ,and whether Eugene will hit the market again.

I'm disappointed in Eugene, he was meant to sell us more shares!

[Rawz]

I'm disappointed in Eugene, he was meant to sell us more shares!

Yeah guttered. I had 160,000 share buy order in a 28 cents. sat there and sat there. hoping for Eugene to sell into it. He has maybe stopped selling so its going to be a struggle to get any now

[silverblizzard888]

Yeah guttered. I had 160,000 share buy order in a 28 cents. sat there and sat there. hoping for Eugene to sell into it. He has maybe stopped selling so its going to be a struggle to get any now


He may be interested in selling at the new price range. Should power through the 40 cent mark soon enough.

[stoploss]

My system says they are currently in a "trading halt " ?

[Rawz]

My system says they are currently in a "trading halt " ?

Shareies say that and i have messaged them about it.
Jarden and ASB dont.
strange

[silverblizzard888]

Someones just taken all the shares at 40 cents, basically next to nothing for sale now.

[winner69]

He may be interested in selling at the new price range. Should power through the 40 cent mark soon enough.

Well over 60 cents next week I reckon

[winner69]

Someones just taken all the shares at 40 cents, basically next to nothing for sale now.

Percy the market maker

Think he’s happy to go to 60 cents this time round …suppose we’ll need to match him

[silverblizzard888]

Well over 60 cents next week I reckon

We might even see it reach that this week if the liquidity for the stock was good. No ladder of stock leading buyers to slowly move up the price chain. Theres 1700 shares at 45 cents, that will likely get taken out by today I imagine.

[Fortunecookie]

This is a nice asymmetric play and company to hold during an uncertain inflationary period.

Can you imagine the damage to the country/ economy if there wasn't a functioning used car market. Regardless what the govt do, the consumers will bare the cost and there is only so much they can bare.

[Muse]

a nice way to start your investment percy well done

[jonu]

Well over 60 cents next week I reckon

Is the former owner now out? If not, what makes you think he won't start selling again?

[percy]

Is the former owner now out? If not, what makes you think he won't start selling again?

I think he will unload more when the share price hits $1.00.
However I could be wrong.
On the last shareholder notice Eugene Williams' trust/s hold 13,850,540 shares or 30.4043%
May pay you to have a word with NTL's Chair as she could know more.

[RupertBear]

a nice way to start your investment percy well done

That Percy can certainly pick them and its no accident as he does impeccable research and backs himself if he believes in a company. He has my greatest respect :)

[bull....]

looks like the price is slipping away :scared:

[Rawz]

looks like the price is slipping away :scared:

more bull more lol

[bull....]

more bull more lol

dont you want to get filled at 28c ?

[Rawz]

dont you want to get filled at 28c ?

yeah so ramp it down for me lol

[percy]

yeah so ramp it down for me lol

A long day for you and me waiting for Eugene.
Perhaps he will reappear on Monday.?.....lol.

[Rawz]

A long day for you and me waiting for Eugene.
Perhaps he will reappear on Monday.?.....lol.

One can only hope lol. Always nice buying a company under 4 p/e and double digit fcf yield

[silverblizzard888]

Next interim report will be where it really starts to get rewarding being a shareholder, once a interim dividend is announced or even a share buyback given how undervalued the share price is.

I'm alright wherever the share price goes for the time being, if it comes down below 35 cents I will top up, if it stays above that I'll just twiddle my thumbs.

[Southern Lad]

With the strategy being adopted by 2CC to materially expand gross margin, I’m expecting the Commerce Commission to require the company to change its Cheap branding on the grounds it’s breaching the Fair Trading Act!

[silverblizzard888]

With the strategy being adopted by 2CC to materially expand gross margin, I’m expecting the Commerce Commission to require the company to change its Cheap branding on the grounds it’s breaching the Fair Trading Act!

A product can still be cheap and have good margins. Expanding your margins doesn't necessarily mean their products won't continue to be cheap in comparison to similar products on the market.

