Bapcor: Result above consensus at every line

BAP’s FY17 result was above Morgans and consensus estimates at every line, with the group ultimately exceeding the top end of its guidance range. Management is comfortable with FY18 consensus estimates, guiding to c30% growth on FY17 proforma NPAT. We comfortably sit 2% above this. BAP often gets criticised for being overly acquisitive, but the proof is in the pudding with all acquisitions exceeding targets to-date and synergies flowing through nicely. BAP will now move into a consolidation phase following this acquisitive period and there is plenty more upside from business optimisation on the agenda.

FY17 result beats with 36.4% EPS growth

BAP’s FY17 result was above our forecast at every line item with the group achieving slightly above the top-end of its guidance range. Highlights of the result include: revenue +47.8%; proforma EBITDA +52.4%; and proforma NPAT +50.9% - buoyed by recent acquisitions (notably Hellaby’s, but also strong growth in each of base businesses). Trade SSS growth remained buoyant at +4.6% (+5%/4.2% 1H/2H) while Retail SSS growth was no worse than feared at +2% (+2.8%/+1.2% 1H/2H). 

FY18 guidance for 30% growth….risk to the upside in our view

BAP noted it is comfortable with current consensus forecasts and guided to c30% growth on FY17 proforma NPAT (A$65.8m), which would equate to cA$85.5m FY18 NPAT. We currently forecast A$86.9m FY18 NPAT, equating to 32% growth which we are comfortable with. Accounting for an additional 6 months of HBY Auto and guided ANA/HBY synergies, our FY18 EBITDA forecast only requires c10% growth from the base business which will be readily achievable, in our view. Our EPS forecasts are unchanged in FY18+ (<1%). 

Hard to ignore the broad-based growth; Add maintained

Today’s result was a strong reminder of the broad-based growth BAP is achieving and provides us with even more confidence in the group’s growth profile. While the market has been critical of BAP’s acquisition ‘aggression’ in the past, the group’s track record speaks for itself – with all acquisitions exceeding targets and meaningful synergies flowing through.

Contributed by Jo Little, Senior Analyst.  Sectors Covered: Consumer Discretionary, Industrials & Developers (VIEW LINK)