Xero Limited (ASX: XRO)

XRO Details
 
Favourable Indicators: Xero expects its free cash flows to fund the future growth and the two-year stand-by bank facility of $100 million has improved the liquidity position. The group had added about $114m as annualised committed revenue in 12 months as at September 2017. The group’s 37% year on year operating revenue growth and positive EBITDA have been key for 1H FY18. XRO is now in its final stages of the sole listing on the Australian Securities Exchange (ASX) with last date of trading as January 31, 2018 on NZX. Thus, investors can transfer the shares to ASX before the close of the trade on 31 January 2018. As Xero continues to grow, it has an enhanced access to its deeper capital markets and it has also increased its trading liquidity along with broadening its base of potential investors which is very critical to fulfil the company’s aspirations. XRO’s Chief Operating and Financial Officer, Sankar Narayan recently sold 30,000 of Xero shares to meet some personal tax liabilities, and this raised few concerns among investors. After the sale, Mr Narayan retains an interest in 42,874 Xero shares, 46,902 in restricted stock units and in 291,000 options.
 

Operating Cash Flows’ Improvement (Source: Company Reports)
 
Further, there have been few issues with regards to user accessibility for Xero Partner Tools and WorkflowMax, and Xero got its Product Team investigate into these matters. On the other hand, the group’s efforts on South East Asia and South Africa expansion are expected to drive momentum with lower cash usage anticipated in FY18. We recommend to “Hold” the stock at the current market price of $30.75
 

XRO Daily Chart (Source: Thomson Reuters)
 

WiseTech Global Limited (ASX: WTC)

WTC Details
 
Setting path for Organic Growth: WiseTech recently announced two acquisitions of European customs solution providers, ABM Data Systems and CustomsMatters. ABM Data provides advanced solutions across custom clearance, bonded warehouse and point of delivery management. CustomMatters provides e-custom solutions through its cloud-hosted custom compliances platform, myCustoms and through customs brokerage and consulting services to its customers which include DHL, UPS, OAG Cargo, SwissPort and many other organisations and logistic providers. These acquisitions are expected to be consolidated into WiseTech Global group accounts from February 2018. All of these transactions are in line with its stated strategy of accelerating the long-term organic growth through targeted and through valuable acquisitions across new geographies. The group is continuing to progress well on its plan and there are few opportunities in the pipeline to target regions of Europe, Asia and Latin America. On the other hand, the group’s EBITDA margin expansion in FY 18 might be limited with a slowing growth trend, and this might be fuelled by higher sales and marketing costs. Meanwhile, WTC stock has risen by 106.5% in the past six months (as at January 23, 2018) and now trades at a very high price to earnings level. The stock now looks “Expensive” at the current market price of $15.19
 

WTC Daily Chart (Source: Thomson Reuters)
 

Sydney Airport (ASX: SYD)

SYD Details

Strong Traffic Performance: Sydney Airport witnessed 2017 as another record year while facilitating 43.3 million passengers through its three terminals, indicating an increase of 3.6% as compared to 2016. Its International passenger numbers were seen growing by more than one million or by 7.2% over previous year. In December 2017, seat capacity growth and load factors helped domestic passenger traffic grow by 2.1% which resulted in 3.5% growth in total passenger traffic while International passenger traffic was up 5.6%.
 

Nationalities Travelling Trend (Source: Company Reports)
 
Sydney Airport now serves 17 mainland Chinese cities, and this represented almost 90% of all travel on the China-Sydney route. Further developments dealing with Tianjin-Zhengzhou-Sydney route commencing 30 January 2018, Haikou-Sydney route operating twice weekly year-round from 31 January 2018 and use of A380 by Malaysian Airlines between March and July for the Kuala Lumpur-Sydney route, are expected to add more seats and eventually resulting in more fees and other benefits. The group’s dividend rose up significantly in 2017 at the back of the continued performance. Post a drop of 4.7% in last one month, the stock surged by 2.99% in last five days (as at January 23, 2018). Despite the fall, the stock price seems to have factored in most of the positives and looks “Expensive” at the current price of $7.03
 

SYD Daily Chart (Source: Thomson Reuters)
 

Flight Centre Travel Group Limited (ASX: FLT)

FLT Details
 
Positive Outlook for 2018: Over the last one year, the share price has increased by 66.57% with 13.9% rise seen in last one month alone (as at January 23, 2018). The group has started the new year positively continuing on the 6.4% growth in TTV (total transaction value) witnessed in 2H FY17. FLT is putting efforts to have better net income growth while having its customer services as one of the top priorities. It forecasts its FY18 profit before tax to grow in the range of 6.2% and 15.6% over FY17. The group has already expanded in 8 new countries and plans to swell its product line and services into leisure, travel, retail and corporate across key geographies. Overall, FLT expects momentum from its international expansion with Asia already on a recovery track while EMEA & Americas operations are already at record levels. In Australia, contraction in sales force might impact the performance, however, recovery in 2H has been flagged. We recommend to “Hold” the stock at the current market price of $50.09
 

FLT Daily Chart (Source: Thomson Reuters)

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