A very minor downgrade on ironically something that is fundamentally positive for 2nd hand importers out of japan...the appreciation of the NZD/JPY. 2cc take out hedges locking in rates - that's a normal risk management practice and a good thing when the cross rate is at historic highs. The yen weakens even further - a good thing. Ironically because of the hedge it is now not effective as the company would be booking higher profits if it were doing things all at spot. that's just the way the cookie crumbles for currency hedges. but the strengthening of the kiwi to the yen is a net positive as the company will be able to purchase at spot and lock in even better rates. If the kiwi remains in an uptrend against the yen a small currency loss against hedges could remain a feature of future results - similar to companies like Skellerup - who hedge their forward currency commitments but are showing minor fx losses on hedges. But the question is this - if the kiwi fell dramatically against the yen and back to historic levels - holders would probably be pretty annoyed the company didn't have several years of future cover to lock in exceptional rates when it was at historic highs.
ex fx hedge guidance looks to be met, so no dropping other shoe in terms of trading post clean car discount removal. that's newsworthy in itself to a pocket of investors who like me wanted to see more run rate in a new regulatory environment.
FY24 guidance midpoint is now $6.4m representing 14 cents eps for the year.
This means 2CC is trading on a p/e today of 5.4.
Personally I think a P/E of 8 is fair based on the growth we will see over the coming years with the network expansion and higher finance and insurance incomes coming from higher penetration rates more in line with industry averages.
So fair value for me is 14cents eps x 8 = $1.12 sp or 47% higher than todays price.
While we wait for fair value a dividend will be paid of at least 60% of EPS.
(With the clean balance sheet and strong cashflows the payout ratio could be widened to 60-70% in line with TRA)
The gross dividend yield of 14eps*60%= 8.4cents/0.72= 11.67 dps.
This equals a gross dividend yield today of 15.4%
H1 gross dividend was 5.78 cents meaning H2 should be at least 5.9 dps
In the event of further tough times in the economy 2CC stands very well to benefit from more consumers falling down into their price bracket. I.e. times are tough this time we buy a cheap car instead of new or mid tier used.
Lastly balance sheet should be super clean with tonnes of cash sitting there.
My summary is this is a low risk with upside, high yield, solid hold through the recession stock
FY24 guidance midpoint is now $6.4m representing 14 cents eps for the year.
This means 2CC is trading on a p/e today of 5.4.
Personally I think a P/E of 8 is fair based on the growth we will see over the coming years with the network expansion and higher finance and insurance incomes coming from higher penetration rates more in line with industry averages.
So fair value for me is 14cents eps x 8 = $1.12 sp or 47% higher than todays price.
While we wait for fair value a dividend will be paid of at least 60% of EPS.
(With the clean balance sheet and strong cashflows the payout ratio could be widened to 60-70% in line with TRA)
The gross dividend yield of 14eps*60%= 8.4cents/0.72= 11.67 dps.
This equals a gross dividend yield today of 15.4%
H1 gross dividend was 5.78 cents meaning H2 should be at least 5.9 dps
In the event of further tough times in the economy 2CC stands very well to benefit from more consumers falling down into their price bracket. I.e. times are tough this time we buy a cheap car instead of new or mid tier used.
Lastly balance sheet should be super clean with tonnes of cash sitting there.
My summary is this is a low risk with upside, high yield, solid hold through the recession stock
Rawz,Guru Share Market Influencer.
Your post resulted in 2CC being the Top Gainer yesterday, being up 5.26%.
I'm hearing absolute horror stories from some customers who bought vehicles from this company. Not only that I'm hearing bad things from multiple Repco stores' employees as well. In fact, I've not heard one positive comment about them.
Staff were very professional and very helpful, a pleasure to deal with.
Reviewed by Alan W. Waiuku Mar 2024
Customer ServiceKnowledge & ExpertiseDealer FacilitiesFinance & InsuranceN/ATrade-in Process
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Helpful team. Answered all questions. Accommodated test drive quickly.
Reviewed by ABHISHEK S. Auckland Mar 2024
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Very helpful and patient staff. I interacted with John Agbayani, Andrew Baxendale, and another sales executive ( I think his name is also John) and they all were very helpful. I like the way they treat customers irrespective of how busy their day is.
Reviewed by KAPIL K. Auckland Mar 2024
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Fantastic service and knowledgeable staff. Andrew and his team was friendly welcoming and very helpful. The process was made super easy and fast!
Reviewed by Megan F. Auckland Mar 2024
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Really good customer service and very informative.
Reviewed by AGAAPAPALAGI T. Auckland Mar 2024
Reviewers would recommend this dealer to friends and family.?
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Originally Posted by Rawz
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