Bapcor Limited

ASX:BAP

Bapcor Limited

ASX:BAP
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$2.25 (-1.7%)
Last close price
#490
Rank
2
Held by
27
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Reports (8) My Report Forum Investors
Forum Topics BAP BAP Trading update

Pinned straw:
mikebrisy
Added 4 months ago

Shocker of an update for $BAP this morning, with 3 Directors tendering their resignations. SP down 28% at time of writing.

ASX Announcement

While revenue is only slightly down, NPAT is guided to $31-34m "after significant items". Note, the consensus was $94.5m (marketscreener.com, n=10)!!

One point which peeked my interest were remarks by Exec Chair Angus McKay who says "We have closed or moved more than 45 sites and consolidated multiple ERPs. These changes were disruptive but necessary as we strive to simplify operations to set us up into the future."

I find it interesting because we often write about how sticky enterprise software is once embedded in enterprise workflows. $BAP launched a transformations several years ago - covered in depth here by several StrawPeople. And yet, it appears that as they get on with trying to consolidate multiple ERPs (the legacy of Abbotomley's acquisition spree), the operational pain continues to be felt.

Will a phoenix ever emerge from the ashes?

I no longer hold $BAP. I did back in the glory days when it was an MF Pro favourite and Abbotomley could do no wrong..

Disc: Not held
Strawman
Added 4 months ago

Gosh, a shocker is right @mikebrisy -- $50m in significant charges!! None of which reflect well on past acquisitions or indeed operational matters.

Write-downs on receivables, inventory, and even ERP systems -- hard to think all of that is just bad luck...seems more than a few past decisions are coming home to roost. Possibly even some rather generous accounting treatments along the way.

Also doesn't imbue confidence in the broader economy given some of those comments and divisional performance.

Maybe with a clean up of the balance sheet and simplification across the business there's a foundation for growth going forward, but these things always take time (if they work at all), and so happy to watch from the sidelines.

How much do you think can be blamed on Darryl? I know he and the board had some disagreements, but he was certainly a key driver for the acquisitions and oversaw their integration prior to his departure. But he effectively stepped down in mid-2021 (and officially in early 2022) , so if there were obvious issues at the time you'd think his successors had a handy scapegoat.

19
mikebrisy
Added 4 months ago

@Strawman you raise a question I've also thought about in the context of this business.

I think Darryl was the right leader for his time. He essentially drove an aggressive growth strategy, built a portfolio via acquisition, aligned the acquired businesses with the strategy and drove the "easy" synergies, i.e., corporate overheads, brand and low-hanging fruit on supply chain.

But realising value from this kind of play on a sustainable basis requires a strong operational leader, whether CEO or COO, as well as the ability to do the hard integration work on systems (incl. risky "ERP") and culture.

Did Darryl have the skills for that? We'll never know. But what is evident is that the sequence of leaders who have followed have definitely been very much second rate compared with what the task needed.

Personally, I am happy to put this failure solely down to leadership. First hand in my own career I have seen the difference a competent operational manager can have compared with an incoimpetent one. The changes can be very material and occur surprisingly soon. And a big part of it is putting the right operational leadership team in place under the CEO / COO.

My own conclusion - rightly or wrongly - is that Darryl set up $BAP for success, but the Board failed in ensuring effective succession and subsequent CEO's have just not been up to the task.

21
Strawman
Added 4 months ago

Thanks @mikebrisy, I think i agree (but we'll never know for sure).

9
ApplePark
Added 4 months ago

Speaking of offshore, I must have missed what happen to the Thailand operations?

Very disappointed long time holder myself and now revisiting what I do from here.


11
lowway
Added 4 months ago

Thanks for the post @mikebrisy, I wish I had seen it earlier (including the writing on the wall stuff). I've been OD on hols and only just seeing this for the first time today.

As a small holder IRL I'm now in the same position as @ApplePark and need to revisit what I do from here. I note that the SP has made up some ground since the financials were released, but if the thesis is busted (seems pretty obvious without song any digging so far) then that's the decision made.

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