Flight Centre Travel Group Limited

FY19 Record Year for TTV: Flight Centre Travel Group Limited (ASX: FLT) deals with the travel retailing in both the leisure and corporate sectors, including destination travel experience businesses comprising tour operators, hotel management, destination management companies and wholesaling. A dividend of A$0.9800 per ordinary share was declared and will be paid on 11 October 2019.

Full ownership of Ignite Travel group:The Flight Centre Travel Group has strengthened its Australian leisure business with the 100% acquisition of the rapidly growing Gold Coast-based Ignite Travel Group. This acquisition will allow integration of Ignite’s product suite through FLT’s leisure network, beyond the recently launched “Flight Centre Exclusives” product range, to include its market-leading My Holiday Centre brands such as MyFiji, MyHawaii and MyCruises.
FY19 Financial Highlights for the period ended as at 30 June 2019:FY19 proved to be another record year in terms of Total Transaction Value (TTV) that exceeded FY18 result by $2 billion.During the year, Profit before tax (PBT) was in-line with the amended guidance range of $335m-$360m. Overseas market, particularly, Americas gave strong results and now is an earning powerhouse while corporate continued to outperform with 15.2% TTV globally to record $8.9 billion. Corporate brands generated 37.7% of Group TTV. Productivity went up by 19.9% since FY15. Group TTV went up by 8.8% to A$23,728 million in FY19 from A$21,818 million in FY18 while the operating revenue was increased by 4.5% to A$3,055 million in FY19 from A$2,923 million in FY18.
 
Underlying cost growth in constant currency held to 3% with full-year trends consistent with H1 and leading to a 32bps reduction in cost margin. Difference between statutory PBT of $343.4 million and underlying PBT of $343.1 million due to Olympus impairment of $29.8million.
 
Cash balance reduced to A$1,172 millionfrom A$1,273 million, representing timing of wage payments throughout the year and the payment of special dividend of $150 million. Other Non-Current Assets went up by 48%, representing the upside of $56 million. There were no major changes in Trade payables due to timing of supplier payments and there was a substantial increase in borrowings due to debt facilities obtained to fund acquisitions.


Financial Summary (Source: Company Reports)
 
There were additional wage payments in Australia, resulting in lower cash flow from operating activities. Outflow of $211 million for acquisitions includes 3Mundi, Umapped and Casto along with payments for the remaining share of Buffalo, Backroads, Topdeck, Travel Tours, Executive Travel and the 25% investment in Upside. Financing activities represented the draw-down on debt facilities taken to fund acquisitions.

Outlook:Coming to the guidance given by the Management, longer term TTV growth target is placed at +7%. Corporate and international business are likely to be the key contributors while Asia is expected to contribute meaningfully to the overall results. Stabilisation is expected in Australia as there are strategies in place to address the issue which impacted the prior performance. About 30 flight centre shops are to be closed and about 30 FCB shops are to be rebranded to travel associates or Universal traveller.

Stock Recommendation:The stock is currently trading at A$47.81 on 27 September 2019 with an annual dividend yield of 3.37%. Currently, the stock is trading above the average of 52-week trading range of $37.590 - $52.856. The stock has gained 16.18% in last 3-months. With the recent acquisition of Ignite Travel Group, investors are advised to keep an eye on the synergistic benefits out of the integration of Ignite’s product suite with the company’s business. Also, as mentioned in the outlook, the company is planning closure and rebranding across its shop network. Considering the above factors along with the current trading levels, we have a watch stance on the stock at the current market price of A$47.810, up 1.919% on 27 September 2019 and suggest investors to wait for better entry level.
 

Crown Resorts Limited

Cash Returns to Shareholders in the form of Dividend:Crown Resorts Limited (ASX: CWN) is one of the largest entertainment Groups in Australia with its core business of investment in integrated resort sector. Recently, the company announced the interest payment of A$1.26 on CWNHB - HYBRID 3-BBSW+4.00% 23-04-75 SUB CUM RED T-07-21 with an interest rate of 5.035%, to be paid on December 16, 2019. A final dividend of 30 cents per share was declared, bringing the total dividend for the year to 60 cents per share.


Financial Summary (Source: Company Reports)

Buy Back of Shares:Recently, the company notified that it has bought back 10,262,923 shares for a consideration of $131,013,384.09.

Highlights of FY19 Financial Performance for the Period ended 30 June 2019: Crown recorded a normalised net profit after tax attributable of $368.6 million, which was down by 4.7% from the previous year.This result reflected subdued market conditions, with a reduction in VIP program play revenue and continued softness in Perth, partly offset by modest revenue growth in Melbourne’s local businesses. Normalised EBITDA at Crown’s Australian resorts of $811.3 million was down 9.2%, while reported EBITDA of $859.6 million was up 6.4%. Crown’s normalised net profit after tax (NPAT) attributable to the parent of $368.6 million was down 4.7%, whilst reported NPAT attributable to the parent of $401.8 million was up 23.0% before significant items.


Financial Summary (Source: Company Reports)

Revenue for FY19 took a dive to $2,929.2 million from $3,083.1 million in 2018. A lower cash and cash equivalents were reported in FY19 than the prior year. Cash flow from operating activities went up to $778.1 million from $731.7 million in FY18.

Stock Recommendation: The stock is currently trading at A$12.120 on 27 September 2019 with a price to earnings multiple of 20.35x and annual dividend yield of 4.99%. The stock corrected 9.96% in last one year. Considering the aforesaid facts, we give a “Hold” rating on the stock at the current market price of $12.120, up 0.832% as on 27 September 2019.

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