The Corporate Travel Management Ltd (ASX: CTD) share price is definitely the odd one out compared to other ASX travel shares like Webjet Limited (ASX: WEB) and Flight Centre Travel Group Ltd (ASX: FLT).
The Corporate Travel share price has nearly fully recovered and is just 7.8% lower than its pre-COVID levels at the time of writing. With this in mind, is it too late to buy Corporate Travel shares?
CTD share price chart
A quick recap of 2020 for Corporate Travel
Corporate Travel is a provider of travel management solutions to the corporate market and currently operates throughout Australia, New Zealand, North America, Europe and Asia.
CTD’s FY20 results didn’t come as a surprise, reporting decreases in total transaction value (TTV), revenue and EBITDA across all its operating regions.
Despite this, I find it really interesting that the market has pretty much priced in a near-full recovery, given how close the share price is to its pre-COVID levels.
What’s driven the quick recovery?
The reason why Corporate Travel has recovered so quickly compared to Webjet and Flight Centre is because the majority of its revenues are generated from domestic travel, so it’s not as leveraged to Australia’s international travel restrictions.
Additionally, CTD has a fairly capital-light cost structure, further bolstered by a strong net cash position of $126.8 million and £100 million from a committed undrawn finance facility. These numbers are after its most recent capital raising to fund the acquisition of Travel & Transport.
Management indicated that prior to COVID-19, over 60% of transactions were domestic and the company should be able to become profitable just on domestic transactions alone.
Is the CTD share price a buy today?
I really like Corporate Travel and think it’s an extremely well-managed company. It stated in the FY20 report that it was well-positioned to take advantage of potential M&A activity in the wake of the COVID-19 pandemic, and then followed through with the most recent acquisition.
As a cherry on top, management has significant skin in the game and the company remains debt-free.
I would definitely not be a seller of Corporate Travel shares at this point, but I probably wouldn’t be a buyer either (as a recovery play). The company has already demonstrated that it doesn’t rely that much on international travel. Based on this, the recovery seems fully priced in to me.
If you are still looking to play the COVID-19 recovery, Flight Centre and Webjet shares probably have a lot more upside potential, but I believe the risks associated with the length of the recovery are definitely factored into their share prices. If you’d like to know more, click here to read my article that compares Webjet and Flight Centre shares.
