Flight Centre Travel Group Limited ASX Code: FLT Price: $14 ......2017, FLT acquired 100% of Bespoke...
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Business Summary Flight Centre Travel Group Limited (FLT, formerly Flight Centre Limited) is engaged in travel agency business. The Company provides a complete travel service for leisure and business travellers in Australia, New Zealand, the United States, Canada, Mexico, the United Kingdom, Africa, Middle East, Asia, and Europe. FLT consists of more than 30 brands with four categories of brands which are Leisure, Corporate, Wholesale and other. Leisure Band FLT operates several leisure travel brands. Its flagship Flight Centre brand is also present in 10 other countries around the world. The Flight Centre and Escape Travel brands are aimed at the mass market, Student Flights and Intrepid My Adventure Store at the youth market, Travel Associates at the premium market and Cruise about at the cruise market. Corporate Brand This division includes six brands that service the needs of organisations of all sizes across industries. The Company's global corporate network spans 90 countries worldwide with company-owned offices and strategic licensing agreements with local agencies. Wholesale Brands This division supply product to its national and international network or travel retail outlets. The wholesale brands consist of Infinity Group, Explore Holidays and GOGO Vacations. Other FLT has also expanded into other travel related areas, such as foreign currency exchange and travel academies, and areas where its unique business model works, including recruitment marketing and bike retailing, as well as employee benefit businesses, Healthwise and Moneywise. Acquisition FLT acquired 100% of Ignite Travel Group (Ignite). Latest Research Leaner and meaner FLT have delivered a 1H21 underlying loss before tax of $247.2m, materially lower than pcp ($102.7m profit) and below our $178.8m forecast loss. Operating revenues of $160m (10.4% margin in-line with BPe) were 10% of pcp and slightly below our $172m forecast (BPe $246m headline forecast included $74m in Govt subsidies). Month-on-month improvements in revenue combined with stable cost control have reduced the cash burn from $40m in Sept to $30m in December. Key talking points include: Cashflow: FLT delivered an operating cash outflow of $660m (vs $136m outflow in pcp), reflecting an unwind in the working capital position (in-line with Company expectations), monthly operating cash outflows and one-off costs. Balance sheet: FLT exited the period with a cash balance of $1.31bn (ex-client cash), $600m total debt and a net cash position of $671m. Total available liquidity (inc. undrawn debt) is currently $1.2bn and provides a sufficient runway in our view. What we liked: In our view, the biggest takeaways from this result included: (1) stable revenue margins in Corporate; (2) strong execution on cost management (down c.66% vs pre-Covid); and (3) reinforcement of FLT’s strong mkt position in Aust. leisure which maintained mkt share (GDS data) through the month of Dec despite 50% less stores. For more information see research 26 Feb 2021. GICS - Consumer Serv Flight Centre Travel Group Limited ASX Code: FLT Price: $18.88 12 Mth Target Price: $21.50 Rating: Buy Important Disclaimer - This may affect your legal rights: Because this document has been prepared without consideration of any specific client's financial situation, particular needs and investment objectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement with Bell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell Potter Securities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate. Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document. This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. This is general investment advice only and does not constitute advice to any person. Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in this commission. Bell Potter Securities and its associates may hold shares in the companies recommended. Snapshot Date Market Cap. Shares on issue 12 Month High 12 Month Low 18 March 2021 $3,762m 199.3m $20.16 $8.56 Rating Rating 12 Mth Target Price Capital Gain Gross Yield Implied Total Return Buy $21.50 13.9% NA% 13.9% Investment Fundamentals FYE 30 Jun 2020A 2021F 2022F 2023F Profit $m -322.7 -237.6 99.7 168.8 Profit (norm)* $m -322.7 -237.6 99.7 168.8 EPS* ¢ -269.1 -113.5 45.5 77.0 EPS Growth % 0.0 0.0 0.0 69.4 P/E* x 0.0 0.0 41.5 24.5 P/E Relative % 0.0 0.0 0.0 0.0 DPS ¢ 0.0 0.0 0.0 40.0 Yield % 0.0 0.0 0.0 2.1 Franking % 100.0 100.0 100.0 100.0 * Adjusted for goodwill and unusual items Source: Based on Bell Potter estimates Share Price Chart Total Return on $10,000 Investment
Transcript of Flight Centre Travel Group Limited ASX Code: FLT Price: $14 ......2017, FLT acquired 100% of Bespoke...
