Helloworld Travel Limited

HLO Details

Leading Australian & New Zealand travel distribution company, Helloworld Travel Limited (ASX: HLO) offers retail travel networks, corporate travel management services, destination management services (inbound), air ticket consolidation, wholesale travel services, and online services. The company has a market capitalization of $272.07 million as on 6^th May 2021.

Results Performance (Half-Year ended 31 December 2020 – H1FY21)

For the first half ended 31 December 2020, revenues stood at $29.6 million, a decline of 85.2% on the prior comparative period (pcp), mainly attributed to the challenges faced by the entire hospitality and travel industry. Underlying EBITDA for the period stood at -$6.5 million, with an underlying Operating Expenses of $36.1 million. Further, Loss After Tax for the period stood at $15.1 million, as compared to Profit after Tax of $22.7 million in pcp.

Key Data (Source: Company Reports)

Trading Update - March Quarter 2021:

As per the release dated 21 April 2021, the Federal Government is providing a further $130 million for independently owned travel agency business throughout Australia, bringing the total assistance package so far to $258 million. Further, the government also announced the sale of 880,000 half-price tickets to a range of leisure destinations throughout Australia.

HLO’s Quarterly Performance is as Follows:

(Source: Company Reports)

Key Risks:

The company faces challenges from the second wave and third wave of COVID-19 related circumstances, particularly in travel industry.

Outlook:

The company expects its TTV across its each division (retail, corporate, ticketing and wholesale) to continue to improve in the coming months, as all State borders are open in Australia and there was commencement of quarantine free trans-Tasman travel on 19^th April 2021. Meanwhile, the company expects TTV to be around $1 billion for FY21, while a full year underlying EBITDA loss has been anticipated to be between $14.0 million to $16.0 million for FY21.

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

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Technical Analysis

Weekly Chart

Note: The yellow color line represents the trend line while the purple color line in the chart depicts RSI (14-period). The green color histograms at the bottom of the chart indicating weekly volumes. The red and sky-blue color lines represent the 21-period SMA and 50-period SMA respectively.

The stock price of HLO is trading in a bearish trend and sustaining below an upward sloping trend line breakout. However, the recent fall in the stock is not backed by the volume, indicating the weakening of the current trend. Currently, prices are trading around the major support level of AUD 1.50, from where prices may reverse to the upside. The momentum indicator RSI (14-period) is trading at ~36 levels, near an oversold zone. Prices are trading below the trend-following indicators 21-period SMA and 50-period SMA, acting as the resistance level for the stock. On the higher side, the major resistance for the stock appears at AUD 2.22 level.

Stock Recommendation:

The company’s current ratio for H1FY21 stood at 1.26x, better than the industry median of 0.93x, implying that the company possess better capabilities to meet its short-term obligations than its peer group. Its Debt-to-Equity ratio for H1FY21 stood at 0.46x, lower than the industry median of 0.61x, depicting reasonable leverage position of the company.

Considering the current trading levels, sufficient cash to cover operating expenses and positive announcement by the government to open borders, we give a “Speculative Buy” rating on the stock at the current market price of $1.68, down 4.274%, on 6^th May 2021.

HLO Daily Technical Chart (Source: Refinitiv (Thomson Reuters))

Vmoto Limited

VMT Details

Global electric vehicle company Vmoto Limited (ASX: VMT) is engaged in the manufacturing and distribution of high-quality electric-powered two-wheels scooters. It operates through three bands: Vmoto (focused on Asia market), Ex-Max (targeting on international B2B markets) and Super Soco (a third-party brand for international B2C markets). The company has a market capitalization of ~NZ$118.28 million as on 6^th May 2021.

Results Performance (Year ended 31 December 2020)

For the financial year ended 31 December 2020, revenues stood at $61 million, an increase of 34% on previous year. Further, EBITDA reported at $5.8 million, an increase of 102% on previous year. Further, net profit after tax (NPAT) stood at $3.7 million, an increase of 174% on previous year. Cash balance stood at $15 million, with no debt.

Key Data (Source: Company Reports)

Market Update (Q1FY21)

As per the release dated 3 May 2021, , VMT again delivered strong operational and commercial performance in the first three months period of financial year 2021 due to increased demand for the Company's products, particularly its B2B products. During the period, 5,869 units in total were sold, an increase of 42% on previous corresponding period (pcp). International unit sales stood at 5,636 units, an increase of 51% on pcp. Cash balance stood at A$15.8 million, with no bank debt as on 31 March 2021.

(Source: Company Reports)

Key Risks:

The company is open to moderate to high competition risk on the back of minimal entry barrier and global inclination towards clean energy vehicle. VMT is facing high competition from established players who have strong financial, research and development, marketing, distribution and other resources. Further, VMT faces technical advancement risk stated by market leaders.

Outlook:

The company has actively increased the promotion and marketing of its products worldwide. FY21 is expected to bring as good results as were in FY20. It has recently appointed new international distributors and has shared samples with a significant number of potential new customers in new markets. With the launch of three new B2C electric two-wheel vehicle models, the new TS, the new TC and CUmini model, VMT expanded into the B2C market. Moreover, it expanded its B2B product offering with the launch of new B2B electric two-wheel vehicle model, the VS2, unveiled at the 2021 e-max World Premiere. 

Technical Analysis

Weekly Chart:

Note: The yellow color line represents the trend line while the purple color line in the chart depicts RSI (14-period). The green color histograms at the bottom of the chart indicating weekly volumes. The red and sky-blue color lines represent the 21-period SMA and 50-period SMA respectively.

VMT's prices are sustaining above an upward sloping trend line for more than a year and currently trading around the trend line support level AUD 0.400, indicating a possibility of an upside reversal. On the higher side, prices are facing stiff resistance from another downward sloping trend line. The momentum indicator RSI (14-period) is trading at ~46 levels with a negative bias. Prices are also trading below the trend-following indicators 21-period SMA and 50-period SMA, acting as the resistance for the stock. On the higher side, the major resistance for the stock appears at AUD 0.505 level.

Stock Recommendation:

The company’s gross margin and net margin for FY20 stood at 24.0% and 6.0%, better than the industry median of 18.9% and 5.2%, respectively, implying decent fundamentals for the company. ROE for FY20 stood at 14.9%, better than the industry median of 8.2%, implying that the company generated better return for its shareholders than its peer group.

Considering the aforesaid facts, its positive FY20 results, and future development plans, we give a “Speculative Buy” recommendation on the stock at the current market price of A$0.425 per share on 6 May 2021.

VMT Daily Technical Chart (Source: Refinitiv (Thomson Reuters))

Note: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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