Stocks’ Details
 

Bapcor Limited

Key Takeaways from Morgan Stanley Conference Presentation: Bapcor Limited (ASX: BAP) is primarily engaged into the sale and distribution of motor vehicle aftermarket parts and accessories, etc. The company has recently presented its business prospects at the Morgans Stanley Conference and highlighted about 1HFY19 activity and its outlook. As per the presentation, it operates four stores in Bangkok district. The stores are making positive progress in new market dynamics. The total auto revenue of the company stood at $636Mn in 1HFY19 when compared to $616Mn in 1HFY18, reflecting a growth of 3.2% while the proforma EBITDA of the company witnessed an upside of 8.2% and stood at $76 Mn in 1H FY 2019 in comparison to $70.2 Mn in 1H FY 2018.

 
Total Revenue and EBITDA (Source: Company Reports)

Future Strategies:The company has anticipated the full year cash conversion to be at historically normal levels, which indicates that the cash conversion will be more than 90%. The company’s growth strategy revolves around strategic acquisitions. BAP is forecasting net debt annualised leverage ratio to be approximately 2x of earnings. Additionally, for FY19, the group continues to expect NPAT of around $94.3 Mn, showing a growth of about 9% when compared to FY18 proforma NPAT.

Stock Recommendation:As per the management, the overall market remains softer than historically due to intense competition in every sector and fighting for business. With regards to trade, the company’s market share is not as high as historically. The above stated points might be a reason for the fall of 3.242% in today’s (i.e., June 12, 2019) trading session. However, the recent acquisition of the Commercial Vehicle Parts Group can provide a long-term growth perspective to the company. On the stock performance front, it witnessed a return of 7.34% in the time span of one-month while the stock generated a negative return of 7.29% in the time span of three-months which reflects volatility. Hence, considering the aforesaid parameters and current trading level, we give a “Speculative Buy” rating on the stock at the current market price of A$5.670 per share (down 3.242% on 12^th June 2019).    

Premier Investments Limited

A Quick Look at Investors Presentation: Premier Investments Limited (ASX: PMV) is operating a number of specialty retail fashion chains within the specialty retail fashion markets in Australia, New Zealand, Asia, and Europe. The company in its investor presentation mentioned about the sales growth driven by Apparel brand. In 1HFY19, the Apparel brands witnessed a rise of 7.5% in the sales in comparison to 1HFY18. The net profit after tax stood at $88.8Mn in 1HFY19, which reflects a rise of 13.0% in comparison to 1HFY18 and there was a rise of 11.1% in Premier Retail EBIT of $113.9 Mn in 1HFY19 when compared to 1HFY18. The company maintains a strong balance sheet position with cash on hand of $183.2Mn at the end of 1HFY19.

 

Total Sales of Apparel Brand (Source: Company Reports)

What to Expect: The company is expected to continue its investment in social media in order to maximise customer potential as well as it is moving ahead with its investment in better merchants for driving future growth. The company is focused on the disciplined execution of markdown management in a highly competitive market leaving a clean inventory position to start 2HFY19.

Stock Recommendation:The company had continued with capital investment in new store concepts in 1HFY19, which was largely financed by the landlords. The net margin of the company stood at 13.0% in 1HFY19 in comparison to the industry median of 5.3%. The current ratio of the company stood at 2.49x in 1HFY19 when compared to the industry median of 1.55x, which reflects that PMV is in a decent position to address its short-term obligations. With respect to the stock’s past performance, it witnessed a return of 0.78% and 8.22% in the time span of one-month and six months, respectively. Hence, considering the above-stated facts and decent outlook, we give a “Buy” recommendation on the stock at the current market price of A$16.820 per share (up 0.598% on 12^th June 2019).
 

Webjet Limited

Leveraging of WebBeds Global Distribution Network: Webjet Limited (ASX: WEB) is into online sale of travel products which includes flights and hotel rooms. The market capitalisation of the company stood at ~A$2.01Bn on 12th June 2019. The company in its presentation mentioned about Rezchain which is supporting the company in order to drive efficiencies throughout its WebBeds businesses. The dramatic reduction in account reconciliation issues is enabling the company to scale rapidly. The company leverages the WebBeds global distribution network and a strong partnership with hotels in the Kingdom of Saudi Arabia in order to offer a range of religious travel offerings and packages. With respect to B2B market, it was mentioned that there is a US$50Bn+ TTV market with significant growth opportunities.

B2B Market (Source: Company Reports)

Future Perspective:The company is tracking its “8/5/3” target, i.e., 8% revenue/TTV and 5% costs/TTV to drive 3% EBITDA/TTV. However, the company believes that it can deliver “8/4/4” which represents 8% revenue/TTV and 4% costs/TTV to drive 4% EBITDA/TTV by FY22. The company is focused on maximizing customer connectivity while reducing the operating costs.

Stock Recommendation: The company is in planning for Integration of e-services in the pilgrim’s journey to enrich the religious and cultural experience.

The net margin of the company stood at 15.1%, reflecting a growth of 9.9% on YoY basis. This represents that the company is efficient in converting its top line into the bottom line. With respect to the stock’s past performance, it had witnessed a return of 25.66% and 14.53% in the time span of six months and one year, respectively. Hence, considering the above-stated facts and decent outlook, we give a “Buy” recommendation on the stock at the current market price of A$14.880 per share (up 0.27% on 12^th June 2019).

 
Comparative Price Chart (Source: Thomson Reuters)    

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