Tourism Holdings (THL.NZ) has continued it stellar share price run in recent times and has made a solid +60% return on THL since buying it in April 2016.
Across both our NZ and Australian portfolios, a “tourism boom” is one of our key investment themes, and we hold a number of stocks in the tourism sector. We expect tourism to remain the key growth driver for the NZ economy over the medium term. So is THL still a buy?
Tourism Holdings has recently acquired El Monte Rents Inc, the second-largest United States recreational vehicle operator. The purchase was funded by $82.2m bank debt and 3.4m Tourism Holding shares. Tourism Holdings chairman Rob Campbell said the purchases were ''positively resetting company expectations and enabled it to leverage off its current business, skills and balance sheet”. The announcements were seen positively by the market, and view the transaction positively, as the company continues to expand its footprint. THL shares also entered the NZX 50 (the major NZ market index), which would have also seen some underweight investors buy shares in the company.
THL lifted first-half profit 38% with particularly strong tourist demand experienced across New Zealand and Australia, and said it will at least deliver its forecast annual profit of $27m. THL also reiterated its recently announced expectation of a $50m annual profit target by 2020, driven by continued growth and its recent US business acquisition.
Not only does THL’s business benefit from continual tourism boom in New Zealand and Australia from a lower AUD & NZD (as it increases tourism activity), given THL’s expansion in global operations any decline in the NZD directly translates into THL’s earnings figures in NZ dollar terms. This allows THL to benefit from two of our key investment thematic views of tourism boom and weakening NZD.
So does THL still offer value for investors going forward? Sign up for a FREE Trial membership below to read more about THL, and our other key stock picks:
