Crown Resorts limited

Annual Dividend Yield at 5.19%: Crown Resorts Limited (ASX: CWN) is engaged in programming and development to gaming, casino and tourism segment across Australia. The company also provides dining services across several resorts.CWN has a healthy project portfolio, which includes Crown Sydney Hotel Resort at Barangaroo on Sydney Harbour and the proposed One Queensbridge project in Melbourne.

As per the recent market update, NSW Independent Liquor and Gaming Authority will conduct an enquiry u/s sec 143 of the Casino Control Act 1992 (NSW). Crown will provide full support to the enquiry.

With a press release on 30^th July 2019, Crown clarified various allegations regarding its business dealings raised by Federal Government. The company has provided a range of information, consistent with its obligations which also includes the business transactions over $ 10,000.

H1FY19 Highlights: During the period, CWN posted mixed results with revenue at $1,478 million, down by 7.3% from H1FY18, and net profit at $ 174.9 million, down by 26.7% on y-o-y basis. Actual EBITDA was marginally lower by 2.1% (y-o-y) at $391.8 million. Lower interest cost at $ 8.6 million in 1H19 against $ 27.9 million in H1FY18, provided some support to the bottom-line. Cash and cash equivalent reduced significantly to $1,274.4 million at the end of 1H19 from $1,844.6 million at the end of FY18. Total current assets in H1FY19 valued at $ 1,487.5 million against $2,076.2 million as at FY18. Net assets stood at $5,033.9 million at the end of 1H19 in comparison with $5,157.9 million at the end of FY18. Capital expenditure came in at $209.4 million with loan repayment of $436.1 million in 1H19.


1H19 Highlights (Source: Company Reports)

Outlook: The company is progressing well with respect to ‘Crown Sydney Hotel Resort’ and the project is expected to complete in the first half of CY21. The project is expected to incur the total gross project cost of $2.2 billion with a net project cost of ~$14.4 billion.

Stock recommendation: With the market cap of ~$7.83 billion, the stock is available at the price to earnings multiple of 15.82x with an annual dividend yield of 5.26%. The stock produced returns of -13.67 % and -5.32 % in the past three months and six months, respectively. The stock is currently trading at the lower end of its trading range of 52-week. On the margin front, EBITDA margin and net margin in the 1H19 came in at 27.5% and 11.8%, which were higher than the industry median of 26.1% and 9.3%, respectively. Considering the aforesaid facts and current trading levels, we recommend a “Hold” rating on the stock at the current market price of $11.410, down 1.298% as on 09 August 2019.
 

Corporate Travel Management Limited

Decent Performance in 1H19: Corporate Travel Management Limited (ASX: CTD) offers travel management solutions to corporate customers. The company has footprints across Australia, New Zealand, the US, Europe, and Asia with headquarter at Brisbane, Australia.

Cancellation of unlisted shares: In an update to the market, CTD informed that 70,000 unlisted share appreciation rights were cancelled. Thus, the total number of unlisted share appreciation rights now on issue stands at 3,998,500.

H1Financial Highlights: The company posted healthy H1FY19 earnings where total transaction value (TTV) was up by 31% at $ 2951.5 million followed by underlying EBITDA at $ 64.6 million with a growth of 21.5% on y-o-y basis. Net profit after tax during the half stood at $ 40.6 million, up ~26% y-o-y. Cash balance stood at $74.2 million, followed by intangibles at $502 million at the end of the period. However, total borrowing was lower at $ 12.9 million from $ 14.7 million six months ago. Net assets of the company at the end of 31^st December 2018 stood at $558.4 million.


1H19 Financial Performance (Source: Company Reports)

Outlook: The Management guided that in the second half of FY19, the company has experienced a marginal decline in the ticket price, which should not have a substantial impact on the total revenue. The Management expects its FY19 underlying EBITDA to be in the range of $144 million to 150 million with a growth of ~15% to 20% on y-o-y basis. As key Strategic Initiatives for FY19-21, the company intends to leverage its clients across the business lines such as CTM, ETM, B2B, B2C. The company will also look for opportunities in terms of acquisition for its organic growth, going forward.

Stock Recommendation: CTD has delivered strong performance in the recent past with regards to financials and considering the provided guidance, we believe that the growth story of the business remains intact. CTD’s EBITDA margin at 31% and net profit margin 19.3% in 1H19 are well above the industry median of 26.1% and 9.3%, respectively.Financial performance in 1H19, higher growth in top-line and bottom-line along with strong margins, decent guidance for FY19, acquisition of Lotus Travel to contribute towards FY19 EBITDA, rise in broad based client activities, etc., augur well for the future growth of the company. CTD’s stock has delivered negative returns of 13.42% and 13.28% during the last three and six months, respectively. Currently,the company’s stock is trading towards the 52-week lower levels of $19.20 with PE multiple of 27.11x. Hence, considering aforesaid facts and current trading levels, we recommend a “Hold” rating on the stock at the current market price of $21.550, up 1.126% as on 09 August 2019.  

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