[Fortunecookie]

A few years ago they had margins of 22%, which declined to 17% for the last financial year. In short I believe it was due to the finance arm and employing a third party to procure the vehicles. Perhaps it resulted in alot of rework. Anyhow the finance arm no longer exists and the procurement is now back to being done in-house. I noted that they brought back the operations guy who left just before the IPO. We have an new CEO that is focused on sales margin. I have nothing against the previous CEO and managing director of the finance arm. Alot of experience and proven track record of building a loan book. Unfortunately covid did affect sales volume, which ultimately affected lending volumes and margin. I looked into it further they have 3 tier of borrowers. But they only provided in-house lending to the middle tier. So a very narrow range. The impact of lending out money put a huge strain on cashflow. You could see it. This threatened their survival so some tough decisions had to be made. They are back to their original operation which was very profitable. Yes regulations are evolving. But think about it for a moment. If the govt makes it too difficult to purchase used vehicles. You will start to see certain parts of the country straining.

They have been guilty of past bad conduct and they paid for it. This hasn't impacted their ability to sell cars. Their share of the total NZ new car registration numbers has consistently been around 6-7% and they looking to grow this. There's alot of qualitative stuff to talk about, but I won't because I could go on forever.

Other similar competitors are valued at 10x.
The market was pricing the company at 10x $1.3m which included the one off restructure charge. Take that out, the company was valued at around 6.5x. So they were already undervalued. They are on track to earn $4m+ which they have been proven to earn in previous years. That earnings multiple just got alot lower.

[haewai]

Other similar competitors are valued at 10x.

Thanks for the background. Who are the competitors priced this way?

[percy]

Thanks for the background. Who are the competitors priced this way?

CMO.The Colonial Motor Company Ltd. are on a PE ratio of 10.20 with a market cap of $300 mil according to ASB,
while ,TRA Turners Automotive Group Ltd.are on a PE of 9.7,with a market cap of $319 mil.
2CC 's PE is currently 13.38 and their market cap at 38 cents is $17.3 mil.
Aussies;
CAR Carsales PE 15.61
APE Eagers PE 11.76

[winner69]

Thanks for the background. Who are the competitors priced this way?

Turners about 10x with little growth

2CC at 10x F24 forecast gives share price $1.10

[Fortunecookie]

Thanks for the background. Who are the competitors priced this way?

I see Percy has responded. He is onto it.

I have to say a big thank you to him. He brought 2CC to everyone's attention. He can spot the deals a mile away.

[Rawz]

I see Percy has responded. He is onto it.

I have to say a big thank you to him. He brought 2CC to everyone's attention. He can spot the deals a mile away.
Yes agree. Thank you very much Percy. Percy is a LEGEND

[percy]

Yes agree. Thank you very much Percy. Percy is a LEGEND

As hugh Hefner said to the bunny girl ;"My pleasure."...lol

[silverblizzard888]

Closed at 42 cents, which is a 9 month high.

[Rawz]

Closed at 42 cents, which is a 9 month high.

And look at the depth.. nothing on the sell side. I'm expecting another 50% gain over the next 6 months. Just need to see the size of the dividend is at half year

[silverblizzard888]

And look at the depth.. nothing on the sell side. I'm expecting another 50% gain over the next 6 months. Just need to see the size of the dividend is at half year

Yeah anything on offer below 40 cents is constantly been taken out. The only person that can bring the price down would be Eugene.

Their next quarter update will likely be October, with interim report due in November. The first quarter profit was $1.4m, which is this current quarter is similar should bring it up to $2.8m for the 6 months. If they payout half in dividend we should be looking 3 cents for the interim.

[Rawz]

Yeah anything on offer below 40 cents is constantly been taken out. The only person that can bring the price down would be Eugene.

Their next quarter update will likely be October, with interim report due in November. The first quarter profit was $1.4m, which is this current quarter is similar should bring it up to $2.8m for the 6 months. If they payout half in dividend we should be looking 3 cents for the interim.

Their payout ratio of 50% earnings i am assuming was put in place to support the cash hungry finance book. Now that has been killed they will lift the payout ratio up towards 80% i reckon. There is just no need for them to hold onto all the cash as the balance sheet is clean as a whistle with no debt.

Even looking at last year, what is probably going to be their worst year ever.. due to the huge disruptions at board and management team level, they generated impressive cash flows:

Operating activities =========$10,908k
Less lease payments======== $2,009k
Less net pp&e purchases ======$167k
Less inventory purchases======$1,623k (company says $10m inventory is steady state for current yard space so need to add back since it was sold down to $8,377k as per balance sheet)
Rawz free cash flow calc $7,109k

So $7.1m fcf and market cap is $19m today.........

