Stocks’ Details
Automotive Holdings Group Limited
Improved Performance in Automotive business:Automotive Holdings Group Limited (ASX: AHG) announced the company director Rob McEniry as new Chairman of the board, effected from 27 February 2018. The company has reported decent revenue growth of 7.5% to $2873.9 Mn in 1HFY18 from $2673.5 Mn in 1HFY17. The sales grew by improved growth of 8.2% in Automotive segment despite 4.7% decline in logistic segment as compared to previous corresponding period. However, EBITDA came down to $88.8 Mn in 1HFY18 against $90.1 Mn in 1HFY17. It was majorly impacted by lower finance & insurance product (F&I) gross income. However, NPAT for the six-months to 31 December 2017 was recorded at $40.7 Mn (down 4.1% pcp) which is in-line with the company’s expectation. The Company retained the interim dividend of 9.5 cents per share, fully franked, same as previous corresponding period. The company focuses on enhancing customer service and innovation which will support top-line growth of the company. Besides this, the company also focuses on cost reduction which will help to expand bottom line of the company in years to come. During the period, AHG announced to dispose its refrigerated logistic business to HNA International for an enterprise value of A$400 Mn on debt and cash free basis and it will be completed before 30 June 2018. The group is also lately getting some support from new car sales. Given the company’s focus and current progress on reducing costs, we give a “Hold” recommendation on the stock at the current market price of $3.72
1HFY18 Financial Performance (Source: Company Reports)
Bapcor Limited
Stellar Performance Continues:Bapcor Limited (ASX: BAP) is leading provider of automotive parts, accessories, automotive equipment and services in Australia. Given the sustained performance over the years, the group is on track to record a leverage ratio of <2x by 30 June 2018 (net debt for 1HFY18 stood at $337.1 Mn, representing a leverage ratio of 2.2x). BAP’s revenue during 1HFY18 was recorded at $616.1 Mn vs $435.1 Mn in 1HFY17, marking strong growth of 41.6% YoY. The revenue surged up by product mix growth during the period. Proforma EBITDA grew by 42.8% YoY to $70.2 Mn in 1HFY18 from $49.2 Mn in 1HFY17. On the margin front, Gross margin and EBITDA margin for 1HFY18 showed muted growth of 0.6 percentage point (pp) and 0.1pp to 45.6% and 11.4%, respectively in 1HFY18. Pro-forma NPAT amounted to $40.4 Mn in 1HFY18 from $27.8 Mn, up by 45.2% YoY. The increase in pro-forma NPAT reflects the impact of Hellaby and other acquisitions as well as the profit growth of Bapcor’s existing Trade and Specialist Wholesale business. EPS stood at 14.48 cps during the same period on the back of strong top-line and bottom-line growth. The financial performance led the group upgrade its dividend and its Dividend Reinvestment Plan will be in operation for the 2018 interim dividend. Further, the company is forecasting continued revenue and profit growth in 2HFY18 through underlying business performance that is supported by the benefits realised through business optimisation and store network growth. It’s previous full year guidance for FY18 remains unchanged at 30% growth in Pro-forma NPAT from its continued operations. Based on strong track record, healthy financials and burgeoning market share, we give a “Speculative Buy” on the stock at the current market price of $5.87
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Stellar Performance over the Years (Source: Company Reports)
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