Tourism Holdings Limited

The Business

THL is the world's largest commercial RV rental operator, holding roughly 50% market share across New Zealand and Australia. Its brands span the price spectrum from premium (Maui) to budget (Hippie), while its Action Manufacturing arm builds vehicles that flow into the rental fleet before being sold ex-fleet once they've earned a rental return. This build-rent-sell loop is what differentiates THL from pure rental peers like Hertz or Avis, and from pure manufacturers like THOR Industries. Rental services now generate 61% of group revenue, with vehicle sales making up the remaining 39%.

Recent Performance

FY26 net profit rose to NZ$46.1 million, a sharp improvement off a weak FY25 base. That headline number masks a stark divergence: rental revenue grew 11% as booking activity recovered, while vehicle sales collapsed 22% as high interest rates froze RV purchases across every market THL operates in. The stock now trades against the backdrop of two live, unconfirmed takeover approaches, at NZ$3.10 and NZ$3.30-$3.40 respectively, neither of which the Board has yet recommended.

Outlook

Revenue growth is expected to resume across the forecast period, accelerating as the vehicle sales segment recovers off its depressed base before settling into a more moderate pace over the following year. The offsetting force is margin: EBITDA margin is expected to compress by roughly 200 basis points from its current elevated level, as the recovering but lower-margin goods mix dilutes the currently rental-heavy earnings base. This is a structural dynamic rather than a one-off, tied directly to the mix shift between rental and vehicle-sales revenue, and it means net profit is expected to stay broadly flat through the period. Per-share value creation over the next few years therefore depends more on the dividend than on earnings growth.

Key Risks

THL's US operations earn a return on funds employed well below both the group average and its cost of capital, a persistent drag that management has not yet resolved with a clear exit or turnaround plan, despite having shown with the UK divestment that it is willing to walk away from underperforming geographies. Fleet reinvestment also absorbs the large majority of gross operating cash flow each year, which keeps free cash flow conversion thin relative to reported EBITDA and limits the pace at which debt can be reduced or the dividend grown. The most immediate risk, however, is event-driven: neither of the two live takeover approaches has received a Board recommendation, and if both ultimately fail, the acquisition premium currently embedded in the share price would likely unwind.

What to Watch

• Oct-Nov 2026 Takeover bid outcome — the thesis-defining event; whether either approach converts into a binding offer, and at what price, over the next two to three months.
• Feb 2027 H1 FY27 results — will confirm whether the booking recovery and margin compression are tracking expectations.
• 6-18 months RBA/RBNZ rate decisions — a cut would ease the RV affordability squeeze and support the goods recovery.

Latest Developments

Two takeover approaches remain in due diligence with no Board recommendation to date. This is the single most important open question for the stock: whether either bid converts into a binding offer, and at what price, over the next two to three months.

Company Description

THL operates across three connected activities. Rental services, roughly 61% of group revenue, run through multi-brand fleets in New Zealand, Australia and the United States, spanning premium (Maui), mid-market (Britz) and budget (Mighty, Hippie) segments. Vehicle manufacturing and sales, the remaining 39%, is centred on Action Manufacturing in New Zealand, which builds vehicles both for THL's own fleet and for external dealer sale, alongside ex-fleet vehicle sales once units have completed their rental life. The company exited its UK operations in FY26 for NZ$57 million, simplifying the portfolio to focus on its strongest markets.

Where the Growth Is

ANZ rental services is the engine. THL holds roughly 50% market share in this segment, which is growing 4-8% a year as fleet expansion runs at 2-5% annually and per-vehicle rental yields improve. A recovery in the broader RV rental cycle, combined with continued yield gains, represents the single largest identifiable upside lever in the business, though the pace and durability of that recovery remain tied to how quickly interest rates ease across THL's key markets.

Competitive Position

The build-rent-sell model is THL's core advantage: it earns a margin when it manufactures a vehicle, again when it rents that vehicle, and a third time when it sells the vehicle ex-fleet, typically above book value. This structure delivers a 500-800 basis point EBITDA margin premium over pure rental operators like Hertz or Avis, and the market has historically been willing to pay more for THL's hybrid earnings stream than for a comparable pure-rental business. Its ~50% ANZ share has held stable through the merger with Apollo, and no competitor operates a fleet within three times its scale in that market. We see this position as durable for roughly 5-7 years, with the main long-term threat coming from peer-to-peer RV sharing platforms that remain a minor presence today but could erode pricing power over time.

Management & Capital Discipline

Management has executed cleanly on operational restructuring: the UK exit, closure of the Brisbane manufacturing facility, and dealership rationalisation were all delivered as planned in FY26. What hasn't followed the same discipline is the US business, which continues to earn near-zero returns without a clear exit timeline, despite the UK precedent showing management is willing to walk away from underperforming geographies. A separate credibility issue: the company's long-stated NZ$100 million net profit aspiration has been pushed back three times, and current trajectory doesn't reach that level within the next three years.

Financial Position

THL's financial health is adequate rather than strong. Free cash flow conversion runs near 23% of EBITDA, reflecting heavy annual fleet reinvestment, which limits the pace of debt reduction and dividend growth. The offsetting factor is asset quality: fleet vehicles typically sell for more than their book value on exit, providing a liquidation buffer most asset-heavy businesses lack. The balance sheet can absorb a moderate downturn, but has limited room to fund an aggressive US restructuring without additional capital.