[silverblizzard888]

Their payout ratio of 50% earnings i am assuming was put in place to support the cash hungry finance book. Now that has been killed they will lift the payout ratio up towards 80% i reckon. There is just no need for them to hold onto all the cash as the balance sheet is clean as a whistle with no debt.

Even looking at last year, what is probably going to be their worst year ever.. due to the huge disruptions at board and management team level, they generated impressive cash flows:

Operating activities =========$10,908k
Less lease payments======== $2,009k
Less net pp&e purchases ======$167k
Less inventory purchases======$1,623k (company says $10m inventory is steady state for current yard space so need to add back since it was sold down to $8,377k as per balance sheet)
Rawz free cash flow calc $7,109k

So $7.1m fcf and market cap is $19m today.........

They may pay a high percent of the profits to dividend, but usually for interim profits companies try not to get carried away and payout too much and the way I see the current management team they aren't the type to run the company on a shoe string. They will want to keep enough to give themselves a buffer and they might have an eye on growth. They may even think about acquisitions which would demand a large amount of capital. Companies only payout a large part of the profits if they have no better use for the capital, which means less likely any ambition to grow the business in a big way.

I always stick to a Buffet view of things, that a profit is exactly whats left and no other figure really changes that, sure theres non cash items to boost cashflow, but something like depreciation which is a non cash expense originated from capital spending and a business should always have in mind they need to keep reinvesting that deduction to maintain their assets for the future.

[percy]

I am not expecting an interim divie.
Having the leading position in imported second hand EVs and Hybrids, I would like to see them use that advantage to expand their footprint,with another 2 or 3 sites.
To Rawz's inventory purchase figure of $1.6 mil a further $1.6 mil would be required for 3 new sites,.
Capital also needs to be spent to refurbish and modernise existing dealerships.
At the end of their financial year next March I would think they will be "well positioned" to pay an excellent final fully imputed divie,and then resume interims .

On The Other Hand..??
2CC are trading extremely well.Their balance sheet is strong and their stock turns are high,as is their equity ratio.
I would expect their new banker is impressed,and keen to advance them further funds.
If this is the case an interim divie may well be on the cards.

[winner69]

Methinks punters will need to pay over $1 soon

When does 2CC become ‘not cheap’

Miracle man Mike doing wonders here

[Rawz]

Im loving it. Making heaps here, losing heaps on KFL warrants. Love this game lol

One day ill get it right

[silverblizzard888]

Anything below $1 cents is in my books considered undervalued

Anything around $1.20 is around fair value

Overvalued would be anything above $1.50

[silverblizzard888]

Im loving it. Making heaps here, losing heaps on KFL warrants. Love this game lol

One day ill get it right

Usually successful investing is when you make one really really good decision. 2CC was a really really good decision. Well done!

Think the market is only starting to discover this stock, barely seems to be on anyones radar yet!

[Rawz]

Anything below $1 cents is in my books considered undervalued

Anything around $1.20 is around fair value

Overvalued would be anything above $1.50

It certainly can go overvalued with momentum. SP will continue in a strong uptrend and then to get overvalued all it will take is punters to get excited by a couple announcements about new sites opening up...

[silverblizzard888]

It certainly can go overvalued with momentum. SP will continue in a strong uptrend and then to get overvalued all it will take is punters to get excited by a couple announcements about new sites opening up...

It can definitely go overvalued if it enters speculative territory, usually when they announce massive expansion that sings high potential. Imagine if they said they were opening another 10 sites in the next 5 years or starting a branch in Australia, all of a sudden the market starts thinking way ahead. Maybe they start a premium dealership called 2 expensive cars!

[silverblizzard888]

10 orders at 47 cents for 13,986 shares, looks like the sharesie folks are here.

[silverblizzard888]

Lovely uptrend for the stock, at 48 cents thats a 10 month high on todays close.

[Joshuatree]

Same! Had a buy sitting at 28 c too.Not chasing it, I didn't check to see when results were coming,sa la vie..

[Rawz]

Probably see those 4000 shares at $0.60 taken out today. even at 60cents its P/E would be 5.9 based on midpoint of FY24 forecast profit so good buying.

[Fortunecookie]

0 to 100 real quick.
It's a good thing it doesn't have the financial and operational leverage.

