Ann: Half Yearly Reports and Accounts, page-38

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BuffettWarren

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16/02/23

11:08

Post #: 66282696
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Originally posted by Swage_17: ↑

I am invested in the stock and I think the current SP is attractive in one doesn't already have this in their portfolio. Having said that, there is far too much optimism in this forum (per usual HC forums). Here are some negatives to consider:

1. Jamie talks the company up and inevitably fails to deliver. E.g. some time back he mentioned dividends starting in the following period (this was during the covid recovery). When the next report came out, no dividend. Ofcourse the company performance fell short of his expectations or alteast the expectations he put out to the market. No acknowledgement of this and they just quietly didn't announce a dividend until the next half report. There are many occasions of Jamie doing this, for example even this report shows he over invested in employees for a recovery he thought would come but never came. The point is, the EBITDA guidance is to be taken with a grain of salt. If I was valuing the company conservatively, I would use an EBITDA of $150m for FY23

2. Competition: There are some big players providing the same service that CTD does e.g American Express Corporate Travel. There is no saying those bigger players will take CTDs organic growth opportunities. I am very disappointed with the US recovery when we keep in mind that the business is supposed to be growing organically in double digits. If CTD was winning new business at a rate of even 10%, then since March 23 to March 2023 the US business should have grown 33% compounded. This means even if the overall industry recovery is at 70% of pre covid, CTDs US business should be at ~100%. The lack of organic growth rate is my biggest concern right now.

3. High levels of D and A coming out of the EBITDA. The NPAT ratio is low and also confusing with additions of 'one off' payments. Also the poor cashflow has something to do with this. The numbers are presented in a way that they make the earnings look better than they are. I like to look at the dividend as that removes all the depreciation and amortisation and one off payments and I must say a dividend of 6c for an entire half where travel has been open with no restrictions is disappointing. Q4 dividend alone was 5c. I understand there are stronger and weaker seasons etc but this is disappointing nonetheless and the low dividend tells me more about the underlying business than anything else.

There are plenty of reasons for optimism per the presentation but this is not trading at bargain basement prices that most posters are implying.

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"an entire half where travel has been open with no restrictions"
Is China included in this statement? I need to go back and look at the % of pre covid for CTD regarding China, but I think there will be a much improved scenario there for the 2nd half.

CTD Price at posting: $16.76 Sentiment: Buy Disclosure: Held
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Ann: Half Yearly Reports and Accounts, page-38

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Ann: Half Yearly Reports and Accounts, page-38

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