by winston » Wed Apr 17, 2019 10:51 am
not vested
TRAVELSKY TECH(696)
Analysis:
The Group is the largest provider of the aviation information systems in China, which developed systems, such as flight control, air ticket distribution, check-in, boarding and load planning, accounting, settlement and clearing system, and aviation logistic.
And, Clients include airlines, airports, travel suppliers, travel agencies, freight forwarders, IATA and other large international organizations and governments.
The Group announced its 2018 annual results, where the revenue grew by 11% to RMB 7.47 billion;
The operating profit dropped by 6.2% to RMB 2.32 billion due mainly to the larger increase in cost than expected, such as technical support and maintenance fees, commission and promotion expenses as well as other operating expenses.
We expect to see commissions and promotion expenses as percentage of revenue increase in the future.
As the distribution market of foreign airlines is opened for competitions and the flights of China Airlines further expand overseas, the Group will need to increase its investment in overseas distribution markets.
On the contrary, we expect that other operating cost percentage of revenue will gradually decline in the future, because the operating costs of the operation centers are relatively fixed.
As the revenue rises, it is believed that the proportion will also fall. As a result, we estimate that the decrease in the proportion of other operating costs is greater than the increase in that of commission and promotion expenses, operating profit margin will gradually improve. Therefore, we believe the plunge in stock price offered the opportunity.
Strategy:
Buy -in Price: $19.00, Target Price: $25.00, Cut! Loss Price: $17.50
Source: Phillips
It's all about "how much you made when you were right" & "how little you lost when you were wrong"