The financial world often stands still, watching behemoths like Apple Inc (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN) manoeuvre. Given their gargantuan size, these market titans inevitably cast wide ripples across the broader investment landscape with every price fluctuation - particularly during reporting season. Yet, beyond the limelight and the vast echo of these large caps, there’s a realm of potential in the business performance of small caps where valuations remain grounded.
Join us a little closer to home as we take a look at two holdings within the TAMIM portfolio that have recently provided positive updates to the market prior to earnings season kicking off.
Helloworld Travel Ltd (ASX: HLO)
Helloworld Travel has continued its post-pandemic resurgence as travel demand continues to defy rising interest rates and inflation. Loyal shareholders have been rewarded with the Company’s year-to-date performance up over 100%.
Helloworld is a leading Australian & New Zealand travel distribution company, comprising retail leisure travel and business travel networks, travel broker networks, destination management services (inbound), air ticket consolidation, tourism transport operations, wholesale travel services, online operations and event-based freight operations.
At the beginning of August Helloworld announced it would be increasing its FY23 guidance.
The company has revised its guidance, projecting underlying operating earnings (EBITDA, earnings before interest, taxes, depreciation, and amortization) of $42 million to $45 million, a significant improvement from the previous year's loss of $10.6 million and the third upgrade having previously guided underlying EBITDA of $28 million to $32 million and $38 million to $42 million.
Total Transaction Value (TTV) is expected to surpass $2.56 billion, representing a substantial 138% increase compared to the previous year.
The Company highlighted its cost management efforts in improving EBITDA to revenue margin outcomes, and all geographic segments are now running profitably. Furthermore the acquisition of Express Travel Group (ETG) has been unanimously approved and is expected to contribute an additional underlying EBITDA of $11 million to $12 million in the FY24 year.
Looking forward, Helloworld believes it is in a strong liquidity position with no external borrowings after funding the ETG acquisition via its cash reserves. The company is confident in the outlook for leisure travel demand in both Australia and New Zealand, and continued improvements from Western markets. Further growth is expected in traditional Asian markets in 2024.
Volpara Health Technologies Ltd (ASX: VHT)
Volpara Health is in the business of medical technology and provides breast imaging analytical products to improve the decision making and early detection of breast cancer.
The company has seen its share price rise over the past month following a number of positive market updates.
In early July, Volpara provided a business update with two significant announcements:
Reduction of revolving credit facility
After experiencing three successive quarters of strong cash flows and implementing a revised strategy, Volpara has moved to reduce its revolving credit facility from NZ$10M to NZ$2.5M. The company has been operating on an approximately free cash flow break-even basis, and with NZ$12M of cash on hand at the end of Q1FY24, they no longer consider the larger credit facility necessary. This decision will result in cost savings of NZ$112,500 per annum.
Microsoft Healthcare & Life Sciences Partner of the Year Award:
Volpara has been recognised by Microsoft (NASDAQ: MSFT) and awarded the global Healthcare & Life Sciences Partner of the Year Award for 2023. This prestigious award acknowledges Volpara's excellence in providing innovative healthcare and life sciences solutions based on Microsoft cloud technologies. Microsoft has been supporting Volpara in providing AI solutions for breast cancer detection and prevention.
Furthermore, Volpara released its Q1 FY24 Quarterly Cash Flow Report revealing strong cash receipts and positive operating cash flow.
The highlights for the quarter included:
With cash flow positivity in sight, perhaps Volpara is at an inflection point and if the company can maintain strong gross margins and continue to improve the conversion of revenue into free cash flow shareholders could be in for a great ride.
Both Helloworld Travel and Volpara Health Technologies have delivered positive market updates, showcasing their resilience and growth potential. Helloworld's post-pandemic resurgence has been impressive, rewarding loyal shareholders with a remarkable performance, while Volpara's share price improvement reflects its successful business updates. With both companies poised for continued growth and market leadership, investors can be excited by the potential opportunities ahead.
Disclaimer: Helloworld Travel Ltd (ASX: HLO) and Volpara Health Technologies Ltd (ASX: VHT) are currently held in the TAMIM Portfolios.
At TAMIM we are committed to educating investors on how best to manage their retirement futures.
Sign up to receive our weekly newsletter:
TAMIM Asset Management provides general information to help you understand our investment approach. Any financial information we provide is not advice, has not considered your personal circumstances and may not be suitable for you.