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UPDATE: Tourism Holdings shares at record on profit growth; CEO pleased but 'far from complacent'

Tuesday 22nd August 2017

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Tourism Holding's shares gained after the company reported stronger earnings this morning, and while chief executive Grant Webster is optimistic about future growth, he says he's "far from complacent".

Net profit rose 24 percent to $30.2 million in the year ended June 30, with revenue rising to $340.8 million from $278.9 million, the Auckland-based company said in a statement. That's ahead of the upgraded guidance the company gave in June, when it said profit would be about $29.5 million.

The shares recently traded at a record high $4.53, up 2.5 percent today. They have rallied about 20 percent this year, bolstered by positive first-half earnings and forecast upgrades for the annual result.

The stock was already gaining ahead of the report, up 3.5 percent in the past week, with the market expecting a good performance given the continued strength of tourism numbers in New Zealand. It has a mean target price of $4.29 and is rated a 'buy' based an average of four recommendations compiled by Reuters.

On a conference call for investors and analysts today, Webster said the company was pleased with the result, but "not satisfied that it's perfect at all - there is definitely still areas we need to work on within the core business." 

"We are growing globally, and we're recognising that provides us with scale and centralisation benefits," he said. "We're in a growth industry in tourism, we believe the RV segment is a growth segment - there was a really positive CNN article in the US about the growth of millennials into the RV segment and growth in the industry. We're careful about the risk we're taking but we are taking some risk and we believe that's the right thing to do. Overall we're in a good space, but we're far from complacent."

Webster said he was aware that some in the investor community think that its net tangible assets to value ratio is "out of whack", but the company has strong competitive advantages and is in a good space with more growth to come.

The company is forecasting an initial net profit range of $36 million to $39 million for 2018, which equates to a percentage gain between 20-and-30 percent, with more details due at its annual meeting in October. It also increased its annual dividend payout 11 percent to 21 cents.


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