FLT - Flight Centre Travel Group

[prawn_86]

Re: FLT - Flight Centre

Hey all,

Got some stats from that store i was talking about. Obviously i want to protect my 'source' so all i'll say is that the store is located in the CBD.

Surprised me actually to see that up to Sep 2008, out of the last 27 months data, only 7 of them actually turned a profit

That store had a big loss in 2007FY and a very slight profit in 2008FY and are negative up to Sep of this FY.

Obviously one store is not a representative sample but it still surprised me. Perhaps it comes down to the amount of competition and other FL stores around so quite a bit of cannibilisation

EDIT - I'll post a few more details when the weekend is over

 

[nomore4s]

Re: FLT - Flight Centre

Could go some way to explaining the current share price?

Not much support appearing volume wise yet either.

 

[ROE]

Re: FLT - Flight Centre

Hey all,

Got some stats from that store i was talking about. Obviously i want to protect my 'source' so all i'll say is that the store is located in the CBD.

Surprised me actually to see that up to Sep 2008, out of the last 27 months data, only 7 of them actually turned a profit

That store had a big loss in 2007FY and a very slight profit in 2008FY and are negative up to Sep of this FY.

Obviously one store is not a representative sample but it still surprised me. Perhaps it comes down to the amount of competition and other FL stores around so quite a bit of cannibilisation

I know some stores do not make money and that is fair enough and it sometimes an advantage for FLT as that increase their TTV and once you increase TTV your commission is increase so you have a leverage field that other players cant play because they are much smaller...

I be interest in Dec 2008 and 1st half 2009 trading update...if this fall in line with my expectation I got nothing to fear.

Where I'm there are 4 travels stores close each other, 1 FLT store, the other Student Flight, every single time I walk pass FLT and Student Flight out number them in customers every time...you got people line up at FLT and the other guys just got 1 or 2 customers in there...

I also like FLT mentality, they expand and compete aggressively in down turn where their rival doesn't and let FLT run the show. Very similar model to Woolworth, it paid off for FLT in the past and so did WOW I cant see them slow down this time around.

http://www.asiatraveltips.com/news09/211-FlightCentre.shtml

 

[persistentone]

Re: FLT - Flight Centre

I'm new to Flight Centre and want to evaluate 10 years of financials. I was introduced to them by Intelligent Investor which just loves the company. When I go to the Flight Centre web site, I don't see any link for Inventors! How can that be? Can someone direct me to the investor's page there and tell me if anyone maintains a complete tabular 10 year set of financials and ratios?

I did find some financials at Reuters but they look corrupted. Gross sales are showing as negative.

On the Reuters' version of the balance sheet I noticed Accounts Payable is three times Accounts Receivable. It looks like one way FLT is keeping a high cash balance is by starving its suppliers.

 

[skc]

Re: FLT - Flight Centre

I'm new to Flight Centre and want to evaluate 10 years of financials. I was introduced to them by Intelligent Investor which just loves the company. When I go to the Flight Centre web site, I don't see any link for Inventors! How can that be? Can someone direct me to the investor's page there and tell me if anyone maintains a complete tabular 10 year set of financials and ratios?

I did find some financials at Reuters but they look corrupted. Gross sales are showing as negative.

On the Reuters' version of the balance sheet I noticed Accounts Payable is three times Accounts Receivable. It looks like one way FLT is keeping a high cash balance is by starving its suppliers.

Corporate site here http://www3.flightcentre.com.au/corporate/

10 year financials for flightcentres are quite meaningless IMO. Things have changed so much in travel booking during the past 10 years. The biggest issue with flightcentre is how much value is still in their bricks and mortar shop fronts. Does anyone under 35 still visit the stores? Do you really get better service at a cheaper price booking through them? Is their web platform any better than the other 200 that are out there? Those are questions I'd ask myself if I was researching this company.

