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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 Expecting Deeper Loss in FY21</h2>
Tourism Holdings (THL) has warned that its after tax loss in FY21 is now expected to be greater than current market expectations (based on NPAT consensus of -NZ$12.8m) on the assumption that borders remain closed and the business is reliant on domestic demand only. It provides no quantitative guidance given the uncertainty that continues to persist. The key change since the company’s ASM in October 2020 appears to be New Zealand related with lower rental demand than anticipated for the peak summer period and fewer vehicle sales than targeted in the “Great New Zealand Motorhome Sale”, despite a significant increase year on year.
<ul>
<li>New Zealand: The NZ rentals and Tourism Group operations will contribute the largest loss in FY21. Two key drivers of the downgrade (1) rentals demand in the late January to March period is now expected to be lower than originally anticipated, and (2) vehicle sales volumes will be lower than previously expected given processing constraints and concerns over replacement availability when travel markets recover.&nbsp;</li>
<li>Australia: Still expecting an EBIT loss but smaller than for NZ. Domestic rental demand has been solid particularly during the short period when state borders were fully open. Vehicle sales are up ~+100% year to date on the prior year.</li>
<li>US: The strength of domestic rental demand will help drive a positive EBIT result in FY21.</li>
</ul>
THL is trading at a ~+24% premium to our assessment of its book value as at year end FY21. A larger loss in FY21 will exaggerate this premium further. Our rating is UNDERPERFORM.
Andy Bowley&nbsp; Head of Research
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.2&amp;permmsgid=msg-f:1686813020170527085&amp;th=1768c38135c4a16d&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ-FyX-Q3W0CzPeTZXZ5P0Hu7YP3bbb2k-MEhYTO9zat_-Ei2ZHgC-x2CgJSTdj4xTYEmJk9CkmJzH88l_m3tPvx3FI3Me4mhtvwLYCcR94-cl0s_x1lyKgjtx4&amp;disp=emb" class="editor-image img-responsive"></figure>
 M: +64 21 338 941 |P: +64 4 495 8246 | TF: 0800 367 227&nbsp; Level 22, NTT Tower, 157 Lambton Quay, Wellington

Tourism Holdings Expecting Deeper Loss in FY21
Tourism Holdings (THL) has warned that its after tax loss in FY21 is now expected to be greater than current market expectations (based on NPAT consensus of -NZ$12.8m) on the assumption that borders remain closed and the business is reliant on domestic demand only. It provides no quantitative guidance given the uncertainty that continues to persist. The key change since the company’s ASM in October 2020 appears to be New Zealand related with lower rental demand than anticipated for the peak summer period and fewer vehicle sales than targeted in the “Great New Zealand Motorhome Sale”, despite a significant increase year on year.

New Zealand: The NZ rentals and Tourism Group operations will contribute the largest loss in FY21. Two key drivers of the downgrade (1) rentals demand in the late January to March period is now expected to be lower than originally anticipated, and (2) vehicle sales volumes will be lower than previously expected given processing constraints and concerns over replacement availability when travel markets recover.&nbsp;
Australia: Still expecting an EBIT loss but smaller than for NZ. Domestic rental demand has been solid particularly during the short period when state borders were fully open. Vehicle sales are up ~+100% year to date on the prior year.
US: The strength of domestic rental demand will help drive a positive EBIT result in FY21.

THL is trading at a ~+24% premium to our assessment of its book value as at year end FY21. A larger loss in FY21 will exaggerate this premium further. Our rating is UNDERPERFORM.
Andy Bowley&nbsp; Head of Research

 M: +64 21 338 941 |P: +64 4 495 8246 | TF: 0800 367 227&nbsp; Level 22, NTT Tower, 157 Lambton Quay, Wellington

Tourism Holdings: Expecting Deeper Loss in FY21