SA’s biggest taxi financier, Transaction Capital, has flagged a rise in earnings to above pre-pandemic levels, saying though it has taken a hit from taxi violence and civil unrest, the industry remains indispensable to economic productivity.
Growth in headline earnings per share for the year ending September should exceed 2019 levels by about 16%, the group said in a pre-close update, adding it expects to pay a dividend, while its online vehicle business WeBuyCars turned in a better-than-expected performance in its second half.
Transaction Capital’s core operations are SA Taxi, which provides finance and insurance to minibus taxi operators, and Transaction Capital Risk Services (TCRS), which is involved in debt collection and payment processes. Competition authorities approved the group’s additional investment into WeBuyCars in August, bringing its stake to 74.9% and providing a bump in earnings for two months.
“We expect future earnings from this division to exceed our expectations at the time of making our initial investment, given favourable market trends,” the group said. The pandemic has boosted the second-hand car market, as more consumers are opting to avoid paying a premium for new vehicles. They are also increasingly shopping online.
SA Taxi was showing recovery, Transaction said, with earnings near 2019 levels, though civil unrest in July severely disrupted transport services, while taxi violence in the Western Cape and Covid-19 restrictions also proved a drag.
From March to May 2021, vehicles financed by SA Taxi travelled 92% of pre-Covid-19 distances on average. Average distances travelled were between 82% and 92% from June to August, which had a knock-on effect on SA Taxi’s clients’ ability to afford finance instalments and insurance premiums.
Transaction Capital, however, said it had a strong position in the market, where it has a track record as a “pioneer”.
“Spending on minibus taxi transport is largely non-discretionary, making the industry defensive in tough economic conditions,” the statement said.
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