[percy]

Same! Had a buy sitting at 28 c too.Not chasing it, I didn't check to see when results were coming,sa la vie..

Think Rawz and me are still with you at 28 cents...

[percy]

Probably see those 4000 shares at $0.60 taken out today. even at 60cents its P/E would be 5.9 based on midpoint of FY24 forecast profit so good buying.

Currently a buyer at 51 cents.
Seller at 60 cents has 4,000.
Thought I better not..??......lol.

[blackcap]

Currently a buyer at 51 cents.
Seller at 60 cents has 4,000.
Thought I better not..??......lol.

Too late Percy, I see they are now at 65. Dare you :)

[percy]

Too late Percy, I see they are now at 65. Dare you :)

At 65 cents I dare not....lol.

[Rawz]

if they do $5m npat (the top of their FY24 guidance).. at 65cents its a 5.9 P/E

Cheap as chips!

[silverblizzard888]

Stock closing at 52 cents makes that a 11 month high! If the 65 cent gets taken out that almost would bring it to a 12 month high.

All the 2CC shareholders must be high as a kite at the moment! Stocks up 79% in the past week!

[Rawz]

Up 7% today. Sheesh its good yet still trading on compelling multiples

[winner69]

Good news

Apparently Turners are witnessing a slowdown in the used car market, with buyers seeking more vehicles below $15,000.

Exactly 2CC's market eh

Go 2CC

[percy]

However, listed company Turners was witnessing a slowdown in the used car market, with buyers seeking more vehicles below $15,000.

Exactly 2CC's market..

Great seeing Winner69 one step ahead of me...lol.
Guess he is as excited as I am with the share price at 59 cents..

[silverblizzard888]

Thats a ringing endorsement for 2CC, the money making recession stock; soon to be the market darling! Everything lining up for the stock to continue its run.

What a massive week we've had closing at 59 cents! Too bad thats the end of trading for the week, looks like next week we are well poised to break 60 cents.

[winner69]

El Cheapo cars in Porirua apparently very busy these days

Pat Baker kept saying the years theres plenty of punters wanting cheap cars and if watch margins plenty of money to be made

Maybe Pat should float El Cheapo

[Valuegrowth]

I bought my first Toyota corolla car from here. Pat Baker gave me some after sales service too. Originally, they were based in Lower Hutt.

El Cheapo cars in Porirua apparently very busy these days

Pat Baker kept saying the years theres plenty of punters wanting cheap cars and if watch margins plenty of money to be made

Maybe Pat should float El Cheapo

[clearasmud]

I bought my first Toyota corolla car from here. Pat Baker gave me some after sales service too. Originally, they were based in Lower Hutt.

If you wanted a car back in the day the name El Cheapo came to mind.
I used to mow Pat's lawn in Woburn in the late 80's.
I went to buy a sporty car off him about 11 years ago and he said good car! but It had low power lol.

[silverblizzard888]

There was only one comparable car model that both stocked, the nearest price comparisons with El Cheapo:

2013 Toyota Aqua Hybrid:

El Cheapo 91,245km
$13,995

2 Cheap Cars 91,843km
$11,164


El Cheapo cars in Porirua apparently very busy these days

Pat Baker kept saying the years theres plenty of punters wanting cheap cars and if watch margins plenty of money to be made

Maybe Pat should float El Cheapo

Pat was indeed right, plenty of money to be made if you watched your margin ;)

2013

[percy]

Well fellow 2 Cheapers it is great seeing our company as NZX's Top Weekly Gainer,up 21 cents or 55.26%.

[Rawz]

Well fellow 2 Cheapers it is great seeing our company as NZX's Top Weekly Gainer,up 21 cents or 55.26%.

Really pleased and excited to see it reach fair value.

Thanks again to you Percy for highlighting this one :)

[winner69]

Really pleased and excited to see it reach fair value.

Thanks again to you Percy for highlighting this one :)

Fir value is another 100% away

[RupertBear]

Well fellow 2 Cheapers it is great seeing our company as NZX's Top Weekly Gainer,up 21 cents or 55.26%.

Note to self - when the Percy train is leaving the station jump on board for the ride :D

[silverblizzard888]

Note to self - when the Percy train is leaving the station jump on board for the ride :D

Not too late to catch the train, only halfway to its destination!

