GUD Lacks Sufficient Brand Equity to Warrant an Economic Moat

We expect GUD Holdings' strong earnings growth to continue, underpinned by the core automotive segment. Compared with new vehicle sales, which can prove volatile, GUD Holdings' aftermarket spare parts business remains resilient. Automotive spare parts, required for routine maintenance and repair of vehicles, are less affected by changes in discretionary income and consumer confidence with demand broadly driven by the increasing pool of vehicles. We expect the number of registered vehicles to continue growing at a low-single-digit CAGR over the next decade, marginally outpacing population growth. We estimate there are currently about 20 million passenger vehicles in Australia, with an average age of around 12 years.