Tourism Holdings Ltd released their annual result for the June 2020 year last Friday. Coupled with the comments on progress over the two months since balance date, fleet reductions to reduce debt is progressing very favourably. This appears to be driven by strong domestic demand in the US, Australia and New Zealand to purchase ex rental RV’s given the relatively safe travel it affords and also given that international travel isn’t that practical currently.
see http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/THL/359966/331014.pdf
This indicates that the short term pressure to raise fresh capital isn’t acute if you can execute on a sensible strategy in these COVID-19 times to take the pressure off funding lines through shrinking the number of units in the fleets and limiting new unit purchases.
The crunch will come when there is a need to rebuilt fleet numbers once the borders reopen. However, maybe there is a better model for ATL and THL with lower fleet numbers going forward through accepting you will be short on units for three months each year but at the advantage of not having yards filled with unused units for nine months each year.
Capital will be easier to raise once there are green shoots evident, however getting the timing right given the lead in time fo construct new units may be a challenge. For me, a softly softly approach makes more sense.
I wouldn’t be holding your breath for THL to make a play on ATL. THL is more focused on getting their own shop in order than putting themselves under pressure to fund the purchase and then take the required actions to rationalise the two businesses. Also, securing regulatory approval in NZ and Australia wouldn’t be a given.
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