[Rawz]

Fir value is another 100% away

Yes sorry I mean I’m exited to sit here on already large gains and watch it get to fair value. Todays SP is far from fair value :)

[silverblizzard888]

I was just browsing 2 Cheap Cars youtube channel and watched one ad from 3 years ago, it showed they had 17 branches? Thats quite a change to drop to 12.
Closed branches come from 1xDunedin, 1x Christchurch, 1x Wellington, 1x Napier and 1x Hastings.

3 year old ad: https://www.youtube.com/watch?v=NLLw_eDh_88
14678

[percy]

I was just browsing 2 Cheap Cars youtube channel and watched one ad from 3 years ago, it showed they had 17 branches? Thats quite a change to drop to 12.
Closed branches come from 1xDunedin, 1x Christchurch, 1x Wellington, 1x Napier and 1x Hastings.

3 year old ad: https://www.youtube.com/watch?v=NLLw_eDh_88
14678

I expect they will be able to reuse the same advert in 2 or 3 years time.
May just have to alter a couple of locations....lol.

[Rawz]

I was just browsing 2 Cheap Cars youtube channel and watched one ad from 3 years ago, it showed they had 17 branches? Thats quite a change to drop to 12.
Closed branches come from 1xDunedin, 1x Christchurch, 1x Wellington, 1x Napier and 1x Hastings.

3 year old ad: https://www.youtube.com/watch?v=NLLw_eDh_88
14678

I wonder if online sales changed things. Or merged some smaller sites into larger sites in some cities?

[silverblizzard888]

I expect they will be able to reuse the same advert in 2 or 3 years time.
May just have to alter a couple of locations....lol.

They can expand while cutting their marketing budget, massive savings!



I wonder if online sales changed things. Or merged some smaller sites into larger sites in some cities?

Yeah quite possible the logistics made some locations inconvenient at the time and merging other sites. Could also have been because of covid too since it was back in 2020 before their listing.

[silverblizzard888]

We have a new 11 month high with a 62 cent closing price. 2CC having a pretty good run appearing as one of NZX's top 5 gaining stock most days in the last couple of weeks.

[Rawz]

Could see the SP float in the 60cent range waiting for half year and dividend announcement to help drive it higher.

Currently priced on a forward P/E ratio of 6.24 vs TRA on 9.50.
If 2CC trades on same earnings multiple as TRA it would have a SP of about $0.95 or 50% higher than today......

Given current market i think best path for 2CC is payout 80% of earnings and reinvest the rest for controlled expansion.

8 cent dividend on todays 63 cent SP would be solid 12.7% yield

[nztx]

We have a new 11 month high with a 62 cent closing price. 2CC having a pretty good run appearing as one of NZX's top 5 gaining stock most days in the last couple of weeks.


65c close today .. lots of market love for 2CC

[Rawz]

Scratch what i said yesterday... looks like its going to push on to 70 cent range :t_up:

[winner69]

Scratch what i said yesterday... looks like its going to push on to 70 cent range :t_up:

And then 80 cents next week …for certain

[silverblizzard888]

67 cent closing price, thats a 12 month high.

[percy]

Just when I thought the share price trajectory had stopped, a buyer for 170,000 at 67 cents cents has appeared.
Be interesting seeing what happens today.

[silverblizzard888]

Just when I thought the share price trajectory had stopped, a buyer for 170,000 at 67 cents cents has appeared.
Be interesting seeing what happens today.

Yeah surprised to see such a large order come in, hard to fill that order unless Eugene decides to step up. Should provide some support for the price and maybe even help give the share price a massive boost this week.

[percy]

Yeah surprised to see such a large order come in, hard to fill that order unless Eugene decides to step up. Should provide some support for the price and maybe even help give the share price a massive boost this week.

I do not know whether I can cope with another massive boost.?,,,,,,,,,,,,,,,,,,,,,,,,but I will try.....lol

[silverblizzard888]

I do not know whether I can cope with another massive boost.?,,,,,,,,,,,,,,,,,,,,,,,,but I will try.....lol

Big orders moved to 68 cents, looks like they were late to the party and want in!

