CIE stock in Focus: Bapcor Limited

In this mid-monthly update, I would like to present a stock we hold that has achieved strong earnings and dividends for the past several years, Bapcor Limited.

Stock in focus: Bapcor Limited

Bapcor Limited is Australasia’s leading provider of automotive aftermarket parts, accessories, automotive equipment and services. Bapcor’s core business segment is the automotive aftermarket, covering Trade (Burson and BNT), Retail & Service (Autobarn, Autopro, etc.) and Specialist Wholesale businesses (AAD, MTQ, ect.).

The trade segment is approximately 50% of the group, with the remainder being retail and specialist wholesale. Bapcor employs over 3,800 team members across more than 800 locations worldwide.

Source: Bapcor 1HY18 Investor Presentation

Bapcor has been delivering growing earnings and dividends for the past several years, which are supported by strong cash flows. The CAGR of revenue and earnings for the past 5 years is above 30%. Dividends have increased at CAGR 23% for the past three years. Earnings are resilient to online retails and economic downturns. The base business is relatively stable which we find attractive.

Source: Source: Bapcor 1HY18 Investor Presentation

Bapcor not only grows from its existing business but also through acquisitions. Bapcor are buying back their underperforming franchise stores and converting them to better performing corporate stores, which will boost average store performance.

The recently acquired NZ Hellaby auto is adding leverage to the specialist wholesale segment, and geographically diversifying earnings. The company has a solid balance sheet and stable cashflows which provide support for the new store roll out plan and some potential acquisitions.

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