Bapcor Ltd (ASX: BAP)

Consistent strategy with specific and measurable targets: With some positive catalysts, Bapcor’s (Australia’s leading provider of automotive aftermarket parts, accessories, equipment and services) share price has been rising for the last one year. Bapcor Limited has delivered ROE of 11.3% in 2017, which is quite striking when compared to its industry average. Its price/earnings to growth ratio is also close to 1, which is decent (given the price to earnings ratio of 21.960 and recent earnings scenario). The group has been successful in growing its profit margins with boost from store expansion and gaining more footprint across the globe. Group’s statutory revenue and net profit after tax for H1 FY18 increased by 41.6 per cent and 72.2 per cent, respectively compared to H1 FY17. Earnings per share for H1 FY18 was 14.61 cents per share, up 37.3 per cent as compared to H1 FY17. Net debt at 31 December 2017 was $337.1 million representing a leverage ratio of 2.2X. The level of debt represents a reduction of $44.8 million compared to 30 June 2017 and includes the proceeds from the divestment of the non-core Footwear and Contract Resources businesses.

Bapcor has continued to grow the number of company owned Autobarn stores via both greenfield Autobarn stores as well as some select conversion of franchise stores to company owned stores. The total number of Autobarn stores at 31 December 2017 was 124 stores, a net increase of 2 stores since 30 June 2017. At 31 December 2017, the total number of company owned and franchise stores in the Retail segment was 385 consisting of Autobarn 124 stores, Autopro 88 stores, Sprint Auto Parts 39 stores and Midas and ABS 134 stores.


Key Performance Indicators (Source: Company Reports)

Recently, Paradice Investment Management Pty Ltd, became the substantial holder of the Group by holding 15,243,705 securities and 5.439 per cent of the voting power. The Group announced the issue price ($5.55) of the shares that were to be issued to the shareholders who were elected to participate in Bapcor’s Dividend Reinvestment Plan (DRP) for the 2018 interim dividend. In accordance with the DRP Rules and the Company’s announcement dated 20 February 2018, the DRP issue price for the 2018 interim dividend has been calculated as a 1.5 per cent discount to the average of the daily market price of Bapcor shares over the 10 trading days between 3 April 2018 and 16 April 2018.

Bapcor expects to continue to see growth in H2 FY18 from business synergies and store network growth as well as solid performance in underlying businesses. The group continues to forecast pro-forma FY18 NPAT from continuing operations to be circa 30 per cent above FY17 pro-forma NPAT from continuing operations. In last one year, the share climbed up by 23.95 per cent, by 14.99 per cent in last three months and by 12.61 per cent in last one month. We give a “Hold” recommendation at the current market price of $6.5 by looking at the sustainable performance of the Company.

 
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