Bapcor Limited
This report is an updated version of the report published on the 5thMay 2022 at 3:55 PM GMT.
BAP Details
Change in Substantial Shareholding: Bapcor Limited (ASX: BAP) functions in the automotive aftermarket industry and sells vehicle parts, accessories, automotive equipment, services, and solutions. BAP operates through segments: retail, specialist wholesale, trade, and service.
- On May 3, 2022, Perpetual Limited has increased its substantial shareholding from ~6.97% to 8.56% of voting rights.
- On March 8, 2022, Challenger Limited ceased to be the substantial shareholder in the company.
- Brad Soller has been appointed as Interim Chief Financial Officer, which will be effective on immediate basis.
Half Yearly Key Metrics; (Analysis by Kalkine Group)
Key Risks: Shortages of semi-conductor may halt topline growth. Supply chain concerns across the global may impact the margins in the near-term.
Outlook: As per its half-yearly report, Bapcor will continue to focus on delivering pro forma earnings matching that of FY21 and its 2HFY22 is expected to better than the 2HFY21, subject to no further material COVID impacts of lockdowns or restrictions. The company delivered pro forma NPAT of $61M in-line with the full-year guidance furnished at the AGM in October 2021.
Valuation Methodology: Price to Earnings Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: The stock of BAP gave a negative return of ~7.01% in the past three months and a negative return of ~22.97% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $5.970 - $8.600. The stock has been valued using the P/E-multiple-based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount than its peers’ median P/E multiple, considering the impact of lockdowns during COVID-19, and supply chain disruptions. For this purpose of valuation, a few peers like ARB Corp Ltd (ASX: ARB), National Tyre & Wheel Ltd (ASX: NTD) and Supply Network Ltd (ASX: SNL) have been considered. Considering the current trading levels, enhanced logistics capabilities, growth in sales, higher margins, improved liquidity, revenue and NPAT in line with the guidance, indicative upside in valuation, and associated key business risks, we give a ‘Buy’ rating on the stock at the current market price of $6.340, 11:30 AM (GMT+10), Sydney, Eastern Australia, as of 5th May 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
BAP Daily Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.
Technical Indicators Defined: -
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.
Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.
There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.
You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.
The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.
Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.
Please also read our Terms & Conditions and Financial Services Guide for further information.
On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.
Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.