Roadworthy
RESULTS ANALYSIS
Need To Know
- In-line result, EBITDA +2.4% on last year.
- BAP adding plenty of new store footprint.
- Market underestimating earnings resilience, in our view.
Investment Implications
A steady result from BAP will see no movement in consensus forecasts, depending on how Bapcor sees the market.
FY23 result. Revenue +9.7%, EBITDA +2.4% to $299m in-line with market expectations. BAP Trade performed strongly with revenue +11.3% (same store sales growth +8.8%) and improved margins due to category and pricing initiatives.
Specialist Wholesale revenue +9.5% also performed strongly but with flat EBITDA at $103m. Retail (Autobarn, Autopro, Opposite Lock, Midas, ABS workshop) revenue +8.3% although softer growth in 2H23 due to economic softness.
BAP New Zealand underperformed in a weak economy as higher input costs dragged on EBITDA margins. Revenue grew 3.0% while EBITDA slipped 8.9% to $30m.
A bigger store footprint across Australia supported solid same store sales growth. Trade added 2 stores (to 226), Retail added 11 stores (118) and NZ added 1 (89). Specialist Wholesale was steady at 168.
BAP’s ‘Better than before’ transformation strategy aims to add ~$100m to EBIT by FY25 with a return on invested capital above 12%.
Gearing at 1.12x (net debt decreased to $252m) allowed a higher dividend of 22cps (full year) on a payout ratio of 60%.
Outlook. BAP expects ‘solid underlying performance’ in FY24 subject to market conditions with the transformation program expected to kick in added benefits.
Investment View
BAP’s presence in the auto parts industry is a commanding position to service a large car parc that is still spending on vehicle maintenance.
The efficiency improvement program could add a material amount of earnings if it can execute well.
This stock travels under the radar, in our view, and at 16x FY24 PER is not gaining recognition for its steady progress. BAP really is a nuts and bolts type of company that could conceivably double its operating margin in line with US peers.
We maintain our Buy recommendation.
Figure 1: BAP FY23 earnings
Stock Overview
Share Price
Company Overview
Bapcor is a provider of automotive parts, accessories, equipment, service and solutions. Its core business is the automotive aftermarket in both wholesale and retail.
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