Corporate Travel shares fall despite flying start to FY24

What happened in the first three months?

| More on:
Woman on a tablet waiting in for her flight in an airport and looking through a window.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Corporate Travel Management Ltd (ASX: CTD) share price is down more than 1% in early reaction to the ASX travel share's update for the first quarter of FY24.

This update is for the three months to September 2023.

Corporate Travel share price falls following FY24 first quarter update

At the 2023 Morgans conference, the business gave a market update, revealing its growth compared to the first quarter of FY23:

With each of these financial metrics, the company said it's on track to meet market analyst consensus.

Corporate Travel said that it's "off to a great start" for FY24 thanks to new client win momentum in FY23. In the first quarter of FY24, it has won $0.35 billion of new clients, including verbal wins. Activity for large clients in North America, ANZ and the EU is "gradually improving" – this segment had been a "recovery laggard".

The incremental revenue to profit conversion is "going to plan" – it's delivering profit acceleration as revenue increases.

In terms of automation and artificial intelligence (AI), the company said that projects are "well underway" and expected to have a positive productivity impact for many years.

The ASX travel share noted that the first quarter is historically a soft quarter because of the northern hemisphere summer holiday season. The first-half profit skew is now expected to be stronger than the 1/3 skew originally forecast.

Investment highlights

Seeing as it was presenting at the Morgans conference, the company outlined some investment thesis points.

It pointed out the strong growth it has achieved since its initial public offering (IPO) in 2010. The company said capital management is actively being discussed, and it's paying dividends of around 50% of net profit after tax (NPAT). Its balance sheet is reportedly in "strong" shape, with no debt.

Corporate Travel Management said it's targeting mid-teen earnings per share (EPS) compound annual growth rate (CAGR) "beyond FY25". The global corporate travel market is estimated to grow at 7.9% per annum between FY23 to FY26.

In FY24, the company is expecting every one of its operating geographic regions to surpass the annual total transaction value. Its 5,700 clients are expected to make over 17 million transactions in FY24. Around 40% of its client base are government and 'essential travel' clients.

Corporate Travel Management share price

Over the past year, the ASX travel share is down 3%.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Corporate Travel Management. The Motley Fool Australia has recommended Corporate Travel Management. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Travel Shares

Happy couple looking at a phone and waiting for their flight at an airport.
Travel Shares

Why have Qantas shares jumped 7% in November?

The Flying Kangaroo is catching the eye this month with a strong gain. But why?

Read more »

Man sitting in a plane seat works on his laptop.
Broker Notes

Are ASX short sellers right about the Flight Centre share price?

The ASX 200 travel share has been a frequent flyer on the top 10 most shorted stocks list since 2022.

Read more »

Santa sitting on beach looking up best ASX shares to buy on a laptop.
Travel Shares

Can Flight Centre shares reach $20 by Christmas?

We check the ASX travel share's prospects in gaining altitude.

Read more »

A female traveller stands in the terminal, ready to board her plane.
Travel Shares

Is the Webjet share price good value?

Is it time to pick up this travel share? Let's find out.

Read more »

Bored woman waiting for her flight at the airport.
Travel Shares

Qantas share price slips alongside ASX 200 airline's reliability ratings

Qantas shares won’t be getting a lift today from the airline’s latest reliability ratings.

Read more »

Man sitting in a plane looking through a window and working on a laptop.
Earnings Results

Webjet shares sink despite 120% half-year profit boost

This travel company delivered stunning growth during the first half. But it wasn't enough for some.

Read more »

asx company executive with multiple fingers all pointing at him
Travel Shares

GUILTY: Qantas shares plunge after criminal conviction

A health and safety representative was sacked after he asked for better protection for staff cleaning planes from China.

Read more »

A corporate-looking woman looks at her mobile phone as she pulls along her suitcase in another hand while walking through an airport terminal with high glass panelled walls.
Travel Shares

'Outlook is bright': Flight Centre shares slip despite new altitudes

The travel agency company is off to a solid start in FY24, but can it keep up the momentum?

Read more »