The Bapcor Ltd (ASX: BAP) share price could be driven higher today by new 5-year targets for the business.
What did Bapcor announce?
Bapcor says that it routinely updates its 5-year strategy and targets.
Its strategy is to continue to grow the business with four different elements.
The first is to drive expansion of its network footprint, both physical and online.
The second is to supplement market leading brands with Bapcor’s own brand products.
Third, is to realise benefits and efficiencies.
Finally, invest in team members.
Network expansion
With its ‘trade’ segment, which includes Burson, it’s looking to reach 260 stores – it currently has 200. It will open 10 to 12 new stores a year, whilst also refurbishing or relocating five to six a year. It’s also targeting more than 90 New Zealand stores, it currently has 73 and will open two to three per year. In Australia, it wants to reach 40% own brand products sold, it’s currently at 29%.
With specialist wholesale, it’s targeting $600 million turnover in Australia, with it currently at $80 million.
In commercial vehicles it’s targeting 90 light and heavy locations, it currently has 49. The combined turnover target is $340 million, with the current turnover being $180 million.
With retail it’s targeting 200 Autobarn stores, it currently has 133 and it will add around 12 per year as well as refurbish or relocate around eight per year. Bapcor is also targeting 200 Autopro stores, it currently has 104.
Looking at ‘service’, Bapcor now wants to reach 500 Australian workshops and 165 NZ ones, it currently has 105 and 134 respectively.
Asia
Asia is an important part of the company’s growth plans.
It currently has six Thailand stores. But it wants to grow that number to more than 60, with total revenue of at least $100 million (currently $4 million).
Its total Asian revenue goal is $500 million. That includes the current $200 million from Tye Soon. It wants to be ‘the’ leading Asia Pacific vehicle parts business.
Summary thoughts on Bapcor and the share price
Bapcor has a number of plans to become the largest auto parts business in the region, with growing profit margins.
I think there’s a lot to like about Bapcor. There’s a big question mark when it comes to electric vehicles and what effect that will have on Bapcor over time, but the prospects of growth in Asia are good. Those longer-term targets look very attractive if achieved.
According to CommSec, at the last Bapcor share price it is valued at 21 times the estimated earnings for the 2021 financial year.
It’s one of the ASX growth shares and ASX dividend shares that I’ve got my eyes on.
