Transaction Capital’s Fiscal Triumph: Exceeding Expectations, SA Taxi’s Shift, and WeBuyCars’ Surprising Rebound Unveiled

  • Transaction Capital's FY2023 trading statement reveals better-than-expected figures, exceeding projections across key metrics.
  • Robust performance in headline earnings, EPS, and net asset value highlights the company's financial resilience.
By Lethabo Ntsoane

Transaction Capital Limited, a key player in South Africa’s financial landscape, has recently released its full-year trading statement for the fiscal year ending September 30, 2023.


Financial Snapshot: Expected vs. Actual Performance

Here’s a comprehensive breakdown of the financial performance, comparing the expected and actual figures for the full year:

MetricExpected RangeActual
Headline Earnings-R784m to -R703mR1,621m
Earnings Per Share (EPS)-103.3c to -92.5c224.4c
Basic Earnings-R958m to -R874mR1,676m
Basic EPS-126.1c to -114.9c232.0c
Core EarningsR220m to R282mR1,246m
Core EPS29.0c to 37.2c172.5c
Net Asset ValueR8,624m to R9,211mR11,729m
NAV Per Share1,130.3c to 1,207.3c1,548.6c

Business Portfolio: A Closer Look

Underlying Businesses

Transaction Capital holds majority stakes in three distinct businesses: Mobalyz (SA Taxi and Gomo), WeBuyCars, and Nutun.

  1. SA Taxi Restructuring:
    • Responding to industry shifts, SA Taxi ceased financing new minibus taxis, focusing on pre-owned vehicles.
    • Economic challenges persisted, leading to underperformance in H2 2023.
    • Auto refurbishment and repair business reclassified as part of continuing operations.
  2. WeBuyCars Performance:
    • Initial guidance suggested a 20% YoY earnings decline, but a robust last trading quarter improved H2 2023 earnings.
  3. Nutun’s Steady Course:
    • Nutun’s FY2023 performance aligned with management’s pre-close update, indicating stability.

Challenges and Strategies: SA Taxi’s Journey

Challenging Economic Environment

SA Taxi faced economic headwinds impacting operators’ ability to afford new minibus taxis, prompting a strategic shift. The decision to finance only pre-owned vehicles aimed to enhance affordability in this market segment.

Restructuring SA Taxi:

  • Aggressive restructuring in March 2023 responded to an industry-wide structural shift.
  • Focus shifted to pre-owned taxis, with a reduction in auto refurbishment and repair facilities.
  • Persistent economic challenges led to underperformance in the latter half of 2023.

Balance Sheet Restructuring:

  • Progress made in restructuring SA Taxi’s balance sheet.
  • Long-term viability tied to successful restructuring supported by existing debt funders.
  • Commitment to SA Taxi remains, but no shareholder funding beyond March 2023.

WeBuyCars: Surprising Turnaround in H2 2023

WeBuyCars, initially projected for a 20% YoY earnings decline, witnessed a positive turnaround in H2 2023, exceeding expectations. The last trading quarter played a crucial role in improving overall earnings, showcasing resilience in a challenging economic climate.


Nutun: Consistent Performance

Nutun’s performance for FY2023 remained in line with the guidance provided in the pre-close update. This consistency reflects a stable operational environment for Nutun within the Transaction Capital portfolio.


Upcoming Milestone: Results Announcement

Transaction Capital will unveil its full-year results for the period ending September 30, 2023, on Tuesday, December 5, 2023. Shareholders are encouraged to register for the live results presentation, offering insights into the company’s financial health.


Conclusion

Transaction Capital’s trading statement reflects a mix of challenges and successes in a dynamic economic landscape. The strategic response to industry shifts in the minibus taxi sector demonstrates adaptability, and the positive turnaround in WeBuyCars showcases resilience. As the company continues its journey, the upcoming results announcement on December 5, 2023, will provide a more in-depth look into Transaction Capital’s financial standing.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo