Corporate Travel Management Limited

CTD Details

H1FY21 Performance Update: Corporate Travel Management Limited (ASX: CTD) is involved in managing the purchase and delivery of travel services for its clients. The market capitalisation of the company as on 18 March 2021 stood at ~$2.86 billion. During H1FY21, the company reported better than expected revenue at $74.2 million. The month of December 2020 delivered an impressive revenue of $17.3 million. The ANZ segment was profitable during the half, aided by new client contracts, and is expected to grow further in the second half of FY21. The underlying EBITDA loss was at $15.27 million during the period. It had no debt as of 31 December 2020 and had a cash position of $119 million during the period end. It had an undrawn committed finance facility of $178 million. The cash position stood at $115 million as on 15 February 2021. It reported a TTV of $403.8 million during the period.

H1FY21 Financial Performance (Source: Company Reports)

Outlook: The company believes that the ANZ and EUR regions to be profitable in the second half of FY21. The group is well-positioned for growth in the post-COVID phase through strategic acquisitions. The client wins will help it to accelerate its revenue into H2FY21. It has also secured Asia-based clients with no capital outlay.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation (Illustrative)

Data Source: Refinitiv, Thomson Reuters, Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: On 2 November 2020, the company has announced that it has completed the acquisition of Travel & Transport, which strengthens its position further in the space. As per ASX, the stock of CTD is trading above its average 52-weeks’ levels of $4.231-$22.880. The stock of CTD gave a positive return of ~33.24% in the past six months and a positive return of ~20.54% in the past one month. On a technical analysis front, the stock of CTD has a support level of ~$20.742 and a resistance level of ~$22.947. We have valued the stock using an EV/ EBITDA multiple-based illustrative relative valuation and have arrived at a target price of low double-digit upside (in % terms). We believe that the company might trade at a slight premium to its peer median EV/ EBITDA (NTM trading multiple), considering the better than expected financial performance and optimistic outlook with the ease of restrictions in the sector. For the purpose, we have taken peers such as Webjet Limited (ASX: WEB), Flight Centre Travel Group Limited (ASX: FLT), Helloworld Travel Limited (ASX: HLO) to name a few. Considering the valuation, decent balance sheet position and positive outlook, we recommend a ‘Hold’ rating on the stock at the current market price of $21.650, up by 3.095% as on March 18, 2021.

CTD Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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