Stock in Focus: Tourism Holdings (THL.NZX)
Tourism Holdings shares were up after releasing solid earnings guidance for the 2023 financial year. The stock now trades at a 3.5 year high, well above post-Covid levels. Factoring in a 7-month contribution from Apollo Tourism and Leisure, Tourism Holdings expects 2023 full year net profit to be $48m, whilst projecting net profit of $75m for FY 24. We feel Tourism Holdings is attractively priced and in a position to reintroduce its dividend.
We are BUY rated on Tourism Holdings with decent medium-term outlook benefiting from the Apollo acquisition and recovery in the travel sector.
US Market Movers
Manchester United (MANU) surged another ~10% on news that the Saudis have entered the bidding war, on a rumored £8B all-or-nothing offer. The Qataris are rumored to have made a £5B opening bid. We first recommended MANU when it traded at ~$22.00 a share with a target price of $29, it now trades at $26.96. Even at the low end, a £5B bid implies a ~35% premium to the current stock price. With the Saudis entering the bidding we think there’s a likelihood of a higher premium being achieved and INEOS’ Jim Ratcliffe is likely out of the equation – it’s a competition between two oil-rich states now.
Farfetch fell ~7.88% today largely because the Saudis sold off a large chunk of their stake in the luxury clothing platform (likely to clear regulatory hurdles for a potential MANU acquisition). We like the stock at $5.32 and below – it’s been oversold heavily and trades at a multiple of 4x earnings. It’s a “cheap and cheerful” stock to have in a portfolio and let appreciate – we think it has a fair value of ~$8.
The S&P 500 fell 1.38% as markets digested strong consumer data which implies rates will stay higher for longer. We keep saying this and we will say it again – on the whole equities feel still quite expensive when you consider we’re living in a high-inflation and high interest rate environment. The other thing we’re noting is that markets tend to “delay” their reaction to news – we see a few days of “Goldilocks” where everything is “just right” and then equities experience a revaluation.
One other thing —the Spanish Paella Index – aye aye aye!
New Zealand Market Movers
The New Zealand Market (NZX50 Index +0.6%) was up on an up-beat day of trade, following mostly strong results over the week.
Skellerup fell-4.4%, as its result missed market expectations with growth slowing down for its agriculture business, while interest costs start to creep up faster than expected.
Australia Market Movers
The Australian market (ASX200 Index, +0.8%) was up following a surprise rise in unemployment, which fueled a broad-based rally. Unemployment in Australia rose from 3.5% to 3.7%, as 11,500 people lost work – news embraced by that market as it hoped the RBA would not be as aggressive with future rate hikes.
Telstra shares rose +1.9% after reporting a +25.7% increase in net profit, lifting its interim dividend from 8 cents per share to 8.5% – we welcome the growth and remain BUY rated as a stable income earner.
Super Retail Group delivered record sales of $1.96B, for the half year, benefitting less restrictions, highlighting most retailers are still holding up, with mixed results across the group.
What Markets will be Watching this Week (UTC +13)
Monday
Contact Energy Earnings
CSL Earnings
Tuesday
Westpac Consumer Confidence Index
CBA Earnings
FMG Earnings
James Hardie Earnings
Wednesday
US and UK Inflation (CPI) Data for January
Wesfarmers Earnings
Treasury Wines Earnings
Fletcher Building Earnings
SkyCity Earnings
Thursday
Telstra Earnings
QBE Insurance Earnings
Friday
US Building Permits Data