This report is the updated version of the report uploaded on 11 October 2023 at 4:40 PM GMT +11

Bapcor Limited

BAP Details

Bapcor Limited (ASX: BAP) is an Australia-based provider of vehicle parts, accessories, equipment, service as well as solutions.

Financial Results for FY 2023

• BAP witnessed record revenue of $2.0 Bn, reflecting a rise of ~9.7%, with growth throughout all the segments. It posted pro-forma NPAT of $125.3 Mn, with H2 FY 2023 pro-forma NPAT of $63.3 Mn higher than H1 FY 2023 of $62.0 Mn as well as in line with guidance.
• There was an ongoing focus towards capital efficiency with ~$50 Mn like for like reduction in inventory resulting in significantly improved cash conversion of 145.4% in H2 FY 2023.
• In line with BAP’s dividend policy as well as on the back of the robust operational performance, a fully franked final dividend of 11.5 cps was declared.

Outlook

BAP’s priority is to continue to perform operationally, as well as executing its Better than Before transformation program. For FY 2024, the company anticipates the robust underlying performance subject to the market conditions as well as for the Better than Before program to deliver the targeted FY 2024 goals.

Key Risks

The fluctuations in the prices of raw materials as well as other variable factors such as labour could impact the financial performance of the company.

Fundamental Valuation

P/E Based Relative Valuation

Stock Recommendation

Over the last 3 months, the stock has given a return of 8.758%. The stock has made a 52-week low and high of AUD 5.81 and AUD 7.09, respectively. The company’s performance is exposed to the risks related to the global slowdown as well as geopolitical tensions. Therefore, investors should exit the stock.

Hence, a ‘Sell’ rating has been provided on the stock at the current price of AUD 6.775 per share (Australian Time: 4:00 PM (GMT +11)) as on 11^th October 2023.

Technical Overview:

Daily Price Chart

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Disclaimer

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