The travel sector has had a rough year. With global uncertainties seeping in as a result of heightening trade and political tensions, consumer expenditure has waned. However, optimism is slightly stronger in the business travel sector.
Here’s a quick update on the key ASX players across the sector.
Webjet Limited (ASX: WEB)
Webjet is a digital travel business company that was extremely promising in the first half of the year. However, since its Thomas Cook business started to falter, its share price has progressively grown weaker. Since its high of $16.87 in May, the Webjet share price has slid 34% to be trading for $10.97 per share, at the time of writing.
This slide was exacerbated by Webjet’s disappointing full-year results, announced last month. While its B2B segment, WebBeds, had a promising result, with earnings before interest, tax, depreciation and amortisation (EBITDA) up by almost double to $67.3 million, its B2C segment was an anchor, growing just 1% in FY19.
Similarly, the bankruptcy of Thomas Cook is a huge hit to Webjet’s forecasted revenue. This is an expected $150–200 million contribution to total transaction value in FY20 that will not be realised.
Flight Centre Travel Group (ASX: FLT)
The Flight Centre share price is up around 12% over the last month to $48.05 at time of writing. The company has been doing particularly well in recent months due to the establishment of new partnerships, and the perceived benefit from the Thomas Cook collapse.
Flight Centre is a fundamentally strong business, with a healthy return on equity of 18% and low debt-to-equity ratio of 0.13. Similarly, its cash on hand equates to a stellar $336 million. The company stands to benefit significantly from the fall of Thomas Cook, as this was a key competitor in the UK market across flights, hotels and packaged holidays.
Helloworld Travel Ltd (ASX: HLO)
Helloworld has seen its share price drop significantly in the year to date, falling 23% to $4.71 at the time of writing. However, its share price has been bumped up around 9% higher in the last two weeks due to its recent acquisition news and bullish forecast.
The company has agreed to acquire TravelEdge for $28 million. TravelEdge focuses on corporate travel management including academic travel services, event and group planning and prizing and incentives.
Helloworld also disclosed that it expected its FY20 EBITDA to be between $83 million and $87 million. This figure is 12.5% higher than its FY19 result of $77.3 million.
Corporate Travel Management Ltd (ASX:CTD)
In line with the companies above, Corporate Travel has seen its share price tumble consistently throughout 2019. From its peak of $29.27 in February, Corporate Travel’s share price has stooped 35% lower to $19.07 at time of writing.
More recently, however, the company’s stock price seems to have reached an inflection point. Its FY19 results show a 12% growth in net profit after tax, due to its 21% increase in revenue. These numbers are expected to continue its positive trajectory, with 90% of the company’s users claiming they would recommend Corporate Travel’s service to their friends. This positive net promoter score is critical in the competitive business travel sector.
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Motley Fool contributor Audrey Thehamihardja has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited, Flight Centre Travel Group Limited, and Helloworld Limited. The Motley Fool Australia has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019