Daily ShareChat: Tourism Holdings

By Jenny Ruth

Tuesday 28th April 2009

Campervan rental operator Tourism Holdings' extensive restructuring over recent years means it is now focused on the free and independent traveler (FIT) market, says McDouall Stuart.

"This segment is likely to offer the highest growth in the future and should boost opportunities in motor home rentals in both Australia and New Zealand," it says. Increasing competition between airlines and higher tourism promotion spending in New Zealand and Australia are likely to enhance the company's prospects.

It is also likely to be assisted by the recent weakness in both the New Zealand and Australian dollars, if sustained, it says.

Nevertheless, margins can be volatile as high fixed costs and high capital expenditure makes it susceptible to demand fluctuations. And the company didn't pay an interim dividend as directors focused on debt reduction in the uncertain global economic environment.

"Tourism flow will continue to be adversely impacted by the global economic conditions."

It is forecasting no profit this year, compared with $14.3 million last year, and just $1.4 million in 2010, rising to $4.6 million in 2011. While it values the shares at 77 cents compared with the 45 cent share market price in late April, its recommendation is "hold" until the global economy improves.

BROKER CALL: McDouall Stuart rate Tourism Holdings (THL) as HOLD

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