Shaws Update.HLO AGM commentary and QAN market update both...

Shaws Update.

HLO AGM commentary and QAN market update both cautious but positive

Event: The share prices of various ASX-listed Travel stocks have been under pressure recently duein part to trading updates and commentary released by their peers. However, we found thecommentary in today’s Helloworld Travel (HLO) Annual General Meeting and QantasAirways (QAN, Not Rated) market update to be cautious but positive. We retain our positiveview on the Australian leisure travel sector given the typical bricks-and-mortar travel agentcustomer is not as impacted by cost-of-living pressures and more inclined to travelcompared to other cohorts. HLO is trading on a Factset consensus FY25 PER of 8.1x versuspeers trading at around 15.0x and trading well below our $3.50/s price target. Accordingly,we retain our BUY rating.


Highlights• HLO AGM SNIPPETS: 1Q25 trading results positive and broadly in line with companybudgets. Business class TTV in NZ increased 6% while economy class TTV fell 6%. InAustralia, business class TTV rose 2% by value while economy class TTV fell 2%. On themargin front in both Australia and New Zealand retail margins improved by 0.15% whileAustralian wholesale is down 1% due to the higher percentage of FIT bookings. NZwholesale margins are slightly up on last year. Wholesale and inbound businesses inAustralia are up 55% and 7% respectively on FY24 numbers. In New Zealand wholesalehas increased 42% on last year while inbound business is down but coming off a very lowbase in Q1 as usual. In terms of destinations, ex Australia demand has increasedsignificantly in early FY25 for Bali, up 23%, Vietnam, up 35% and Japan, up 45%. Sales tothe Middle East have declined however not as much as HLO had expected to endSeptember. HLO expects to continue to capitalise on the strong demand for leisuretravel into 2025 and beyond. However, given the degree of global uncertainty, thecompany did not provide guidance at this time.

• QAN MARKET UPDATE SNIPPETS: The Group continues to see first half trading in linewith expectations. Both Qantas and Jetstar are seeing stable demand in their respectivesegments across the portfolio. Jetstar Domestic's unit revenue is outperforming previousexpectations due to stronger than anticipated travel demand. Qantas Domestic's loadfactors and demand for corporate travel continue to improve y/y. QAN expects FY25underlying EBIT to be up 10% y/y. FactSet consensus is forecasting 8.2% growth at thetime of writing.• We make no changes to our earnings forecasts at this time. We continue to forecastFY25 Revenue of $251.9m, representing growth of 10.4% versus PCP. FactSet consensusis $239.5m (5% growth). We continue to forecast FY25 EBITDA of $75.2m, representinggrowth of 11.5% versus PCP. FactSet consensus is $70.1m (4% growth).

RecommendationHLO trades at a material discount to both our $3.50/s price target and its ASX-listed peers.Accordingly, we retain our BUY rating