Webjet Limited

Decent TTV Growth in 1HFY19: Webjet Limited (ASX: WEB) is a leader in an online travel agency, with its operations in Australia and New Zealand.

The company recently, announced that the voluntary escrow restrictions on 1,059,681 ordinary shares which were issued in part consideration for the acquisition of DOTW Limited, will be lifted on21 May 2019.


1H FY19 Performance Highlights (Source: Company Reports)

Webjet delivered a record 1H FY19 performance with a 42% increase in EBITDA to $58.0 million. The revenue of the company grew by 33% to $175.3 million driven by which the underlying net profit after tax (NPAT) was up by 55% to $31.0 million before acquisition & amortization.

The Total Transactional Value (TTV) for the half increased by 29%, representing a 2% increase in B2C and a 65% increase in B2B. B2B growth for the half incorporated 6 months of Jac Travel compared to 4 months in the Prior Corresponding Period (PCP).Adjusting for impact of acquisitions, organic growth was 21% despite softness in the bookings due to the hot European summer.

Reduced FX volatility: Going forward, the revised hedging policy is expected to reduce FX volatility and the company expects minimal FX movements for 2H19. Also, the corporate costs going forward, is expected to be approximately $15 million in FY 2019. This includes option costs, D&O insurance and other costs associated with supporting a growing global business.

On the price performance front, the stock has delivered a return of 58.64% on YTD basis. The strong performance of business in the first half, along with the decent increase in margins over the prior corresponding period, Webjet is poised for a robust growth, going forward. Moreover, with the expectation of reduction in FX volatility which is a significant factor, we believe the risks and uncertainties are likely to moderate in the coming future. Hence, considering the above-mentioned facts, we recommend a “Buy” on the stock at the current market price of $15.50 (down ~7.738% on 20 May 2019 while its peer in airport space, Sydney Airport touched upon capacity management that impacted domestic passenger numbers).
 

Nearmap Limited

Strong Organic Growth in 1HFY19 Top-line: Nearmap Limited (ASX: NEA) is a small-cap technology company with the market capitalization of $1.7 Bn as on May 20, 2019. It has laid the platform for frequently updated and high-resolution aerial imagery. The company caters to several industries including engineering, rail, construction, etc.

The performance of the company in 1H FY19 was in-line with expectations and witnessed strong growth key metrics with the Group Portfolio Lifetime Value (LTV) exceeding $1Bn. The company is well positioned for future growth on the back of scaling for global opportunities, product enhancements, capture technology and machine learning research.


1HFY19 Key Metrics (Source: Company Reports)

On the financial performance front, the Group ACV (Annualised Contract Value) portfolio increased to $78.3 million, recording a growth of 42% (Y-o-Y) post exchange rates adjustments. The growth was primarily driven by a strong rise in subscribers and the average subscription value. Revenue grew by 45% to $35.5 million in 1HFY19 over the prior corresponding period. The net loss stood at ~$1.97 million in 1H FY19, showing an improvement of 70% against the loss of $6.50 in 1H FY18, primarily due to a significant rise in revenue during the same period. The Group STCR (Sales Team Contribution Ratio) increased to 117% in 1H FY19 as compared to 114% in FY18 on the back of strong customer acquisition and expansion metrics in both ANZ and the US.

The balance sheet of the company remained strong without any debts other than corporate credit card facilities. The positive outlook for the business is enhanced by the recent capital raise, enabling Nearmap to accelerate its strategic objectives in pursuit of the considerable global market opportunity. The current ratio stood at 1.98x in 1H F19increasing significantly as compared to 0.92x in 1H FY18 on the back of a substantial increase in cash, strengthening the liquidity position of the company.

Expectations In Second Half of FY19: In H2 FY19, the company will enhance its products, with a range of releases to be rolled out to increase the workflow utility and customer stickiness of the MapBrowser platform.Given the disciplined approach with respect to capital management, the company reaffirmed its cash flow break even guidance for FY 19 excluding the deployment of capital raise proceeds.

Stock Performance & Recommendation: The stock performed well with a YTD return of ~150.33%, and 60.92% return over the past three months. NEA is poised to expand its operations, supported by capital raising initiatives of the company. Global aerial imagery market is estimated at USD$7.4 billion (in 2018), growing to USD$10.1 billion in 2020. With the growing aerial imagery market and NEA’s unique business model, we are of the view that the company will be able to capitalize on several growth opportunities. With the significant improvement in key financial metrics in 1HFY19, the company is expected to continue its momentum in the second half of FY19. Hence, we recommend a “Hold” rating on the stock at the current market of $3.610 per share (down 5.74% on 20 May 2019).   
 

Comparative Price Chart (Source: Thomson Reuters) 

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