Helloworld Travel Limited

HLO Details

Total transaction values aided by acquisitions, air sales volume: Helloworld Travel Limited (ASX: HLO) ended FY 2018 by posting total transactional value or TTV amounting to $6.07 billion and was helped by the business acquisitions as well as robust growth in the air sales volume. The acquisitions which the company undertook in H2 2018 helped the company in garnering TTV. The company’s revenues of FY 2018 were in line with the previous year as the favourable impacts of the business acquisitions in H2 2018 got offset by the restructuring of the Insider Journeys business as well as by the disposed operations.

HLO’s TTV (Source: Company Reports)

The operating costs of Helloworld lowered on the YoY basis representing the company’s focus on operating costs reduction. In the Australia segment, the revenue growth as well as TTV growth was well-supported by the improved contracting outcomes as well as by the business acquisitions. In the New Zealand segment, the TTV growth in regard to the retail division was witnessed because of the elevated member numbers. In the company’s rest of the world segment, the company generated TTV amounting to $96.8 million in FY 2018 which implies the decline of 15.5% on the YoY basis.

What Could Support Helloworld Moving Forward: Helloworld has been making developments in regard to the technology which includes the launch of ResWorld to the retail networks, launch of Amadeus “Cytric” product as well as upgradation done in the Air Tickets system.The company’s management is having a favourable outlook and has been focusing towards profitable revenue streams as well as towards greater efficiencies. The company is well-positioned to encounter growth with the help of acquisition as well as organically. 

The management of Helloworld stated that the economic growth globally as well as domestically is expected to witness upward momentum which would be helping the travel in which the company has its operations. According to them, the company has done numerous acquisitions in FY 2018 and the benefit of these acquisitions would support it in FY 2019. Moreover, in the future financial years, the shareholder returns are expected to get positively impacted because of the acquisitions.

Stock Analysis: A technical indicator, Moving Average Convergence Divergence or MACD, is applied on the daily chart of Helloworld Limited and default values have been used. As per the observation, the MACD line has crossed the signal line and is moving upwards. However, after this crossover another crossover is expected, and stock price movement can be estimated only after this crossover. Therefore, the market players need to wait and watch the stock at the current market price of A$5.700 per share.


 
HLO Daily Chart (Source: Thomson Reuters)
 
 

Crown Resorts Limited

CWN Details

Crown Melbourne Underpinned CWN’s Performance: Crown Resorts Limited (ASX: CWN) ended FY 2018 with net profit amounting to $326.7 million implying the YoY growth of 5.8%. The company’s FY 2018 results got supported by the Melbourne operations as the turnover from the VIP program play witnessed the YoY increase of 73.9%. However, the subdued momentum in the trading in Perth impacted the company’s results. The company has been focusing on its Australian operations as well as towards the development projects. However, the company has also focused on improving the shareholders’ returns.


Investment in Australian Resorts (Source: Company Reports)

Crown Perth generated normalised revenues amounting to $844.5 million in FY 2018 which implies the growth of 1.7% and VIP program play declined 5.8%, main floor gaming witnessed the fall of 2.1% as well as non-gaming rose 12.5% mainly because of the full year impact of the Crown Towers Perth which came into existence in the month of December 2016.  

What CWN’s Management Expects: The top management of Crown Resorts Limited stated that they would be focusing on the performance of the present business operations and towards the execution of the development projects. In addition, the company also plans to increase the digital assets. The balance sheet of the company, along with the net cash position, is strongly-positioned to finance the Australian development projects.

In FY 2018, the company stated that it had unloaded significant assets which includes the company’s interest in CrownBet and as a result of the sale it garnered $150 million. Moreover, after selling Alon Las Vegas land the company gathered US$300 million, unloading the shares in Caesars Entertainment Corporation helped company in garnering US$53.3 million and by selling the interest in Ellerston it fetched $62.5 million.

Technical Analysis: A technical indicator, Moving Average Convergence Divergence or MACD, has been applied on the daily chart of CWN and default values have been considered. As per the observation, the MACD line has just crossed the signal line and is moving upwards. Therefore, we maintain our “Hold” rating on the stock at the current market price of A$11.700 per share.  


 
CWN Daily Chart (Source: Thomson Reuters)
 

Qantas Airways Limited

QAN Details

Improving Net Passenger Revenue: Qantas Airways Limited. (ASX: QAN) provides transportation of passengers through two airlines including Qantas (full service carrier) and Jetstar (low cost carrier), operating international, domestic and regional services. The Company also includes Qantas Frequent Flyer and Qantas Freight which generates diverse revenue streams and adds value for customers and investors. The total revenues for the FY2018 was clocked at $ 17,060 Mn a rise of 6.25% over pcp, this was on account of the “Dual brand strategy” which was adopted by the company. Under the umbrella of dual brand, the Qantas International was able to deliver better earnings on account of the improvement in Unit revenue and higher seat factor which helped the firm to offset the impact of rising fuel prices.

The underlying PBT came in at $1.6 Bn which was the highest ever reported by the company. The Jetstar also delivered a robust performance on the domestic as well as international front on account of the rise in net passenger revenue. The rise in net passenger revenue of 6% was due to the enhanced revenue from the additional flying activity and improved group unit revenue.

 
 
 
 
QAN’s Total shareholder’s return in comparison with various Index (Source: Company Reports)

On the other hand, Qantas Airways faces operational risk in the form of fuel price risk in the times of rising fuel prices, in order to mitigate such risk, the company has entered into futures & options strategy. It is looking forward to foray into new growth markets in Asia and also focussing on the development of its own pilot academy, so as to make sure that the company has a strong pipeline of talent in place.
 
The sector is also slated to face extreme competition and margin pressures in the upcoming periods on account of the capacity growth being ahead of the underlying demand. However, the company believes that its market leadership position and the dual brand strategy will help it steer and face the dynamic market changes with requisite solidarity.

Stock Analysis: A technical indicator named Moving Average Convergence Divergence or MACD is applied on the daily chart of QAN. As per the observation, the MACD line has crossed the signal line and is still above the signal line. The company’s stock price is trading slightly towards the lower side of the range. Based on foregoing and current trading level, we maintain our “Buy” recommendation on the stock at the current market price of $ 5.590.


 
QAN Daily Chart (Source: Thomson Reuters)
 
 

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