Corporate Travel Management Ltd

On track to achieve the top end of the FY 19 EBITDA Guidance & Responded to VGI report: Corporate Travel Management Ltd.’s (ASX: CTD) stock recovered 11.32% on November 1st, 2018 as investors regained the lost confidence on CTD. The company had a strong start in FY 19 and is on track to achieve the top end of the FY 19 EBITDA Guidance (AUD $150m). The company’s YTD client wins are at record levels across the group with the key objectives on track of Lotus integration and USA technology rollout by 31 December 2018. CTD’s reported operating cash flow is expected to be low in 1H of FY 19 but will regain in 2H, on the back of the timing of BSP payments compared to reporting date. The normalized cash flow for the full year 2019 is expected to be circa 100%. For FY 19, CTD expects EBITDA to be in the range of $144-150m, which is a growth of approximately 15% to 20%. The key foreign currency and client activity assumptions are proving favorable for CTD underlying EBITDA guidance. On the other hand, CTD responded to the report of VGI Partners, which is holding a significant short position in CTM and can only profit from its investment if there is a decline in the CTD’s share price. CTD discussed two major issues, one of which is related to the requirement for the Company to keep its website updated with its office locations. The second one relates to not using the term ‘patented’ in relation to its proprietary technology. As per CTD, the rest of the report either has misunderstood or misrepresented the company’s financial performance, governance and business model. Meanwhile, CTD stock has fallen 34.28% in one month as on October 31st, 2018  and is trading at a P/E of 27.69x. The stock was in trading halt till 31 October 2018. The stock is trading at the price of level $22.32, and has support at $19.6 and resistance at $26.2. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 22.32.

FY 18 Financial Performance (Source: Company Reports)
 

BWX Ltd

All the key projects are now back on track and essentially complete: BWX Ltd.’s (ASX: BWX) stock rose 9.45% on November 1st, 2018 after the company for FY 19 indicated to report normalised earnings before interest and tax (EBITDA) to be broadly in line with normalised FY18 EBITDA of A$40.3m. The company also expects a significant skew in earnings to the second half, which is expected to account for approximately 70% of FY19 EBITDA. This is despite BWX faced significant disruption and loss of business momentum at the beginning of FY19 driven by the now failed management buyout (MBO) process. As a result, the company’s several key projects were delayed, and that has affected the company. However, all the key projects are now back on track and are mostly complete, with the exception of the North American roll out of the ERP which will occur in 4QFY19. Meanwhile, BWX stock has fallen 55.04% in three months as on October 31st, 2018  and is trading at a reasonable P/E of 14.94x. The stock is trading at the price of level $2.78, and has support at $2.25 and resistance at $3.67. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 2.78.
 
 

 
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