THL - Tourism Holdings

**winner69** · 27-05-2019, 08:48 AM

Good US business not broken / might be a bit of drag on growth through 2020 / all honky dory after that

http://nzx-prod-s7fsd7f98s.s3-websit...062/300520.pdf

And guidance is unchanged ...relief for many

**percy** · 27-05-2019, 08:59 AM

Originally Posted by winner69

Good US business not broken / might be a bit of drag on growth through 2020 / all honky dory after that

http://nzx-prod-s7fsd7f98s.s3-websit...062/300520.pdf

And guidance is unchanged ...relief for many

Their business model may still be intact,but lack of used camper van sales has put a big dent in it.
I notice ATL have the same issues in both USA and Australia.

**BlackPeter** · 27-05-2019, 09:22 AM

Originally Posted by winner69

Good US business not broken / might be a bit of drag on growth through 2020 / all honky dory after that

http://nzx-prod-s7fsd7f98s.s3-websit...062/300520.pdf

And guidance is unchanged ...relief for many

I suppose you mean "Good (that the ) US business (is) not broken" vs "Good US business ... not broken"?

Not quite sure though their presentation would help me to draw any of these two potential conclusions.

While they say that their strategy and direction is right - their buy / rent / sell model appears to be badly broken and they even admit that it won't get better for the next 12 months. What's supposed to be happening afterwards?

The market is already saturated with used campervans and in 12 months the sugar rush of Trump's temporary tax cuts will be over as well. Less purchase power in a saturated market does not bode well for good business.

The only thing they seemed to have done so far in the US business is reshuffling deckchairs. I doubt this will help the business long term ... first they would need to realise that their strategy and direction is broken, before they can fix it.

**Beagle** · 27-05-2019, 09:49 AM

Seasonal uplift in demand has not occurred. Important to realise that lots of purchase decisions are usually made in late winter / early spring so its clear many consumers have pulled their heads in and are sitting on their hands.

$25m = 20 cps. Historically THL has traded at a peak PE of 18 when they were growing profits strongly and everything was working well. $3.60 would be the share price absolutely maxed out in terms of fair value from my perspective. $3.00 would appear to me more appropriate until they can prove that there hasn't been a systemic change in American consumer behaviour.

They continue to pay high dividends effectively out of rising debt level's which is quite an "interesting" strategy.

If they are only selling ~ half the campers they used too then I think its fair to say that the basis behind their business model has fundamentally changed.

Parking up 80 brand new campers in storage is analogous to an airline parking up planes on the ground...and in my view gives a valuable insight into exactly how much business conditions have changed in the US. It will all get better in 12 months time though so no worries...or will it ?

I think its quite clear they are pulling the levers they can over there but things have changed quite considerably from where they were.

**whatsup** · 27-05-2019, 10:49 AM

Originally Posted by Beagle

Seasonal uplift in demand has not occurred. Important to realise that lots of purchase decisions are usually made in late winter / early spring so its clear many consumers have pulled their heads in and are sitting on their hands.

$25m = 20 cps. Historically THL has traded at a peak PE of 18 when they were growing profits strongly and everything was working well. $3.60 would be the share price absolutely maxed out in terms of fair value from my perspective. $3.00 would appear to me more appropriate until they can prove that there hasn't been a systemic change in American consumer behaviour.

They continue to pay high dividends effectively out of rising debt level's which is quite an "interesting" strategy.

If they are only selling ~ half the campers they used too then I think its fair to say that the basis behind their business model has fundamentally changed.

Parking up 80 brand new campers in storage is analogous to an airline parking up planes on the ground...and in my view gives a valuable insight into exactly how much business conditions have changed in the US. It will all get better in 12 months time though so no worries...or will it ?

I think its quite clear they are pulling the levers they can over there but things have changed quite considerably from where they were.

Totally agree, paying divs out of debt is what Brierley did in the 80's imho and where did that end ?

**Beagle** · 27-05-2019, 10:58 AM

Originally Posted by percy

Their business model may still be intact,but lack of used camper van sales has put a big dent in it.
I notice ATL have the same issues in both USA and Australia.

I think its a world wide problem and indicative of a fundamental change in consumer behaviour. As Tourism has grown and grown all these companies have been putting more and more new capacity into the market sailing along blissfully assuming that the demand for used campers will also grow at the same rate. Maybe consumers are thinking rather than investing say $100,000 in a decent used camper that I might use for a couple of weeks a year I'll simply rent instead because its far more efficient to do so ? Where does that leave THL's business model in terms of fleet disposal ?

**percy** · 27-05-2019, 11:36 AM

Maybe their business model is more "broken" than just "dented".?

**oldtech** · 27-05-2019, 11:48 AM

Originally Posted by Beagle

I think its a world wide problem and indicative of a fundamental change in consumer behaviour. As Tourism has grown and grown all these companies have been putting more and more new capacity into the market sailing along blissfully assuming that the demand for used campers will also grow at the same rate. Maybe consumers are thinking rather than investing say $100,000 in a decent used camper that I might use for a couple of weeks a year I'll simply rent instead because its far more efficient to do so ? Where does that leave THL's business model in terms of fleet disposal ?

I have been wondering for some time if, as you say, there is a fundamental change in consumer behaviour. I get the feeling that people are (a) trying to do more things and see more places in a relatively short amount of time, and (b) moving more towards convenience and comforts, which they are happier to pay for. Are tourists finding the ready availability of hotel rooms and AirBnB easier and more convenient?

I also wonder if, particularly here in NZ, maybe the anecdotes about councils clamping down on freedom camping are turning people away.

Just my random thoughts ...

Disc ... got out in February

**Drew95** · 27-05-2019, 11:48 AM

Just a bit of anecdotal evidence. I just bought a campervan, and there were hundreds to choose from. I ended up buying a (non-ex-rental) with 40,000km on the dial for $76,000. The new equivalent is $155,000. I went to one rental company, who were trying to sell off very similar, but much lower spec'd vans, with 200,000km on the dial for $90,000. And they had 60 to choose from. That was one rental co. And down the road were several more. My impression after doing about a year of research was that the market was flooded, and prices would need to come down simply because of supply and demand.