Stocks’ Details

Apollo Tourism & Leisure Limited (ASX:ATL)

Strategic Acquisition aligned with Company’s growth strategy - Apollo Tourism & Leisure Ltd is an Australia-based vertically integrated manufacturer, rental fleet operator, wholesaler and retailer of a range of recreational vehicles (RVs), including motorhomes, campervans and caravans. Recently, the Groupexecuted a binding agreement to acquire the brands Fleetwood RV, Coromal and Windsor and associated intellectual property from Fleetwood Corporation Limited for a purchase price of $1.0 million. This acquisition is a logical strategic response to current industry dynamics and will be a catalyst for improved margins and will provide a significant potential for manufacturing synergies due to economies of scale. With this transaction, Apollo’s existing rental and retail sales sites in Melbourne will be consolidated into the large and well positioned retail site at Campbellfield. All the acquisitions undertaken by Apollo have always been fit with the Company’s strategic intent to expand its retail distribution and rental footprint.


RV Sales Revenue (Source: Company Reports)

The Group will release its FY18 results on 21 August 2018. It is expected that the latest acquisition will help in improving ongoing demand and margins following some softness in the Australian caravan sales market in the June quarter. Recently, Fleetwood executed a binding agreement for the sale of the Coromal and Windsor Caravan brands and associated raw materials and finished goods stock to Apollo Tourism & Leisure Limited and with this, the Group expects that the second half losses for Fleetwood’s caravan manufacturing business will be between $7 million and $8 million. Otherwise, the Company has performed well and in line with the expectations. Total percentage of Debt in capital employed increased from 21% in June 2017 to 28.5% in December 2017.  The shareholders have been concerned over the acquisition as the business has been a major drag on Fleetwood’s performance lately. Since the start of the year, the stock was down by 12.43 per cent as on 6 July 2018. The stock was up by 1.29 per cent as on 9 July 2018. The stock looks “Expensive” at the current market price of $1.57 and can be avoided as of now.
 

Sealink Travel Group Limited (ASX:SLK)

Expanding Operations in Tasmania- Sealink Travel Group Limited is an Australia-based tourism and transport company. The Board expects that the group will continue 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, built on the Manly to Barangaroo and Rottnest Island services, continue maximisation of synergies and cost reduction opportunities. The Group 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 and will support the business plan in terms of improving services, investigate the new opportunity, and make strong community engagement.


Operating Revenue Performance (Source: Company Reports)

ROE improved from 7.4 per cent in June 2017 to 7.6 per cent in December 2017 which is more than the industry median (4.9 per cent). Assuming average seasonal and current business conditions that remain over the remainder of the period, and considering the year to date results, it is expected that the business will perform well and in line with the previous year excluding the impact of any new acquisitions. Recently, Mr. Paul Blewett retired as the Company’s Secretary (effective from 6 July 2018). Further, the Tasmanian Government announced that SeaLink Travel Group Limited has been appointed as the new operator of the Bruny Island Ferry Service. The stock price was moving upward since one year but declined in the last five days that is by 2.24 per cent as on 6 July 2018. The group had recently rejected an acquisition offer while the assets that the group has offer prospective opportunities and this can set the stage for superior offers for a takeover in time to come. We give a “Hold” recommendation at the current market price of $4.38 after looking at the tourism industry landscape and further opportunities which Group has in its pipeline that can improve its margins in FY19.
 

Experience Co Limited (ASX: EXP)

Adverse weather conditions impacted the performance - Experience Co Limited, formerly Skydive the Beach Group Limited, is an adventure tourism and leisure company. Challenger Limited changed its substantial holding from 6.16 per cent to 7.17 per cent on 5 July 2018. It was observed that Cairns received 34.6 per cent of the last 12 months of the rainfall and Port Douglas received 48.4 per cent of the last 12 months rainfall in the month of March and these adverse conditions impacted the all North Queensland skydiving and adventure operations. Further, April was also impacted by these poor weather conditions and ultimately the road to Tully River collapsed because of which the Raging Thunder Adventure white water rafting operations came to an end.


Financial Performance for 1HFY18 (Source: Company Reports)

Due to this, the Quarter ended 31 March 2018 fell short of management’s sales and EBIDTA expectations and this was also anticipated for April 2018. The management expects that the revenue will be between $127-$130 million and EBITDA within $30-$31 million for FY18. The Company remains on track and will release the expected synergies from recent acquisitions and organic growth. The  share price has been declining since 1 year (down by 12.59 per cent as on 6 July 2018) and by 1.75 per cent on 9 July 2018. We give a “Hold” recommendation at the current market price of $0.56 given the risks associated with the group while it has otherwise depicted earnings growth earlier based on fundamentals and diversified operations.

 
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 advice or recommendations.