FLT - Flight Centre Travel Group

[mreversion]

Re: FLT - Flight Centre

FLT up a 5% from its daily lows, the RBA rate cut seemingly being the turning factor.

Assuming the banks pass the rate cut through in full (which on current policy is a huge assumption) there's about $46 a month extra to spend for a person with a mortgage of $300,000. Which is more than offset by the fall in the dollar if you're using your extra $46 a month to book that flight overseas.

 

[RottenValue]

Re: FLT - Flight Centre

Seems like a lot of people in this thread think that FLT has "run too hard" or "got ahead of itself".

What is this based on? Purely the fact that it has been rising?
FWIW, I think its around fair value now...wouldn't call it overly expensive. That said, I wouldnt be suprised to see it go back to ~$20 within 6 months :

FLT has had steady sales, EPS and DPS growth (if you ignore 2009) over the last 5-10 years at around 10-11% per year. A very strong performance and the company has a strong balance sheet and a business model that is clearly working.

However, paying 20 times earnings for this seems over the top, given the business on balance is more likely to reduce growth going forward than increase markedly. FLT was a bargain below $20 (thank you Greece!) and in my opinion fair value at around $30.

 

[mreversion]

Re: FLT - Flight Centre

Thank you Rotten Value! Looks like people are assuming that management will deliver on every promise plus more, which on historical performance is fair and completely understandable. In my view, the business, expansion and macro risks are simply not factored in.

That said, noting that 2007 PE's got up to around the 25 mark for industrials then I wouldn't be surprises if this continues to run for a bit.

Definitely looks like the Macquarie presentation the other day has gotten a few fund managers involved, which you would expect will be a boon for the stock. Nothing like a bit of jaw boning at one of those things to encourage some fund managers to squander away your super on an overvalued stock like this.

As so much is held in house though and the only active substantial holder other than related entities appears to be NAB, it will be really interesting to see if we see the insiders selling out. There's no way that scroo is going to let himself go from seeing his $1 - $2bn on paper get cut into pieces when this falls. In fact, that's the only explanation I can see for the volume selling into this upward push. For once there appears to be some sellers standing behind the stock, albeit in the short term the buying interest appears to be stronger. As a result I expect to continue to see it trade erratically in the short term before taking a step down.

 

[catfish]

Re: FLT - Flight Centre

Wow, 91c final div! Was anyone lucky enough to get this under $5 in the GFC? Almost a 30pc div yield on purchase price @ $5.

Another solid result. Margin, dividend and profit increases. Npat of 240m up 20pc.

I sold out in the high 20s, regretfully.

 

[ROE]

Re: FLT - Flight Centre

This is a Frick of a Business, nothing like it on the ASX in its market cap range
but there are some on the way there

Nothing stir people up more than planes, travel and record profit

Flight Centre Kill the Internet Star?

 

[System]

On November 6th, 2013, Flight Centre Limited changed its named to Flight Centre Travel Group Limited.

 

[DocK]

I'm sitting on a nice profit in FLT, having bought some in Dec '12 @ $26.00, and I'm wondering if I should take my profits and run. They've taken a whack recently with the ACCC ruling against them on an old price-fixing case. I'd appreciate any fundamentalist's opinions on whether they feel this ruling will have any long-term effect, or whether they feel that the share price will recover. There doesn't seem to be any reason that profits in the future should be materially affected?

 

[ROE]

I'm sitting on a nice profit in FLT, having bought some in Dec '12 @ $26.00, and I'm wondering if I should take my profits and run. They've taken a whack recently with the ACCC ruling against them on an old price-fixing case. I'd appreciate any fundamentalist's opinions on whether they feel this ruling will have any long-term effect, or whether they feel that the share price will recover. There doesn't seem to be any reason that profits in the future should be materially affected?

If it is just Australia no worry ACCC is fairly toothless but if that to happen in the US that going to be
a different story could this spread to other part of the world? no idea

 

[VSntchr]

Result looks good again.

TTV growth helped a little by FX. Tracking slightly ahead of guidance but not upgrade at this stage..the big run up from $44 looks like it was people taking advantage of the drop and subsequently hoping for a good report...so perhaps a bit of selling the fact today..

The US is a bit of a concern with an EBIT loss of 7.5m, that is the seasonally slower half...but presentation indicates the severe weather does not bode well for H2.

Overall a pretty resilient business IMO and the interim divvy has been raised to 55c.

 

[VSntchr]

Court case with the ACCC update today with FLT having to pay an $11m fine. They are still going to appeal it in the 2014/15 year....but I think this is more to do with saving face than worrying about the $11m?

