Is it time to buy Burson Group Ltd?

Despite the recent surge in the share price, Burson Group Ltd (ASX:BAP) still looks cheap.

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Burson Group Ltd (ASX: BAP) recently listed on the ASX in April of this year at $1.82. Since listing, the share price has surged to its current price of $2.50, an outstanding return for investors who purchased shares at the listing date. However, despite the increase in the share price, I believe the shares are still cheap for this quality, defensive business.

Burson is the largest trade focused distributor of automotive aftermarket parts in Australia. The automotive aftermarket distribution industry supplies replacement parts and consumables used in the service and repair of vehicles. Burson distributes automotive parts using an extensive distribution network that comprises 114 stores.

A look at Burson's financials reveals an impressive past performance. Net profit was $11 million in FY12 and has grown to $19.4 million in FY14, which narrowly exceeds the prospectus forecast of $19.3m. The FY14 profit result represents an increase of 21% over FY13. Sales growth has also been impressive, growing from $284 million in FY12 to $341 million in FY14. The company expects FY15 net profit to be $21.9 million – an increase of 13% from FY14.

The distribution of automotive parts to workshops is an attractive industry because of its underlying growth and resilient demand. The industry has experienced steady growth underpinned by increasing numbers of vehicles per household, population growth, an increase in older vehicles requiring repair and an increase in the percentage of vehicles serviced by workshops.

The range of parts required by workshops has expanded as the number of vehicle makes and models in Australia has increased. This trend has placed pressure on the ability of smaller distributors to compete with Burson and other large players. The company expects these industry trends to continue going forward. Further, volatility in the sale of new vehicles does not impact Burson as it supplies parts to vehicles that are predominately four years old or older.

Burson increased its store count by 11 stores in FY14, growing its total store count to 116, and also saw same store sales growth of 3.9%. Burson is targeting 175 stores by 2019.

Burson Group is a quality business set for further growth. At the current share price, the shares still represent good value.

Motley Fool contributor Bradley Murphy owns shares in Burson Group mentioned in this article. The Motley Fool owns shares in Burson Group.

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