Flight Centre Travel Group Ltd (ASX: FLT)

Fast-tracking growth: Record sales and accelerated second half (2H) top and bottom-line growth has helped Flight Centre achieve a decent FY17 result. The group has also been able to deliver underlying profit result at top end of the revised guidance provided at the back of challenging 1H conditions. Further, the record total transaction value (TTV) of $20.1billion that exceeded the $19.3billion sales milestone achieved in FY16 by $804million or 4%, was a significant achievement. The group is now aiming to fast-track revenue growth, deliver new efficiencies and contain costs globally with the help of the recently introduced business transformation program adopted in 2H. Delivering a return to a 2% net margin, profit before tax (PBT) as a percentage of TTV, within three to five years and 7% average TTV growth per annum in constant currency over the next three years are the key targets under the program. The group has recently completed its NZ Acquisitions of Travel Managers Group and Executive Travel Group. Increasing sales in Australia/New Zealand, record sales in Asia, greater contribution to profit from Europe, Middle East and Africa (EMEA) operation despite the currency movements, along with execution of key global strategies across core business sectors, seem to provide momentum for FY18. FLT stock has been up 58% in last six months but fell about 9.8% in last one month (as at September 27, 2017). Given the prospects and travel sector scenario, we maintain a “Hold” at the current price of $ 44.80


FLT’s progress on cost and growth (Source: Company Reports) 

Crown Resorts Ltd (ASX: CWN)

Crown Digital to support growth: Crown Resorts, one of the largest entertainment groups in Australia, with casino resorts in Melbourne and Perth is planning to set up new establishments in Sydney and Melbourne complex to cater to the rising demand for entertainment channels and the need to have more tourist attractions. While, Crown Resorts’ FY17 net profit of $308.9 million before significant items was down 21.5% from the previous year, the group has significantly reduced its net debt at the back of the proceeds from the MRE sale and has strengthened its balance sheet and credit profile for its development projects. The group’s Crown Sydney project is expected to be completed in 2021. Further, group’s investments in Crown Digital will provide a continued source of future growth with online wagering business CrownBet (62% owned), online betting exchange Betfair Australasia (100% owned), US-based online social gaming business DGN Games (70% interest) and Chill Gaming (50% owned), focussing on innovation and serving as new entertaining product options. Annual General Meeting (AGM) of the members of Crown will be conducted on 26 October 2017. The stock has fallen about 11% in last three months (as at September 27, 2017) and CWN has faced many challenges including the detention of a number of current and former Crown employees in China last October. The group’s last set of the employees detained were released in August. Nonetheless, given the long-term potential, we maintain a “Hold” at the current price of $ 11.15

Webjet Ltd (ASX: WEB)

Organic travel bookings on the rise: Webjet’s strong organic growth in bookings, revenues and profit, the integration of Online Republic, the sale of Zuji and board succession, all have contributed to a successful FY17. Group’s three-year CAGR in organic travel bookings has been 26% across the business and 36% after acquisitions. Booking growth is further expected from Online Republic. Further, Sunhotels also continues to grow across new markets in Europe. Overall, FY17 total transaction value (TTV) on continuing operations has risen by 35.7% with revenue rise of 37.2% and net profit after tax rise of 58.0%. The group’s efforts also led it grow from a small cap to an ASX 200 company in two years. The earnings result had led the group increase its final dividend to 10 cps. However, the stock seems to be at a high level given the price to earnings ratio, and give an “Expensive” recommendation at the current price of $ 10.70

Mantra Group Ltd (ASX: MTR)

Additional properties to boost growth: Mantra Group, the leading Australian-based hotel and resort operator, has witnessed a stock price surge of 7.8% in last one month (as at September 27, 2017). The group’s FY17 result indicated underlying EBITDAI surge of 12.7% to $101.2m in line with market guidance while underlying NPAT of $47.2m was up 14.2% year-on-year. The group expects to benefit from the strong pipeline of development opportunities in both domestic and international markets and these include Mantra MacArthur Hotel, Canberra and the first two towers of FV by Peppers. Primarily, the additional six properties added to the network during FY17 and Mantra Hotel at Sydney Airport that was opened in July 2017, are expected to be further growth catalysts for the group. MTR’s Resorts revenue and earnings have been strong over FY2016 while Central Revenue and Distribution also witnessed a decent growth in revenue. While challenging conditions might prevail in slower than expected markets in Perth, Brisbane and Darwin; overall growth across the Resorts, CBD and Central Revenue and Distribution segment and boost from Gold Coast 2018 Commonwealth Games are expected to drive momentum.We maintain a “Hold” on the stock at the current price of $ 3.15

SeaLink Travel Group Ltd (ASX: SLK)

Leveraging opportunities for market expansion: SeaLink has recently signed a contract for the delivery of a 260-passenger, 29m high speed multipurpose ferry, MV Nancy Wake. The vessel is said to be initially located in Sydney, and will assist Hop-On Hop-Off, Watson’s Bay, Manly Ferry and Whale Watching services. Recently, Mr Anthony Hayes has joined the group as Chief Operating Officer. Overall, the group has been able to increase its online sales as a proportion of tourism sales. Growing sales for Captain Cook Cruises New South Wales lunch and dinner cruises have helped the margin improvement. In the month of September 2017, the group has launched services including service from Manly to Barangaroo and Rottnest Island service. The group has opened-up many opportunities for market expansion with the increasing fleet post acquisitions. Product growth in Sydney Harbour, fleet addition and replacement programmes are all set to proffer various growth and cost-effective opportunities. The stock surged up about 2% on September 28, 2017, and more upside momentum is expected from the stock in the coming period; while we maintain a “Hold” at the current price of $ 4.25

Delivering on opportunities (Source: Company Reports)

Ardent Leisure Group (ASX: AAD)

Challenging conditions for Main Event: Ardent Leisure has recently reported about discussions with shareholders and Ariadne on AAD’s board’s ability to focus on executing its strategy and deliver shareholder value. Meanwhile, the group updated that its operations were impacted by Hurricane Harvey in the US, and the group had to close five centres for the Main Event Business. In last one year, the stock has tumbled about 35% (as at September 27, 2017) at the back of growing pains from the US Main Event and impact from last year’s Dreamworld tragedy. The embattled group might get some boost from the rise in visitors during the tourism boom. We give a “Hold” on the stock at the current price of $ 1.80

Corporate Travel Management Ltd (ASX: CTD)

Expanding global clientele base: Despite many challenges at macro level, Corporate Travel Management delivered a strong full-year result that entailed a 43% rise in underlying EBITDA on the previous year. The group’s organic growth contributed to $16 million of its profit growth. CTD’s optimised business model and 80% uptake in technology solutions by customers has helped the group demonstrate great earnings. The group’s enhanced international exposure and technology offerings are expected to increase global clientele base. The group expects its FY18 full-year underlying EBITDA to be in the range of $120-125 million, which is 22-27.5% growth on FY17.We maintain a “Hold” on the stock at the current price of $ 21.86


Diluted Earnings per Share (Source: Company Reports)

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