Flight Centre Travel Group Ltd


FLT Details

·       Positive guidance for TTV growth: Flight Centre Travel Group Ltd (ASX: FLT) stock lost over 7.7% on December 12, 2016 at the back of softness in market sentiments. The group had reported for lower than estimated first half of 2016 results with a slower than normal TTV and revenue growth on the back of international airfare prices cut against prior corresponding period (pcp). Then the British pound’s depreciation has led to >$5million in unrealised foreign exchange (FX) losses while UK performance was also weak due to Brexit impact. On the other hand, FLT reiterated their forecast of more than $20billion in TTV for the first time in fiscal year of 2017. Underlying PBT is forecasted to be in the range of $320million and $355million for the full year of 2017, wherein strong second six months would compensate weak first half. The overly positive guidance has also added to the latest concerns from investors.
·       Recommendation: FLT stock rose over 11.7% in the last four weeks (as of December 09, 2016) and we maintain a “Hold” recommendation on the stock at the current price of $30.46
 

Strong TTV growth against peers (Source: Company Reports)
 
a2 Milk Company Ltd


A2M Details

·       Strengthening brand value: a2 Milk Company Ltd (Australia) (ASX: A2M) stock fell over 6.5% on December 12, 2016 due to ongoing weak sentiments prevailing for peer, Bellamy’s Australia Ltd, which is again in a trading halt pending an update on trading conditions. On the other hand, the group issued a decent trading update for four months to October for fiscal year of 2017.  The group reported a 4M17 revenue of NZ$155.2 million, driven by infant formula and milk products growth. A2M Fresh milk performance is ongoing in their core markets while their core a2 Platinum® infant formula is gaining awareness. Even in China, the awareness for their a2 Platinum® and a2 Milk™ brands is strengthening.
·       Recommendation: A2M gained over 61.5% in the last six months (as of December 09, 2016). We give a “Hold” recommendation on the stock at the current price of $2.16
 

A2M performance in 4M17 (Source: Company Reports)

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