Investment Ideas from Alpari: Royal Caribbean Cruises

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Investment Ideas from Alpari: Royal Caribbean Cruises
Investment Ideas from Alpari: Royal Caribbean Cruises

International company Royal Caribbean Cruises is the second biggest cruise operator in the world in terms of size. The company has its own fleet of around 40 cruise liners and has several brands specialising in the elite sector (“Premium” and “Luxury” classes) of the cruise holiday industry as well as in the economy sector. The company 3 key brands (Royal Caribbean, Celebrity Cruises and Pullmantur) welcome around 4 million passengers every year. The company was founded in 1968 and their revenue diversification can be broken down as follows: USA – 53%, other countries – 47%. Among its biggest shareholders are BlackRock (4.59%), J.P. Morgan Chase (3.00%), Credit Suisse Group (0.64%) and Rockerfeller&Company (0.49%).

Growth factors:

  • The annual number of tourists in the cruise industry continues to grow at an even pace according to data from the Cruise Lines International Association.
  • The company is proceeding with the implementation of a development strategy for Asia, where demand for cruise services is growing rapidly.
  • The financial performance of the company continues to improve. Revenue went up by 2.4% YoY in 2016 and by 4.7% YoY in the first quarter of 2017. Cash flows from operational activities increased by 29.3% YoY in 2016, and by 66.7% YoY in the first quarter of 2017.
  • The business profitability is an attractive factor. In 2016, the return on equity and the ratio of net profit to revenue came to 14.9% and 15.2% respectively. For the first quarter of 2017, the corresponding figures are 16.3% and 9.7% respectively.
  • Moderate risks to financial stability. The ratio of total debt to total assets is 38.9%. The ratio of net debt to EBITDA is 3.37.

Expected Return — more than 120% per annum

Expected yield is calculated according to 90% capital protection and the price of the base asset at expiry, equal to 181 USD.

Technical Analysis:

Royal Caribbean Cruises share price has broken upwards out of the 50-, 100- and 200-day moving averages and has left the Ichimoku indicator cloud upwards. The dynamics of the company share price continues to find itself in a long-term upwards trend. The significant technical levels are: 101.09; 98.10; 96.06; 94.30; 91.72; 89.68; 86.69; 84.79; 82.07; 79.22; 75.82; 73.24; 70.93; 68.62; 65.50; 62.65; 58.29; 55.30.

This investment opportunity is provided by Alpari.

Alpari International Limited is part of the Alpari group of companies, a recognized global leader in Forex. Alpari has offices in all the major financial centers around the world, including London, New York, Tokyo, Shanghai and Frankfurt. Their monthly turnover exceeds 280 billion USD.

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