Still winning share
The key point to emerge from the CTD AGM and analyst briefing was the fact that the
Company re-iterated FY17 EBITDA guidance of $85-$90m despite noticeable
headwinds from currency and subdued activity levels. This suggests the Company
continues to win market share both in Australia and Internationally despite client
activity levels remaining relatively subdued and downward pressure on airfares
(particularly international fares). In addition, we note the following key takeaways:
1) Asia represents the only region that is underperforming and this was flagged
at the full year result. The Asian business was the standout performer in the
FY16 result, reporting a 34% increase in EBITDA to $21.3m (all organic growth).
The Company guided to materially lower growth from the Asian business in FY17
at the time of FY16 result driven by a material decline in ticket prices and this
appears to be playing out;
2) The Company showcased its internally developed “Lightning” booking tool
and we expect this to play a key role in winning and retaining clients both
domestically and internationally; and
3) The CFO will be now based in the UK which suggests some significant
acquisitions in Europe and Nth America may come under consideration.
Retain Hold PT $18.41 (prev $18.08)
Our EPS estimates are unchanged but our 12 month price target has increased 2% to
$18.41 due to the roll forward of our model and is based on a DCF model (WACC of
10.00% and terminal growth 3% both unchanged). We maintain our positive view on
the Company, noting upside risk to our earnings estimates for future acquisitions but
retain the Hold rating purely on valuation grounds.
Absolute Price Earnings Forecast
Year end June 2016 2017e 2018e 2019e
Sales (A$m) 264.8 334.6 375.9 418.4
EBITDA (A$m) 69.0 91.4 106.7 121.9
NPAT (reported) (A$m) 42.1 52.7 63.1 76.6
NPAT (adjusted) (A$m) 46.7 57.7 68.1 80.6
EPS (cps) 48.1 57.9 67.9 80.2
EPS growth (%) 47.6 20.4 17.4 18.0
PER (x) 39.3 32.6 27.8 23.5
EV/EBITDA (x) 27.1 20.4 17.5 15.3
Dividend (¢ps) 24.0 30.6 36.5 41.9
Yield (%) 1.3 1.6 1.9 2.2
CTD Price at posting:
$18.93 Sentiment: Buy Disclosure: Held
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