Sharechat Logo

Daily ShareChat: Tourism Holdings

By Jenny Ruth

Tuesday 15th February 2011

Text too small?
 Jenny Ruth

Tourism Holdings' lowered guidance of a $4 million loss for the year ending June is $6 million worse than his forecast, says Rob Mercer at Forsyth Barr.

“A decline in UK/European visitors and the weather-related disruptions in Queensland are the biggest contributing factors,” Mercer says.

“These issues were compounded by Tourism Holdings' planned increase in fleet for Australia and the capital cost of its Road Bear acquisition.” The company settled its US$17 million (NZ$22.4 million) Road Bear purchase on December 31.

While the company has acknowledged it is likely to breach its banking covenants, it owns all its motorhome fleet, giving it higher financial and operational leverage, Mercer says.

“We are confident that Tourism Holdings will renegotiate its banking covenants without the need for it to raise equity with the preferred option being to downsize its Australasian fleet,” he says.

While the company's trading environment has been volatile and challenging over the last few years, “we continue to regard the prevailing weak conditions as cyclical and not secular trends on Tourism Holdings' business,” Mercer says.
Near-term risks continue to weigh heavily on the company's businesses but its rental operations, Waitomo attractions and coach-building CI Munro division “are well-positioned to later benefit from the upside of the recovery phase.” Mercer values the shares at $1.27.

 

Recommendation: Accumulate.



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Tainui appoints ex-Heartland exec Craig Stephen to drive new investment strategy
Utilico sells Tourism Holdings stake for $5.7 mln
Tourism Holdings says annual earnings fell 11 percent to $14.6 million on weak demand in Australia
Tourism Holdings looks to snaffle failed Pacific Horizon's customers, won’t buy assets
GPG's Campbell joins Tourism Holdings board
Tourism Holdings shares fall on earnings guidance cut, weak Australian market
Tourism Holdings forecasts first-half loss on merger costs
Tourism Holdings shareholders give $69.5M merger the nod
Tourism Holdings $69.5M merger offers 'compelling' opportunities
Tourism Holdings shares surge