07/04/2016: What are Australia's best tourism stocks?

Scott Schuberg:

Good afternoon members and welcome to Rivkin virtually live local for Thursday the 7th of April I am Scott Schuberg joined by Shannon Rivkin, how are you Shannon?

 

Shannon Rivkin:

Good, very good Scott, how are you?

 

Scott Schuberg:

Very well, thank you.

 

Shannon Rivkin:

The next question tourism is also going very well in Australia what stocks would you recommend in this area? Again, very small list you've mentioned …

 

Scott Schuberg:

Mantra it's a good one, a listed hotel chain, aside from that, you know, there are some other more abstract exposures.

 

Shannon Rivkin:

Well, I mean, I've got a few names that I think are quite interesting. One I actually kind of like is a different one that's Ardent Leisure they own Event Cinemas, they own some theme parks. Why I like it I guess is because I'm not necessarily saying that anyone should be buying it but really been sold off since the new CEO came on board and there was a lot of shareholder angst about her appointment. And there have been certainly some mistakes at the beginning of her reign, and now that they've talked about selling off some of their assets, you know, a potentially good turn around play. We've seen some smart money buy into that one as well. And that's Jeff Wilson bought into that.

 

Scott Schuberg:

Yep.

 

Shannon Rivkin:

Obviously, you know, the Mack Daddy of tourism stocks or at least tourism exposure stocks is Sydney Airport. You know, it's the best asset there is. What an amazing monopoly asset that is and run really, really well. But very, very expensive and, the yield itself is probably okay but that's probably the best thing going for it on every other metric it looks expensive but that's what happens when you buy fantastic assets like that. Village Road Show like, Ardent has some has movie exposure but it also has some theme park exposure as well. And probably again, like the Sydney Airport: Webjet and Flightcentre which are involved in online flight bookings and hotel bookings.

 

Scott Schuberg:

Yeah. And those are good stocks. Webjet is a good stock. Great earnings margins for the type of businesses it's in. There's a lot of other online travel companies that have very slim EBIT margins, Webjet is a good one, I quite like that. And, and I guess in a similar vein to your first question about the Oiffce property markets, the net volume of visitors coming to Australia has been steadily growing for a good seven or eight years. No particular correlation with the Aussie dollar coming off, you've seen numbers increase a little bit more than they had previously over the last two or three years but not to a great extent so I think probably a lot of these stocks are well priced.

 

Shannon Rivkin:

Look I do think that's a risk though if the Aussie dollar keeps running, I would say keep that in mind if it does become more expensive for overseas visitors to come here that probably will effect, but things momentum wise things have been strong recently at least some of them because of currency.

 

Scott Schuberg:

Yeah.

 

Shannon Rivkin:

So that could unwind a little bit.

 

Scott Schuberg:

And some of them are a little more defensive because they have larger share domestic business so like the Webjets and Flight Centres, versus Sydney airports. You've got a higher Aussie dollar I think the travel bookers will still do extremely well for themselves by selling flights to the US and and Fiji ad what not.

 

Shannon Rivkin:

Yep.