Bapcor Ltd

Expects 30% NPAT growth on continuing operations in FY 18: Bapcor Ltd (ASX: BAP), the auto parts business group has been tracking well on accretive acquisitions and store expansion efforts. For FY 18, the group expects 30% NPAT growth on continuing operations. The company has been in the process of integrating Hellaby Automotive, that is now known as Bapcor New Zealand. BAP has plans to deliver between $8M to $11M EBIT of annual benefit per annum by 2020, including programs such as increased intercompany sourcing and private label programs. Further, BAP has reduced Hellaby corporate costs by over $5M per annum by winding down the Hellaby Holdings Limited head office. Moreover, BAP has completed the sale of non-core business of the Footwear and Contract Resources business (excluding North America). The company has signed a sale agreement for Contract Resources North America and has well progressed on the divestment of the remaining non-core business, TBS. Additionally, BAP is looking to revolutionise the warehouse and distribution systems to become the most efficient group in the industry in terms of cost. Meanwhile, BAP stock has risen 2.50% in three months as on January 23, 2018. Based on the potential, we give a “Speculative Buy” recommendation on the stock at the current price of $5.73
 

Till date trading update for FY 18 (Source: Company Reports)
 

Bellamy's Australia Ltd

Upgraded its revenue and profit guidance for FY 18: Bellamy's Australia Ltd.’s (ASX: BAL) stock moved up 6% on January 24, 2018 with emanating positive view on the group and overall optimistic movement of peers on ASX. BAL has lately upgraded its revenue and profit guidance for FY 18. The company has raised FY 18 revenue growth forecast for its core business and acquisition of the remaining 10% stake in Camperdown Powder Pty Ltd. For FY 18, BAL now expects its core business, excluding the Camperdown business, to post a revenue growth of 30% to 35% compared to a previous forecast for a 15-20% rise. The company has also raised its core earnings margin forecast to 20-23% from earlier projection of 17-20%. Additionally, BAL expects the 1H18 revenue to be higher than 2H18 due to the seasonality impact of platform events, higher winter consumption in China and Chinese New Year. Further, all ‘Chinese label’ sales have occurred in 1H18 with previously announced delays in Bellamy’s CFDA registration. As per the previous guidance, these sales are expected to total approximately $18 million. Moreover, BAL will be buying the remaining stake (10%) in China-registered Camperdown formula cannery for about A$3.6 million ($2.87 million), after getting the China Food and Drug Administration’s approval. The company had completed buying a 90% stake in Camperdown in early July for a consideration totaling $28.5 million. BAL stock has risen 41.6% in one month as on January 23, 2018. We have a “Hold” recommendation on the stock at the current price of $16.03, while the group is showing signs of benefits from its turnaround strategy.

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