Bapcor has provided another trading update, revealing a 26% jump in group revenue for the 5 months to the end of November.

For the firsty half the business expects at least 25% top line growth but a 50% jump in NPAT due to operating leverage resulting from lower costs and the contribution from Truckline.

Bapcor noted that broker consensus forecasts for FY21 NPAT of between $110-115m "did not appear unreasonable".

That translates to ~33c EPS for the full year, and puits shares on a forward PE of 22 (using last close of $7.31). Investors can probably expect a 2.5% ff yield.

For a business that I expect can deliever upper single digit growth in the coming years, that seems undemanding. Especially in this low rate environment.

ASX anouncement here

Bapcor has released a trading update for the first quarter of FY21, which (remarkeably) have shown a 27% lift in revenue despite Government imposed restrictions in Auckland and Victoria.

Indeed, it was the retail segment that saw the biggest lift, with revenue up 47% thanks to an especially strong result for company owned Autobarn stores.

Bapcor is very well placed for a strong 1st half, but didn't give any full year guidance given the uncertainties that remain.

You can read the ASX announcement here

Bapcor (ASX:BAP) had a decent result all things considered.

• Revenue up 12.8%, or 7% excluding acquisitions
• NPAT down 5.5% to $89.1m, or 30 cents per share, proforma. (added provisions, promotions and new store costs appear to account for drop in net margin)
• Final dividend mainatin, with FY payments up 2.9% to 17.5c per share
• Burson trade same store sales up 6%, with record sales for 70% of network
• NZ the hardest hit due to lockdowns, sales down 5.2% and EBITDA down 14%. Sales down 80% at peak of lockdowns, but June levels ahead of where they were in February.
• Specialist whole saw a 26% boost to revenue thanks to acquisitions, but organic growth was 5.5% at the top line. EBITDA was down 7.1%
• Retail was surpringly strong -- I guess as we've seen elsewhere, consumers have continued to spend on discretionary items (so far) -- with a 14.7% lift in sales and 12.8% lift in EBITDA (record levels). As has been the theme for retailers, the online component grew strongly; up 240% for the year. May and June up 400% (!)
• Retail same store sales 9.5% up for the year
• Balance sheet in a very strong position following the capital raise. Burson has $126m in cash. Net debt is $109m
•  5 year targets unchanged (and, if realistic, show a lot of further growth potential. See attached presentation)

On these latest figures, at at the current market price, Bapcor is on a P/E of 22.2, with a yield of 2.6% fully franked (or 3.7% grossed up)

Results presentation is here

Bapcor says that the impact of COVID-19 has not been as severe as expected, and that demand has been stronger than anticipated as restrictions ease -- particularly in the Australian Retail and Trade segments.

Autobarn was quite amazing really, with sales up 45% in May & June! Although there was a 3% dip in April, FY sales from this business will be 8% higher.

Trade sales are expected to be up 5% for the FY

NZ operations, Specialist Wholesale and Thai operations were the hardest hit, but to what extend they didnt say.

Bapcor has speculated that the increase in sales was "stimulus induced". They warned investors to expect demand to moderate once Government stimulus stops.

Bapcor has reinstated guidance, telling investors to expect between $84-88m in NPAT for FY20. Prior to COVID, they were telling investors to expect mid- to single-digit gains in FY19 NPAT, which came in at $94m

Read the announcement here

Bapcor has raised $180m through an institutional placement, issuing 40.9m new shares at $4.40.

This was done at a 8.5% discount to the most recent closing price, which isn't too bad (although it represents a ~32% discount to the pre-COVID market price).

The company is also hoping to raise a further $30m through a Share Purchase Plan (SPP) to eligible shareholders, at the same offer price (or better if the market price falls between now and the SPP close date). That will result in the issue of a further ~6.8m shares.

In total, BAP will have approximately 332m shares on issue.

The raise is primarily to reduce the comapny's net debt, and ensure there is sufficient liquidity available thorugh the COVD-19 disruption. After the raise, Bapcor expects to have at least $231m in cash, or $261m if the SPP is fully subscribed. That comapres to total borrowings of $441m.

Put another way, the net debt to EBITDA ratio wiull drop to 1.3x

At the same time, Bapcir provided a trading update which shows that business has held up remarkeably well through to the end of March, although the NZ business suffered more than others due to stricter lockdown measures. Safe to assume that April will see the full impacts of lockdowns, and it wont be pretty.

