Tourism Holdings Ltd [NZX:THL] has joined other fast-risers in the market this morning with a meaningful increase in the stock price.

Tourism Holdings is a New Zealand tourism business that has changed dramatically since it opened as ‘The Helicopter Line’ in 1986. Today it is the largest provider of holiday vehicles for sale or rent in Australasia.

THL came to focus in this area after a series of sales of other tourism business units, such as Milford Sound Red Boats, Kelly Tarlton’s, Great Sights New Zealand, and others.

At the moment, the current share price for THL is $2.50. The company has a market capitalisation of $291 million.


Why has the Tourism Holdings share price risen?


Over the past 24 hours, global markets have rallied in spite of US unrest and ongoing China–Hong Kong tensions. This is no surprise to experienced investors.

The markets care only about the performance of businesses. If businesses can reopen in large numbers, and the economy can return to some form of normality, that alone increases their earnings value.

THL has enjoyed a rebound to around $2.55 from mid-March lows of $0.55. That was back when New Zealand tourism looked shaky indeed. However, THL is still a long way from its year high of $4.26.

Since then, the business has seen the Accident Compensation Corporation (ACC) increase its share from around 6.7% to 8%. And it seems insiders, including CEO Grant Webster have been topping up too.

The company announced a managed exit from its technology group venture, Togo Group. This agreement sees THL receive a USD $6 million payment and the option to receive a further USD $20 million via sale of THL’s remaining holding in Togo over the next four years.

All this assists liquidity in a COVID-19 slashed business.

THL has remained an essential-service business for the provision of motorhomes for COVID-19 usage. Substantial staff changes enabled the business to reduce wage costs by 60% over the critical 12-week period from 20th March. And the company remained confident it would not breach any financial covenants for FY20.

Last Tuesday, the company announced that it is commencing a restructuring process which could impact 140 staff. These changes are directed to helping the business get back on its feet and find a ‘clear and flexible roadmap to return to sustainable operations and earnings.’


Where could [NZX:THL] go from here?


It really does seem that the worst is behind THL.

The key markets of Australia, New Zealand, and the United States are all on a reopening phase. The prospect of a trans-Tasman bubble provides further impetus for the motorhome trade.

While the stock has enjoyed a very strong rising streak over the past few weeks, there remains a long rebuilding process to restore earnings and business value.

Currently, there are no upcoming dividends. Previous margins at around 7% looked relatively tight. And the current P/E is still looking to be over 11 — suggesting the market is expecting growth.

Yet Tourism Holdings appears to be a well-run business, and on book value, it may present some opportunity. You need to look back 5 years to find this level of stock price for this company.

I am not personally a fan of motorhomes. Or any form of roving or cramped accommodation. But I must set that aside and watch their developments with interest.



Simon Angelo



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