Corporate Travel Management trading update

About the author:

Author name:

By Belinda Moore

Job title:

Senior Analyst

Date posted:

30 October 2014, 11:27 AM

Sectors Covered:

Agriculture, Food & Beverage, Travel and Chemicals

Corporate Travel Management (CTD) has had a strong start to FY15 and already earnings guidance has been upgraded. FY15 will benefit from record new client wins in Australia and offshore, the scaling of the US and a full year of the Westminster Travel acquisition.

In line with CTD's strategy, an acquisition in Europe is also expected to be made. Hold on for the ride.

AGM: guidance is upgraded; all regions are performing well

• FY15 EBITDA guidance is now expected to be above A$41m (+41.8% on the pcp) compared to A$38-41m previously
• Management said that it will refine this guidance further at the 1H15 result. Given the strong momentum across the business, we believe that new guidance could prove to be conservative. We have increased our FY15 EBITDA forecast to A$43.4m
• CTD is currently investigating a number of acquisitions opportunities across the UK/Europe and the US. An acquisition in UK/Europe is expected to made during FY15. This position, will allow CTD to compete in regional and global client tenders. The regional and global client tender pool is worth US$200bn. If CTD can increase its market share over the next few years, the upside is enormous.

New contract wins see material upgrades to FY16 & FY17

On the back of upgraded guidance, stronger operating conditions in Australia and New Zealand, large new client wins in the US and a weaker AUD, we have increased our FY15/16/17 NPAT forecasts by 5.8%/10.2%/10.6%.

Hold for now

We continue to rate this business highly and recommend that investors hold on for the ride. Morgans clients should login to view our new DCF valuation and price target.

Alternatively, contact your Morgans adviser or nearest Morgans office for more information.

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