Bapcor Limited (ASX:  BAP)

Performing well on growth trajectory: It has been noted that BAP is growing through earnings accretive acquisitions along with new stores. The group focusses on having businesses with healthy margins. The concerns on electric vehicles are yet to start impacting this Australasia’s premier provider of automotive aftermarket parts. Meanwhile, Chairman of Bapcor Limited, Mr Robert McEniry announced his resignation from the Bapcor Board due to serious health issue and Mr Andrew Harrison was appointed as its Chairman and he took his position effectively from 4 April 2018. Bapcor announced the results for the six months period ending on 31 December 2017 and reported an increase of 41.6 per cent and of 72.2 per cent of revenue ($616.1 million) and NPAT ($43.5 million) respectively, as compared to the corresponding period in the previous year. Net debt at 31 December 2017 was $337.1M representing a leverage ratio of 2.2x. Bapcor is on track to record a leverage ratio of <2x by 30 June 2018. An interim fully franked dividend of 7.0 cents per share was declared, up 27.3% compared to the H1 FY17 interim dividend. Company’s previous full year guidance for financial year 2018 remains unchanged at 30% growth in Pro-forma NPAT from continued operations. Bapcor operates a Dividend Reinvestment Plan (‘DRP’) which provides shareholders with the opportunity to utilise all or part of their dividends to purchase shares in the Company. The DRP will be in operation for the 2018 interim dividend. The Company advised that the issue price of shares to be issued to the shareholders who have been elected to participate in Bapcor’s DRP for the 2018 interim dividend has been calculated at $5.5547 per share. DRP shares will be issued to the participating shareholders on 27 April 2018, when the interim dividend will be paid. The share prices were up by 2.84 per cent since the start of the year and in the past one week the share prices were up by nearly 2 per cent. We give a “Speculative Buy” on the stock at the current price of $ 5.750.
 

KeyPerformance Indicators (Source: Company Reports)
 

Treasury Wine Estates Limited (ASX: TWE)

Increase in net debt and working capital: Shares in global wine company, TWE have rocketed by 48 per cent in last one year. TWE reported an Earnings Before Interest, Tax, SGARA and material items (EBITS) of $283.3m, up 25% on a reported currency basis. The Board declared an interim dividend of 15 cents per share, 75% franked, representing 2 cents per share increase (+15%) and a 54% pay-out ratio. Robust cash conversion of 83% in 1H18 was in line with TWE’s target and reflects TWE’s strong operating performance. The Commercial wine segment continues to decline in the US and the UK (with market volume falling by 3% and by 10%, respectively). Net Assets were down by $171.1 million on a reported currency and amounted to $3,477.3 million and this was primarily due to an increase in borrowings and net working capital. Treasury Wine appointedMatt Young as TWE’s Chief Financial Officer (CFO), formerly Deputy CFO, and will effectively take his position from 1 May 2018. The stock looks “Expensive” at the current market price of $ 17.510.
 

Balance Sheet (Source: Company Reports)

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