Mondee: Upcoming Key Participant In The Journey Expertise Trade (NASDAQ:MOND)

Description

I consider Mondee Holdings, Inc. (NASDAQ:MOND) is value $9.43, representing ~24% upside from the date of writing (Oct 19, 2022). With a portfolio of leisure and journey manufacturers which are well-known all around the world, MOND is an organization that operates in journey know-how and {the marketplace}. The corporate stands out from the competitors because of its cutting-edge technological platform, which facilitates sooner transactions, is definitely accessible on cellular gadgets, and makes use of cutting-edge advertising and Fintech instruments.

Firm overview

MOND is a journey know-how firm and market with a portfolio of worldwide acknowledged leisure and company journey manufacturers. It offers state-of-the-art applied sciences, working methods, and providers seamlessly enabling journey transactions. These technology-led platforms can entry international journey stock and in depth negotiated journey content material. Mixed with MOND’s distribution community, these platforms create a contemporary journey market.

Assisted and affiliated client journey is ripe for disruption

Earlier than the COVID-19 pandemic, journey and tourism have been essentially the most important and fastest-growing international financial sectors. In accordance with MOND’s S-1, in 2019, these sectors represented roughly 10% of the worldwide GDP. International journey spending equaled $1.9 trillion, and the increment within the annual price was 6% previous to the coronavirus pandemic.

Assisted and Affiliated Shopper Journey contains stock bought to vacationers by associates and curators equivalent to journey brokers, TMCs, companies, name facilities, associations, and different membership organizations. With the assistance of third events, finish customers achieve entry to airline and lodge reservations, automotive reservations, and different lodging which have been configured for particular journey or expertise necessities and best-value costs. MOND studies that the Assisted and Affiliated Shopper Journey vertical accounted for $1 trillion in income in 2019. It focuses on this phase of the journey reserving market, which is proliferating. In accordance with MOND’s S-1 submitting, the worldwide journey market is anticipated to develop by 9% CAGR from 2021 to 2025, whereas in the identical interval, the journey company market is anticipated to develop by 11%.

Lots of the conventional stakeholders offering Assisted and Affiliated Shopper Journey are nonetheless depending on legacy distribution networks and archaic working methods and depend on standard reserving strategies, failing to align with fashionable customers’ reserving preferences and life-style necessities. They typically lack the transaction platforms and working methods with present client engagement applied sciences and transaction providers, thereby underserving the rising client cohorts.

I consider these stakeholders don’t fulfill important segments of the quickly rising gig financial system journey market, together with SMEs, thus creating important white house market alternatives. Within the Assisted and Affiliated Shopper Journey phase, MOND’s platforms provide full options and a contemporary market for each leisure and enterprise vacationers.

MOND’s journey ecosystem disrupts incumbent platforms by modernizing an trade nonetheless reliant on legacy technology infrastructure. The corporate’s know-how platform will increase the effectivity of transactions, offers nice cellular accessibility, and incorporates fashionable advertising and Fintech instruments. For instance, TripPro is the highest resolution for the gig financial system within the journey providers market. It provides gig employees the instruments they should construct a profitable work-from-anywhere journey enterprise or group.

MOND’s platform offers entry to a variety of content material and fares

MOND’s distribution community connects over 50,000 journey associates and brokers to over 500 airways and over a million lodge and various hospitality lodging. This distribution community permits it to broadly present segment-targeted vacationers’ entry to its International Content material Hub (GUB) stock. The user-friendly TripPro, Rocketrip, TripPlanet, and UnPub platforms are then used to assist vacationers in goal markets use GCH stock.

Administration intends to increase its in depth flight content material to distinguish itself from opponents by working with all airways that must fill planes rapidly because the COVID-19 pandemic wanes. Most airways lowered flights and capability to partially offset the numerous discount in passenger site visitors, speedy lower in load components, and steep enhance in losses. Because the journey market restoration progresses and these airways reopen their routes and re-establish capability, they’ll want extra assist to fill seats and enhance load components.

Apart from flight content material, lodge bookings are a latest addition to the MOND platform and presently account for lower than 10% of its bookings. Lodge bookings are an space the place MOND plans to focus its efforts, as the corporate will deal with constructing relationships with different accommodations and different various lodging suppliers. MOND believes its UnPub subscription-based product will attraction to hoteliers hoping to fill last-minute lodge stock. The corporate plans to make use of its energy in airfare content material to spice up lodge bookings by providing lodge bookings as an add-on or as a part of a bundle with largely air transactions.

