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Corporate Travel Management Ltd (ASX:CTD) Share price declined in June 2022. It fell more than 16% over the past month.
it was bad enough S&P/ASX 200 Index (ASX:XJO), which fell “only” about 9%. This is still a big drop in a month.
However, ASX Travel Share was not the only casualty in June. Flight Center Travel Group Limited (ASX:FLT) stock price also fell 15% during webjet ltd (ASX: WEB) stock price fell more than 10%.
Corporate Travel has not announced anything in June 2022 that it considers “market sensitive” to investors.
In fact, investors last heard about the corporate journey in early May. I’ll rewrite this update in a moment, but first let’s look at what else happened in June.
interest rate increases
Central banks are highly motivated to rise on top of inflationary conditions.
Inflation has increased in Australia, the US, the UK and many other economies. Central banks have one key tool to try to reduce demand in the economy – raising interest rates. While this could ultimately bring inflation under control, what does this do to asset valuations?
The RBA raised interest rates by 50 basis points in June. Today, at its July meeting, it raised interest rates by another 50 basis points.
Why is interest important? Well, as billionaire Ray Dalio once said:
It depends on the interest. As an investor, you only pay a lump sum for future cash flows.
Higher interest rates, in theory, lower asset valuations.
better approach
While Corporate Travel Management’s stock price has fallen, trading conditions are actually improving.
Looking ahead to the company’s May 2022 business update, Corporate Travel said it expects to be at least 75% larger than full recovery in calendar year 2019. Monthly revenue for the fourth quarter of fiscal 19 is expected to be the 22nd mark will be exceeded. It also said the acquisitions made during COVID-19 have been “transformative.”
The company said it is recovering faster than business travel among its largest sectors, with “strong market share gains” across sectors.
Management assumes that earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter of the 2012 financial year will provide “strong impetus” in the 2013 financial year.
The company claimed it had no debt and enough cash to support a full recovery, putting it in a “strong” financial position. It also said it continues to invest in its technology and people.
Corporate Travel Management stock price snapshot
Since the beginning of 2022, business travel shares have fallen by about 13%.
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