2CC - 2 Cheap Cars Group

[lorraina]

Improved momentum into FY26 final quarter

2 Cheap Cars Group (2CC) has delivered an improved trading performance through the latter part of the third quarter and into the early fourth quarter of FY26. This has been underpinned by better vehicle margins and robust finance and insurance (F&I) penetration rates, reflecting the Group's continued focus on operational excellence and customer value.

The recent Government adjustments to carbon credit rates under the Clean Car Standard are further bolstering margins. As inventory accepted under the new settings is sold, these benefits are set to continue, delivering an uplift in margins through the fourth quarter of FY26.

On the back of this improving performance, 2CC now anticipates second-half FY26 net profit after tax (NPAT) to reach or exceed $2.0 million, with full-year FY26 NPAT expected to be at least $3.0 million. These forecasts remain subject to final audit and standard year-end adjustments.

While the Board maintains a prudent stance on the broader economic environment, the Group's recent profitability gains provide momentum as FY26 concludes.

[winner (n)]

I have 2CC having a PEG in excess of 2 .....hmmmm

[lorraina]

Does not look good for their PEG for year ending 31/3/2026.
However, the trading momemtum has returned with a good second half expected after the Govt changes that affected the poor first half,were altered on 1/01/2026.
I expect the year starting 1/4/2026 will see the momentum continue,and the PEG will go back under 1.[Perhaps .6].
I also expect ROE [currently 15.67%] and Gross Dividend yield [currently 8.008 %] will increase too .I am expecting a gross dividend yield of 10 % plus.
We have not yet seen the full results of their updated procurement [Japanese buying] and logistics,adding a lot more cars for them to sell.Still a work in progress.
What has been good to see is their increase in both finance and insurance penetration.
With an excellent web site I am looking forward to seeing stronger marketing from 2CC in future.

[lorraina]

An excellent second half after the difficult first half.
• Revenue and income: $81.7m, down 0.3%
• Gross margin: $17.4m, down 2%
• Vehicle sales: 7,239, compared with 7,675 units in FY25
• EBITDA including finance income: $8.1m, up 1%
• Net profit after tax (NPAT): $3.2m, compared with $3.3m in FY25
• Underlying earnings per share (EPS): 7 cents per share (cps), unchanged from FY25
• Final gross dividend: 3.99 cps
• Total FY26 gross dividend: 6.14 cps vs 6.03 cps

[lorraina]

Trading update

2 Cheap Cars Group Limited (NZX:2CC) today provided an update on its recent trading performance.

As outlined in the Company's FY26 results announcement (29 May 2026), trading momentum improved materially through the second half of FY26. This was driven by stronger vehicle margins, improved procurement conditions, disciplined cost control and robust finance and insurance penetration rates.

This momentum has continued into the early part of FY27.

The Company recorded net profit after tax (NPAT) of approximately $0.6 million in March 2026, the final month of FY26. Unaudited management accounts for April and May 2026 also each show NPAT of approximately $0.6 million. Trading through the first half of June has remained positive.

The Board considers this recent performance encouraging, particularly when compared with FY26 NPAT of $3.2 million for the full year to 31 March 2026. However, the Board notes that the current trading reflects a short period and may not be representative of the balance of FY27.

The Company is not providing FY27 earnings guidance at this time.

Chairman Michael Stiassny said the recent trading performance reflected the Group's focus on disciplined inventory management, procurement quality, finance and insurance execution, and operating cost control.

"Recent trading has been encouraging, with the business entering FY27 with positive momentum. The Board believes it is appropriate to update the market on the Company's current trading position, however it is too early to extrapolate this performance across the full financial year.

"The operating environment remains unpredictable, and our focus is on maintaining disciplined execution and protecting margins," he said.

The monthly NPAT figures referred to in this announcement are based on management accounts. The March 2026 figure forms part of the Company's audited FY26 result announced on 29 May 2026, while the April and May 2026 figures are unaudited. References to June trading are based on trading information available to date.

Ends

[Plata]

Will be interesting to see how that holds up assuming gas prices normalize. Is this a one off frenzy as people buy more economical cars or something more sustainable. I'm holding but think it is more the former.

[lorraina]

Possible reasons for 2CC's improved performance.
Stronger brand and marketing,particularly in digital media,resulting in better results from advertising spend.
Excellent web site.
David Sena spending more time in Japan with 2CC's buyers,resulting in better procurement.2CC react straight away to changes in consumer requirements.
Better banking arrangements for Japan car buying.
Improved shipping logistics.
Improved compliance,including car preparation for sale, combining in house and out sourced suppliers.
Improved staff training achieving  higher finance and insurance penetration ,resulting in higher commission revenue.
Higher Immigration..[Why this works I do not know.]
Iran War resulted in buyers looking for smaller more economical cars,and hybrids.
Hybrids were  52% to 53% of the cars 2CC had for sale before the war started.This % fell to the low 30s,as hybrid sales took off,and has slowly increased to just over 40% today.
2CC have increased the number of vehicles they have for sale from around 400 in early January to 597 today.ie increase of 49%.
To sum up I think 2CC are providing what the market wants,good quality, reliable,economical vehicles at a fair price..