Pent-Up Demand and Government Stimulus Drive Strong First Half for Bapcor; FVE Increased 4%

We raise our fair value estimate for narrow-moat Bapcor by 4% to AUD 7.30 per share, due in equal parts to an increase in near-term forecasts and time value of money. Group sales increased 26% compared with the prior corresponding period, or PCP, underpinned by strong same-store sales (notably 37% for Autobarn stores) and additional revenue from an expanded store footprint. Effective cost controls and improved operating leverage led to a 54% increase in underlying NPAT on the PCP to AUD 70 million. We lift our fiscal 2021 NPAT forecast by 5% to AUD 114 on the back of the stronger-than-expected first half. Bapcor declared an interim fully franked dividend of AUD 0.09 per share, up 13% on the PCP--tracking our full-year forecast of AUD 0.18 per share, representing a payout ratio of around 50% of underlying earnings.