Business SummaryFlight Centre Travel Group Limited (FLT, formerly Flight Centre Limited) isengaged in travel agency business. The Company provides a complete travelservice for leisure and business travellers in Australia, New Zealand, theUnited States, Canada, Mexico, the United Kingdom, Africa, Middle East,Asia, and Europe. FLT consists of more than 30 brands with four categoriesof brands which are Leisure, Corporate, Wholesale and other.
Leisure Band FLT operates several leisure travel brands. Its flagship FlightCentre brand is also present in 10 other countries around the world. TheFlight Centre and Escape Travel brands are aimed at the mass market,Student Flights and Intrepid My Adventure Store at the youth market, TravelAssociates at the premium market and Cruise about at the cruise market.
Corporate Brand This division includes six brands that service the needs oforganisations of all sizes across industries. The Company's global corporatenetwork spans 90 countries worldwide with company-owned offices andstrategic licensing agreements with local agencies.
Wholesale Brands This division supply product to its national andinternational network or travel retail outlets. The wholesale brands consist ofInfinity Group, Explore Holidays and GOGO Vacations.
Other FLT has also expanded into other travel related areas, such as foreigncurrency exchange and travel academies, and areas where its uniquebusiness model works, including recruitment marketing and bike retailing, aswell as employee benefit businesses, Healthwise and Moneywise.
Acquisition FLT acquired 100% of Ignite Travel Group (Ignite).
Latest ResearchLeaner and meaner
FLT have delivered a 1H21 underlying loss before tax of $247.2m,materially lower than pcp ($102.7m profit) and below our $178.8m forecastloss. Operating revenues of $160m (10.4% margin in-line with BPe) were10% of pcp and slightly below our $172m forecast (BPe $246m headlineforecast included $74m in Govt subsidies). Month-on-month improvementsin revenue combined with stable cost control have reduced the cash burnfrom $40m in Sept to $30m in December. Key talking points include:
Cashflow: FLT delivered an operating cash outflow of $660m (vs $136moutflow in pcp), reflecting an unwind in the working capital position (in-linewith Company expectations), monthly operating cash outflows and one-offcosts.
Balance sheet: FLT exited the period with a cash balance of $1.31bn(ex-client cash), $600m total debt and a net cash position of $671m. Totalavailable liquidity (inc. undrawn debt) is currently $1.2bn and provides asufficient runway in our view.
What we liked: In our view, the biggest takeaways from this result included:(1) stable revenue margins in Corporate; (2) strong execution on costmanagement (down c.66% vs pre-Covid); and (3) reinforcement of FLT’sstrong mkt position in Aust. leisure which maintained mkt share (GDS data)through the month of Dec despite 50% less stores.
For more information see research 26 Feb 2021.
GICS - Consumer Serv
Flight Centre Travel Group Limited
ASX Code: FLT Price: $18.88 12 Mth Target Price: $21.50 Rating: Buy
Important Disclaimer - This may affect your legal rights: Because this document has been prepared without consideration of any specific client's financial situation, particular needs and investmentobjectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement withBell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell PotterSecurities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate.Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document.This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. This is generalinvestment advice only and does not constitute advice to any person.Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in thiscommission. Bell Potter Securities and its associates may hold shares in the companies recommended.
