Bapcor Limited

Poised to Grow Further: Bapcor Limited (ASX: BAP) is a mid-cap company with the market capitalization of circa $2.0 Bn as of October 17, 2018. It is involved in the business of providing aftermarket parts, accessories, equipment and services. There are three main business verticals, i.e., Trade, Specialist Wholesale, and Retail & Service which contribute around 53%, 28%, and 19%, respectively of the total revenue from continuing operation during FY18. BAP has recorded top line and bottom line growth at CAGR of 49% and 55%, respectively over the four years. Resultantly, NPAT margin came in at 6.5% on a 4-year average basis (FY15-18) and the group is on track to improve its PAT margin from the current level while BAP’s trailing 4-year EPS and DPS growth (CAGR) have been around 32% and 21%, respectively. Additionally, for FY19, it is expected to grow NPAT between 9% and 14% as compared FY18 proforma NPAT.



Financial Metric Trend (Source: Company Reports)

Meanwhile, the share price has risen 23.78% in the past six months as of October 16, 2018 and traded close to higher level. Looking at its historical financial performance and current trading level, we maintain our “Hold” recommendation on the stock at the current market price of $7.130 as the group seems to grow further backed by its well-diversified product portfolio and strong clientele base.

Coca-Cola Amatil Limited

Expected Mid-Single EPS Growth in the Medium Term: Coca-Cola Amatil Limited (ASX: CCL) is a mid-cap company with the market capitalization of circa $7.09 Bn as of October 17, 2018. The group delivered a statutory NPAT of $158.1 Mn and underlying NPAT of $178.8 Mn in 1HFY18. It was mainly driven by strong performance in New Zealand and a significant growth of EBIT, revenue and volume in Fiji and Alcohol & Coffee segment across the market. Based on the performance, the Board of Directors declared interim dividend of 21.0 cents per share, franked to 65 percent which is in-line with the prior corresponding year where it was 21 cents per share, franked to 70 percent. This represented an underlying payout ratio of 85.0 percent. Further, the management believes that the New Zealand, Fiji, and Alcohol & Coffee divisions are expected to deliver strong growth in the upcoming period with shareholder value proposition. Further, the company has seen some encouraging sign in Australian Beverages business with revenue growth and an improving volume trajectory. To tap the emerging market opportunities, the company will continue to do investment across its operation that includes marketing, execution, cold drink equipment, and technology up-gradation. In order to do this, the management has targeted to achieve mid-single digit EPS growth in the medium term.


Tracking Against Shareholder Value Proposition (Source: Company Reports)

Meanwhile, the share price has risen 10.25% in the past six months as at October 16, 2018 and traded at reasonable P/E of 15.52x. Currently, the stock traded at a 2.2% discount to a 12-month high of $10.22 against a 33.0% premium to a 12-month low of $7.52. Based on foregoing and current trading level, we maintain our “Hold” recommendation on the stock at the current market price of $10.00.
 
 

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