In today’s daily we have covered stock research on WEBJET (Expensive). 










The S&P 500 was down by0.12points or0.01%on Friday and closed at 1955.06. The S&P 500 finished nearly flat on Friday after recovering from an earlier selloff prompted by reports of Ukraine shelling a Russian armoured column. Nordstrom which said it expects its all-stock acquisition of men's clothing company Trunk Club to reduce earnings for the next several years, was the top percentage decliner in the S&P 500.

Fresh concerns over the strength of the Eurozone economy dominated the last week. This week will also provide investors a chance to scrutinize the latest thinking at the Federal Reserve when minutes of its July 29-30 meeting are released on Wednesday. Wayfair which sells furniture and home furnishings online has filed for an initial public offering in New York. A batch of recent disappointing economic data from the US and China alongside dovish comments from Bank of England governor Mark Carney have caused investors to push back the timing   of when they expect interest rates to rise in the US and UK.




Nordstrom Daily Chart (Source – Thomson Reuters)

S&P ASX 200was up by 18.0points or 0.32 %on Friday and closed at 5566.5 points. S&P/ASX 200 surged 131.3 points, or 2.4 per cent, to 5566.5 last week. ANZ delivered a quarterly update on Friday, reporting an 8 per cent rise in cash earnings to $5.2 billion in the first nine months of its financial year. Goodman Fielder reported a heavy loss of $405.1 million.

The price of iron ore was up 0.21 per cent at $US93.40 a metric tonne. Meridian energy announced a solid result for the year ended 30th June 2014 with results well ahead of the prospectus forecast reporting a net profit after tax of $229.8 million. Stockland has accepted the offer from Frasers Centrepoint Limited to acquire Stockland’s Australand securities for $4.48 per security. Among the top performers was Magellan financial. To read our latest report on Magellan Financial – Click Here

ANZ Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 




Stock of the Day – Webjet (WEB)

Webjet announced in July that it has entered into a binding Heads of Agreement to acquire the SunHotels Group. This acquisition will form an important an important cornerstone platform for the immediate extension of product sourcing and distribution opportunities underpinned by more than 6000 directly contracted hotels in the existing portfolio leveraged against a fully owned and scalable technology platform which has been operational for fiver years.


Growth in revenue margin (Source – Company Reports)
 
WEB expects to retain existing SunHotels management and more or less maintain the current operating model and technology platform therefore the key rationale is leveraging SunHotels hotel inventory in our view adding a cornerstone platform for extension of directly contracted hotel inventory available for Lots of Hotels, their business to business international hotel aggregation platform distribution. 







Growth in EPS (Source – Company Reports)

Some of the key risks associated with WEB are 1) The risk of site leakage. 2) Pressure eon fees as competition for online booking intensifies 3) Upside risks to marketing spend as top line growth begins to slow. Broader macro risks for a travel company include 1) the impact of extraneous shocks such as terrorism or SARS on people’s decision to travel and 2) The outlook for Australian economy.







WEB Daily Chart (Source – Thomson Reuters)
WEB’s execution on growth initiatives has been mixed. Current management delivered strong improvement in organic performance after it took control, plus traction in Lots of Hotels. Yet Zuji has so far disappointed on earnings delivery. In our view the whole sale growth profile is the biggest debate for WEB. Over the next 12 months we continue to see less favorable domestic air market conditions compared tor FY12 -13 which will pressure WEB’s core Australian air revenue (volume based booking fees). We believe the stock is expensive at its current price and would review the stock at a later date.

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