Snapshot
DateMarket Cap.Shares on issue12 Month High12 Month Low
18 March 2021$3,762m199.3m$20.16$8.56
RatingRating12 Mth Target Price
Capital GainGross Yield
Implied Total Return
Buy$21.5013.9%NA%13.9%
Investment FundamentalsFYE 30 Jun 2020A 2021F 2022F 2023F
Profit $m -322.7 -237.6 99.7 168.8Profit (norm)* $m -322.7 -237.6 99.7 168.8
EPS* ¢ -269.1 -113.5 45.5 77.0EPS Growth % 0.0 0.0 0.0 69.4P/E* x 0.0 0.0 41.5 24.5P/E Relative % 0.0 0.0 0.0 0.0
DPS ¢ 0.0 0.0 0.0 40.0Yield % 0.0 0.0 0.0 2.1Franking % 100.0 100.0 100.0 100.0* Adjusted for goodwill and unusual itemsSource: Based on Bell Potter estimates
Share Price Chart
Total Return on $10,000 Investment
Profit & Loss ($M)2016A 2017A 2018A 2019A 2020A
Sales Revenue 2,625 2,544 2,921 3,055 1,898Total Revenue ex. Int. 2,653 2,653 2,927 3,086 2,077EBITDA 439 406 441 457 -356Depreciation & Amort. -66 -75 -78 -82 -237Goodwill Amortisation -- -- -- -- --EBIT 372 331 364 375 -593Net Interest -3 -2 -0 -1 -24Profit Before Tax 370 330 363 373 -617Income Tax -100 -95 -99 -79 187Outside Equity Int. -- -- -1 -0 -0Profit after Tax 269 235 263 294 -430Significant Items after Tax -25 -4 -- -30 -232Reported Profit after Tax 245 231 263 264 -662Preferred Dividends -- -- -- -- --
Cash Flow ($M)2016A 2017A 2018A 2019A 2020A
Receipts from Customers 2,680 2,607 2,885 3,128 2,797Funds from Operations 466 399 404 371 -44Net Operating Cashflow 357 295 314 279 6Capex -121 -104 -87 -101 -111Acquisitions & Investments -195 -58 -62 -221 -38Sale of Invest. & Subsid. 10 9 -- 113 111Net Investing Cashflow -290 -161 -146 -218 -48Proceeds from Issues 4 6 5 6 694Dividends Paid -158 -138 -156 -320 -99Net Financing Cashflow -110 -156 -186 -175 757Net Increase Cash -44 -22 -18 -114 715Cash at Beginning 1,378 1,315 1,282 1,273 1,172Exchange Rate Adjust. -19 -12 10 14 -21Cash at End 1,315 1,282 1,273 1,172 1,866
Ratios and Substantial Shareholders2016A 2017A 2018A 2019A 2020A
Profitability RatiosEBITDA Margin % 16.71 15.97 15.11 14.96 -18.76EBIT Margin % 14.19 13.02 12.45 12.26 -31.25Net Profit Margin % 10.25 9.23 9.00 9.61 -22.64Return on Equity % 20.00 16.44 16.97 20.08 -30.85Return on Assets % 9.64 7.97 8.26 8.92 -10.08
Debt/Safety RatiosNet Debt/Equity % -92.06 -85.79 -79.61 -68.27 -64.63Interest Cover x 134.66 196.56 2,139 257.34 -25.08
Top 5 Substantial ShareholdersGainsdale Pty Ltd 8.3%Gehar Pty Ltd 7.9%James Management Services Pty Ltd 6.9%
Balance Sheet ($M)2016A 2017A 2018A 2019A 2020A
Cash & Equivalent 1,316 1,282 1,273 1,183 1,889Receivables 686 765 846 560 320Inventories 2 1 2 2 12Other Current Assets 259 290 314 563 217Current Assets 2,263 2,338 2,435 2,308 2,438Prop. Plant & Equipment 216 256 248 240 525Intangibles 446 471 612 769 762Other Non-Current Assets 265 301 322 571 220Non-Current Assets 738 858 970 1,186 1,561Total Assets 3,001 3,195 3,405 3,493 3,999Interest Bearing Debt 77 56 35 185 989Other Liabilities 1,579 1,711 1,815 1,846 1,617Total Liabilities 1,655 1,767 1,851 2,031 2,606Net Assets 1,346 1,429 1,554 1,462 1,393Share Capital 399 401 393 394 1,094Reserves 24 13 34 15 11Retained Earnings 923 1,015 1,122 1,053 288Outside Equity Int. -- -- 5 0 0Total Shareholders Equity 1,346 1,429 1,554 1,462 1,393
Current Analyst Recommendations *
* Source: Morningstar. This chart shows the spread of recommendations from thosebroker analyst's in Australia with research coverage of this stock.
Principals & DirectorsPrincipals
Company Secretary Mr David C Smith
Directors
Ms Colette Mary Garnsey(Non-Executive Director)Mr Robert (Richard) Anthony Baker(Non-Executive Director)Mr Graham Francis Turner(Chief Executive Officer,ManagingDirector)Mr Gary Warwick Smith(Non-Executive Director,Non-ExecutiveChairman)Mr John Anthony Eales(Non-Executive Director)
To access further Research or for information regarding our recommendations and ratings please seewww.bellpotter.com.au
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Flight Centre Travel Group Limited
Bell Potter Securities Research
AFS Licence No. 243480 ABN 25 006 390 772
Email [email protected]
Website www.bellpotter.com.au
