Corporate Travel Management Limited

Strong Business Strategy: Corporate Travel Management Limited (ASX: CTD) is an Australia-based leading travel management company that manages the purchase and delivery of travel services for its clients. The company reported robust performance in the first half of the year wherein NPAT grew by 38.29% to $30.61 Mn in 1HFY18 as compared to prior period (pcp). Revenue from ordinary activities was $172.75 Mn in 1HFY18, up 14.81 per cent from last year. As a result, Diluted EPS grew by 29.4 per cent and accounted to 28.6 cents per share against the prior corresponding period (pcp). Net operating cash flow was $25.7 Mn compared to $42.42 Mn last year. Based on solid performance, the Board of Directors declared fully franked interim dividend of 15 cents per share which was paid on April 11, 2018, representing dividend rise of 25% as compared to previous corresponding period. On the other hand, the company has recently signed a strategic acquisition with Lotus to expand its wing size in Asia region. At present, the company enjoys its decent cash-rich position with virtual debt-free status. The current ratio moderately increased from 0.91x to 1.20 in 1HFY18 from the prior corresponding period. The group expects 20% growth in 2H organic EBITDA with full year underlying EBITDA to be up over 27% on pcp.


Business Strategy (Source: Company Reports)

Further, the company has made a strong start to the second half of the financial year with the signing of several deals across the globe, focus on enhancing its productivity and innovations, and empowering its core team to support client’s need. Meanwhile, the stock price was up by 22.55% in the past three months as at July 25, 2018 and is trading at the higher level. Hence, we maintain our “Hold” recommendation on the stock at the current market price of $29.00, considering the aforesaid facts that can provide affluent opportunity in the upcoming period at least till 2021 through strategic initiatives.
 

Sealink Travel Group Limited

Intention to Maintain Dividend Policy: Sealink Travel Group Limited (ASX: SLK) is one of the leading dynamic travel companies in Australia and has more than 1600 passionate employees across the country and delivers fantastic services to more than 8 Mn customers annually. However, the company reported NPAT degrowth of 13.82% to $11.3 Mn for the half-year ended 31 December 2017. Primary, it was impacted by several factors such as the closure of Sydney Travel Agency, the weaker trading season in Swan River WA services, new service start-up costs on Sydney Harbour and to Rottnest Island, and lower customer requirements in Gladstone. Revenue from ordinary activities de-grew by 4.91% and amounted to $100.84 Mn in 1HF18 against the prior corresponding period (pcp). It was mainly attributable to a combination of Gladstone earnings, and closure of travel centre in the region during the same period. Net operating cash flow was $17.68 Mn compared to $16.78 Mn last year. However, the Board of Directors declared a fully franked interim dividend of 6.5 cents per share which was paid on April 20, 2018, representing a dividend rise of 8.5% as compared to previous corresponding period. Further, the management notified that the company will maintain their dividend policy in the future under any conditions, but it is subject to the corporate’s earnings. As of now, we maintain our “Hold” recommendation on the stock at the current market price of $ 4.340 considering higher trading level despite decent growth in years ahead.


Dividend Performance (Source: Company Reports)

 
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