Hi allI have today sold out of my CTD position.I waited for more...

Hi all

I have today sold out of my CTD position.
I waited for more information from the company and it came today via the Macquarie conference.

CTD at MQG update. Current revenue per month is 2-5 m and cost 10-12 m. Pre Covid revenue about 42 m per month, 25 m of this was domestic facing (travel within that country). Pre Covid operating costs were about 27 m per month. Balance sheet is fine. Profitability is the concern.

Profitability is going to be highly leveraged to a sustained recovery in domestic travel. I think this also assumes people will want to travel for work and that companies are willing to pay them to travel (versus remote work). I think that 25 m in domestic revenues per month will need discounting in any valuation model, perhaps even by 50%. 12.5 m per month at 10-12 m cost per month versus 25 m per month is a big difference. 12.5 m per month will give you pre-tax profit of 30 m per year (assuming costs are kept down at 10 m per month). Net profit is 21 m. At current market cap of 1.3 b, that is a PE of 61. I think the assumptions I make are generous.

The big upside here is that smaller corporate travel companies are taken out by Covid. On a probability basis downside is greater than upside.

Other concerns-
1. VGI remain short, I am befuddled by this, as the volumes were definitely there for them to close out in mid March.
2. The GOAT over the weekend (Warren E Buffett) with his bearish stance on the airline industry, as he sold out of all his airlines holdings at a loss.
3. No executives bought any stock despite the cratering share price. Despite buying big at about 20 dollars per share, JP (who must know his business prospects best) has not put anymore of his hard earned down during the Covid crisis. This does not match the enthusiasm for rapid recovery etc. demonstrated in the Macquarie presentation.

I will certainly continue to watch this company closely for a possible re-entry based on change to any of the above concerns or a substantial fall in share price.

P.S I know I said I would not post again until CTD was "over 20 dollars", I do not believe that in a normally functioning market this is a possibility in the near or medium term.