Qantas Airways Limited

Customer Satisfaction, Demand Levels Aided QAN in FY 2018: The management of Qantas Airways Limited (ASX: QAN) reflected favourable views regarding the performance in FY 2018. According to them, the company’s fundamentals happen to be in a robust position. Additionally, the favourable momentum has also been witnessed from the demand point of view across the important markets. At the annual general meeting, the management also stated that company is still exposed to the robust competitive environment. The performance of the company would continue to be affected by the fluctuations or movement of prices of the fuel.

QAN’s Financials (Source: Company Reports)

The company ended FY 2018 with total net debt amounting to $4.9 billion while in FY 2017 the net debt stood at $5.2 billion. As per the company, the fall in the net debt on the YoY basis would help it in being financially flexible.

Decent Key Ratios to Support QAN: The important financial ratios of Qantas Airways Limited have been witnessing favourable momentum in FY 2018 on the YoY basis. In FY 2018, the company’s EBITDA margin stood at 19.2% representing a rise YoY, as in FY 2017 it was 18.3%. The company’s operating margin has also improved YoY - as in FY 2018 it stood at 9.2% while in FY 2017 it was 8.5%. Qantas Airways Limited also witnessed rise in the return on equity or ROE and ended FY 2018 with 26.2% while in FY 2017 it was 25.1%.

Transformation Focus Would Help QAN Moving Forward: In the press release focused towards the FY 2018 results, it was mentioned that Qantas Airways Limited might witness favourable momentum moving forward. The company’s focus towards transformation as well as robust momentum in the forward bookings would support QAN tackling the negative impacts which might come because of increased fuel costs. 

Stock Analysis: A technical indicator named moving average convergence divergence or MACD has been applied on the daily chart of Qantas Airways Limited and default values have been considered. As per the observation, the MACD line has crossed the signal line and is moving downwards. However, the crossover has just taken place.

The YoY improvement in the important financial ratios further supports the confidence in the company’s expected future performance. Additionally, the favourable momentum in the forward bookings as well as focus towards transformation might aid the company moving forward. Therefore, we maintain a “Buy” on QAN at the current market price of A$5.690 per share.  

Webjet Limited

Strong Financial Performance, Bookings Increase Supported WEB: In FY 2018, Webjet Limited (ASX: WEB) generated EBITDA amounting to $87.4 million which implies the substantial YoY growth of 71%. The company also witnessed favourable momentum in the total bookings as, in FY 2018, total booking witnessed the CAGR of 44% over the past four years.

WEB’s total and organic booking (Source: Company Reports)

In FY 2018, the company witnessed favourable momentum as the they have been increasing the footprints as well as serving more customers. The management of the company also stated that on the back of JacTravel acquisition as well as robust organic growth, the company’s WebBeds segment has witnessed favourable momentum. They also stated that in FY 2018, the company has maintained its focus towards the cash management.

WEB expects to witness growth in EBITDA in FY 2019: The company has given favourable outlook for FY 2019. It stated that it might achieve EBITDA (underlying) amounting to minimum A$110 million with respect to existing businesses in FY 2019. However, in same businesses, in FY 2018, the company generated EBITDA amounting to A$87.4 million. The management of the company stated favourable views for the B2B business and stated that there are numerous growth prospects moving ahead.

Stock Analysis: On the daily chart of Webjet Limited, Relative Strength Index or RSI has been applied and default values have been considered. As per the observation, the 14-day RSI is near its oversold region and soon a rebound may happen. As a result and given a high P/E ratio of about 32x, we have a wait and watch stance on the stock at the current market price of A$11.400 per share.
 
 

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