Forsyth Barr says Tourism Holdings faces bumpy journey to restoration

business

January 13, 2021, 4:00 a.m.3 minutes to read

Tourism Holdings’ US business could recover faster than New Zealand. Photo / supplied

Tourism Holdings (THL) earnings downgrade late last year brought catastrophic companies to a catastrophic year, and THL faces uncertain demand in New Zealand, analysts at Forsyth Barr say.

They say that with lower rental demand
During the summer peak and fewer vehicle sales than expected in New Zealand, net profit loss for the full year ended June 30 could reach $ 22.4 million. This is a significant reversal of the reported profit of $ 20 million for fiscal 2019-20.

” The balance sheet remains strong and has significant capacity to deploy capital when the travel markets rebound. However, we warn that this is likely to be a lengthy and non-linear profile, ”say Andy Bowley and Scott Anderson.

The company assumes that the borders will remain closed until the end of the current fiscal year.

THL also operates in Australia and the US, markets it believes it can generate positive profits, particularly the US.

” New Zealand, on the other hand, is far more dependent on international visitors and will likely continue to lose money in order to be optimally positioned for recovery. At the group level, we expect the losses to continue until the borders are reopened. ‘

Analysts say the demand profile is uncertain and they expect a clunky approach to reopening the borders.

Although the company was better positioned compared to competitors due to its reach, balance sheet strength and younger average fleet age, it was expected that the rental markets would take some time to calm down and that the reinvestment of the fleet would be hampered by potential access problems to new vehicles. Chassis in the face of global challenges in the supply chain.

” In addition, vehicle sales will decline from their current elevated levels. ”

” Given the inherent difficulty in deriving profit projections for THL, we believe that the only reasonable basis for valuation is book value. Our estimate for the book value of THL for FY21 falls from around USD 2.05 to around USD 2.00 due to this downgrade. ”

On the subject of matching items

In an NZX announcement on December 23, the company said that while it could not give a “credible” forecast for the full year, the loss is likely to be higher than the average forecast by market analysts.

Last year, Carter Bar, Ord Minnett, Jarden and Forsyth Barr were projected to have an average net loss after tax of $ 12.8 million

The company will release its half year results on February 26th, where the company will release a more comprehensive update of its outlook.

The battle for the travel industry is reflected in the latest data from the International Air Transport Association, which says the next six months will be tough for airlines but they could be cashless again by the end of the year.

Globally, international capacity declined 88 percent year over year in November and, due to the resurgence of Covid-19, the domestic recovery abruptly stopped at 41 percent from 12 months earlier.

Appointment bookings have fallen by 80 percent compared to the previous year.