Either way, the outcome is pretty good for FLT and it removes the uncertainty of having a court case hanging over the company.

I was half expecting an upgrade for the FY to go with this announcement, given that the FY guidance at time of the HY report looked pretty conservative..but as yet they are sticking with original guidance.

 

[skc]

Court case with the ACCC update today with FLT having to pay an $11m fine. They are still going to appeal it in the 2014/15 year....but I think this is more to do with saving face than worrying about the $11m?

It's not about the $11m or saving face. It's about ACCC telling them how they can and cannot operate as an agent going forward.

I only had a quick look at the case and I am no lawyer, but it wasn't black and white to me. If I was a distributor of anything, I should have the right to ask the product manufacturer (i.e. the airlines) to give me access to the same deal that everyone else can get. I might not have the authority to tell the product manufacturer not to undercut me, but I should at least have the right to say that I will stop selling your products if you keep doing it.

 

[VSntchr]

I only had a quick look at the case and I am no lawyer, but it wasn't black and white to me. If I was a distributor of anything, I should have the right to ask the product manufacturer (i.e. the airlines) to give me access to the same deal that everyone else can get. I might not have the authority to tell the product manufacturer not to undercut me, but I should at least have the right to say that I will stop selling your products if you keep doing it.

Agree.
Looks like it really comes down to if FLT can convince the court that they are an agent of the airlines as compared to a competitor. Pretty hard to do that when you have flight centre exec's calling the airline's "foes", lol...but they maintain the stance as an agent relationship.

As they have stated that they are in full compliance with what is now being argued, would the reversing of the decision enable them to go back to the old-school? i.e. do you see potential for upside in this case?

 

[skc]

Agree.
Looks like it really comes down to if FLT can convince the court that they are an agent of the airlines as compared to a competitor. Pretty hard to do that when you have flight centre exec's calling the airline's "foes", lol...but they maintain the stance as an agent relationship.

Really? That's an argument?! Who doesn't call FLT a travel agency? ACCC really barks up the wrong tree sometimes.

As they have stated that they are in full compliance with what is now being argued, would the reversing of the decision enable them to go back to the old-school? i.e. do you see potential for upside in this case?

I don't know FLT to that level of detail and sensitivity. The case was pretty old (for conducts all the way back in 2005) so chances are, whatever they have been doing in the last 5-8 years with the airline will probably remain the status quo...

 

[tinhat]

Really? That's an argument?! Who doesn't call FLT a travel agency? ACCC really barks up the wrong tree sometimes.

In the tourism industry both companies like FLT and airlines do have quite a bit of overlap as tourism operators in that they package holidays and tours that include flights, accommodation, car hire, etc. FLT started out as a tour operator. I don't know to what degree the domestic airlines are integrated with hotels and resorts these days but Ansett use to own a few resorts in the old days.

 

[fiftyeight]

I am back up in the NT, not sure if it made news elsewhere but "a travel agent" is under criminal investigation for ripping off a travel scheme run by the government. The only travel agent up here really is FLT.

Is the kind of news that you could use to short FLT or would this have been priced in well before it made it to the news?

 

[McCoy Pauley]

FLT announced a profit downgrade this morning and the share price has tanked, down ~9%. FLT originally forecast PBT of $395-$405 million for the current financial year, and they now expect to achieve underlying PBT of between $360-$390 million, compared to underlying PBT of $376.5 million in the previous financial year.

FLT blames soft leisure travel sales growth in Australia as a result of depressed consumer confidence thanks to the failure of the Commonwealth budget to pass into law and increased wage, occupancy and sales and marketing costs as a result of altered front-end pay structures to stimulate business. FLT states that the corporate travel market remains stable.

FLT appears not to blame the falling Australian dollar.

 

[Boggo]

FLT announced a profit downgrade this morning and the share price has tanked, down ~9%. FLT originally forecast PBT of $395-$405 million for the current financial year, and they now expect to achieve underlying PBT of between $360-$390 million, compared to underlying PBT of $376.5 million in the previous financial year.

Theory above and reality below
The writing was on the wall back in June !

(click to expand)

 

[Ves]

Theory above and reality below
The writing was on the wall back in June !

If only trading / investing was as easy as marking up charts 6 months after the fact, we'd be all rich.

I'd actually call it theory once it's already happened.

 

[Boggo]

I'd actually call it theory once it's already happened.

I guess those who hang on would, apparently over 90% of 'investors' do

 

[Ves]

I guess those who hang on would, apparently over 90% of 'investors' do

Do you have any facts to back this assertion up or is this just something you decided to make up?