Nevertheless, the business is now well positioned to weather the storm and there is no change to its 5 year strategy.

I will lower my valuation due to the increased number of shares on issue.

ASX announcement here

Bapcor has provided a business update for the period since H1 results were released on January 20.

In that period, Bapcor said its core trade segment have continued to be strong with same store sales up 5% and gross margin improvement. Likewise, the retail segment has experienced "good sales growth", with trends from the first half continuing for other segments. On this basis, the company is on track to meet its full year guidance.

That being said, with store closures and lockdowns the company said it's not possible to forecast how the business will perform for the remainder of the year, and so the company has removed any FY guidance.

Shares have so far fallen ~50% since the current crisis began. At the half year, the business had ~$43m in cash and $441m in long term debt (comprised of multiple tranches that don't begin to expire until 2022)

I expect the trade segment will hold up relatively well, but that retail will suffer a lot more. Although worth noting that Retail represents just 16% of total group EBITDA.

I estimate that FY20 EPS will be roughly 30cps, which puts BAP on a forward PE of ~11

ASX announcement here

Bapcor just keeps getting it done. 

For the half it saw revenue rise 10.4%, while NPAT increased 5.9% (pro forma). The dividend was lifted by 6.7%

All segments made good headway -- even retail moved forward (3.1% increase in EBITDA). The continued expansion of their network looks to be proceeding well, with Thai stores mostly EBITDA positive in December. Gross margins improved slightly too.

The business has $43m in cash, but the debt to equity has increased to 59% (due to acquisitions).

Not a business that is likely to see fast growth, but I expect it to steadily grow at a decent rate in the years ahead. Have slightly increased my valuation.

Results presentation is here

Bapcor has signed agreements to acquire Diesel Drive and Truckline.

Both businesses provide spare parts for trucks, and will augment the existing speciality warehouse division.

Truckline generates around $100m in sales, while Diesel Drive earned $13m in revenue last year.

The combined price is $48 million, which will be funded from existing debt facilities. It will increase their debt by around 12.6% and leaves the debt to equity at ~64%

Bapcor reckons they'll get a 15% retunr on investment for these purchases, and boost per share earnings in their first full year of operation.

This is a team well practiced at making value creating acquisitions, and is consistent with their startegy. Bapcor is now uniquely positioned to provide aftermarket parts to all forms of road transport.

Full announcement here

Electric cars

The rise of electric cars is seen as a negative by many for Burson; after all, they require less parts and tend to be longer lasting.

Nevertheless, even with a strong adoption rate, it will be many years before electric vehicles become a major part of the market.

And, of course, Burson is well placed to supply what parts are needed.

So, for me, this is not a huge risk.

A business led by one of the best management teams on the ASX, Bapcor's autoparts distribution business offers defensive earnings and good growth potential.

A combination of savvy acquisitions, material efficiency gains and network roll-out have underpinned outstanding per share earnings gains in recent years, and I expect growth to remain in the upper single digits range for many years to come (on average).

Morningstar rate Bapcor a buy with a $7 valuation.

See here

Bapcor's first half result saw proforma revenue and per share earnings growth of 3.2% and 5.9%, respectively. Which is well down on the previous pace of growth.

The performance looks better when you exclude the now divested New Zealand TRS business from the previous period, with revenue up 5.5% and EPS up 8.5%. But it seems this has underwhelmed the market with shares down 10% (at time of writing).

CEO Darryl Abotomy also spoke of "challenging market conditions" and offered full year guidance of 9% growth in proforma net profit, which is right at the lower end of the group's previous estimate of 9-14% growth.

Despite this slowdown, the core underlying businesses are doing well, in my opinion.

Burson Trade saw a 4.8% lift in revenue with same store sales up 2.1% and with an imporved margin. Meanwhile, Specialist Wholesale grew sales and EBITDA by 7.8% and 11.4%, respectively. These two segments represent 80% of group revenue and profit.

Retail and services (Autobarn, Midas etc) saw revenue up 8.8%, and here too same store sales were higher, but EBITDA was flat due to store expansions and refurbishments, and (it seems) higher discounting. 

As always, the question is whether we are seeing the start of a structural slowdown in growth, or just the inevitable cyclicality of a retail exposed business.

To my mind, even if you assume upper single digit earnings growth the 'new normal', shares still represent reasonable value. Especially given the quality of management. 

I have however reduced my valuation to account for the slower pace of growth.