[Rawz]

With fair value still some 40%-50% away (based on what peers are trading at) maybe late to the party but still plenty of gains on the table. Happy to sit back and watch as i have had my fill

[silverblizzard888]

Share price at 70 cents, but big order disappeared without getting their fill.

[winner69]

Up she goes again …train didn’t stay at that station for long …..choo choo toot toot

[nztx]

Closing Bell today:

$0.710

+ $0.050 / +7.58%

52 Week Change: $0.237 / 46.48%

[silverblizzard888]

Seems Eugene only comes to sell when he needs money from his piggy bank to expand NZ cheap cars.

https://autotalk.co.nz/nz-cheap-cars-opens-new-branch-on-aucklands-north-shore/

Looks like a bit of resistance in the share price above 70, will indeed be hovering around in the 60s for a while longer.

[Rawz]

Might be able to get a second bite of the pie? Doubt it.. but ya never know

[silverblizzard888]

Might be able to get a second bite of the pie? Doubt it.. but ya never know

Its a good pie when you want a second bite! Could drift a little until we have confirmation of second quarter results and an interim dividend.

[bull....]

the party over ? major s/h sold major holding at 32c

[blackcap]

the party over ? major s/h sold major holding at 32c

What goes up must come down?

[silverblizzard888]

Eugene just wanted to get out and David offered to buy all his shares for 32 cents. Probably the quickest way given the illiquidity of the stock. Given the average traded volume was 36,443 shares and his holding of 13,679,934 shares would have taken 75 weeks to sell out assuming no other sellers, which if we factor in other sellers that it might have taken him 2 years at the current volume to sell out. Maybe some good faith pricing to his fellow co-founder too.

[bull....]

Eugene just wanted to get out and David offered to buy all his shares for 32 cents. Probably the quickest way given the illiquidity of the stock. Given the average traded volume was 36,443 shares and his holding of 13,679,934 shares would have taken 75 weeks to sell out assuming no other sellers, which if we factor in other sellers that it might have taken him 2 years at the current volume to sell out. Maybe some good faith pricing to his fellow co-founder too.

why would you sell at 32c if the companies worth heep's more ? says to me it was just a momentum trade in a very thinly traded stock. in these stocks you need to make your dough and get out quick

[silverblizzard888]

why would you sell at 32c if the companies worth heep's more ? says to me it was just a momentum trade in a very thinly traded stock. in these stocks you need to make your dough and get out quick

Eugene has his business NZ Cheap Cars that im sure he believes the capital would grow quicker there than waiting for the share price to recover and slowly sell down. David who is already a major shareholder with plenty of stock is happy to buy him out. At the end of the day the financial performance of the business is what matters. The quick jump in the stock price was partly based on momentum since we are only one quarter of the way into their guidance, so there is still risk that they may not achieve their guidance. Main sell down will be profit takers who don't want to wait for their dividends and who can blame them, the share price is 100% in a month based on todays 56 cent pricing.

I'm a buyer all day at 32 cents if it ever came back that low.

[Rawz]

There is really only one reason why Eugene would sell at 32 cents and thats because he believes he can make more money putting the capital into NZ Cheap Cars.

Like Silver says, the EPS and DPS will price this stock.

I honestly dont mind which way it goes because i had a big buy order in (big for me) early that i only partially filled. So if it drops down to 30 cent range by some miracle and i seriously doubt it will happen, then ill buy some more.

[silverblizzard888]

David will have 34,586,927 after buying Eugene out, that leaves 10,967,573 shares for everyone else.

Minus Director Samantha Sharif's 238,000 shares and CEO Paul Millward's 140,000 shares thats 10,589,573 shares left. Not a lot of shares left for the float.

[percy]

Eugene has his business NZ Cheap Cars that im sure he believes the capital would grow quicker there than waiting for the share price to recover and slowly sell down. David who is already a major shareholder with plenty of stock is happy to buy him out. At the end of the day the financial performance of the business is what matters. The quick jump in the stock price was partly based on momentum since we are only one quarter of the way into their guidance, so there is still risk that they may not achieve their guidance. Main sell down will be profit takers who don't want to wait for their dividends and who can blame them, the share price is 100% in a month based on todays 56 cent pricing.

I'm a buyer all day at 32 cents if it ever came back that low.

