Zeda, which owns Avis and Budget car rental businesses, expects its profit to have risen as much as 20% in the year ended September compared with the same period a year ago.
The trading update sent its share up 14.5% to R12.40, the biggest one-day gain since Zeda listed on the JSE nearly a year ago after it was hived off of industrial conglomerate Barloworld.
Still, the rally is off a low base given that Zeda listed at about R18 in mid-December. The stock has largely flown below investors’ radar for the most part despite the pick-up in international business and leisure travel, as well as local tourism following the Covid-19 pandemic.
CEO Ramasela Ganda said Zeda had also been innovating to reduce its reliance on cyclical tourism-related activities. Three weeks ago, Avis Fleet entered the flexible car rental market with the launch of iLease, which gives consumers the option of using a vehicle for any duration between 12 and 48 months.
While vehicle leasing and rentals have been around for decades, iLease offers flexible leases or rental terms as opposed to fixed ones.
Ganda has said iLease aims to respond to the growing need of consumers for choice and convenience. But the iLease solution also spares consumers the hassles of owning and maintaining the vehicles, especially in a higher interest environment.
iLease will be competing with other local start-ups such as Naspers-backed Planet42, which is looking to further democratise the passenger car market.
Zeda's subscription-based model enables individuals and companies that use its services more regularly and provide a predicable revenue stream over time based on the given contracts.
For the year ended September, Zeda expects its headline earnings per share to rise to between R3.73-R3.90 versus R3.25 in the same period a year ago. This is despite the increase in interest rates, which it said led an increase in net finance costs of more than 60% or R320m.
Zeda also announced that it settled its unbundling legacy debt of R1.55bn, leaving it with net debt of less than R5.1bn.
Its ebitda, or core profit, will rise between 10% and 15% year on year.
“Zeda has delivered a stellar performance in its first year of trading as an independent listed entity, despite a challenging operating environment,” it said in a statement.
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