CTD has struggled through 2024, and after recently buying JB Hi-Fi (JBH), we question whether this is the time for increased consumer spending exposure as cost of living expenses remain high. The travel sector remains firm, with both FLT and CTD maintaining guidance at the recent Macquarie conference, but there is the risk of rising inflation eventually following in the footsteps of retail and weighing on the sector, e.g. 3Q24 airfares have fallen 13% YoY. CTD is already seeing AI efficiencies, and over its 5-year strategy, it targets 50% of all non-revenue transactions to be managed by AI, but it’s not the current driver of the share price.
Corporate Travel Management has banked on earning margins of at least 50% from parts of a controversial contract to house asylum seekers in the UK, but this increasingly feels under threat after the UK Prime Minister called an early election. As we all know, during elections, politicians rarely push unpopular policies and with the UK already bursting at the seams, this could easily become a political football. While potentially lucrative, CTD has faced scepticism from some investors because of the contentious nature of the British government’s asylum-seeker policies, and this appears to be the key to CTDs share price at present, with an election just 6 weeks away.
- Rishi Sunak’s announcement on Wednesday marks the start of a six-week election campaign. The economy, immigration, health services, and the cost of living are key issues for voters. Note that immigration and asylum seekers are front and centre.
- We are considering selling/switching out of CTD – the price action is simply terrible – we should have listened to a UK-based client on this one.
MM is neutral towards CTD
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