The Bapcor Ltd (ASX: BAP) share price is revving higher after providing a solid FY21 update.
Bapcor is the leading auto parts business across Australia and New Zealand with a number of brands including Burson, Autobarn and various other wholesale brands.
FY21 Bapcor update
Bapcor has previously said that July 2020 saw a strong start to the new financial year.
Whilst the re-imposed restrictions hurt earnings in Victoria and Auckland, the overall business performed “extremely well” in the September 2020 quarter.
Burson Trade saw revenue rise by 10%, with same store sales up 7.7% (and up 17% excluding Victoria).
New Zealand revenue grew by 6% with same store sales up 4%. Retail (largely Autobarn) sales grew 47%. Autobarn same store sales (SSS) grew by 36% and AB Company SSS grew 50%.
Specialist wholesale revenue rose by 45%. Excluding acquisitions, revenue went up 18%.
Overall, Bapcor’s revenue is up 27%.
Management comments
Bapcor CEO and Managing Director Darryl Abotomey said: “We are very pleased with the start to the FY21 financial year, despite the impact of the government imposed restrictions. Our talented team members have worked hard under challenging circumstances and delivered an exceptional result for the quarter.”
Mr Abotomey went on to say that the auto parts business is resilient and in the past performed well in difficult economic circumstances.
A reduction in public transport is helping an increase of second hand car sales. More local tourism will also mean more vehicle usage. This could translate into continued higher demand for Bapcor products.
Investing for growth
Bapcor said it’s continuing to invest in its business including IT, marketing, process and system upgrades and capital investment in its facilities. This will increase its footprint and drive improved efficiencies. Bapcor said this will assist profit growth in the future.
Outlook
Whilst Bapcor expects to report a strong first half, the second half remains unclear because of COVID-19 and economic uncertainties. It isn’t able to provide a forecast for FY21 earnings.
I think Bapcor is well suited to the next six to twelve months. Australia’s COVID-19 situation is among the best in the world, it’s a demand and economic issue. The Bapcor share price has been a strong performer since March 2020. I’m not sure if it’s a buy today, FY22 may not be as good as FY21 because of the one-off bump in demand.
Bapcor is a great business. But there other ASX growth shares I like the look of more such as Pushpay Holdings Ltd (ASX: PPH).