 

[persistentone]

Re: FLT - Flight Centre

Corporate site here http://www3.flightcentre.com.au/corporate/

10 year financials for flightcentres are quite meaningless IMO. Things have changed so much in travel booking during the past 10 years. The biggest issue with flightcentre is how much value is still in their bricks and mortar shop fronts. Does anyone under 35 still visit the stores? Do you really get better service at a cheaper price booking through them? Is their web platform any better than the other 200 that are out there? Those are questions I'd ask myself if I was researching this company.

10 year financials are not meaningless. At worst, they document the trend within an industry. At best, they show the discipline of management to maintain return on equity, which good managements can do very well in many different business climates.

In any case, where can I find *ANY* financials?!

 

[persistentone]

Re: FLT - Flight Centre

Corporate site here http://www3.flightcentre.com.au/corporate/

10 year financials for flightcentres are quite meaningless IMO. Things have changed so much in travel booking during the past 10 years. The biggest issue with flightcentre is how much value is still in their bricks and mortar shop fronts. Does anyone under 35 still visit the stores? Do you really get better service at a cheaper price booking through them? Is their web platform any better than the other 200 that are out there? Those are questions I'd ask myself if I was researching this company.

P.S., I think a company that can combine both strong online and physical travel agent businesses gains synergies from both. It's a unique value proposition that Expedia and Travelocity and Priceline do not compete with. Do I think it is a strong growth business? Maybe not. Do I think they can *defend* a *niche* and continue to pour out positive cash flow for a long time? Yes, I do.

 

[prawn_86]

Re: FLT - Flight Centre

I know two people directly who work with Flight Centre, so I like to think i know a bit about the day to day runnings, so i'll answer what questions i can (my answers in blue.)

The biggest issue with flightcentre is how much value is still in their bricks and mortar shop fronts. This is an interesting point actually, and one i had not yet thought of. I know the majority of FLT stores are company owned/run but they do have a few franchises. Of the company ones, im not sure what they actually own and what they rent.

Does anyone under 35 still visit the stores? From what I have heard, yes. The demographic is quite spread out according to the people i know. Dont forget FLT also 100% owns Escape Travel and Student Flights. Its amusing cause people go to Escape Travel specifically to avoid Flight Centre, yet is the same company.

Do you really get better service at a cheaper price booking through them? Compared to what? A person will (at least should) always give better service than just sitting in front of your own computer. But you cant have both better service and cheaper prices. Also, FLT has a price beat policy, so if you take a quote in off the net they HAVE to beat it. Depending on the quote type, but the min they have to beat it by is $50

Is their web platform any better than the other 200 that are out there? This is one area i would like to see them improve upon personally.

 

[oldblue]

Re: FLT - Flight Centre

FLT's looking increasingly attractive to me - but I want to see the SP consolidate before considering buying.

 

[ROE]

Re: FLT - Flight Centre

Corporate site here http://www3.flightcentre.com.au/corporate/

10 year financials for flightcentres are quite meaningless IMO. Things have changed so much in travel booking during the past 10 years. The biggest issue with flightcentre is how much value is still in their bricks and mortar shop fronts. Does anyone under 35 still visit the stores? Do you really get better service at a cheaper price booking through them? Is their web platform any better than the other 200 that are out there? Those are questions I'd ask myself if I was researching this company.

Past performance doesn't warrant the same performance in the future but it tell you a lot about a company and how they operate and the management discipline of capital allocation.

Without that information there is no way you can calculate intrinsic value of a stock because you got nothing to work on.

Toy R Us was making a lot of money in the dot.com boom but for some reason people buy etoys.com just because they think internet going to wipe out Toy R Us..with no track records for etoys and Toy R us with proven track records
smart people was buying toy r us.....dot.com come and goes etoys bankrupt and Toys r Us still making money until today.

People fear the same thing for FLT .. History shall repeat

 

[ROE]

Re: FLT - Flight Centre

I'm new to Flight Centre and want to evaluate 10 years of financials. I was introduced to them by Intelligent Investor which just loves the company. When I go to the Flight Centre web site, I don't see any link for Inventors! How can that be? Can someone direct me to the investor's page there and tell me if anyone maintains a complete tabular 10 year set of financials and ratios?