MOND may even prioritize including new classes of journey content material, equivalent to cruises, dynamic packages, and leisure, organically and thru acquisitions. Journey associates provoke a majority of cruise bookings by offline channels and specialty distributors. It may leverage its sturdy relationships with journey associates and its place with rising gig employees worldwide to increase its cruise relationships and content material.

Sturdy distribution capabilities

MOND at present maintains a distribution community that features over 50,000 journey associates and brokers, company enterprise prospects, and companions with direct channels to vacationers. Administration plans to take the next actions to strengthen its worldwide journey distribution community:

1. The corporate plans to increase its presence globally to grow to be a number one working system for international journey lodging. As such, worldwide growth is a precedence in 2022 and shifting ahead.
2. MOND is increasing with TripPro’s new “Journey Options in a Field” providing, reworking gig employees into Twenty first-century journey suppliers. The corporate expects this new pool of gig employees to exponentially enhance the journey supplier market. These gig employees will depend on MOND’s platform to conduct this enterprise, strengthening the corporate’s aggressive benefit vis-à-vis legacy suppliers. I consider the brand new gig journey financial system may even encourage journey suppliers who wish to promote their journey content material by these new gig journey suppliers to make use of MOND’s market, which is able to strengthen its content material and distribution community.
3. Develop SME Journey Market Share. Historically, solely giant enterprises have had entry to worth pricing, higher service, and reporting. Nonetheless, with TripPlanet, MOND plans to offer this mannequin effectively to SMEs, nonprofits, and different membership organizations. TripPlanet already brings a deep set of journey advantages, and the corporate plans to develop this enterprise by focusing on extra small companies and non-business organizations. MOND plans so as to add much more providers, equivalent to new advantages for workers and members of those companies who wish to journey for enjoyable.

M&A to additional enhance development

The corporate has a robust monitor file of efficiently integrating and enhancing its acquired companies. MOND plans to maintain searching for strategic alternatives that may enhance its platforms, broaden and deepen its content material, and enhance its infrastructure for distributing its content material.

MOND plans to increase its dynamic packaging capabilities with even higher content material choices and is assessing acquisition candidates with this experience to reinforce these features on its platform. The corporate has recognized alternatives to extend its worldwide footprint by buying distributors, aggregators, and platforms primarily based in Europe and different international markets. Particularly, MOND regarded for tactics to increase its number of accommodations and different locations to remain, cruises, and excursions.

Valuation

I consider MOND is value USD $9.43 in FY23 representing a 24% upside from the date of writing.

This worth is derived from my mannequin primarily based on the next assumptions:

1. Income development will comply with administration’s FY22 and FY23 steering, which is supported by natural development and M&A.
2. I differ from the market and consider that NOTE deserves to commerce at a a lot increased a number of than right this moment after we evaluate it to different main gamers within the journey house, equivalent to Reserving (BKNG) and Expedia (EXPE). I consider MOND ought to commerce similarly to EXPE given the upper similarity within the enterprise mannequin. EXPE has traditionally traded at round 11x ahead EBITDA earlier than COVID occurred, and I count on MOND to ultimately commerce at related ranges when the world recovers fully from COVID.

Key Dangers

Competitors

The journey providers trade is aggressive. MOND’s opponents could have entry to important monetary assets, higher identify recognition, and well-established shopper bases of their goal buyer segments. This might make it tougher for MOND to draw new prospects. MOND competes for its personal share of the journey providers market in a number of market segments, with completely different enterprise fashions, know-how, and different expertise, and in several elements of the world. This may occasionally make it more durable for MOND to search out new prospects.

Repeated lockdowns will harm MOND

These authorities mandates have had a major damaging impression on the journey trade and lots of the journey suppliers on which our enterprise depends, in addition to on our workforce, operations, and shoppers. Journey restrictions imposed by the European and U.S. governments are starting to be lifted, however there may be nonetheless a substantial amount of uncertainty across the impression of the brand new variants of COVID-19. Considerations have additionally been raised about how properly present vaccines will work towards these new variants and when they are going to be distributed and given world wide.

Levered stability sheet

If COVID or one other main lockdown occurs once more, MOND might face liquidity points given its excessive debt ranges. MOND would possibly want to lift extra financing by fairness financing, which might dilute buyers.

Abstract

MOND is at present undervalued at its present share value as of this writing. MOND is a market and know-how provider for the tourism trade, and its shopper listing contains many well-known names. The corporate distinguishes itself from opponents with its cutting-edge technological platform, which permits for sooner transactions, is mobile-friendly, and employs cutting-edge advertising and Fintech applied sciences. I really feel that the present worth offers a wonderful alternative for buyers to earn reasonable returns over the subsequent 12 months.