It is a win win situation for Sena and Williams.
Sena has bought the big over hanging shares.
Wiliams can now move on.
For me as a shareholder I am pleased the overhang of shares has gone.Makes the share register nice and tidy. One major shareholder "razor" focussed..
Wife and I already have substantial holdings,so no need to be any more 2cheap shares.
We will be voting in favour of the sale.

[Rawz]

Sena must be laughing all the way to the bank!!

[Snoopy]

Eugene has his business NZ Cheap Cars that im sure he believes the capital would grow quicker there than waiting for the share price to recover and slowly sell down. David who is already a major shareholder with plenty of stock is happy to buy him out. At the end of the day the financial performance of the business is what matters. The quick jump in the stock price was partly based on momentum since we are only one quarter of the way into their guidance, so there is still risk that they may not achieve their guidance. Main sell down will be profit takers who don't want to wait for their dividends and who can blame them, the share price is 100% in a month based on todays 56 cent pricing.

I'm a buyer all day at 32 cents if it ever came back that low.

If David Sena wants to go from 46% to 76%, i.e. assume majority control of the company, by buying a block of shares at 32c, then under the NZ takeover code, will he not have to offer all other shareholders 32c for their shares as well? (not that the remaining shareholders that hold 24% of the company will be required to accept such an offer).

SNOOPY

[silverblizzard888]

If David Sena wants to go from 46% to 76%, i.e. assume majority control of the company, by buying a block of shares at 32c, then under the NZ takeover code, will he not have to offer all other shareholders 32c for their shares as well? (not that the remaining shareholders that hold 24% of the company will be required to accept such an offer).

SNOOPY

Thats only required if they hold 90% or more shares after the acquisition. The current move to over 50% shareholding is within compliance since the acquisition is on an existing parcel of shares that need shareholder approval.

Takeover code chat below:

14691

[silverblizzard888]

It is a win win situation for Sena and Williams.
Sena has bought the big over hanging shares.
Wiliams can now move on.
For me as a shareholder I am pleased the overhang of shares has gone.Makes the share register nice and tidy. One major shareholder "razor" focussed..
Wife and I already have substantial holdings,so no need to be any more 2cheap shares.
We will be voting in favour of the sale.

Its a positive steep forward for the stock not having the possibility that every time the stock goes up that someone might sell down heavily. Also David has almost twice the incentive to work harder. In any vote where David was to abstain from voting you might have some considerable influence on the vote ;)

[Rawz]

So Sena got another 13.4m shares on a forward P/E of 3.2 based on mid point of FY24 guidance $4.2m-$5m npat. Or EPS 0.10
Current div policy is 65% so 6.50cents/32cents= 20% div.

Wow what a deal

[blackcap]

I will most likely be voting my shares against this deal. Never really that good (from a minority shareholder perspective) to have very large cornerstone shareholder with over 50% of the stock is it....

[silverblizzard888]

So Sena got another 13.4m shares on a forward P/E of 3.2 based on mid point of FY24 guidance $4.2m-$5m npat. Or EPS 0.10
Current div policy is 65% so 6.50cents/32cents= 20% div.

Wow what a deal

Hes getting a great deal, I guess thats what you call mates rates.


I will most likely be voting my shares against this deal. Never really that good (from a minority shareholder perspective) to have very large cornerstone shareholder with over 50% of the stock is it....

Its good if they are driven to make the business succeed. Sena was the one who kick out the under performing board and management. Better he holds the shares than Eugene.

[Jaa]

None of this makes much sense.

Eugene sold me a small parcel at 26.5c. Amazing to see the transaction in a SSH note. I would pay more than 32c for some more.

Why did Eugene crash the price?
Why did he stop selling when the price started to go up?
Why sell to Sena now instead of continuing to sell on market at a higher price or to institutions via a book build?
Does Sena really have $4.3m free to buy out Eugene?
If so, why didn't Sena just buy him out last year?

Only explanation I have is the two are still reasonable friends and their dispute was just over business strategy.

Eugene actions seem irational. Why give away millions of dollars in wealth?

[Fortunecookie]

Hes getting a great deal, I guess thats what you call mates rates.



Its good if they are driven to make the business succeed. Sena was the one who kick out the under performing board and management. Better he holds the shares than Eugene.

I don't think the breakdown in relationship between David and Eugene as bad as perceived.

