New Zealand Professional Investment Services Firm

Forsyth Barr

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Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

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New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Tourism Holdings<br>Earnings Appear Bigger in Rear View Mirror</h2>
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<p><strong>NEUTRAL</strong></p>
<p>Tourism Holdings (THL) has pre-released its FY20 NPAT result, which is modestly above the previous guidance range set on 25 June 2020. THL will report underlying NPAT of "approximately NZ$20m" on Friday 18 September 2020, which compares to the previous range of NZ$17.5m–NZ$19.0m. Management says the better than anticipated result reflects a higher level of vehicle sales, particularly in the US, which also lowers net debt to NZ$128m from previous guidance of NZ$133m. We raise our FY20 earnings forecasts accordingly but retain an asset based target price of NZ$2.20. THL is trading broadly in line with our assessment of forward looking net asset value (NAV). The company has done well in reducing its capital base and lowering net debt through vehicle sales. This will remain a key theme through FY21, however, with border restrictions in place, rental operations will be limited by less profitable domestic demand. Our rating is NEUTRAL.&nbsp;</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/159/021/original/image_14870706121600128038901.png?1600128041" class="editor-image img-responsive" data-smartkarma-image-id="159021"></figure>
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<h3>What's changed?</h3>
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<li><strong>Earnings</strong>:&nbsp;We raise our FY20 NPAT forecast to be consistent with the pre-release&nbsp;</li>
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<h3>Audit&nbsp;adjustment boost&nbsp;</h3>
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<div id="m_-3955805853721689226ic32b">
<p>THL's&nbsp;previous guidance for NPAT (on 25 June 2020) and net debt (31 July 2020) has been superseded and improved. In light of timing this&nbsp;suggests year end audit adjustments. THL has also outlined a number of one-off items including the partial Togo exit&nbsp;(NZ$9.3m gain), a US tax benefit (NZ$1.1m gain) and the write-off of goodwill attributed to Kiwi Experience (NZ$3.1m loss). Reported NPAT after accounting for these one-offs will be "approximately NZ$27m".&nbsp;</p>
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<h3>Results conference call</h3>
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<div id="m_-3955805853721689226iqrte">
<p>Management will host a post-result investor&nbsp;conference call at 12pm on 18 September. Investors are required to register for the call using the following link:&nbsp;<a href="http://apac.directeventreg.com/registration/event/4876698" target="_blank" data-saferedirecturl="https://www.google.com/url?q=http://apac.directeventreg.com/registration/event/4876698&amp;source=gmail&amp;ust=1600214011037000&amp;usg=AFQjCNHv8qD77eC_9IOPQ43YUV3ka7B6hw" rel="noopener">http://apac.<wbr>directeventreg.com/<wbr>registration/event/4876698&nbsp;</a>​​​​​​​</p>
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<div><strong>Andy Bowley</strong></div>
<div><a href="mailto:andy.bowley@forsythbarr.co.nz" target="_blank" rel="noopener">andy.bowley@forsythbarr.co.nz</a></div>
<div>+64 4 495 8246</div>
<div></div>
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<div><strong>Scott Anderson</strong></div>
<div><a href="mailto:scott.anderson@forsythbarr.co.nz" target="_blank" rel="noopener">scott.anderson@forsythbarr.co.<wbr>nz</a></div>
<div>+64 4 914 2219</div>
</div>
</div>

Tourism Holdings Earnings Appear Bigger in Rear View Mirror

NEUTRAL
Tourism Holdings (THL) has pre-released its FY20 NPAT result, which is modestly above the previous guidance range set on 25 June 2020. THL will report underlying NPAT of "approximately NZ$20m" on Friday 18 September 2020, which compares to the previous range of NZ$17.5m–NZ$19.0m. Management says the better than anticipated result reflects a higher level of vehicle sales, particularly in the US, which also lowers net debt to NZ$128m from previous guidance of NZ$133m. We raise our FY20 earnings forecasts accordingly but retain an asset based target price of NZ$2.20. THL is trading broadly in line with our assessment of forward looking net asset value (NAV). The company has done well in reducing its capital base and lowering net debt through vehicle sales. This will remain a key theme through FY21, however, with border restrictions in place, rental operations will be limited by less profitable domestic demand. Our rating is NEUTRAL.&nbsp;


What's changed?



Earnings:&nbsp;We raise our FY20 NPAT forecast to be consistent with the pre-release&nbsp;



Audit&nbsp;adjustment boost&nbsp;


THL's&nbsp;previous guidance for NPAT (on 25 June 2020) and net debt (31 July 2020) has been superseded and improved. In light of timing this&nbsp;suggests year end audit adjustments. THL has also outlined a number of one-off items including the partial Togo exit&nbsp;(NZ$9.3m gain), a US tax benefit (NZ$1.1m gain) and the write-off of goodwill attributed to Kiwi Experience (NZ$3.1m loss). Reported NPAT after accounting for these one-offs will be "approximately NZ$27m".&nbsp;


Results conference call


Management will host a post-result investor&nbsp;conference call at 12pm on 18 September. Investors are required to register for the call using the following link:&nbsp;http://apac.directeventreg.com/registration/event/4876698&nbsp;​​​​​​​



Andy Bowley
andy.bowley@forsythbarr.co.nz
+64 4 495 8246





Scott Anderson
scott.anderson@forsythbarr.co.nz
+64 4 914 2219



Tourism Holdings: Earnings Appear Bigger in Rear View Mirror