SeaLink Travel Group Ltd (ASX: SLK)

SLK Details

Growth driven by Tourism business: For full year FY17, SeaLink recorded sales of $201.4 million, representing a 13.5% growth over $177.5 million sales of FY16 driven by business acquisitions and strong growth in tourism businesses. Growth in Captain Cook Cruises New South Wales and SeaLink South Australia operations supported the result and SLK reported for Net Profit After Tax (NPAT) of $23.8 million, indicative of a growth of 6.6% on the previous year figure of $22.3 million. SLK’s underlying EBITDA surged 12.1% to a record $49.4 million while underlying EBIT was up 6.3% to a record $37.5 million in 2017 from $35.3 million of last year. Performance of the South-East Queensland (SEQ) and Gladstone business unit also met expectations.
 

International Tourism at year ending March 2017 (Source: Company Reports)

At the back of the result, the group enhanced its fully franked final dividend to 8.0 cents per share, up 6.7% on 2016 final dividend. SLK is also expanding operations for Captain Cook Cruises in WA by introducing services to Rottnest Island, starting November 2017. Further, the group is expanding operations on Sydney Harbour at the back of the permission granted by NSW State Government to start operation of the Barangaroo Fast Ferry. New services and business operations are expected to add to the growth prospects driven by boom in the tourism industry. We give a “Hold” on the stock at the current price of $ 4.05


SLK Daily Chart (Source: Thomson Reuters) 

Webjet Limited (ASX: WEB)

WEB Details

Rise in final dividend at the back of record result: For the full year ending June 2017, Webjet reported 146% growth in net profit after tax (NPAT) while NPAT from continuing operations grew 58%. The group got a boost from the ongoing growth of the Webjet online travel ‘OTA’ business wherein flight bookings were seen to be growing at more than 6 times the underlying market. Webjet bookings were up 11.4% to 1.40 million and TTV was up 15.3% to $1.14 billion. There was a 25% EBITDA improvement during the year owing to the integration of Online Republic. Bookings were up 28% to 446,000 and TTV was up 22% to $267 million for Online Republic. WEB also gained about $28.0 million on the sale of Zuji while bringing the focus to B2B opportunities in the Asian market. On the acquisition front, the group announced about acquiring JacTravel Group (Holdings) Limited that has been expected to make WebBeds the #2 player in the global B2B market and the #2 player in the important European market. Webjet has now completed the acquisition of JacTravel.

Financial Result (Source: Company Reports)
 
Strong growth was also reported for the Sunhotels business wherein bookings were up 22.5% compared to estimated market growth of around 3%. It is further expected that Sunhotels will get a percentage of TTV sold and this will offer significant revenue and EBITDA potential from FY20 onwards. Another highlight is that WEB reported a net increase in cash position of $61.9 million during FY17 against the increase of $40 million in FY16. WEB has enhanced its final dividend by 25% to 10 cents due to the strong improvement in core earnings in FY17. The stock has surged over 13.5% this year to date (as at August 31, 2017) and is trading at slightly high levels. We give an “Expensive” recommendation at the current price of $ 11.79


WEB Daily Chart (Source: Thomson Reuters)

Flight Centre Travel Group Ltd

FLT Details

Footprint expansion in New Zealand: Flight Centre lately expanded its presence in New Zealand with the completion of acquisitions of Travel Managers Group and Executive Travel Group that were announced in July 2017. FLT earlier revealed about its business transformation program that the group introduced in second half of FY17 for fast-tracking revenue growth, delivering new efficiencies and managing costs globally. Over the next three to five years, benefits are expected from this plan. These include 7% average total transaction value (TTV) growth per annum in constant currency over the next three years and stronger returns from FLT’s existing network. Further, a return to a 2% net margin - profit before tax (PBT) as a percentage of TTV is expected within three to five years. In its audited FY17 results, the group achieved a $329.5 million of underlying profit before tax (PBT) which excluded the one-off $4.1 million loss incurred on exiting the Employment Office investment during first half of the year. The statutory PBT was 5.7% lower than that of FY16. On the other hand, the group reported a 10.5% rise in international ticket sales in Australia during FY17 that was better than the 4.1% outbound travel growth rate. FLT’s US corporate TTV reached $US 1 billion for the first time. The South Africa business, which expanded into Namibia, also outperformed the FY16 results. However, reduced profit contribution came in from the UAE business. FLT has already started FY18 with a strong momentum and aims to hold underlying cost growth below $100 million in FY18. Given the above, FLT is expected to witness further momentum and has already surged about 70% in last six months (as at August 31, 2017).We maintain a “Hold” at the current price of $ 48.33


FLT Daily Chart (Source: Thomson Reuters)

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