Reporting Season

ASX Reporting season preview: Flight Centre and Corporate Travel

Tue 26 Jul 22, 3:17pm (AEST)
Covid 14 Covid passport vaccine travel
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Key Points

  • Morgans is Hold rated on Flight Centre and Add rated on Corporate Travel
  • Corporate Travel considered to have the potential to surprise to the upside
  • Both travel companies expected to return to profitability in FY23

Morgans views on ASX 200 travel companies heading into August reporting season.

Flight Centre: Narrows losses

Flight Centre (ASX: FLT) pretty much pre-announced its FY22 results on Monday, now expecting to deliver a smaller loss between -$180m to -$190m compared to its previous guidance of -$195m to -$225m.

The update was in-line with Morgans view that the business was cashflow positive in the March quarter, with the Corporate segment profitable in March and Leisure segment expected to be profitable in May.

“Markets continuing to reopen and fewer restrictions provide strong momentum into FY23. Asia and Australian outboard are the laggards,” the analysts said.

Still, the uncertain macroeconomic environment could weigh on earnings, given "the potential for reduced corporate/consumer travel budgets".

The broker is Hold rated on Flight Centre shares, with a $19.60 target price. 

Flight Centre share price chart
Flight Centre share price chart

Corporate Travel: Potential to surprise

“After a slow 3Q22 start due to Omicron, trading in March and the 4Q22 was strong,” noted Morgans analyst Belinda Moore.

“Revenue is lagging the recovery in total transaction values given less higher value international ticket sales vs. domestic, and the timing of accruing overrides," Moore added.

Morgans sees the potential for Corporate Travel (ASX: CTD) to surprise positively, as international markets continue to open. Though, flagged Asia (China's zero-covid policy) and Australian outbound as main laggards.

Higher ticket prices are expected to offset inflation and based on a full recovery from covid, Corporate Travel is forecast to generate earnings of $265m in FY23.

For this financial year, the company is projected to deliver a 209% increase in total transaction values to $4.97bn and deliver a underlying net profit of $17.8m, compared to a -$31.9m loss a year ago.

The broker is Add rated on Corporate Travel shares with a $25.85 target price.

Corporate Travel share price chart
Corporate Travel share price chart

 

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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