Home' Forge : Vol 2 No 2 Contents benefciary of growth in inbound
Chinese tourists seeking four-star
Mantra listed on the ASX in June
2014 through a $239 million initial
public offering. Its $1.80 issued
shares have rallied to $3.96, making
it one of the best-performing IPOs
in recent years.
Rising inbound Chinese tourism
will drive demand for Mantra's
Queensland leisure properties. An
expected lower Australian dollar is
another potential tailwind, as is a
slight recovery in domestic consumer
and business travel demand.
Longer term, Mantra's strong
balance sheet offers scope to
continue opening new hotels and to
upgrade existing ones. New hotel
openings in Queensland could be
the catalyst for the next leg of share-
price growth in the medium term.
Few Australian companies have more
direct leverage to Chinese tourists in
the coming decade: Asian tourists and
travel groups fnd Mantra’s high-
quality, four-star hotels ideal for short
stays. Mantra's customer satisfaction
ratings at its properties are high, and
more hotels are being opened or
upgraded in time to cater for an infux
of Asian tourists.
4. SeaLink Travel Group
SeaLink Travel Group, a small-cap
tourism operator, has had relatively
less attention than its larger peers.
The owner of passenger ferries and
travel cruises, under the SeaLink
and Captain Cook Cruises brands,
raised $16.5 million and listed in
SeaLink's $1.10 issued shares have
rallied to $4.44 after better-than-
expected proft results. SeaLink’s
one-year total shareholder return
(including dividends) is a stunning
83 per cent, making it among the
best-performing foats in the past
The group is superbly leveraged
to the Chinese tourism boom. Its
Captain Cook Cruises operation
is a magnet for international
tourists who take the customary
boat trip on Sydney Harbour to
experience the great city by water.
Regular visitors to Circular Quay
will notice the growing number of
Asian tourists visiting the city's
After strong share-price gains,
SeaLink is not cheap. But it can
grow faster than the market
expects in the next few years as
our low dollar and the influx of
Asian tourists drive demand for
its ferry cruises. Higher exposure
to New South Wales, Australia's
best-performing economy, is
5. SKYCITY Entertainment Group
As Australian investors focus on
local companies exposed to the
tourism boom, don't forget about
New Zealand. It, too, is benefting
from strong growth in Chinese
tourism: Statistics New Zealand
data shows that annual visitor
arrivals in the country rose 10.4 per
cent to 3.2 million for the year to
March 2016 -- the best percentage
growth in at least a decade.
The number of Chinese tourists to
New Zealand grew 31 per cent in
2015--16, and visitors from Hong
Kong rose 48 per cent. That is
good news for dual-listed casino
operator SKYCITY Entertainment,
which has monopoly casino
licences in Auckland, Hamilton
and Queenstown, and casinos in
Adelaide and Darwin. SKYCITY
will also own and operate the New
Zealand International Convention
Centre when it is built.
SKYCITY’s fagship Auckland casino
is performing well, and SKYCITY
Hamilton and its two Queenstown
properties are improving. But the
Adelaide casino has disappointed.
Nevertheless, SKYCITY has rallied
from a 52-week low of $3.32 to
$4.43 in May 2016. Morningstar
values its shares at $4.10, and has
a hold recommendation.
Morningstar says the casino
operator is entering an
unprecedented period of investment
in Auckland and Adelaide casinos.
That brings capital and execution
risks, and potential disruption to
current operations and earnings.
Greater competition from Australian
and international casinos for Asian
tourists could also hurt SKYCITY.
If done well, SKYCITY's capital
expenditure program should help
it secure a bigger slice of the Asian
tourism market at its casinos and
hotels -- just as tourism growth shifts
up a few gears later this decade. Its
Adelaide casino, in particular, has
plenty of potential.
Tony Featherstone is a former
managing editor of BRW and
Shares magazines. The column does
not make stock recommendations
or offer fnancial advice of any kind.
It takes no account of an investor 's
individual fnancial needs, and
offers general commentary only.
Readers should do further research
of their own or talk to their
fnancial adviser before acting on
themes in this article. All prices and
analysis current at time of print.
40 // FEATURE
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