Tourism Holdings is New Zealand’s largest motorhome rental operator and the second-largest operator in both Australia and the United States.
Brokers are expecting more detail on the input from El Monte Rents Inc, the second-largest recreational vehicle rental business in the US, which Tourism Holdings acquired in December for $91million.
Forsyth Barr broker Damian Foster said recent upgraded profit guidance suggested there would be "few surprises" in Tourism Holdings’ full-year result, predicting the strong profit growth would continue into 2018, given it coincided with the first full year of El Monte’s consolidation.
When reporting its half-year result in February, the company maintained
profit guidance of $27.5million for full-year 2017, but upgraded that to about $29.5million in June.
Craigs Investment Partners broker Peter McIntyre said the El Monte acquisition had "catapulted" Tourism Holdings’ US market share to 28%.
"We expect the acquisition to deliver strong earnings growth and improved returns through scale benefits, synergies and cost rationalisation," Mr McIntyre said.
He maintained a "positive outlook" for the next few years, the company having raised after-tax profit guidance to $50million for full-year 2020, compared with $24.4million in full-year 2016.
"This will be on the back of continued growth in tourism and the impact of EL Monte’s acquisition," Mr McIntyre said.
Tourism Holdings’ first-half result had been buoyed by its offshore acquisitions and New Zealand’s booming tourism market, its profit rising almost 40% to more than $11million on a year ago.
Revenue for the six months to December was up 9% at $146million, operating profit before tax rose 29% to $17.7million and after-tax profit was up 38% at $11.3million.
Mr Foster said a key issue at present was the state of forward bookings for rental vehicles in New Zealand and Australia, particularly given the arrival of new competitors here.
"Rapidly increased yields and improved utilisation has made the New Zealand rental and sales market more attractive to would-be new entrants, such as the arrival of German player McRent and a plethora of smaller operators in the import sales channel.
"As an industry leader Tourism Holdings needs to respond," Mr Foster said.
New Zealand’s tourism demand growth was expected to be slow over the next 12 months, in line with sluggish airline capacity growth, and the Australian backdrop was even less favourable.
On the plus side, the acquisition of El Monte Rents Inc, expansion of the Mighway booking service platform into North America and several transactions with Roadtrippers USA would boost the company’s full-year result.
However, Tourism Holdings had provided "little insight" into its El Monte integration and he hoped the company would give more detail on its progress and outlook given it was acquired almost eight months ago.
