Flight Centre Travel Group Limited

FLT Details

Flight Centre Travel Group Limited’s (ASX: FLT) stock slipped down by 0.682 per cent on May 04, 2018 while the group has recently revealed a decent first half year performance and recorded TTV growth of 8.7% on year on year basis. This pointed to a further market-share growth in near future, as per the company. Revenue increased by 5.4% to $1373.8 Mn in 1HFY18 as against prior corresponding period. Profit before tax recorded slightly above the targeted 1H range ($120 Mn-$135 Mn), which prompted FLT to lift its full year guidance to a $360 Mn-$385 Mn as compared to its initial target of a $350 Mn to $380 Mn. As result of top-line growth, PAT registered strong growth of 37.2% to $102.2 Mn in 1HFY18 from $74.4 Mn in 1HFY17. On the other hand, the group is cash rich company with cash and cash equivalent of $1,010.9 Mn, and debt to equity of 0.06x. FLT group’s return on equity (RoE) increased to 7.1 per cent from 5.6 per cent in the previous corresponding period.


5-Year Historical Performance (Source: Company Reports)

Recently, the court imposed a penalty of $12.5 Mn on the company in relation to competition law test case, which was initiated by the Australian Competition and Consumer Commission (ACCC) in 2012. But as per FLT, this penalty will not affect FLT’s market guidance for FY18 relating to 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. Besides this, the key risk of the company includes intense competition, currency fluctuation and, rising trend towards isolationism could negatively impact the international sales. Moreover, the company issued 2,345 fully paid ordinary shares at an issue price of $55.90 under the Employee Share Plan for the April 2018 contribution shares as on April 30, 2018.The stock price was up by 79.98 per cent in the past one year and up by 2.48 per cent in past one month as on May 03, 2018. The stock has rallied significantly in last one year and looks to be at a fair value to take profits. Further, with the end of holiday period, the group’s momentum has factored in the key catalysts in the stock price and may now need some other substantial drivers to move up the ladder. Considering the above, we put a “Sell” recommendation on the stock at the current market price of $ 58.290.
 

FLT Daily Chart (Source: Thomson Reuters)

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