THL - Tourism Holdings

[noodles]

SP increased circa 28% from $1.80 in Sept to $2.30 approx. in anticipation of a ripper announcement at the ASM. When tourism is growing at a whopping 9% per annum and there's also a strong tailwind from the lower currency both in terms of conversion of overseas earnings and N.Z. being a cheaper and more attractive place to visit with cheap airfares and lower currency is it really any surprise the market is underwhelmed with a 10% increase in profit forecast ?

The company was very explicit that the forecast included $2m of growth initiatives that were to be expenced. Without this, they would have been looking at 20% growth in NPAT. Their track record of conservative forecast means that it is likely to be upgraded.
It is also worth noting that Rob Campbell was buying at current prices.

[Beagle]

The company was very explicit that the forecast included $2m of growth initiatives that were to be expenced. Without this, they would have been looking at 20% growth in NPAT. Their track record of conservative forecast means that it is likely to be upgraded.
It is also worth noting that Rob Campbell was buying at current prices.

Yep fair comment mate and noted but OTOH just for the sake of a debate and comparison, AIR are expanding their operations and expensing much of the cost in doing so on new routes and growing profit at 100% and are on about half the PE. Perhaps its simply that the market is underwhelmed by 20% underlying profit growth given the strength of the tailwinds ?

[sb9]

The company was very explicit that the forecast included $2m of growth initiatives that were to be expenced. Without this, they would have been looking at 20% growth in NPAT. Their track record of conservative forecast means that it is likely to be upgraded.
It is also worth noting that Rob Campbell was buying at current prices.

Agree 100%.

Bit of weakness in sp is expected as some might want to get out, fair enough. Happy to continue to hold for long term.

[golden city]

time to buy

[DarkHorse]

Yep fair comment mate and noted but OTOH just for the sake of a debate and comparison, AIR are expanding their operations and expensing much of the cost in doing so on new routes and growing profit at 100% and are on about half the PE. Perhaps its simply that the market is underwhelmed by 20% underlying profit growth given the strength of the tailwinds ?

I hold both AIR and THL and I'm more bullish on the later. Being an RV business with high marginal costs of meeting excess demand, it's less able to quickly leverage increased demand into multiplied profits. However they operate in a somewhat less cyclical/less competitive industry in the medium-long term and have more room for both organic growth and earnings accretive acquisitions.

[noodles]

Yep fair comment mate and noted but OTOH just for the sake of a debate and comparison, AIR are expanding their operations and expensing much of the cost in doing so on new routes and growing profit at 100% and are on about half the PE. Perhaps its simply that the market is underwhelmed by 20% underlying profit growth given the strength of the tailwinds ?

Ok Roger, you bought up AIR. So I thought I might do a comparison.
Given the level of debt and large depreciation for both companies, I think EV/EBIT is the best way to compare.

FY16	AIR	THL
Market cap	3080	248
Debt	1026	75
EV	4,106	323
EBIT	806	37
EV/EBIT	5.1	8.6

At first glance AIR appears to be significantly cheaper. But I think we need to consider the abnormally low fuel price. In fact, a broker recently said the cost savings (on a like-for-like basis) is $363m for FY16. Now lets repeat the above table assuming FY15 fuel pricing (i.e. reduce EBIT by $363m).

FY16 (without fuel savings)	AIR	THL
Market cap	3080	248
Debt	1026	75
EV	4,106	323
EBIT	443	37
EV/EBIT	9.3	8.6

THL now appears to be cheaper.

I know this is very simplistic. AIR has dropped prices as a result of the fuel drop. But there is no doubt that a mean reversion of fuel prices is likely to leave little difference in the comparatives between the two companies. Then it is a question of which companies has better growth prospects. A regional player(AIR) or a global player(THL).

[sb9]

Good analysis there noodles as always.

And they're amongst the award too at Deloitte Top 200 last night for the following.

Best growth strategy: Tourism Holdings

[bull....]

The company was very explicit that the forecast included $2m of growth initiatives that were to be expenced. Without this, they would have been looking at 20% growth in NPAT. Their track record of conservative forecast means that it is likely to be upgraded.
It is also worth noting that Rob Campbell was buying at current prices.

market must seen your post price recovering nicely

[bull....]

acc selling some

[Sideshow Bob]

Country is buzzing with tourist, Chinese New Year not far off and no talk from our main cheerleader?

Are you still in Golden City?