Disc: held reasonably strongly in my SMSF

Gaurav Sodhi at Intelligent Investor wrote a pretty blunt piece yesterday communicating their decision to advise a sell on BAP and that they were ceasing coverage. The pointy end of the piece here...

"Bapcor’s business is progressing nicely and – on a price-earnings ratio of 20 with a decent yield and solid balance sheet – the valuation of the company appears reasonable. Yet tussles between board and management, departures of senior executives, and public feuds are not what we want to see.

If you hold Bapcor, we suggest you SELL and watch how things progress from the sidelines. We’ll keep an eye on the business and might wade back in, but we don’t intend to provide additional coverage until we're confident in the board and management. For now, we’re CEASING COVERAGE to focus on better opportunities."

BAP is one of my longest holdings, a business I knew well and was totally confident in. I have only ever added to my holding. After Darryl Abotomey left so abruptly I was nervous, things looked to have stabilised a little but all the signals are pointing the wrong way for me and I've just submitted my first sell order with a tinge of sadness.

More messiness at BAP with COO Jeff Nicol resigning. He has been the driving force behind the new distribution strategy and structural cost saving in the business. Never good when successful management teams are breaking up.

The Australian again today - https://www.theaustralian.com.au/business/dataroom/bapcor-assembles-its-takeover-defence/news-story/edab4e6a7d71ceed47efff7ef57c7d46?utm_source=TheAustralian&utm_medium=Email&utm_campaign=Editorial&utm_content=AM_BIZREV_Newsletter&net_sub_uid=AM_BIZREV_Newsletter

Not much new in this other than rumour about BAP appointing takeover defence (the rumour is UBS) and investors being divided on the appointment of Noel Meehan as CEO. Given the timing of things, it does seem like the Board moved a little more quickly on his confirmation than I might have expected.

SP down 21% since November when the Board accelerated the retirement of CEO Darryl Abotomey to his immediate dismissal.

BAP closed the day down almost 8% after the release of their H1 results today (and presumably the turmoil going on).

Management quite positive and declared an increased interim fully franked dividend of $0.10 (to keep investors happy and onside one presumes if they're about to fight takeover offers)

Lots of comparison back to FY20 as the comparisons back to FY21 don't look great on profitability despite the nearly 2% growth in revenues. Lots of costs associated with COVID and transition to their new Melbourne Distribution Centre. Some highlights:

CEO: “The team delivered an increase in revenue of 1.9% and proforma NPAT of $61M, a testament to the resilience of the business. Compared to FY20, a year that had the benefit of stimulus-induced demand, the current half year delivered a 28% increase in revenue and 33% increase in pro forma NPAT."

Compared to FY21 though that's a pro forma NPAT decrease of 13.7% and I suspect that's what has earned a kick in the pants from the market

"In FY22, Bapcor continues to aim to deliver pro forma earnings at least at the level of FY21. H2 FY22 is expected to be stronger than the second half of FY21, subject to no further material COVID- 19 impacts."

Hot on the heels of scuttlebutt about a possible tilt to take over BAP (intrigue deepened by the possibility that the cast aside former CEO might be involved in an offer), announcement today of the appointment of Noel Meehan as CEO. Has been acting as CEO since the dramas of late last year and CFO since 2020

Article in The Australian today that the vultures are circling BAP. The article says BAP has received two buyout proposals since December but the Board says it has received no bids... ahhh the games people play.

Share price hasn't recovered to its previous heights after the dramatic fall when the Board ousted the long-term successful CEO.

Article here --> https://www.theaustralian.com.au/business/dataroom/two-bapcor-bids-as-suitors-circle/news-story/88154b28b774c029d4ccd00a3061b816

BAP is my longest held stock and it remains a hold for me. Record results.

Bapcor Ltd today announced its financial results for the financial year ended 30 June 2021 (FY21).

Bapcor delivered a record full year result in FY21 driven by growth in revenue, operating leverage and profitability in every business segment. Along with the strong financial performance, Bapcor has continued to deliver major projects including the new state of the art distribution centre in Tullamarine, Victoria, that will underpin the group’s continued profitable growth. Bapcor’s financial position remains strong and positions the group to capitalise on opportunities as they arise.

RECORD FULL YEAR REVENUE AND EARNINGS

Revenue from operations of $1,761.7M, up 20.4% Pro-forma EBITDA up 28.8% to $279.5M
Pro-forma Net Profit after Tax up 46.5% to $130.1M Pro-forma Earnings Per Share of 38.3 cents per share, up 26.8%

Final dividend of 11 cents per share (fully franked), up 15.8% compared to the previous corresponding period

Statutory Net Profit after Tax of $118.8M, up 50.0% Statutory Earnings Per Share of 35.0 cents per share, up 29.8%

Since listing on the ASX in April 2014, Bapcor has consistently executed on its strategy and delivered strong growth – with more to come...