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FLT - Flight Centre Travel Group

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The problem with flight centre and others are IMO, the public is becoming more internet savvy and the carriers are wanting to cut overheads after the pandemic closures.
So whether the carriers continue the commissions to third party sellers will be interesting, post pandemic, time will tell.
But i'm not gambling.
However I do love enthusiasm.
 

Sean K

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FLT significantly lower this morning, down 3.22% to $22.21. More profit taking after running too far too fast I would think.

Chart looks like healthy profit taking after running to $25 and much needed correction on reducing volume, which is a positive. Heading towards 20 and 50d sma's while the longer term previous strong resistance and now support at $20 obviously still well in tact. Chart still looking good.

No idea what a fair valuation is going to be moving forward. Do they even have a useful pe ratio at the moment?

Screen Shot 2021-10-13 at 11.42.32 am.png
 

galumay

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Do they even have a useful pe ratio at the moment?

You can get some sense of one by applying 2019 earnings to current capitalisation. It would be extremely optimistic obviously, but would be about 20x. You would need big cajones to take that bet!
 

Sean K

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You can get some sense of one by applying 2019 earnings to current capitalisation. It would be extremely optimistic obviously, but would be about 20x. You would need big cajones to take that bet!

Yeah, in normal circumstances, day-to-day operations, I imaging this would have been closer to 12, pre-Covid.
 

galumay

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Its the doubling of shares on issue that people miss, it was trading at about 17x pre covid at $40. Today its $22 and trading at 20x the same 2019 earnings!! So the market is currently valuing it higher than it did before Covid. If thats not the definition of insane, I dont know what is!!

(without even considering the explosion in debt!)
 

greggles

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Almost every Flight Centre retail location in my area has been closed since 2020, except for one located in a Westfield shopping centre that sees a lot of foot traffic. My understanding is that they now have less than 50% of the retail outlets they did pre-COVID. Growing revenue from this position will be a very slow process.

No industry will take longer to recover from this pandemic than travel. Betting on FLT, or any other travel industry listed company, is a very risky bet IMO. People can make all the assumptions they like about how things will play out over the next couple of years, but the bottom line is nobody knows.
 

Sean K

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AGM Pres out yesterday makes interesting reading on where they're sitting and expectations going forward.

Of interest to my theory that they might go back to pre-Covid booking levels within 12 months and the SP to correspond (although factoring in some forward looking price - higher pe) Skroo thinks it's not going to be until June 2024 that they will go back to 2019 TTV levels. So, I might be going to owe you a beer @greggles

Screen Shot 2021-10-21 at 9.11.44 am.png
 

galumay

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The share price is already back to pre-Covid levels in real terms. (share count doubled). Massive debt now.

There is a lot of positive narrative working hard in that outlook, "leaner & more efficient" as opposed by "bloated with debt",
"customers will require more assistance", as opposed to "customers WFH & using online retail much more have learnt new skills and will need our services less"

The optimism is naive, to imagine a company that suffered such a massive destruction of its entire business model for more than 2 years will just bounce back to the level of previous business activity with no structural damage. That the share price shows the market already valuing it at 2019 steady state is truly mind boggling.

No doubt despite my thoughts, it will double in the next 6 months!!
 

greggles

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AGM Pres out yesterday makes interesting reading on where they're sitting and expectations going forward.

Of interest to my theory that they might go back to pre-Covid booking levels within 12 months and the SP to correspond (although factoring in some forward looking price - higher pe) Skroo thinks it's not going to be until June 2024 that they will go back to 2019 TTV levels. So, I might be going to owe you a beer @greggles

View attachment 131727

It is not going to be easy for FLT to dig themselves out of this hole they have found themselves in. Demand will not bounce back to 2019 levels quickly or easily. Lots of people have been buying property and are now mortgaged to the hilt. As a result, more people will holiday at home in the years to come. Not just because of their heavy personal debt loads, but because of the risks that international travel now pose. Getting infected by a coronavirus is a little more serious than a case of Bali Belly.

Good article here about this: https://www.abc.net.au/news/2021-10...ut-covid-makes-travel-admin-complex/100552564

There are a lot of headwinds FLT will be struggling against in the years to come. This is not a business I would invest in due largely to the inherent uncertainty. Travel is an industry that will be changed forever by COVID-19. It is difficult to know how FLT will emerge from those changes. But they are now debt laden and struggling with an uncertain future. Much better opportunities out there if you ask me.
 
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