I did find some financials at Reuters but they look corrupted. Gross sales are showing as negative.

On the Reuters' version of the balance sheet I noticed Accounts Payable is three times Accounts Receivable. It looks like one way FLT is keeping a high cash balance is by starving its suppliers.

There are a few tricks up FLT sleeves and that is one of it. FLT get paid first, lock that cash in the bank, grab interest, then pay supplier at a later date...Free Cash
and the bigger they are the more cash they make.

and the bigger they are the more discount they can command and in turn pass on to their customers and that will wiped out smaller operators in time like this.

Moat is very important in business and these intangible even though doesn't seem to have any value on the book..look deeper and it one thing that guarding their income and protect their future.

Who can craw into WOW supermarket moat? who can dethrone Microsoft monopoly in PC operating system moat? Who can open competing with TAB outlet? Who can compete with Brambles in Pallet and CHEP?

In order for them to attack any of these moat...it's going to take someone a massive amount of capital to invest before they even turn a dime in profit
and that will keep them away and make money for these wonderful companies

 

[Rainmaker2000]

Re: FLT - Flight Centre

I compare FLT to an ordinary retailer.......and that cash on trust is a massive advantage.......also, FLT has no inventory going stale on the shelves.....no goods to depreciate....it has so few nasty little secrets over the years like other retailers....it is a virtuous little story.....

I'm kind of sick of hearing about how bricks and mortar are irrelevant cause it's all about the internet now........EPS, ROE, that's what's relevent

Granted, no place probably offers better capital return ratios than an exclusively online business........but there is a limit to that market too........it's not just one endless dream.........

How long will it be for Webjet or whatif 'diversifies' by buying a depressed bricks and mortar enterprise........it will happen

I know, it's all about the internet these days.........well, why don't we all buy into the most visited travel website in Australia......is it Webject? Whatif?..............oh damn, it's a business called Flight Centre

I have not done it for a while but I wonder what the comparison is between wotif's market capitalisation and Flight Centre's....and then compare the profits.....I suspect I would feel discomfort just doing the math........why?........I'm thinking that the incredible global business that FLT has built over the last decades will count for a mere fraction as Mr Market adjudges 'two websites' to be around a similar value.......Well, yes, they are valuable websites but one is connected to an unrivalled global growth story

 

[Rainmaker2000]

Re: FLT - Flight Centre

I know, ROE, I know.......I got to get a life....

I just had to do the Wotif V FLT comparison.......it's like Mr Market is in some alternate universe at the moment....

Wotif, you know, the website business is capitalised at $656 million

How much is FLT centre...........$601 million............who can believe that???

So I don't need to cite Buffett to disprove the 'rational market hypothesis' any more........Why

So Wotif earned a respectable $34 million last year.....versus FLT a mere $143 million......and yes, Wotif is having a good year this year V FLT not good year...

.........I know, I know, wotif is a fast grower.......consider this......Both FLT's and Wotif's earnings practically doubled in last 2 years..........................Can you believe that WTF's return on capital and return on equity has apparently halved in that same period......imagine the capital needed when a mere website is not enough.......

 

[ROE]

Re: FLT - Flight Centre

I know, ROE, I know.......I got to get a life....

I just had to do the Wotif V FLT comparison.......it's like Mr Market is in some alternate universe at the moment....

Wotif, you know, the website business is capitalised at $656 million

How much is FLT centre...........$601 million............who can believe that???

So I don't need to cite Buffett to disprove the 'rational market hypothesis' any more........Why

So Wotif earned a respectable $34 million last year.....versus FLT a mere $143 million......and yes, Wotif is having a good year this year V FLT not good year...

.........I know, I know, wotif is a fast grower.......consider this......Both FLT's and Wotif's earnings practically doubled in last 2 years..........................Can you believe that WTF's return on capital and return on equity has apparently halved in that same period......imagine the capital needed when a mere website is not enough.......

