1H19 beats expectations CTD delivered a strong 1H19 result which exceeded our forecast. Underlying EBITDA rose 21% to A$64.6m (Morgans was A$63.5m). Importantly, 85% of the growth was by organic means with the acquisitions of SCT and Lotus Travel adding just A$0.4m and A$1.3m of EBITDA to the result. Strong results were posted in ANZ (EBITDA +18%), Europe (EBITDA +30%) and Asia (EBITDA +34%). Each of these regions benefited from strong client activity (except UK given Brexit uncertainty), record client wins and retention and continued efficiency gains. As guided to, North America EBITDA was up only 3% as CTD implemented its technology capabilities in the region which saw one-off developments of A$2m. Pleasingly global overheads fell slightly as CTD benefits from scale. Cashflow conversion was weak (45%) due to timing issues but in line with guidance and was slightly better than our forecast of 40%. The interim dividend of 18cps ff (up from 15cps the pcp) was in line with our forecast. FY19 guidance remains unchanged but looks conservative CTD reiterated that it is trading at the top end of its FY19 underlying EBITDA guidance range or A$150m, up 19.6% on FY18. Given the strong 1H result, track record of surprising on the upside and favourable FX, we believe guidance is conservative. Earnings are seasonally skewed to the 2H (40-43% 1H vs 57-60% 2H). We have made only minor upgrades to our EBITDA forecasts and we now sit slightly ahead of guidance. The upgrades at the NPAT level are even less due to higher amortisation and tax. Importantly, full year cashflow conversion is expected to be ~100%. Foundations in place for a big FY20 Benefiting from a full year of Lotus and the tech hubs in Asia and the US, we believe that CTD is well positioned to deliver strong earnings growth in FY20. While not included in our forecasts, further accretive acquisitions are likely. CTD is continuing to explore M&A opportunities in North America and Europe. It said its pipeline is full and that the opportunities are getting larger. Investment view – Add rating and A$31.65 price target We maintain an Add rating on this quality growth company. Following forecast changes and rolling forward to FY20, our blended valuation and price target have risen to A$31.65 per share (A$26.72). | 
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