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Switch Lendlease (LLC) into Corporate Travel (CTD)

Firstly, let’s look at the two stocks individually:

LLC $6.27 – delivered a poor result last month, which was a significant disappointment after guidance in December was reiterated; the stocks down -16.1% so far in 2024, and MM hasn’t been slow to criticise LLC after its recent result. We also think there is an outside chance they may need capital with the balance sheet under some short term pressure, depending on the patience of lenders and how they look at covenants. They have a planned Investor Day on  May which is the next catalyst, however the stock looks heavy following downgrades across the board after their result.

CTD $16.35  – we were very critical of the Corporate Travel result on the day it landed, it was a big miss to expectations and it was messy. At a high level, revenue was down -5% and earnings a touch more for the half, while FY24 guidance was cut by ~15% – the stock was rightly hit 16.4% on the day of their result.

However, on reflection, we believe the market may have become too short-term focused, and although our initial reaction to their result was to step aside, CTD looks suitable for patient investors over the coming years. We see significant upside potential in the vast North American market, where CTD still has a market share of less than 1%. Hence, we believe the recent sell-off provides a good risk/reward opportunity to enter a quality business that plans to double its FY24 profits organically in 5 years.

  • After recent moves, we see more upside and less risk in CTD than LLC, which has caused us to lose confidence after last month’s report. Plus, importantly, we believe CTD is a far higher quality company.
LLC
MM is considering switching from LLC to CTD
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Switch Lendlease (LLC) into Corporate Travel (CTD)
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