Yeah man book a holiday here via FLT of course

http://www.news.com.au/travel/gallery/0,23607,5037328-5018708-3,00.html

 

[So_Cynical]

Re: FLT - Flight Centre

I know, ROE, I know.......I got to get a life....

I just had to do the Wotif V FLT comparison.......it's like Mr Market is in some alternate universe at the moment....

Wotif, you know, the website business is capitalised at $656 million

How much is FLT centre...........$601 million............who can believe that???

Its like the Bricks and mortar, and all those employees are a liability...the FLT business
burns alot of cash every week and WTF dont.

 

[GumbyLearner]

Re: FLT - Flight Centre

I would rather invest in AMP than FLT in this kind of environment! JMO!

People will increasingly travel at home with a weaker $Aussie.

Can't see this one increasing revenues/profits for a long while.

DYOR

 

[prawn_86]

Re: FLT - Flight Centre

Its like the Bricks and mortar, and all those employees are a liability...the FLT business
burns alot of cash every week and WTF dont.

One of the good things, form an investors perspective, is the travel agents are paid about 50% on commission. So this means if FLTs earnings drop off, so does the amount the pay out in wages. This turns part of the wages into a variable rather than a fixed cost.

 

[persistentone]

Re: FLT - Flight Centre

Past performance doesn't warrant the same performance in the future but it tell you a lot about a company and how they operate and the management discipline of capital allocation.

Without that information there is no way you can calculate intrinsic value of a stock because you got nothing to work on.

Toy R Us was making a lot of money in the dot.com boom but for some reason people buy etoys.com just because they think internet going to wipe out Toy R Us..with no track records for etoys and Toy R us with proven track records
smart people was buying toy r us.....dot.com come and goes etoys bankrupt and Toys r Us still making money until today.

People fear the same thing for FLT .. History shall repeat

I definitely like the FLT story because of:

1) The growth

2) The financial discipline as shown by the consistent and high ROE

3) The enormous free cash flows

4) The extremely good coverage they have based on that cash flow for the dividend

5) What appears to be a reasonable differentiation in travel of having both real and online presence, integrated. This may or may not constitute a moat, but certainly it is a barrier for the smaller players.

Would anyone like to guess how low the FLT dividend will go in 2009 and 2010? I'm assuming that we may step back to 2006-to-2007 levels on sales and earnings if this recession deepens and prolongs. The coverage on the dividend is so good that management *could* choose to send a message by keeping the dividend higher as a percentage of free cash flow than it has been historically.

 

[skc]

Re: FLT - Flight Centre

I think we are seeing slightly different views on the underlying industry versus the company's valuation.

On the industry prospect, it is logical to feel somewhat negative, given the expected fall in people booking for flights, the threat of lower cost on-line operators and changing customer behaviours. One of the key consideration for a business to have a great "moat" is whether there are high customer switching costs. In this case, switching cost (to a competitor or a substitute) is minimal as any customer can go to another provider and book their airfares.

On valuation however, the comparison with WTF is very insightful. Given the company's track record in management, growth, and financial position, is the market being too harsh on FLT's share price? I must admit that I will have flight centre over WTF on these grounds alone.

Perhaps a pairs trade Long FLT and Short WTF is in order?

 

[persistentone]

Re: FLT - Flight Centre

I am a US based investor, and I have a few questions relative to Australian stocks:

1) Is there a good technical charting site that lets you build watchlists of stocks using their foreign exchange symbols (e.g., FLT.AX)? Reuters allows this on its watch lists, but the Reuters is web site is so slow that it is unusable. The Reuter's charting features also fall far short of the competitive standard for US-based investments like stockcharts.com.

2) Where can I get a breakdown of any stock options that trade for Flight Centre? If we get a rise to 8 or so I would probably sell a covered call with the $7.5 strike.

Can someone tell me do Australian options trade differently than US options? Are they European style expiration?