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    Can Bapcor’s (ASX:BAP) New CEO and Relaxed Leverage Covenants Reframe Its Turnaround Risks?

    Simply Wall St·12/20/2025 12:26:06
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    • Bapcor recently announced that outgoing CEO Angus McKay will be replaced by automotive aftermarket veteran Chris Wilesmith as CEO and Managing Director from 14 January 2026, alongside an updated FY26 earnings outlook that includes an expected Statutory NPAT loss of A$5 million–A$8 million in 1H26 and A$31 million–A$36 million for the full year.
    • At the same time, Bapcor secured temporary lender approval to lift its net leverage covenant to 3.5 times adjusted EBITDA, giving the new leadership more balance sheet flexibility to execute the turnaround plan.
    • We’ll now examine how Wilesmith’s appointment and added covenant flexibility could reshape Bapcor’s turnaround-focused investment narrative and risk profile.

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    Bapcor Investment Narrative Recap

    To own Bapcor today, you need to believe its turnaround can offset recent weak trading and guided FY26 Statutory NPAT loss of A$31 million to A$36 million. The key short term catalyst remains operational improvement under refreshed leadership, while the biggest risk is that ongoing restructuring, store closures and executive turnover fail to restore margins and earnings momentum. The latest guidance downgrade meaningfully heightens that execution risk.

    The most relevant announcement is the temporary relaxation of Bapcor’s net leverage covenant to 3.5 times adjusted EBITDA for the December 2025 and June 2026 testing dates. This added balance sheet flexibility supports the turnaround initiatives that underpin the investment thesis, but it also underlines the importance of delivering on cost savings, supply chain upgrades and network optimisation before the covenant heads back toward its prior settings.

    Yet investors should be aware that if restructuring efficiencies and cost savings stall, then...

    Read the full narrative on Bapcor (it's free!)

    Bapcor's narrative projects A$2.1 billion revenue and A$106.9 million earnings by 2028. This requires 2.2% yearly revenue growth and an earnings increase of about A$78.8 million from A$28.1 million today.

    Uncover how Bapcor's forecasts yield a A$3.21 fair value, a 53% upside to its current price.

    Exploring Other Perspectives

    ASX:BAP 1-Year Stock Price Chart
    ASX:BAP 1-Year Stock Price Chart

    Seven fair value estimates from the Simply Wall St Community span roughly A$2.62 to A$6.69 per share, showing how far apart views on Bapcor’s worth can be. Against this backdrop, the guided FY26 loss and raised leverage covenant sharpen the focus on whether the turnaround can offset execution risks to margins and earnings that many investors may be underestimating.

    Explore 7 other fair value estimates on Bapcor - why the stock might be worth just A$2.62!

    Build Your Own Bapcor Narrative

    Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.