Why the Bapcor (ASX:BAP) share price is rocketing 9% higher today

The Bapcor (ASX: BAP) share price has soared up 9.5% in morning trade. We take a look at why the investors are snapping up shares today.

Bernd Struben

Author bio Bernd Struben earned his BA in economics from the University of Michigan in 1991, with post-graduate studies in environmental economics at the University of Connecticut. Over the years he’s written about and analysed the tourism industry in the Caribbean; Europe’s commercial real estate markets; and, since moving to Australia in 2010, global and Aussie share markets. Bernd studies geopolitical and macroeconomic trends, alongside sector and company specific data, to gauge what he believes could be tomorrow's best investments. In his free time, you might find Bernd at the beach with his family or working on his next science fiction novel. Areas of expertise Australian and global share markets Macroeconomic and geopolitical trends Real estate Education Economics, University of Michigan Favorite investment quote "The four most dangerous words in investing are: 'This time it's different." — Sir John Templeton

Published December 17, 2020 10:51 am AEDT

The Bapcor Ltd (ASX: BAP) share price is soaring higher, up 9.5% to $8.01 this morning, after the company released a favourable trading update to the ASX.

flying asx share price represented by cartoon car rocketing above all other cars on the road — Inage source: Getty Images

What's driving the Bapcor share price higher?

Today, Bapcor provided a first quarter 2021 trading update revealing a sharp increase in group revenue.

For the 5 months to the end of November, the company reported a rise in group revenue of approximately 26%. It indicated that a combination of lower interest rates, the contribution of Truckline (not included in the prior corresponding period) and less spending on discretionary expenses, like travel, saw net profit after tax (NPAT) achieve operating leverage.

In a forward-looking statement, the company forecasts revenue growth of at least 25% for the first half of FY21 compared to the first half of FY20. And it expects NPAT to increase by at least 50% over the $45.6 million achieved in FY20.

The company concurred with market consensus for full year NPAT in the range of $110-115 million. But it stressed that "uncertain economic conditions" remain in play.

Addressing the updated results, Bapcor CEO Darryl Abotomey said:

We are very pleased with the strong performance of Bapcor's businesses. Trade and wholesale represent over 80 per cent of Bapcor's business, with retail 20 per cent. Historically, trade focussed businesses perform solidly in difficult economic conditions – which is again borne out by Bapcor's current performance.

In addition the changes that have been implemented in our retail business continue to gain momentum with revenue up 40 per cent over the pcp [prior corresponding period]. Initiatives include the recently launched new Autobarn store format that is delivering a significant uplift in sales…

The construction of our new Victorian Distribution Centre is progressing well with the building expected to be handed over in February 221 and the automated picking system operational in the following 6 months.

Bapcor share price and company snapshot

Bapcor Ltd (formerly Burson Group Limited) provides vehicle parts, accessories, equipment and services throughout the Asia Pacific region. The company listed on the ASX in 2014. Today it makes up part of the S&P/ASX 200 Index (ASX: XJO). Bapcor pays a 2.5% annualised dividend yield, fully franked.

With this morning's gains, Bapcor's share price is now up 25% year-to-date. And shares have gained 152% since the 25 March lows.

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