Bapcor Earnings: Retail Woes Offset by Strength in Trade

We maintain our AUD 8 fair value estimate for Bapcor. Underlying fiscal 2023 net profit after tax of AUD 125 million was 5% lower than fiscal 2022 and about 7% below our prior forecast. Better-than-expected top-line growth was offset by weaker margins, particularly in retail. The dichotomy between discretionary and nondiscretionary automotive expenditure has manifested in the results. Rising cost of living pressures weighed on retail profitability, while the trade and wholesale divisions proved resilient. We lower our fiscal 2024 underlying NPAT forecast by about 10% to AUD 138 million. We anticipate the subdued retail environment, which is more exposed to discretionary purchases, will continue to weigh on profitability into fiscal 2024. Despite the weaker near-term outlook, the underlying dynamics in automotive spare parts are positive, and we make no material changes to our long-term forecasts.