2CC - 2 Cheap Cars Group

[Buzz]

And with PHEV, potentially RUC and tax on petrol, how are "they" going to get around that - e.g. how many Km's done on electric  to work out the RUCs??

It's less about "how" they will, and more about 'they' will, figure something out. The folks at MOT (responsible for the legislation and policies) are busy at their work trying to achieve a shift in buyer and importer behaviour. They have to, it's in the legislation. They won't stop either, unless the government mandates a change in legislation.

Anyone invested in the car market (and soon heavy vehicles as well) really does need, imo, to factor in that the whole market in recent times has been massively distorted by the governments' social engineering experiments with removing or lessening user charges during Covid and introducing clean car schemes penalising 'dirty cars' and rewarding 'clean cars'. These will all change, either slowly if Labour get back in, or very quickly if National get in.

Whether or not you agree with all the background government legislated interventions is irrelevant, they have happened, and the market is a very different place now from what it was a couple of years ago. Kudos to the vehicle industry for adapting to the changes and some prospering whereas others have not.

As time goes by, these legislative interventions will move and shift or even be removed, and the vehicle industry will change with it. The windfall profits that we see in the past couple of years will be replaced by business  as usual. It's only a question of who comes out the other side with the best business model when all the interventions and profit enablers have been replaced by no incentives anymore, and taxes on vehicles that don't currently exist. Importer and buyer behaviours will continue to change.

But either way, it will change again and again. The thing I'm trying to say is that vehicle industry business performance now is not reflective at all of business performance in the future, it is a mirage as it has occurred in times of unprecedented interventions by the government with incentives and penalties, that in time will go away, maybe slowly, but possibly quickly.

That means, a valuation analysis of the vehicle importers and retailers now, is not, at all, a reliable indicator of their performance in the future.

[Rawz]

Agree.. has been a tough couple of years for used car retailers. The regulatory changes has caused a drop in the used car market total sales. FY23 number of used car sales is down 20% odd from FY19 levels.

Turners love to say 20% of the NZ vehicle fleet is 20+ years old.

All looking good for 2CC to pick up their fair share of increased used car transactions going forward.

[Rawz]

Just want to add that if this was trading with a $80m market cap it would be a totally different story.. the 2CC bulls wouldn't even exist and we wouldn't be talking about it here or the other place.

It's a $12-$$15m stock.. deep value play. Will do $5m npat and I calculate $6m FCF last year once adding back inventory to bring it to their steady state of $10m.

Once the value gap has been covered it will all go quiet and sit on page 8 of the forums..

[Basil]

Good post Buzz.  The new clean car standard is truly bizarre.
Did nearly 300 km's in the wife's new, latest model diesel Sportage yesterday, (medium SUV) and with 2 large people on board and a very large dog, we averaged a truly remarkable 5.8 liters per 100 km's and that's with me driving with my lead foot ! I've never seen fuel economy like that in my life before and they now whack a vehicle with that remarkable economy with a dirty vehicle tax of $2,825.  That's absolutely bonkers.
If this sort of madness endures it's going to have a significant effect on the vehicle market.

The current madness only applies to vehicles first registered when imported into N.Z. so that confers a significant advantage to Turners who buy the vast majority of their vehicles locally.

[winner (n)]

Knocking on 50 cents door

Over $1 seems inevitable from here

[lorraina]

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

[Left Field]

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

Despite a lot of contrary yapping you appear to have read this one well. Congratulations Percy. Long may it last.

[Rawz]

Possibly a bit of analysis paralysis..

End of the day 2CC sell used cars..

[lorraina]

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

[lorraina]

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

The upward share trajectory continues unabated.
Currently a buyer at 65 cents and a seller at 68 cents [only has 250].
Next seller is at 75 cents with 5,000 to sell.

[blackcap]

Massive tailwinds in Q1 and Q2 that won't repeat.
CEO has basically no experience in the sector and is basing his forecast on trading conditions when strong tailwinds prevailed. Caution required.

Man you really are nana negative pants on this stock. Lets not be too one eyed.

[lorraina]

https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/x75hQhxH6vfvajYa5ijYjQ/mx0nNIS86koCXcfFddrrHA
Other listed companies with major shareholders includes;
AFT 68.69....AGL,50.79% BGP,77.95%..DGL,66.11%...JLG,70.83%+,..MCK,70.79%.

[winner (n)]

Incredible upgrade in guidance today ......~20% more than previous guidance ....which in itself was rather incredible

Don't cheap and recession go together in some sectors ....to produce incredible results

[lorraina]

https://www.rnz.co.nz/news/business/497565/used-car-dealer-2-cheap-cars-revises-full-year-profit-expectations-after-strong-sales

[Basil]

Can't help myself wondering if he's factoring in that National are odds on favorite to win the election and have stated they will remove all incentives on hybrids PHEV's and EV's which seems to be what 2CC's mostly stock.  I suppose in the short term this might boost sales of that type of vehicle pre-election but after that...

If a company has a multi year track record of issuing forecasts and meeting them and / or getting close it adds a fair bit of cred to the veracity of their forecasting but that's not the case here and simply extrapolating 5 months' worth of sales and EBIT to a full year, (which looking at the numbers here seems to be the case), seems fraught with forecasting risk especially when its well known in the market the clean car scheme has provided strong tailwinds to the motor vehicle sector this financial year to date.  Good luck to shareholders.  This is not a proven enough investment for me to have trust, but each to their own.