-Clear opportunity to grow earnings into FY22
-Ability to cycle heightened FY21 earnings a catalyst
-Opportunities include expansion in
As more Australians take to the roads amid prolonged international travel restrictions,
Burson auto parts and the Autobarn retail operation were the stand-out features of the March quarter update, with like-for-like sales growth of 13% and 35%, respectively.
The rate of sales growth should moderate in the fourth quarter as the company cycles elevated comparables but strong profit growth is still expected over FY21. Moreover,
Earnings growth should be driven by demand in the core Burson business as well as continued expansion of the store network in
Credit Suisse quips
Hence, the current valuation appears attractive relative to both the market and peers. The broker's estimates for operating earnings of
The increased number of cars on the road from domestic travel, accelerated store roll-out amid early benefits of the distribution centre consolidation means this could be readily achievable, in the broker's view.
The store roll-out for Autobarn is also slower than expected, which the broker believes is a function of delays stemming from the pandemic.
This is a top small-cap auto pick for Citi and a Buy rating is reiterated. Favourable conditions are likely to be around longer and the broker highlights the investment in a number of growth strategies such as supply chain optimisation, Asian expansion and private-label.
Fundamentals in the vehicle aftermarket are enduring and the company has the balance-sheet capacity to pursue acquisitions as they arise, Macquarie adds. Opportunities include growing the existing footprint in
FNArena's database has six Buy ratings and one Hold (Morgans, yet to comment on the update). The consensus target is
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