Bolt-on deals, competitive pressure in store for Australia's GUD - Morningstar

Amotiv

15/08/2022 20:43

** Morningstar says automotive parts marker GUD Holdings
 GUD.AX  has enough room for bolt-on acquisitions, even as
pressure from rivals remains
    ** GUD on Monday reported a 39% jump in annual underlying
NPAT and declared a final dividend of 22 Australian cents per
share, bringing its full-year dividend payout to 62% of
underlying NPAT  urn:newsml:reuters.com:*:nL4N2ZR0VD
    ** "We expect GUD to return to paying out about 80% of
underlying EPS from fiscal 2023," writes Morningstar equity
analyst Angus Hewitt
    ** Hewitt says GUD has little capital requirement beyond
inventory and a solid balance sheet, leaving it with enough
headroom to fund more bolt-on deals in the automotive segment
    ** In November, GUD bought vehicles accessories maker
AutoPacific Group for about A$744.6 mln ($522.9 mln) from PE
firm Pacific Equity Partners  urn:newsml:reuters.com:*:nL4N2SK4JG
    ** Still, Hewitt anticipates continued competitive pressure
from generic parts manufacturers and international peers
    ** "We expect GUD to struggle to command price increases
above cost inflation over the long term," he says
    ** Five of seven brokerages rate the stock "buy", two
"hold"; median PT is A$11.98
    ** Up to Monday's close, stock down 21.4% this year

($1 = 1.4241 Australian dollars)

 (Reporting by Shashwat Awasthi)
 ((Shashwat.Awasthi@tr.com
mailto:Shashwat.Awasthi@thomsonreuters.com))