A number of mid-cap ASX shares are delivering explosive growth at the moment, partly due to COVID-19 effects.
Mid-cap ASX shares could be interesting ones to consider because they have more growth potential than large caps – just look at how much their profit is growing right now – but they’re large enough that they could be more reliable than small caps or microcaps.
No-one can say when elevated levels of growth will change, but these two mid-cap ASX shares could be ones to watch right now:
Bapcor Ltd (ASX: BAP)
Bapcor is a leading auto parts business across Australia and New Zealand.
The company operates a number of different businesses. Bapcor’s two key businesses are Burson and Autobarn. Burson provides auto parts to mechanic customers, whilst Autobarn is one of the biggest auto part retailers in the country. It also has a network of various wholesalers which are generally national leaders in their categories.
The FY21 half-year result included a high level of growth – total revenue went up 25.8% to $883.6 million, pro-forma earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 38.5% to $145.6 million, pro forma earnings before interest and tax (EBIT) rose by 45% to $106.8 million and pro forma net profit after tax (NPAT) increased by 54% to $70.2 million.
Actual NPAT grew 49.7% to $67.7 million and pro forma earnings per share (EPS) went up 28.9% to 20.7 cents.
The mid-cap ASX share added 27 new company locations throughout the network, which means it now has 1,100 locations throughout Australia, New Zealand and Thailand.
Bapcor’s trade segment, which includes Burson, saw revenue growth of 12.3% with same store sales up 11%. Autobarn same store sales went up 37.1%.
The mid-cap ASX share said that an element of stimulus created elevated discretionary spending and increased DIY positively impacted demand. Bapcor also said that online sales increased by around 300%, with over 80% of that being click and collect.
Bapcor thinks that it has several avenues to drive further growth including network growth, operational efficiencies and an expansion of its own brand product range.
In January 2021, business performance continued at similar levels as the first six months. The company has large growth aspirations for Asia with its Burson division.
Ansell Limited (ASX: ANN)
Ansell is another mid-cap ASX share that is experiencing high levels of growth because of demand for its protective clothing and gloves.
The company reported that its sales increased by 24.5%, with organic growth of 22.9% – this was a mixture of 12.3% volume growth and a 10.6% increase due to the price and mix of products.
Ansell’s healthcare division achieved organic growth of 37.3% with strong volume growth across all of its business units.
Total EBIT went up 60.6% year on year to $147.4 million. This was an increase of 64.3% in constant currency terms. Overall net profit grew 61.9% year on year to $106.5 million, with EPS going up 65.5% to 82.9 cents.
Despite COVID-19 being the cause of the current strong numbers, Ansell is actually expecting continued good strong over the longer-term. The mid-cap ASX share said:
Our expectations are that COVID-19 will continue to impact the world for some time. Assuming the pandemic is under control towards [the] end of FY22, GDP will accelerate further and depressed sectors such as automotive, oil and gas and transportation will return to growth while hospitals return to normal operations to manage down the pent up demand for surgeries and other procedures.
We expect to see strong demand for PPE for the next twelve months. Even when 70% of the population is vaccinated, elevated demand for most of our products will continue due to (a) enhanced safety practices at plants and hospitals, (b) better protection awareness with increased glove use per capita (particularly emerging markets), (c) elevated research & testing activities worldwide, (d) potential need for annual COVID-19 vaccinations and (e) improving industrial activity.
Ansell is expecting to generate EPS of between $1.60 to $1.70 in FY21.