Bapcor Earnings: A Difficult Year, but Expect Profits to Recover From Fiscal 2025

Demand headwinds, competitive pressure, management tumult, and operational missteps weighed heavily on Bapcor in fiscal 2024. Underlying net profit declined 24% to AUD 95 million, marginally below our AUD 96 million forecast. The statutory result was an AUD 158 million loss, mostly due to an impairment in the retail business. However, we expect this to prove a trough year for Bapcor and shares trade at a material discount to our unchanged AUD 7.30 fair value estimate. We expect demand for discretionary goods to revert to trend levels in the longer term and underlying automotive spare parts demand—the bulk of earnings—to remain resilient. Bapcor’s trade network, which underpins its narrow economic moat, enables it to supply a wider range of often slow-moving parts more quickly and at a lower cost than smaller competitors.