SERKO LIMITED (SKO)
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29/05/2024

1

Buy

$4.25

32.81%

Serko reported FY24 earnings results with Ord Minnett pointing to a significant improvement in free cash flow, narrowing the loss from -NZ$32.6m in FY23 to -NZ$7.1m in FY24, driven by the incremental impact of the Booking.com deal.

Management revised revenue guidance for FY25 down to NZ$88-92m, reflecting a challenging economic climate in Europe is much lower than the analyst's expectations.

The extension of the Booking.com deal until March 2029 removes uncertainty around the stock and  the analyst expects potential upside for a contract opportunity.

There are "material" declines in the EPS forecasts, highlights Ord Minnett.

Buy rating unchanged. Target lowered to $4.25 from $5.45.

FORECAST
Ord Minnett forecasts a full year FY25 dividend of 0.00 cents and EPS of minus -0.83 cents.
Ord Minnett forecasts a full year FY26 EPS of 17.30 cents.

31/10/2024

2

Overweight

-

-

Serko would meaningfully expand its presence in North America with the proposed acquisition of Sabre's GetThere booking tool and strategic partnership with the global distribution system, Jarden notes.

The proposed acquisition makes strategic sense in the broker's view, providing an installed customer base with scale in North America, a market in which Serko has struggled to gain meaningful traction despite apparent travel management company support.

At this stage, Jarden views the proposed acquisition and partnership as valuation-neutral and will seek further information at the December 10 investor event. Target rises to NZ$4.70 from NZ$4.65, Overweight retained.

FORECAST
Jarden forecasts a full year FY25 dividend of 0.00 cents and EPS of minus -0.18 cents.
Jarden forecasts a full year FY26 dividend of 0.00 cents and EPS of 8.28 cents.