Flight Centre Travel Group Ltd (ASX: FLT)

FLT Details

Encouraging outlook: Flight Centre’s stock moved up 1.97% on November 09, 2017 while the group delivered a positive earnings outlook for FY18 at its Annual General Meeting, with a profit rise of over 15% in the full year at the back of a strong first half. The group’s transformation initiative is showcased to deliver tangible returns at the back of its 7-2-100 goals with regards to TTV growth, net margin and cost growth over next three to five years.

The group’s chief executive, Graham Turner has signalled for strong momentum from the second half of FY17 into 2018 while businesses are performing well and tracking towards a $120 million to $135 million underlying first half profit before tax. This has been flagged to represent 6% to 19% growth on the $113.2 million underlying profit before tax recorded during the first half of FY17, and thus would lead to full year profit before tax between $350 million and $380 million, indicating a growth of between 6.2% and 15.6% over the disappointing results of FY17. The group expects the international businesses to be growth drivers for 2018, with its North American unit and its Europe, Middle East and Africa unit performing well, while Australia and New Zealand regions still face challenges and the group is making some changes with rolling out of new systems and slashing of costs. Given the run-up of over 55% in last one year and estimated forward earnings around 20x, while the group tracks well with performance going forward, we maintain a “Hold” on the stock at the current price of $47.45



FLT Daily Chart (Source: Thomson Reuters)
 

Virgin Australia Holdings Ltd (ASX: VAH)

VAH Details

Surging on positive performance: Virgin Australia was a great mover on November 09, 2017 with a 9% rally in stock price that made it touch high levels. The group seems to have come out with flying colours with regards to its first quarter of FY18 results with continuation of a positive trajectory into FY18. The group’s underlying profit before tax was about $18 million against underlying loss of $3.6 million in first quarter of FY17 and the revenue surged by 5.7%. The group, particularly announced for stronger passenger revenues across its Domestic and International businesses. Virgin Australia has also appointed two new independent directors (one being the Chairman of Senex Energy). VAH was otherwise noted to witness a positive free cash flow of $34.3 million in FY17 after a long period since FY12. With efforts, the group’s debt was also slashed by $839 million in FY17. It would be crucial to see how the group performs given the initiatives on delivering free cash and leverage improvements through continued disciplined capacity and capital management. Meanwhile, VAH is set to deliver five new Boeing 737-NG aircraft with four scheduled for the first half of current financial year.
 

Trading Update (Source: Company Reports)
 
News around privatisation is also doing the rounds for VAH and this might have been a reason the group is catching some eyes lately. While the group seems to be performing well, the stock looks “Overvalued” at the current price of $0.24



VAH Daily Chart (Source: Thomson Reuters)

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