Corporate Travel Management Limited

CTD Details
 
Reaffirmed FY18 Underlying EBITDA guidance: Corporate Travel Management Limited (ASX: CTD) has recently presented its business prospects at the Macquarie Conference and highlighted about FY18 activity and guidance wherein the group continues to be highly leveraged to global growth and has meaningful exposure in the world’s largest evolved corporate markets and aims to deliver a return on investment to the customers. The group posted statutory EPS growth at CAGR of 34% over FY 10-17. Based on the splendid growth over the period, the group has reaffirmed its FY18 Underlying EBITDA guidance, which is expected to be approximately $125 Mn for the full year, representing 27% growth on prior corresponding period (pcp). Additionally, 2H EBITDA organic growth on the pcp will be nearly 20%.
 

Statutory EPS growth since IPO, 2010-2018 (Source: Company Reports)
 
The group has taken several initiatives to enhance its market share across the globe by focusing on to execute M&A opportunities, enhance productivity and innovation, and empowering its core team to support its client’s needs. Currently, the stock is trading towards 52-week high level ($ 26.700).Hence, we maintain our “Hold” recommendation on the stock at the current market price of $ 26.260, considering healthy financials along with organic and inorganic growth.
 

CTD Daily Chart (Source: Thomson Reuters)
 

Qantas Airways Limited

QAN Details
 
Update on Buy-Back Shares Event: Qantas Airways Limited (ASX: QAN) updated the market about the progress on several transactions under its ongoing buy-back event. The group intends to buy back remaining shares with an aggregate consideration of $19,753,327.96. Recently, the group bought back 535,923 shares via on-market trade for the consideration of $3,473,316.96. This buy back is expected to bring the total reduction of shares on issue to 24 per cent since 2015. Moreover, QAN disclosed to ASX that one of its directors, Michael Gerard L’Estrange had an indirect interest in the company and acquired 6,000 more ordinary shares via on-market trade with the consideration of $ 6.50 per share. In addition to this, the group retains decent balance sheet and flexibility to pursue growth opportunities in future. TheCurrent Ratio improved from 0.44x to 0.47x and Debt-Equity Ratio improved from 1.37x to 1.31x in 1HFY18 as compared to previous six months. Besides this, RoE and RoIC as at December 2017 stood at 16.7% and 5.9%, respectively, against values as at June 2017 of 9.3% and 3.3%.
 

1HFY18 Key Financial Metrics (Source: Company Reports)
 
The company seems to be benefitting from rising demand of passengers across the globe coupled with healthy balance sheet, high return ratio, and strong footprint in the domestic and international market, renewed codeshare deal with Air France and synergistic deal with Air New Zealand. Meanwhile, the stock climbed up 8.70 percent in the past three months as at June 18, 2018 and currently trading at reasonable PE level (12.330x) among its peer group. Hence, we maintain our “Buy” recommendation on the stock at the current market price of $ 6.480, considering the above.
 

QAN Daily Chart (Source: Thomson Reuters)
 

SeaLink Travel Group Limited

SLK Details
 
Growth Initiatives: SeaLink Travel Group Limited’s (ASX: SLK) stock was down by 1.643 per cent on June 19, 2018 and the group recorded NPAT degrowth of 13.7% to $11.3 Mn in 1HFY18 as against prior corresponding period. It was mainly 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. Despite this, the group has recently acquired the assets and operations of the Fraser Island Kingfisher Bay Resort Group which will help to increase the topline growth of the company in years to come. We expect that the group continues to grow further and tap various opportunities in the tourism and transport sectors for the remainder of 2018 and beyond including new product opportunities in Western Australia and South East Queensland, new tubby ferry services on Sydney Harbour, build on the Manly to Barangaroo and Rottnest Island services, continue maximisation of synergies and cost reduction opportunities. On the balance sheet front, current ratio and quick ratio stood at 0.89x and 0.78x, respectively in 1HFY18 while RoE and RoIC came at 7.6% and 5.2%, respectively during the aforesaid period.
 

1HFY18 Financial Highlights (Source: Company Reports)
 
On the other hand, the group has recently launched its first ever Reconciliation Action Plan (RAP) 2018-2020 which is a promise to Aboriginal and Torres Strait Islander individuals in the networks where the company works. This strategic document will support business plan in term of improving services, investigate the new opportunity, and make strong community engagement. Meanwhile, SLK stock has risen 10.65% in the last one month as on June 18, 2018 and currently trading close to 52-week high level ($4.460). The group got a boost post receiving an unsolicited, confidential, indicative and non-binding proposal from a party regarding a potential acquisition of SeaLink, which SLK later rejected. We give a “Hold” recommendation on the stock at the current market price of $ 4.190 considering strong sales growth in core tourism location which will create further opportunities to improve margins in 2019.
 

SLK Daily Chart (Source: Thomson Reuters)

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