Corporate Travel Management Ltd. (Australia) – Value Analysis (ASX:CTD) : October 5, 2017

Capitalcube gives Corporate Travel Management Ltd. (Australia) a score of 68.

Our analysis is based on comparing Corporate Travel Management Ltd. (Australia) with the following peers – Flight Centre Travel Group Limited, Hanatour Service, Inc. and Thomas Cook (India) Limited (FLT-AU, 039130-KR and 500413-IN).

Investment Outlook

Corporate Travel Management Ltd. (Australia) has a fundamental score of 68 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance last month is down from a median performance last year.
  • It’s current Price/Book of 5.81 is about median in its peer group.
  • We classify CTD-AU as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • CTD-AU‘s relatively high profit margins are burdened by relative asset inefficiency.
  • Compared with its chosen peers, changes in the company’s annual earnings are better than the changes in its revenue, implying better than median cost control and/or some economies of scale.
  • Over the last five years, CTD-AU‘s return on assets has improved from median to better than the median among its peers, suggesting the company has found relative operating advantages.
  • While CTD-AU‘s revenue growth in recent years has been above the peer median, the stock’s P/E ratio is less than the peer median suggesting that the company’s earnings may be peaking and the market expects a decline in its growth expectations.
  • The company is likely overinvesting in a business with only median returns.
  • CTD-AU has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

CTD-AU has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 1.90% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 3.12%), and a well-cushioned interest coverage level of 23.25x, CTD-AU can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • All 3 peers for the company have an outstanding debt balance.

CTD-AU has maintained its Quick & Able profile from the prior year-end.

  • CTD-AU‘s interest coverage is its lowest over the last four years and compares to a high of 34.77x in 2015.
  • The decrease in its interest coverage to 23.25x from 30.83x (in 2016) was also accompanied by a decrease in its peer median during this period to 20.97x from 25.19x.
  • Interest coverage fell 3.35 points relative to peers.
  • CTD-AU‘s debt-EV has declined 0.87 percentage points from last year’s high and is now close to its four-year average debt-EV.
  • Like the interest coverage trend, the decrease in its debt-EV (to 1.90% from 2.77%) was also accompanied by a decrease in its peer median during this period (to 3.12% from 4.07%).

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Flight Centre Travel Group Limited 2.26 1.43 18.68 401.29
Hanatour Service, Inc. 3.97 1.14 37.73 164.49
Thomas Cook (India) Limited 16.1 1.06 1.55 15.03
Corporate Travel Management Limited 1.9 1.04 23.25 185.57
Peer Median 3.12 1.1 20.97 175.03
Best In Class 1.9 1.43 37.73 401.29

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Company Profile

Corporate Travel Management Ltd. provides travel management services to the corporate market. It offers business travel advisory services, bookings, ticketing, diagnostics and recommendations, ancillary services and also provides networking tools. The company was founded by James Michael Pherous in 1994 and is headquartered in Brisbane, Australia.

Disclaimer

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