THL - Tourism Holdings

[Elles]

Not sure winner that I'd agree PPH is totally "safe" but its good to know I've mitigated the risk by investing big (for me) in both THL and PPH :-)

I think PPH is the risky one...?

[iceman]

I think PPH is the risky one...?

You can never be sure with winner69 :-)

[Beagle]

I read somewhere some days ago that tourism grew 7% in 2017 worldwide, the fastest pace ever recorded. The NZ Tourism Forum is forecasting visitor numbers to NZ to grow from 3.5 million in 2016 to 4.9 million in 2023. Total tourism spend in NZ forecast to increase from $10 billion to $15.3 billion for the same period. THL is a core part of my portfolio and looking at numbers like this as well as THL's own forecasted numbers, I feel we are well positioned with this company to take advantage of this phenomenal growth in the industry.

Got thinking about this overnight in terms of valuation theory.
Go back to Benjamin Graham's famous valuation of V= e x (8.5 + 2g) where a PE of 8.5 represents a no growth company and g = the estimated sustainable growth rate over a 7-10 year period.

The main weakness of Ben Graham's valuation methodology in my opinion is that there are very few companies where growth can be reliably estimated that far out with the odd exception with companies with a very long track record of sustainable growth with RYM being one notable example.

In this case however even if we ignore the current year's tourism growth as something of an aberration caused by low fuel prices long term IATA are forecasting airline traffic growth of 5-6% per annum for the foreseeable future.

THL are extremely well placed as a major global player to capture this tourism growth and possibly capture more of it from a possible change towards more "experience" tourism.
If we use a g of 5.5 representing the mid point of IATA's long term sustainable flight growth predictions we can see THL is worth a PE of 8.5 + (2 x 5.5) = 19.5.
Ben Graham's formula however is based on historical EPS not forward earnings.

Add in synergies as they expand their global reach and capex efficiency enhancements and other business optimization strategies and one can see the intrinsic value.

On the other hand almost all DCF models I have seen by brokers analysts simply make sets of assumptions about the next five years and then apply a terminal compound growth rate after that to EPS which is almost always 2% and there's the flaw right there. If IATA is saying tourism long term is growing at 5-6% and DCF models are saying five years out its only 2% you can understand why DCF models are going to give a much lower valuation.

Just all mindless theorizing...probably something the Chinese investors do over their herbal tea...

[Leftfield]

Not sure winner that I'd agree PPH is totally "safe" but its good to know I've mitigated the risk by investing big (for me) in both THL and PPH :-)

80% of my portfolio in 3 shares - ATM, PPH and THL. Feeling well positioned!

[Sideshow Bob]

Please no.
There are enough tourist drivers struggling with NZ road conditions.
Put them in a LEFT HAND drive vehicle and there will be madness.

Indeed drivers struggling enough already. Only 3-4 cars written off per week!! And that is only one company!!

https://www.odt.co.nz/regions/queens...driving-skills

Not relishing my drive across the Lindis Pass today, as just starts to rain....

[winner69]

I love corporate welfare esp when it goes to company I punting on .....but that’s being hypocritical because I feel corporate welfare is a generally bad thing

Go Jacinda



Tourism Holdings will receive $402,000 to convert an electric van into a campervan, invest in charging equipment working with holiday parks, and develop dedicated travel itineraries with charging stations at 100km intervals. Beyond this project, they aim to have 20 electric campervans on the road within one year.

http://www.sharechat.co.nz/article/7...th-3-7-mlnhtml

[Beagle]

Nice. Watching this whole electric thing closely. Fascinated as to how the infrastructure is going to be rolled out ?
Consider this. How often at your local petrol station do you drive in and have to wait for a bowser to be available, fairly often right ?
Consider that it takes perhaps 3-5 minutes to fill up and pay and consider how many petrol stations there are everywhere.
How many EV charging points are we going to need long term even if we have 50 KW/hr charge points the average user is going to have to spend well over an hour charging their 90 kw/hr vehicle.
How is that going to work when it presently only takes 3-5 minutes ? Once we get widespread adoption of EV's we are going to neewd an absolute massive amount of infrastructure in terms of charging points, far more widespread than petrol stations at present as it takes perhaps 15-20 times as long to fill with power as it does with fuel. Even if most people charge at home I still struggle to see how the infrastructure will be there in sufficient scope to make long range line travel up and down the length of N.Z. a plausible possibility. Returning to short range considerations...Charging a campervan every 100 km's, who is going to want to do that and sit around and wait for an hour or more while it gets charged before they can drive on ? Limited scope application to very rich greenies who can afford the premium pricing for these eco Campervan's ? Hope there's some bright cookies working on this project to solve these apparent problems. Suppose all this electric campervan stuff has to start somewhere...suppose we should be pleased the new Government is at least making a token effort to encourage R&D in this area.

[Antipodean]

Not just charging stations, in addition the widespread adoption of EV's in a country like NZ would quickly outstrip the electrical grid's ability to provide. A rapid increase in electrical generation required at short notice would currently unlikely to be able to be filled with non-renewable sources. An ironic scenario.

[winner69]

guy down the road got an EV

He has an older house but needed to get the place rewired to cope with charging his car

[mondograss]

From a campervan perspective though, as long as you're using camp grounds the basic infrastructure is already there to recharge, so it's actually a good starting point.