Our target price of A$16.10 is derived from a blended average of: (1) DCF valuation of A$17.70 per share; (2) sum-of-the-parts valuation of A$15.40 per share; and (3) P/E valuation of A$15.20 per share. Our DCF valuation is derived by using an equity beta of 1.2 and WACC of 10.5%, along with a terminal growth rate of 3.0%. Our sum-of-the-parts valuation is derived by applying a 10x multiple to our FY26e EBITDA forecasts, based on key comparables multiples across respective business regions. Our P/E valuation applies a 19x multiple to our FY26e earnings forecasts.

This stock is High Risk based upon our quantitative model, but we believe assigning a High Risk rating is not supported by our qualitative analysis. We see the largely domestic business and strong balance sheet as reducing its risk and thus have not applied a High Risk rating. Key risk factors include:

– Delay in travel recovery: Our estimates are based on the assumption that domestic and international activity continue to recover. Any further delays would put downward pressure on our forecasts.

– General economic conditions: Corporate travel is generally correlated to the health of the economy and businesses that operate in it. Any changes or further recessions may have an adverse impact on the group’s financial position in the future.

– Supplier risk: The business model relies on contractual arrangements and fees with a number of third-party suppliers including airlines, rail travel providers, and global distribution systems. Any renewal of contracts that are on less favourable terms may have a negative effect on future earnings. 

– Technology: The rise and adoption of video conferencing and meetings may structurally impact the overall demand and volume of business travel in the future. As such, any sustained material decrease in travel may impact future ability to earn revenues.

– Management: Departure of key management personnel would be a risk to the company. The current managing director founded and has been at the company since 1994.

– Balance sheet and funding risk: We believe with vaccines having been rolled out and travel activity recovering, the worst of the demand destruction is behind us. However, any further outbreak and material cancellation of travel may put the balance sheet and funding at risk.

If the impact on the company from any of these factors proves to be greater than we anticipate, the stock may fail to reach our target price. Likewise, if any of these factors proves to have less of an effect than we anticipate, the stock could outperform our target price.