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Is Bapcor Ltd (ASX: BAP) on the mend?

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    Is Bapcor Ltd (ASX: BAP) on the mend?

    Hi MM, Having purchased BAP a while ago only to see their share price continue to new lows, it was pleasing to see today's FY report and uptick in share price. Have they turned the corner? Any view when they might reinstate dividends? Thanks, Peter

    Answer

    Hi Peter,

    Bapcor has been a large tale of woe over the last 5-years falling well over 90% so any semblance of a bounce/recovery must be kept in context.

    BAP has surged ~55% over the past two sessions following its FY26 result, as investors focused on signs that the struggling automotive parts retailer is finally stabilising. Revenue of $1.924bn was broadly in line, while underlying EBITDA of $152.5m beat consensus by ~4%, with improving second-half trading and early FY27 sales providing further encouragement.
    • A more than 50% rally on a 4% beat shows how low expectations were, and how under owned the stock was.
    The headline $431.6m statutory loss was largely driven by $442.4m of non-cash impairments, while a $200m equity raising and stronger working capital reduced net debt to $135m and leverage to 1.72x, substantially de-risking the balance sheet.

    The result has been interpreted as a credible financial and operational reset rather than a return to strong earnings growth just yet. Consumer conditions remain challenging, underlying NPAT fell sharply to $10.8m and no final dividend was declared, but improving sales trends, further cost reductions and a much healthier balance sheet have increased confidence in the turnaround.

    At 4.6x forward EV/EBITDA, Bapcor trades at a substantial discount to peers, reflecting ongoing turnaround risk, but improving execution and earnings could drive a meaningful re-rating toward the 6–8x multiples of comparable businesses, while the valuation discount may also attract M&A interest. We would not be expecting a dividend any time soon.

    • We feel the worst is probably behind BAP but it’s not for us at this stage.
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    Bapcor Ltd (BAP)
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