Hi there! Welcome to the new look Pendal website... Take a two minute tour to see what we’ve changed.
Login

Mainstream Online Web Portal

Investors can view their accounts online via a secure web portal. After registering, you can access your account balances, periodical statements, tax statements, transaction histories and distribution statements / details.
Advisers will also have access to view their clients’ accounts online via the secure web portal.

How ASX travel stocks are likely to take off in 2022

Aussies have overseas holidays on their minds. But has Zoom impacted corporate travel for good? How will ASX travel stocks fare in 2022? Pendal analyst Sondal Bensan has some answers

Will Zoom kill corporate travel? Or at least wound it?

This is arguably the biggest unknown for travel stocks in the post-Covid world, because corporate travellers are higher-yielding than leisure tourists.

“People had thought there would be a permanent loss of corporate travel demand because of video conferencing platforms like Zoom. But I think it will come back pretty strong with just a bit of a lag,” says Pendal Australian equities analyst Sondal Bensan.

“We always thought leisure would come back strong and business would be a bit of a drag. But it looks like there hasn’t been any permanent damage.

“Before Covid, demand for the sector was growing at a couple of per cent per annum. Now we’ve had two years of interruptions, but the post-Covid starting point should be a trend line above the previous level.

“That reflects both natural growth and a phenomenal wave of pent-up demand.”

A rebound in corporate travel has not been fully priced into some travel stocks, including Qantas, he says.

“The market is pricing in part of the revenue recovery but it’s not pricing in the margin outcome from that recovery.

“The profitability post-Covid from domestics and international travel could be significant. Investors have priced in domestic re-opening but not international.”

Pendal Focus Australian Share Fund

A high-conviction equity fund with 16 years of strong performance in a range of market conditions

Bensan says margins will be higher both because of stronger-than-expected demand from corporate travel and also because airlines in particular have done a very good job at maintaining pricing, even during the pandemic.

“We’ve seen it in the US, New Zealand and here. That’s been a big surprise — the industry’s ability to manage prices.”

Some travel and tourism stocks tumbled when Covid hit, then experienced a massive adjustment period and emerged more efficient. Bensan expects some airlines, including Qantas, will do the same.

Factors to watch

No sector has been hit harder by the pandemic than travel and tourism.

But the best operators have been able to withstand the tumbling revenue and restructure. And as the economy heads towards a post-Covid phase, there are other kickers that will substantially help the sector.

Throughout the Covid period there has been glimpses of what might be for the sector.

“If you look at late last year and then the June quarter, the recovery in travel was quite remarkable. It ramped back up a lot quicker than many people thought.”

There are other factors helping travel and tourism stocks.

Many will have tax losses they can carry forward. Also working capital should benefit balance sheets in the short term, based on the experience of the industry during the June quarter, when travel and tourism re-opened ahead of the most recent lockdowns.

“There will be the initial surge in cash from people starting to make bookings again,” Bensan says, and he expects travellers will make plans further in advance, elongating the gap between payment and travel.  

“People’s attitudes will change. They will book in school holidays well in advance. Booking international travel will be longer duration that it ever used to be.”


About Sondal Bensan and Pendal Focus Australian Share Fund

Sondal Bensan is an Australian equities investment analyst with more than 19 years of experience covering the retail, telecom, media and transport sectors. Sondal holds a Bachelor of Commerce (Finance) and a Bachelor of Science (Maths and Statistics).

Pendal Focus Australian Share Fund is Crispin Murray’s flagship Aussie equities strategy. It is a high-conviction equity fund with a 16-year track record of strong performance in a range of market conditions. The Fund features our highest conviction ideas and drives alpha from stock insight over style or thematic exposures.

Pendal is an independent, global investment management business focused on delivering superior investment returns for our clients through active management. 

Find out more about Pendal Focus Australian Share Fund here

Contact a Pendal key account manager here


This article has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426 and the information contained within is current as at September 23, 2021. It is not to be published, or otherwise made available to any person other than the party to whom it is provided.

This article is for general information purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It has been prepared without taking into account any recipient’s personal objectives, financial situation or needs. Because of this, recipients should, before acting on this information, consider its appropriateness having regard to their individual objectives, financial situation and needs. This information is not to be regarded as a securities recommendation.

The information in this article may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information in this article is complete and correct, to the maximum extent permitted by law neither PFSL nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information.

Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance.

Any projections contained in this article are predictive and should not be relied upon when making an investment decision or recommendation. While we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections.

The Target Market Determination (TMD) for the Fund is available at www.pendalgroup.com/ddo. You should obtain and consider the PDS and the TMD before deciding whether to acquire, continue to hold or dispose of units in the Fund.

Keep updated
Sign up to receive the latest news and views