2CC expanded their North shore site by 25%. The adjoining site was vacant, now it's occupied by NZ cheap cars. So some kind of agreement was reached between the three parties. Plenty speculation about the share price agreement.

[Baa_Baa]

Maybe ... perhaps consider it a little more.


None of this makes much sense.

Eugene sold me a small parcel at 26.5c. You don't know for sure that it was Eugene that sold, the market is not transparent on who the buyer or the seller is. Amazing to see the transaction in a SSH note. I would pay more than 32c for some more. I'd think more about that, especially after this development.

Why did Eugene crash the price? He's happy with the price, willing seller, willing buyer, it's what he thinks they're worth. Which may be a worry to retailers who have bought higher.

Why did he stop selling when the price started to go up? Liquidity, there's not enough volume on market to make a move as substantial as this.

Why sell to Sena now instead of continuing to sell on market ... liquidity again ... at a higher price or to institutions via a book build? This is not an insto stock, would be surprised if they gave it a second glance.

Does Sena really have $4.3m free to buy out Eugene? Probably, or the deal wouldn't have been published for consideration by investors.

If so, why didn't Sena just buy him out last year? Who knows, it's not worth speculating on, now's the time to focus on the now.

Only explanation I have is the two are still reasonable friends and their dispute was just over business strategy. Maybe, but does that have any bearing on the situation now?

Eugene actions seem irational. Why give away millions of dollars in wealth? Can't "give away" something you haven't got, consider what his shares cost him, versus what he get's selling them at this price?

[silverblizzard888]

None of this makes much sense.

Eugene sold me a small parcel at 26.5c. Amazing to see the transaction in a SSH note. I would pay more than 32c for some more.

If you look at his most recent disclosures he sold 756,478 shares (19/6/23) for $211,296 averaging at 27.9 cents per share and in another disclosure (9/6/23) 554,417 shares for $155,940 averaging at 28.1 cents, that disclosure showed over many days that each day he sold the price would go lower, so it was hard to exit without having a material affect on the share price. Overall he was selling 1,310,895 shares at around 28 cents, which is much lower than 32 cents.

Why did Eugene crash the price?

There was no way of getting out without taking lower pricing.

Why did he stop selling when the price started to go up?

The price went up on relatively small volume, but I reckon Sena had made the offer weeks ago when the share price was in the 30s and its only now after the paperwork has been done that its been disclosed.

Why sell to Sena now instead of continuing to sell on market at a higher price or to institutions via a book build?

If the above was accurate and Eugene made the deal to sell out before the price rise, a bookbuild would have achieved a similar pricing and perhaps hes alright taking less if he was selling to his fellow co-founder.

Does Sena really have $4.3m free to buy out Eugene?
The business has been profitable for a long time now, making millions every year, both founders made good money. Either that or Sena took out a loan to buy the shares.

If so, why didn't Sena just buy him out last year?
Maybe Eugene didn't want to sell out or they weren't on speaking terms after Sena ousted everyone from the company.

Only explanation I have is the two are still reasonable friends and their dispute was just over business strategy.

Seems like they made up after cooling off. Sena probably saw Eugene selling out last month and decided to offer him a buyout.

Eugene actions seem irational. Why give away millions of dollars in wealth?

I think the decision was rational at the time when the arrangement was made and the share price was low. Going by all the details it would have taken a considerable amount of time to get to this stage and announce this disclosure to the market. Also hes more interested in expanding his new business New Zealand Cheap Cars.

At least thats what I assume to be the case.

[percy]

https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/x75hQhxH6vfvajYa5ijYjQ/mx0nNIS86koCXcfFddrrHA

[clearasmud]

Just bought some more of these at 47c.
Seems cheap if the can make 5 million and distribute 3 million that's a yield of 13.5%

[winner69]

Buyer at 41 cents

[Rawz]

Might head back to 32cents :scared:

[Sideshow Bob]

Might head back to 32cents :scared:

Percy will be ready to back the hatchback from 2CC up again......:laugh:

[winner69]

It’ll be over a buck one day

[alokdhir]

It’ll be over a buck one day

Sure mate why not ...with your endorsement sooner then latter ....:t_up:

[percy]

Buyer at 41 cents

Wonder who that may be.?.....lol.

[RupertBear]

Wonder who that may be.?.....lol.

Hmmm let me guess…someone who is already well positioned…looking to improve their position :D