Corporate Travel share price falls 6% on coronavirus concerns

Here's why the Corporate Travel Management Ltd (ASX: CTD) share price has taken a sharp tumble today.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Corporate Travel Management Ltd (ASX: CTD) share price has tumbled 6.29% to $18.92 at the time of writing, joining its fellow ASX travel companies in their downward slide today.

Why are ASX travel shares under pressure today?

The travel sector has come under pressure today due to concerns around the ongoing coronavirus outbreak, with a number of shares seeing their value plummet.

Other travel shares that have been impacted on Tuesday include Flight Centre Travel Group Ltd (ASX: FLT), Qantas Airways Limited (ASX: QAN), and Webjet Limited (ASX: WEB). Also impacted has been Crown Resorts Ltd (ASX: CWN), which is heavily linked to the travel industry. Webjet was the worst performing of this group with its shares down by 11.1% to $12.77 at the time of writing.

A growing number of Chinese cities have placed restrictions on travel in an effort to contain the virus. In addition, the United States (US) government has already given a recommendation to avoid travelling to China.

Chinese health authorities have confirmed the coronavirus has killed just over 100 people so far and infected 4,000 globally, the vast majority of whom live in China. Four of Australia's 5 confirmed cases are in NSW, and in the US more than 100 people are being evaluated for possible infection.

The coronavirus outbreak could significantly affect Australia's travel sector, particularly if more travel restrictions are imposed on international travel to slow down the spread of the virus. Tourists from China now account for over 15% of total short-term inbound travellers to Australia, as compared with just 4% in 2003, according to an Australian Financial Review article sourcing Moody's.

How has Corporate Travel performed recently?

Last year, Corporate Travel reported its FY19 earnings before interest, tax, depreciation and amortisation (EBITDA) rose 20% to $150.1 million, the top end of guidance, and it grew its revenue by 21%.

Despite what looked to be a solid result, investors appeared disappointed with the company's guidance for the year ahead. Management advised that it expected underlying EBITDA of between $165–175 million. This equated to year-on-year growth of only between 10–17%, which was lower than market expectations.

More than 70% of Corporate Travel's revenue base is generated outside of Australia and New Zealand, with its reach extending to the UK, Europe, Asia and North America. This percentage is also growing, with 72% of its revenue generated outside of the Australia and New Zealand region in FY19, up from 70% a year prior.

So far, the second half of FY20 has proved to be stronger than the first half for Corporate Travel, with its Australia and New Zealand segment performing solidly due to recent client wins.

Motley Fool contributor Phil Harpur owns shares of Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited, Crown Resorts Limited, and Flight Centre Travel Group Limited. The Motley Fool Australia has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A man looking at his laptop and thinking.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors were pulled back down to earth this Tuesday.

Read more »

A woman faces the camera with her lip raised up to the side in total confusion.
Bank Shares

Why is the CBA share price being hit so hard today?

Has CBA's luck finally run out?

Read more »

Three people with gold streamers celebrate good news.
Record Highs

7 ASX 200 shares that just smashed new record highs

In a topsy-turvy day for the ASX 200, these stocks have ascended to new price milestones.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Share Gainers

Why EML Payments, Gentrack, Regis, and Resimac shares are racing higher

These shares are outperforming on Tuesday. What's going on?

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why ASX, CBA, Iperionx, and Sayona Mining shares are dropping today

These shares aren't having a good session on Tuesday. But why?

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Capital Raising

Why the Novonix share price is frozen today

Time to refill the cash tank before it runs out.

Read more »

Woman looking at a phone with stock market bars in the background.
Share Market News

Why did the rising ASX 200 just reverse course into the red?

US President-Elect Donald Trump has announced new tariffs on goods from China, Canada, and Mexico.

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Broker Notes

This ASX All Ords stock is undervalued and could rocket 60%+

Bell Potter is tipping this share to deliver big returns for investors.

Read more »