CORPORATE TRAVEL MANAGEMENT LIMITED (ASX:CTD) - Ann: Investor Presentation - Building a Global Business, 37837625, page-15 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Originally posted by manny100 ↑

Just had a read. Does create fear. Its print/digital medias version of social media Trolling. Trolls enjoy the fear they create in people.
I must admit to an increased level of fear once again. If CTD is indeed bleeding cash (and the cash is not recoverable) due to poor performing business I would have thought it would have to be compensated by ever increasing debt or working capital CRs. Bills have to be paid. So far we have not seen this.
Joe says that H2 has always been the biggest share of the years earnings and therefore most of the cash will be booked in the following year. This makes Operating cash conversion look poor. Looking at the chart on the presentation that is true except for H2 13 and 2018.
What Joe has not realised or does not understand is that a high growth business is always going to have 'apparent' cash operating cash conversion problems with timing differences and the reason is simple. If you keep increasing sales you keep increasing costs. With timing differences you are always comparing this H costs against smaller sales from the last H as the cash for those sales is not received until this half. So in effect comparing H1 costs with H2 2018 sales .
eg (not CTD), H1 sales this year are 100, cash received for those sales is 100 in H2 this year due to timing differences.
H2 itself has 20% sales growth, so sales are now 120 but the cash is not received until H1 the following year. Costs of say 110 for H2 tickets sold are paid in H2.
So Cash received H2 is 100. Cash paid out H2 is 110.
This year Operating cash conversion for H2 is cash received in H2 = 100 divided by cash paid for tickets in H2 = 110. IE 91%
With continuing high growth this will keep 'getting worse' as we will be comparing increasing costs caused by increasing ticket sales against cash received from smaller sales.
I am hopeless at explaining things. The bottom line is high growth companies always appear to bleed cash if cash is received in a financial period after payments made.
If you look at the seven year average line on the presentation graph its slightly falling. The fall is caused by the ongoing high growth effects mentioned above and while growth continues the line will continue to fall.
The only way to stop the ups and downs of operating cash conversion is revert to low growth with of course no bad debts.
Again keep an eye on the situation there are no sure things in the market or business and most of us have been bitten on the bottom before. If cash is being lost forever it eventually ALWAYS find its way to smash profits and will ALWAYS have to be made up by increased debt or working capital CRs as bills and dividends have to be paid. We will know soon enough. Usually high growth companies have either massive debt or massive amount of shares on issue. CTD has neither.
Not sure why Joe is bitter about the 15% EBITDA growth targets. Simply Wall Street has analysts estimates of yearly earnings growth next 3 years at 18.5% per year and revenue at 9.8% per year. These are not considered a pass for high growth businesses although are pretty good.
Has Joe declared whether he holds the stock or is shorting the stock or whether he is associated with persons or organisations that hold or short the stock?
Anyway DYOR.

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The cahflow tallies with the receivables, payables, and net debt immaculately from what I have seen.

I suspect Joe just hopes that one of his targets goes bad, so that in future he can mention that one all the time and conveniently forget about the rest. It is not a bad strategy for a bus journo, and he gets eyeballs on the way. I have no idea of his financial acumen, but suspect he is unlikely to be a financial genius.

When you read the factual bits of the article - the article is actually favourable for CTD outlook (i.e. covers the positive outlook items), just with a negative spin on everything based on I don't believe it, and they are not believable. (Or I don't want to believe it or JP - lol).

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1	2063	11.420
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Price($)	Vol.	No.
11.430	809	1
11.450	186	1
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11.470	3403	1
11.480	3403	1

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(20min delay)
Last $14.09		Change 0.030(0.21%)		Mkt cap ! $1.780B

Open	High	Low	Value	Volume
$14.13	$14.28	$14.03	$6.232M	444.4K

The cahflow tallies with the receivables, payables, and net debt...

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