Sydney Airport

SYD Details

Robust Passenger Traffic growth: Sydney Airport’s (ASX: SYD) stock edged up on April 20, 2018 post announcement of robust traffic performance for March 2018 wherein Sydney Airport experienced exceptional international passenger traffic growth of 11.1% during the March holiday period. This was majorly driven by early Easter and expanding international market with Indian travellers up 19.5 % and 12.2%, respectively during 2018 compared to 2017. After the solid traffic performance, Air India increased its Delhi to Sydney flights on their 787-800 Dreamliner from four times a week to five per week which commenced on 30 March 2018. The additional frequency delivers an incremental 14,000 seats annually. Moreover, domestic traffic rose 3.5% for March 2018 compared to the pcp driven by a 1.4 percentage point improvement in load factors and a 1.7% increase in capacity.


Top 10 Nationalities Travelling Through Sydney Airport (Source: Company Reports)

On the other hand, the Group has recently completed successfully Eurobond issue. The issuance of a EUR500m 10-year Eurobond continues to demonstrate its proactive approach to capital management. Expanding its presence in one of the deepest and most liquid bond markets with a competitively priced transaction has also created funding flexibility for future raisings. The Proceeds raised will be used to repay all drawn bank debt, unlocking additional liquidity to cover debt maturities and to fund planned ongoing investment. Recently, the group appointed Abi Cleland as a non-executive director of the company. Meanwhile, the stock price was down by 8.03 per cent this year to date, as on April 19, 2018, and is still trading at a slightly high P/E. We give an “Expensive” recommendation on the stock at the current market price of $ 6.560.


SYD Daily Chart (Source: Thomson Reuters)
 

Flight Centre Travel Group Limited

FLT Details

Brighter Market Outlook: Flight Centre Travel Group Limited’s (ASX: FLT) stock was up 1.1 percent on April 20, 2018 and has been benefiting from the continued tourism boom. The company has revealed its decent first half year performance. Revenue for the six months grew by 5.4 per cent and amounted to $1.37 Bn which led to a lower overall income margin. However, PBT increased by 27.7% YoY to $139.4 Mn in 1HFY18 from $109.2 Mn in 1HFY17. This Profit before tax was slightly above the targeted 1H range ($120 Mn-$135 Mn), which compelled FLT to lift its full year guidance of PBT to $360 Mn-$385 Mn as compared to its initial target of $350 Mn-$380 Mn. NPAT registered growth of 37.2% YoY to $102.2 Mn in 1HFY18 compared to previous corresponding period (pcp). The company’s 1H growth was achieved during the period of network consolidation which saw overall sales staff numbers decrease modestly, pointing to further productivity gains.


1HFY18 Financial Performance (Source: Company Reports)

As per the latest update on Australian Competition and Consumer Commission (ACCC) test case, the court imposed a penalty of $12.5 Mn on the group in relation to the competition law test case, which was initiated by the ACCC in 2012. Since past six years, FLT was losing in three different courts while winning on appeals. However, the company believed that it acted lawfully, and it did not contravene the Trade Practices Act but the group respects the court’s decision and will continue to adhere to the policies and practices. This penalty will not affect FLT’s market guidance for FY18 on underlying profit before tax of between $360 Mn and $385 Mn, and penalty will be included in the Group’s statutory results for the year. Meanwhile, it was seen that share price has increased in past six months by 22.51% (as at April 19, 2018). Based on overall market growth, we give a “Hold” recommendation on the stock at the current price of $ 56.280, while the stock seems to be almost fairly priced.
 

FLT Daily Chart (Source: Thomson Reuters)
 

Corporate Travel Management Limited

CTD Details

Affirmative FY18 Guidance: Corporate Travel Management Limited’s (ASX: CTD) stock was down 1.229 per cent on April 20, 2018 while Pinnacle Investment Management Group Limited and Pinnacle Investment Management Limited became substantial holder of CTD in March 09, 2018 by holding 5,651,178 securities with 5.65 percent of the voting power. Recently, the Group disclosed to the market that one of its directors, Anthony Bellas who has an indirect interest of the group has disposed about 23,000 ordinary shares.


Underlying 1H18 EBITDA Growth Summary (Source: Company Reports)

The company has presented at Morgan Stanley Asia Pacific Summit and revealed its strong first half year performance wherein underlying EBITDA recorded growth of 32% to $53.5mn in 1HFY18. TTV registered a growth of 21% and amounted to 2,258.5 Mn in 1HFY18 as compared to previous corresponding period despite the headwind of ticket price in the Asia. Moreover, the company had previously projected FY18 underlying EBITDA range of AUD$120-125m (22.0%-27.5% growth on the pcp). The company is on track to achieve top end of FY18 Guidance (approximately $125m), despite unfavourable FX. Therefore, 2H EBITDA organic growth on the pcp will be nearly 23%. Based on affirmative FY18 guidance revealed in summit, we give a “Hold” recommendation on the stock at the current price of $ 23.310.
 

CTDDaily Chart (Source: Thomson Reuters)
 

Sealink Travel Group Limited

SLK Details

Efforts for Growth: Sealink Travel Group Limited’s (ASX: SLK) stock was up 1.013 per cent on April 20, 2018 on the back growth of the business which will be supported by new route services and future expansion plan. The Group revealed its first half year performance and future guidance for FY19. During the period, the Group posted revenue of $100.8 Mn in 1HFY18 which was down by 4.7% as against corresponding period of FY17 on Year on Year (YoY) basis. Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) stood at $23.8m in 1H FY18 as compared to previous corresponding period (pcp). Sales & operating performance were lower due to several factors such as closure of Sydney Travel Agency, weaker trading conditions in Swan River WA services, new service start-up costs on Sydney Harbour and to Rottnest Island, and lower customer requirements in Gladstone. As a result of this, Net Profit After Tax (NPAT) came at $11.3m in 1HFY18, representing a de-growth of 13.7% on YoY basis.


Operating Revenue over years (Source: Company Reports)

On the other hand, the group announced that it has completed the acquisition of the Fraser Island Kingfisher Bay Resort Group on Fraser Island, Queensland for $43 million from Cosmos Australia Pty Ltd and fulfilled all its conditions related to the acquisition. The SeaLink Fraser Island acquisition comprised of four distinct, profitable and well-established tourism and transport operations – Kingfisher Bay Resort, Eurong Beach Resort, Fraser Explorer Tours and Fraser Island Ferries and it accounts for 90 per cent of accommodation rooms on Fraser Island. It is expected that this acquisition will generate earnings in FY19 and will deliver a further value to its shareholders. Given start-up costs of the new services and the operating performance of the Western Australian business, the group expects that underlying (pre-Kingfisher Bay Resort Group) net profit after tax for the second half 2018 will be in line with the same period last year. The share prices were down by 2.47 per cent in the past three months but slightly edged up by 0.51 per cent in the past five days as on April 19, 2018. Based on ongoing development, we give a “Speculative Buy” recommendation on the stock at the current market price of $ 3.990.
 

SLK Daily Chart (Source: Thomson Reuters)

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