Which ones are good to invest in the leisure, travel and tourism sectors?

Crown Resorts Ltd

CWN Dividend Details
 
Improving VIP programs turnover from domestic operations: Crown Resorts Ltd (ASX: CWN) stock recovered about 7% (as of January 29, 2016) in the last three months after facing pressure due to its poor performance in its Macau business. CWN has been focusing on its domestic business, and accordingly, the group’s VIP program play turnover in Australia reported a 41.8% year on year (yoy) rise to $70.8 billion for fiscal year of 2015. Moreover, Australian resorts witnessed a strong performance during July to October 2015 period, wherein the main floor gaming revenues (without VIP program play revenue) surged 10% yoy as compared to the earlier corresponding period. James Packer had recently resigned from the director position of the group, and intends to focus on Crown’s ongoing development projects across Sydney and Melbourne as well as its online platforms.
 


Crown Resorts performance in the last five years (Source: Company Reports)
 
Despite Macau pressure, the group’s ongoing focus on VIP program as well as improving domestic business would continue to add support to CWN’s performance in the coming months. The growing tourism opportunity from China outbound leisure travelers would also be a major driver for the group’s long term growth. We remain bullish on CWN and reaffirm our “Buy” rating on this dividend yield stock at the current price of  $12.41
 
 
CWN Daily Chart (Source: Thomson Reuters)
 

Sealink Travel Group Ltd

SLK Dividend Details
 
Expanding fleet via acquisitions: Sealink Travel Group Ltd (ASX: SLK) acquired Transit Systems Marine Business for $125 million, with which the group aggressively expanded its fleet to 60 vessels as compared to 27 vessels. As a result, the shares of SLK exploded around 74.42% in the last six months (as of January 29, 2016) alone. Accordingly, the group is positioning itself to leverage the growing demand for tourism transport services and passenger ferry services on the back of enhancing international tourism prospects. Transit Systems Marine also made two major contracts for the gas plants at Curtis Island near Gladstone since SLK announced the acquisition. The company has also recently signed a 5 year contract with Sibelco Australia to service carrying of mineral sands from Stradbroke Island.
 


Sealink’s revenue split before and after Transit systems acquisitions (Source: Company Reports)
 
Recently, SLK appointed Ms. Andrea Staines for the Non-Executive Independent Director position who has strong expertise in the transport industry. SLK intends to continue to focus on SE Queensland services and Sydney Harbor transport services in the coming periods. We believe there is more positive momentum left in the stock and hence recommend investors to “Hold” SLK at the current price of  $3.76
 
 
SLK Daily Chart (Source: Thomson Reuters)
 

Ardent Leisure Group

AAD Dividend Details
 
Positive first quarter performance: Ardent Leisure Group (ASX: AAD) reported for a strong first quarter of 2016 delivering a 19.3% yoy rise in revenues driven by solid Theme Parks and Bowling growth. The group’s overall divisional EBITDA rose by 8.9% to $37.20 million against the corresponding quarter of last year. Ardent’s Main Event expansion efforts paid off during the quarter which generated a 30.8% yoy revenue growth to US$37.42 million. On the other hand, the shares of Ardent Leisure Group corrected over 25.45% (as of January 29, 2016) in the last three months as the group declined the rumors of raising further equity. But, we view this correction as an entry opportunity to investors given its ongoing efforts to expand Main Event to over 35 centers by FY17 as compared to 20 centers in first quarter of 2016. AAD also has a strong dividend yield and the management has reported for a Distribution Reinvestment Plan price of AUD 2.1067 per stapled security for December ending in 2015. Based on the foregoing, we put a “Buy” recommendation on the stock at the current price of  $2.04
 
 
AAD Daily Chart (Source: Thomson Reuters)
 

Air New Zealand Ltd

AIZ Dividend Details
 
Improved passenger growth but low yields: AIR New Zealand Ltd (ASX: AIZ) reported that their carried passenger number rose by 5.8% yoy to 1,514,000 passengers in December of 2015 while Long Haul passenger number surged by 28.8% during the month against the corresponding period in 2014, driven by demand (Revenue Passenger Kilometers) and capacity (Available Seat Kilometers) increase of 28.4% and 26.3%, respectively. Consequently, AIZ stock performed well by surging over 12.9% in the last six months (as of January 29, 2016).
 


December and year to date performance (Source: Company Reports)
 
On the other hand, the group’s stock plunged over 9.36% in the last five days (as of January 29, 2016) as AIZ reported that its group-wide yields during 2016 fiscal year to date decreased by 1.1% against the prior corresponding period. We believe that AIZ stock would continue to be under pressure in the coming months given the increase in competition and challenging market conditions that might continue to hurt its yields in the coming periods. Accordingly, we give an “Expensive” recommendation on the stock at the current price.
 
 
AIZ Daily Chart (Source: Thomson Reuters)

 
Virgin Australia Holdings Ltd

VAH Details
 
Received approval for re-authorization of alliance with Etihad Airways: Virgin Australia Holdings Ltd (ASX: VAH) got re-authorization for its Etihad Airways alliance from Australian Competition and Consumer Commission (ACCC) to operate amid Australia and the Middle East for the next five years. ACCC reported that this alliance would enhance services to customers who are travelling in between Australia and the Middle East. Therefore, VAH stock surged over 10.1% in just last four weeks (as of January 29, 2016). VAH enhanced Tigerair Australia business by focusing on cost efficiency as well as targeting further growth via Velocity Frequent Flyer business. On the other hand, management reported that the rising competition has hurt the group’s International business performance especially for short haul international routes. Given the mixed sentiments and the current scenario, we believe that the stock is “Expensive” at the current price.
 
 
VAH Daily Chart (Source: Thomson Reuters)

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