Stocks’ Details

Carnival Corporation

CCL Plans to Resume Cruising Operations: Carnival Corporation (NYSE: CCL) operates as a cruise and vacation company that operates in North America, Australia, Europe, and Asia. On December 3, 2020, CCL informed its guests and travel agents that it has cancelled selected itineraries for specific operations in 2021. The step was in-line with CCL’s decision of resuming cruising in 2021.

Key Financials for 3QFY20: Recently, CCL provided a business update for the third quarter for the period ended 31 August 2020. During the quarter, the company reported a loss per share of $2.19, as compared to year-ago earnings of $2.63 per share. During the quarter, revenues declined from the year-ago period figure of $6.5 billion and stood at $31 million, due to shutdowns caused by COVID-19 led crisis. The company exited the quarter with a cash balance of $8.2 billion and long-term debt amounted to ~$18.9 billion. In 3Q20, the company’s monthly average cash burn rate stood $770 million.

Revenues and Operating Income Highlights (Source: Company Reports)

What to Expects: Amid the coronavirus-induced shutdowns, CCL’s average cash burn rate for the 4QFY20 is projected to be ~$530 million. The company expects to further enhance future liquidity, which will help it survive in an extreme zero revenue scenario for some time.

Stock Recommendation: The stock of CCL gave a positive return of 26.5% during the span of last three months and 75.8% in the past one-month period. The stock of the company is currently trading below the average of its 52-week trading range of $7.8 - $51.94. On the technical analysis front, the stock has a support level of ~$21.2 and resistance of ~$24.5. Debt to equity ratio of the company stood at 1.28x at the end of Aug’20 as compared to the industry median of 0.97x. On the valuation front, the stock is trading at an EV/Sales multiple of 7.3x as compared to the industry median of 1.4x on TTM (Trailing Twelve Months) basis. The company is likely to release its 4QFY20 results on 18 December 2020. Considering the movement in the stock price over last one-month, current trading levels, high debt to equity ratio and higher valuation on TTM basis, we suggest investors to wait for better entry level and give an “Expensive” rating on the stock at the closing price of $23.45, up by 2.49% on 4 December 2020. 

Norwegian Cruise Line Holdings Ltd.

NCLH Extends Cruise Suspension: Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) is one of the top cruise companies across the globe that is engaged in operating the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. On December 2, 2020, the company extended its suspension of global cruise voyages till March 31, 2021, due to the coronavirus pandemic. The extended cruise suspension was undertaken to meet the requirements of the framework for conditional sailing order issued by the U.S. centers for disease control and prevention.

3QFY20 Key Financial Highlights: During the quarter, the company reported an adjusted loss per share of $2.35, as compared to year-ago earnings of $2.23 cents per share. During the quarter, revenues declined from $1.9 billion reported in 3QFY19 to $6.5 million, owing to a decline in passenger ticket revenues and onboard and other revenues. Total cruise operating expenses plunged 80.8% in 3QFY20, due to costs linked with the suspension of cruise voyages and an increase in fuel costs. The company exited the quarter with a cash balance of $2.4 billion, and long-term debt amounted to $10.5 billion.

3QFY20 Key Highlight (Source: Company Reports)

What to Expect: The company expects to report net loss both for the 4Q and FY20, on both GAAP and adjusted basis.  For the coming quarter, the company anticipates monthly cash burn to be ~$175 million, owing to the timing of interest expense.

Stock Recommendation: The stock of NCLH gave a positive return of ~54.9% during the span of one month. The stock of the company is currently trading below the average of its 52-week trading range of $7.03 - $59.78. On the technical analysis front, the stock has a support level of ~$24.5 and resistance of ~$27.2. Debt to equity ratio of the company stood at 2.68x in Sep’20 as compared to the industry median of 1.41x. Considering the spike in the stock price over last one-month, current trading levels and high debt to equity ratio, we suggest investors to wait for better entry level and give an “Expensive” rating on the stock at the closing price of $26.3, up by 3.46% on 4 December 2020.

Fisker Inc.

FSR Collaborates with Magna: Fisker Inc. (NYSE: FSR) is involved in the development of electric vehicles. Recently, the company announced that in collaboration with Magna International Inc., together both the companies had completed the Preliminary Product Specification (PPS) gateway, for the Fisker Ocean SUV. FSR plans to start the production of this key engineering and purchasing milestone in Q4FY22.

FSR Closes Business Combination: The company recently announced that it has completed its previously announced business combination with Spartan Energy Acquisition Corp., post the approval of Spartan stockholders in a special meeting held on October 28, 2020. The company started trading on New York Stock Exchange (“NYSE”) from 30 October 2020, under the ticker symbols “FSR”.

Q3FY20 Result Highlights: For Q3FY20, the company reported total expenditure of $3.3 million, up from $0.455 million reported in the year-ago period. Further, the company’s net loss for the quarter stood at $3.25 million, against a profit of $2.04 million in pcp. The company opinions that the impact of the COVID-19 pandemic has negatively impacted FSR’s financial position, results of operations and pending business combination. As at 30 September 2020, the company had cash and cash equivalent of $0.164 million. Cash used from operations stood at $0.972 million, during the quarter.

Q3FY20 Results (Source: Company Reports)

Stock Recommendation: The stock of FSR has provided a return of 57.9% in the last one month and is trading close to its 52-weeks’ high price of $23.62. On the technical analysis front, the stock has a support level of ~$16.24 and resistance of ~$18.29. Considering the spike in the stock price over last one-month, current trading levels, losses in business, limited financial information and the key risks associated with the business, we suggest investors to avoid the stock at the closing price of $17.15, down by 0.87% on 4 December 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

Disclaimer  

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.