THL - Tourism Holdings

[J R Ewing]

That has always been THL's problem - replacing its aging fleet.

Not sure what the answer is but selling in bulk into the second hand market was a dumb idea which cost the company plenty in the past - many were bought and then, rented out in competition!

That might have been a bit of an issue in the past but there are not many operators running clapped out old proper self-contained campers. The competition is more from the converted Previa or similar (not self contained) and the rental car/motel/B&B alternative.

But the whole tourism sector is going better now. They should certainly post some improved results over the next year or two (barring catastrophes like Chch of course).

[Beagle]

Guidance was NPAT $10.5m ...doing better so say $12m

PE at shareprice 117 then 11.1

About what AIR was a few weeks ago

Thanks, I did some of my own homework and edited that post but yeah, I think your estimate for improved performance on previous guidance looks fair enough mate but the baggage this company carries from the past should serve as a warning as to the cyclical extremes this company has to endure. Taking into account the lower liquidity and implied higher risk premium I'm not leaping on the buy button but will put it on my watch list Rob Campbell is a good operator, something I am sure many on here would agree.

[forest]

Can I pick your brains mate. How do the companies compare on a 2014 PE basis if we assume AIR makes $240m after tax = 21.6 eps for a PE of 9.9 times at latest price of $2.14 ?

THL Feb FC was 10.5mil profit lets assume after today announcement 11mil profit. This would give THL a 2014 P/E of 11.4. Not spectacular for a cyclical company but it is the 2015 profits which could look interesting.

[Beagle]

Sorry mate, I'm impatient as well as lazy, LOL, so did my own number crunching as you can see. Some are picking EPS for AIR of 30 ish cps for 2015 so THL forward guidance would have to be really strong to get me on board.

[forest]

Sorry mate, I'm impatient as well as lazy, LOL, so did my own number crunching as you can see. Some are picking EPS for AIR of 30 ish cps for 2015 so THL forward guidance would have to be really strong to get me on board.

Not disagreeing that AIR is a good cyclical play or trying to get you on the THL share holders register. I am just pointing out that todays announcement together with previous announcements and insiders buying I think its worth spending a little time looking at THL.

[golden city]

THL will surprise everyone in 2015 forecast.., which i guess will be around 17c per share.at a apropriate return.., at pe 10., it should be 1.70 ..in 2015

[noodles]

THL will surprise everyone in 2015 forecast.., which i guess will be around 17c per share.at a apropriate return.., at pe 10., it should be 1.70 ..in 2015

Wow that is pretty bullish. How do you see them doing that?

I think they will increase their NPAT by at least $2mill through a reduction in depreciation and interest costs alone. If they can improve their underlying business as well, then they might be able to reach your magic 17cps.

I hope you are right!

[percy]

Can anyone point me at THL's utilisation rates? I.e. how spare capacity have they had in the last few years.

Just crunching through the numbers based on the NZ Herald link above to see what their bottom line looks like, and it looks good, but only if they have spare capacity (or can ramp up prices!)

Have no idea,yet when ever I drove past their ChCh depot there were always hundreds of their vans ,just sitting outside in their yard depreciating.
The thought of under utilised capital wasting away,needing to be replaced with new capital ,has always encouraged me to invest elsewhere.
I would take a drive past any of their depots, and check it out for yourself before buying into this company.
The season for rental companies runs from about October through to March/April.Car rental companies buy in vehicles for October start, then sell excess when the season is finished.Vans take a lot more capital,and need to be retained [capital tied up] for longer.

[Balance]

Some very good points made re THL vs AIR, and the capital intensive nature of the rental vans business.

Here's hoping that THL, after many cycles of boom and bust with the rental van business (going as far back 20 years ago!) has finally learnt how to manage the cycle.

[Beagle]

Not disagreeing that AIR is a good cyclical play or trying to get you on the THL share holders register. I am just pointing out that todays announcement together with previous announcements and insiders buying I think its worth spending a little time looking at THL.

Agreed, well worth keeping an eye on

Some very good points made re THL vs AIR, and the capital intensive nature of the rental vans business.

Here's hoping that THL, after many cycles of boom and bust with the rental van business (going as far back 20 years ago!) has finally learnt how to manage the cycle.

As most of you know AIR leases a lot of its wide body fleet at exceptionally low finance rates removing both the residual value risk and enabling financing at U.S.interest rates.
I think two of the biggest issues with rental vans is the relatively short N.Z. season and very low barriers to entry in the industry...sell off old vans opens the door to other competitors to buy them up.
As you've quite correctly noted Balance, long history shows its difficult to get adequate returns on rental fleets across the varying tourism cycles and I struggle to see how that's going to change going forward with so few barriers to entry. As Percy has hinted at and the company itself acknowledges, there's still plenty of spare capacity in the rental van industry whereas on the other hand AIR flies around with 80%+ load factors most of the year.

My own investment view with small cap illiquid stocks is I expect a pretty good discount to a large cap stock to compensate for the illiquidity. It'll be interesting to see if THL's forecast eludes to this being a possibility in the year ahead, relative to AIR.