Fuelled up for further growth

Fuelled for further growth

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Investment adviser Justin Still outlines some of Morgans Financial Limited's key investment themes.


In October, Morgans held its annual Queensland Conference in which 42 companies across a broad cross section of the economy presented.

Justin Still

Justin Still

The tone around this year’s conference was actually the most positive in years, confounding broader market caution in the popular press.

High calibre management teams pursuing innovative ideas was a common trait of companies creating their own opportunity in these conditions.

Despite the challenges, many companies offered positive outlooks, indeed proving that many corporates are thriving, and actually providing ample opportunities for investors even in some of the most challenged parts of the market, such as the retail and the consumer discretionary sectors, with companies such as Lovisa Holdings (LOV) and Apollo Tourism & Leisure (ATL) currently going from strength to strength.

Apollo Tourism & Leisure (ATL) has grown from a family owned business to now operating one of the largest recreational vehicle fleets in the world, with the business becoming a listed entity in late 2016.

Apollo Tourism & Leisure Ltd (ATL) is a multi-national, vertically integrated manufacturer, rental fleet operator, wholesaler and retailer of a broad range of recreational vehicles (RVs) across Australia, New Zealand, the USA and Canada. 

The volume of domestic and inbound international tourists is a key determinant of RV rental demand.

According to industry bodies such as Tourism Australia and the US National Trade & Tourism Office, international visitor arrivals into Australia, NZ and the US are projected to grow at a solid pace (circa 3-5 per cent pa) over the next 5-10 years, boding well for RV rental demand growth in ATL’s key geographies. 

Since listing, ATL has made a series of acquisitions in new sales, all of which have been earnings accretive and are tracking in line with expectations. In August the company reported a strong maiden result as a listed company, beating prospectus forecast net profit after tax by 12pc. 

Management have noted that forward rental bookings are tracking well across all geographies as guided, with NZ and Canada key growth regions.

We forecast circa 40pc earnings per share growth in financial year 2018 driven by: annualised contributions from the recently acquired Sydney RV and Kratzmann businesses; a maiden 9 month contribution from George Day Caravans dealership; further US expansion; and a maiden contribution from the CanaDream acquisition.

We see ATL as a quality founder led business which we believe has a strong outlook for growth across its business. 

  • Justin Still, Investment Adviser (Authorised Representative: 000279726) Morgans Financial Limited | ABN 49 010 669 726 | AFSL 235410 

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