Stocks’ Details

Bapcor Limited

Bapcor Limited Share Purchase Plan: Bapcor Limited (ASX: BAP) is a distributor of automotive aftermarket parts. As on 24 April 2020, the market capitalization of the company stood at $1.48 billion. The company has recently stated its Share Purchase Plan is open for eligible shareholders, wherein shareholders can apply for up to A$30,000 of new fully paid ordinary shares without incurring brokerage or transaction costs.

Record Results Across All Measures: During 1H20, revenue of the company went up by 10.4% to $702.5 million and EBITDA witnessed a growth of 4.6% to $79.4 million. These record results are reflective of resilience of the business to economic conditions. The increase in revenue and EBITDA resulted in a growth of 5.1% in NPAT to $45.3 million.


1H20 Financial Highlights (Source: Company Reports)

What to Expect: The company is performing in line with expectations and is on track to reach full year guidance. Bapcor is a resilient and financially solid business and is focusing on continued service through these difficult circumstances.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

EV/Sales Multiple Based Approach (Source Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: As per ASX, the stock of BAP gave a return of 42% in the past one month and is inclined to its 52-week low of $2.850, proffering a decent opportunity for accumulation. During 1H20, gross margin of the company went up to 47.5%, up from 46.7% in 2H19. Considering the returns, trading levels, record results across metrics and decent outlook, we have valued the stock using EV/Sales multiple based illustrative valuation method and arrived at a target upside of lower double-digit (in percentage terms). Hence, we recommend a ‘Buy’ rating on the stock at the current market price of $4.660, up by 2.87% on 24 April 2020. 

Webjet Limited

Successful Completion of Retail Entitlement: Webjet Limited (ASX: WEB) provides full range of online travel booking service for flights, hotels, car hire, cruises, tours. As on 24 April 2020, the market capitalization of the company stood at $614.75 million. Recently, the company has successfully completed the retail component of its fully underwritten, non-renounceable entitlement offer and raised approximately $118 million.

During 1H20, revenue of the company went up by 24% to $217.8 million and EBITDA witnessed a growth of 43% to $86.3 million. During the half year, the company increased its scale and the direct contracts resulted in growth. The increase in revenue and EBITDA resulted in a growth of 44% in NPAT of $55.1 million. In the same time span, the company reported strong balance sheet with decreased borrowings and conservative debt. 


1H20 Financial Highlights (Source: Company Reports)

Future Expectations: The fallout of COVID-19 has resulted in reduced earnings; however, the company expects to overall earnings profile to return quickly to expectations. While the travel industry will be impacted for some time, WEB expects emerging with a strong competitive position because of its diverse geographic markets, product offers and its capital position following the recent capital raise.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

EV/EBITDA Multiple Based Approach (Source Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: As per ASX, the stock of WEB is trading close to its 52-week low of $2.250. During 1H20, EBITDA margin of the company stood at 59.9%, up from 38.4% in 2H19. Considering the currtrading levels, decent financial performance, and positive outlook, we have valued the stock using EV/EBITDA based illustrative valuation approach and have arrived at a target upside of higher single-digit (in percentage terms). For the said purposes, we have considered Corporate Travel Management Ltd, Flight Centre Travel Group Ltd and Virgin Australia Holdings Ltd (ASX: VAH) as peers. Hence, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $2.5, up by 9.649% on 24 April 2020. 

Corporate Travel Management Limited

1H20 Financial Performance: Corporate Travel Management Limited (ASX: CTD) is a provider of travel management services to the corporate market. As on 24 April 2020, the market capitalization of the company stood at $926.51 million. During 1H20, the total transaction value of the company went up by 12% to $3,310 million and revenue witnessed an increase of 6% to $222.2 million. This reflects the strength and resilience of the business in the macro conditions. In the same time span, the company renewed its financed facility and reduced its total drawn debt.


1H20 Financial Performance (Source: Company Reports)

Future Expectations: While the travel restrictions due to the virus might pose some short-term uncertainty in the business, the company expects to recover the current activity levels in due time. CTM continues to retain and win clients at consistently high levels. The company is sufficiently liquid and hence is not considering raising any further equity.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

EV/EBITDA Multiple Based Approach (Source Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: As per ASX, the stock of CTD is trading close to its 52-week low of $4.355. During 1H20, EBITDA margin of the company stood at 30.9%, higher than the industry median of 25.3%. Considering the trading levels, decent financial performance, and positive outlook, we have valued the stock using EV/EBITDA multiple based illustrative valuation method and arrived at a target upside of lower double digit (in percentage terms). For the said purposes, we have considered Webjet Ltd (ASX: WEB), Flight Centre Travel Group Ltd (ASX: FLT) and Virgin Australia Holdings Ltd (ASX: VAH) as peers. Hence, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $9.080, up by 6.824% on 24 April 2020. 

 
Comparative Price Chart (Source: Thomson Reuters)

Disclaimer

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.