Flight Centre Travel Group Limited

Upgraded Full-Year Guidance: Flight Centre Travel Group Limited’s (ASX: FLT) stock climbed up 2.677% on June 26, 2018 following the positive market sentiments while the group recently upgraded full-year guidance of PBT to $360 Mn-$385 Mn as compared to its initial target of $350 Mn-$380 Mn. The group delivered TTV growth of 8.7% in 1HFY18 as compared to the previous corresponding period. Sales grew by 5.4% to $1.37 Bn, which led to a lower overall income margin. The margin fell due to the given changes in FLT's business mix. NPAT substantially increased by 37.2% and amounted to $102.2 Mn due to USA tax rate changes and FLT's strong performance in the UK, which also operates with a lower corporate tax rate. In light of this strong cash position, the Board of Directors declared a fully franked 60 cents per share interim dividend, representing a 59% return of NPAT. On balance sheet front, the current ratio stood at 1.47x in 1HFY18 while debt to equity ratio came at 0.06x.


1HFY18 Financial Highlights (Source: Company Reports)

On the other hand, the group has recently informed to the market that it has reported an amendment to the ‘Shareholders Deed of Pre-Emption’ between its five founding shareholders to remove the two smallest founding shareholders. These families collectively hold 2.2% ownership. Further, the largest founding shareholder currently holds almost 42.2 per cent (42.7 Mn) of total outstanding shares through the Gainsdale, Gehar and James Management Services entities. These amended Shareholders Deed of Pre-Emption has also been lodged. Trinity Holdings Limited and Friday Investments Pty Limited ceased to be the substantial holder of the group since June 19, 2018. Besides this, Gainsdale Pty Ltd. and Gehar Pty. Ltd., a substantial holder of the Group changed its holding from 44.99 per cent of the voting power to 42.21 per cent of the voting power. The stock is currently trading near its 52-week high level, hence, we maintain our “Expensive” recommendation on the stock at the current market price of $64.810.
 

Credit Corp Group Limited

Decent Outlook: Credit Corp Group Limited (ASX: CCP) is an Australia based financial services provider to the credit-impaired consumer segment. Recently, the group requested that the Australian Securities Exchange (ASX) place a trading halt over shares in the Company pending the preparation of a response to an anonymous report. According to the release, the report was not credible and rejected the assertions contained which were available in the report. Further, the Company maintains two bank facilities totalling $300 Mn, of which $100 Mn remains undrawn. These comprise of a corporate facility of $215 Mn expiring in July 2020 and a securitized warehouse facility of $85 Mn expiring in June 2021. The securitized warehouse facility is subject to a run-off period to June 2023. Besides this, the group is experiencing strong operational performance over the final quarter and re-affirms its FY2018 market guidance wherein FY 18 earnings per share will be in the range of 130-134 cents per share, and Purchased Debt Ledger will be in the range of $190Mn to $200 Mn. With this upgraded guidance, NPAT growth for full year is expected around 16% as compared to previous year and the company is on track for continued growth for FY19. Meanwhile, the stock was down by 4.02% in the past three months as on June 25, 2018 and is trading at a P/E of 14.750x. Looking at the current trading scenario, we give an “Expensive” recommendation on the stock at the current price of $ 18.530.


Strong Outlook (Source: Company Reports)

 
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