The Bapcor Ltd (ASX:BAP) share price fell 3.7% to $5.70 after the results announcement this morning, despite it revealing big growth in profits. Here's what you need to know:
- Revenues rose 34% to $435 million
- Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) rose 32% to $45.6 million
- Net Profit After Tax (NPAT) rose 31% to $25.2 million
- Earnings Per Share rose 21% to 9.66 cents per share
- Interim dividend of 5.5 cents per share
- Outlook for 'continued strong profit growth' due to acquisitions in the first half, continued store growth and acquisition of Hellaby's, albeit offset somewhat by acquisition costs
So What?
A strong result from Bapcor, with the pro-forma results (excluding the costs associated with the acquisition of Hellaby's) coming in even stronger, with revenues and profits rising more than 40%. Some of the benefit for shareholders was masked further by the earnings per share dilution caused by the capital raising, but the Hellaby's acquisition was an important first step into New Zealand for Bapcor.
Same-store sales growth was strong both in Bapcor's Trade segment (up 5%) and Retail segment (up 2.8%), although competition in retail was fierce resulting in slower growth compared to previous years. Somewhat surprisingly, 4 Autopro stores also left Bapcor's network to join an independent franchise network.
For the full year 2017, Bapcor is forecasting net profit after tax to be between $57 million and $59 million, excluding the impact of Hellaby's. This reflects a strong second half and significant improvement over the first half results.
Now What?
With an upper limit of $59 million in profits forecast for the full year, Bapcor shares are priced at about 28 times full year profit. Given that the Hellaby's acquisition is yet to be integrated, Bapcor would be looking at some additional profits from synergies between the two businesses.
So Bapcor still looks a little pricey on conventional metrics, but as it scales up its distribution network it will increase its ability to get better prices both from buyers and from suppliers. Investors also get an attractive 2% growing dividend today. I wouldn't bet against Bapcor after today's results.
