MaxiPARTS Limited

MaxiPARTS (ASX: MXI) is a distributor of truck parts and associated consumables for truck operators and mechanics. Whilst the business has been trading under the MaxiPARTS name since May 2013, it has been operating for over 30-years under three separate names being Colrain, Queensland Diesel Spares and Gladstone Air Cleaner Services. It’s worth noting that prior to 2021 MaxiPARTS was subsidiary of a parent company known as MaxiTRANS which was predominantly focused on manufacturing truck trailers. As the trailer division was inherently volatile and capital intensive, the decision was made to divest the trailer division and focus wholly on the capital light truck parts division which had produced consistently positive results over a long period of time.

Today, MXI is one of the largest independent distributors of truck parts and consumables, operating across 32 sites nationwide, with revenues approaching $300m. At any one time, MaxiPARTS provides customers access to over 19,000 truck associated parts necessary for daily operations. Within these 32 locations across 6 states & territories, MXI focuses on selling replacement axles, suspensions, wheels, brakes, trailer products to a vast range of truck customers (fleet operators, individuals, workshops & trailer manufacturers) principally across vast number of North American and Japanese commercial vehicle makes & models. The recent acquisition of Förch Australia has enhanced MXI’s product range which now includes the ability to provide an adjacent range of consumable type products (such as cleaning products, nuts & bolts, lubricants, and specialised paints), to automotive/commercial vehicle workshops, many of these workshop customers are already undertaking the parts replacement work using MXI replacement parts.

Our investment thesis for MXI is centred around the numerous levers that MXI has available to grow earnings, together with the significant valuation multiple discrepancy that MXI has relative to some of its listed peers. MXI operates with several long-term market dynamics that should assist in its growth. The specialist independent aftermarket part distributors for trucks is a consolidating industry, which has the central tailwind of Australia’s ageing trucking fleet (the trend of which can be seen in the below graph). With an ever increasing number of kilometres driven each year to transport Australia’s road freight, in addition to a constantly ageing fleet of vehicles, not only are we likely to continue to see the need for replacement part continue to grow but also the time and cost savings commercial vehicle fleet operators/drivers reap by utilising aftermarket parts providers is a structural growth backdrop for the industry and for MaxiPARTS.

Maxiparts Distribution Centre/Head Office, Truganina Melbourne (Source: Maxiparts Limited)

Australia’s Aging Truck Fleet

Brendan York represents NAOS on the board of MaxiPARTS, reflecting our approach to active and collaborative investment. This strategy allows us to support the business, ensuring they are positioned to maximize the long-term compounding potential of our invested capital.