October trading update by CTD reiterated the risks around the UK government’s planned budget cuts, which represents a real risk to travel spending; around 10% of CTD’s earnings come from the UK, which is unsettling. However, given the low investor expectations for CTD, and the broader recent softness in ASX travel stocks, we aren’t surprised the update was reasonably well received with no major hidden surprises. CTD is a good business with a market-leading tech stack, global scale and a record of winning and executing major contracts. Also, the balance sheet is strong and the company has plans to double NPAT in 5 years, none of which is reflected in the current share price ~$13.50.
- We have tweaked our call to a more bullish one as the dial starts to turn – the stock is looking for/found a low.
MM is neutral to cautiously bullish towards CTD
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