Webjet Limited

WEB Details

WebBeds Becomes the Largest Business by EBITDA:Webjet Limited (ASX: WEB) is engaged in the online sale of travel products, including flights and hotel rooms.The company recently updated that the voting power of UBS Group AG has been reduced from 7.88% to 6.64%. As per another recent update, the voting power of Mitsubishi UFJ Financial Group, Inc. increased from 7.78% to 9.05%.

FY19 Financial Results- Key Highlights: During the year, the company generated revenue amounting to $366.4 million, up 26% on prior corresponding period. EBITDA for the year was reported at $124.6 million, posting a growth of 43% in comparison to the prior corresponding period. Net profit after tax was reported at $81.3 million, up 46% on previous year. Total transaction value for the period was reported at $3.8 billion, rising 27% on prior corresponding period. Statutory earnings per share were reported at 47.0 cents, increasing 30% on prior corresponding period.


Financial Highlights (Source: Company Reports)

FY20 Outlook: The company reported a strong start to FY20, with TTV for the period of 6 weeks to 12 August 2019. During the period, TTV for WebBeds increased by more than 50% over reported pcp. TTV for Webjet OTA went up by 9% and that for Online Republic went up by 4% on pcp. Guidance range for FY20 will be provided at the company’s AGM to be held on 20 November 2019. The company will continue to see significant opportunities for profitable growth in all markets for WebBeds. Webjet OTA is expected to see above market growth opportunities across both domestic and international flights. In addition, the company will focus on higher TTV margins and lower acquisition costs for Online Republic.

Stock Recommendation: The stock of the company generated negative returns of 0.40% and 14.18% over a period of 1 month and 3 months, respectively. EBITDA of the company more than doubled in 2 years, from $51.0 million in FY17 to $124.6 million in FY19. TTV and EBITDA margins for WebBeds continued to improve in all regions. The company successfully integrated DOTW (Destinations of the World) into WebBeds regional structure with cost synergies tracking ahead of plan. Full impact of cost synergies is expected to be seen in FY20. In addition, the WebBeds business is expected to deliver additional EBITDA of $27 million to $33 million in FY20. By FY22, the business is expected to deliver an EBITDA margin of 50%. Hence, considering the above-stated parameters, we give a “Buy” recommendation on the stock at the current market price of $12.550, down 0.318% on 09 September 2019.


               
WEB Daily Technical Chart (Source: Thomson Reuters)
 

Electro Optic Systems Holdings Limited
 

EOS Details

Space Sector to Turn Profitable Soon:Electro Optic Systems Holdings Limited (ASX: EOS) is engaged in the business of space and defence systems.

1H19 Highlights: During the six months ended 30 June 2019, the company reported an operating profit after tax amounting to $7.52 million, as compared to $5.34 million in the prior corresponding period. Revenue from ordinary activities amounted to $57.43 million in 1HFY19, as compared to $35.44 million in the prior corresponding period.


P&L Statement (Source: Company Reports)

EOS Defence Systems: Profit before income tax for the segment, was reported at $10.9 million, representing an EBIT of $10.6 million. The result improved in comparison to pcp on the back of increased efficiency as plant utilisation in the Australian plant at Hume, ACT moved past 60% of full capacity.

EOS Space Systems: The company reported a loss of $1.2 million for the segment, consistent with prior expectations. During the period, the investment in research through the Commonwealth’s Cooperative Research Centre for Space Environment Management exceeded $2 million.

Forecast: EBIT for the full year to 31 December 2019 is expected to be around $20 million and that for the year ended 31 December 2020 is expected to be $28 million. Contract awards for both the business sectors in 2020 and 2021 individually, are expected to be over $1.2 billion.

Outlook: With 1H19 EBIT results consistent with expectations, the company expects a stronger second half for EOS Defence Systems. The company is looking forward for expansion through commencement of production in new plants in 2020. To upgrade its capabilities, resources and infrastructure in financial systems, engineering software, cost control and configuration management, the company is expected to achieve scale through new processes. With respect to EOS Space, the company expects to announce a major technical development in Q32019. The segment which was earlier expected to transition from loss to profit in Q42019 and be profitable on an annual basis from 2020, is now expected to be profitable for the full year ending 31 December 2019.

Stock Recommendation: The stock of the company generated a return of 86.24% over a period of 1 year and is currently priced close to its 52-week high level of $5.900. In 1H19, the company significantly increased outlays in marketing, product development and production capacity in the defence segment. In addition, the space segment reported a loss which is expected to turn into profits in the second half. Based on the high returns on stock and the current trading levels, we have a watch view on the stock at the current market price of $6.000, up 8.108% on 09 September 2019 and suggest that investor should wait for better entry levels.

 
EOS Daily Technical Chart (Source: Thomson Reuters)
 

Dicker Data Limited
 

DDR Details

Strong Growth Across all Business Units:Dicker Data Limited (ASX: DDR) is engaged in the wholesale distribution of computer hardware, software and related products. The company recently updated that Fiona Brown acquired a total of 1,129 shares for a consideration of $5.9604 per share. In addition, Mary Stojcevski acquired 1,701 fully paid ordinary shares for the consideration of $5.9604 per share.

Dividend: On 02 September 2019, the company distributed a dividend of AUD 0.0500 per ordinary share amongst the shareholders.

1H19 Performance Highlights: During the six months ended 30 June 2019, the company reported revenue from ordinary activities amounting to $852.01 million, up 18.7% in comparison to $717.56 million in prior corresponding period. Net profit for the period stood at $23.78 million, increasing 50.5% on prior corresponding period net profit of $15.8 million. During the period, the company’s net cash from operating activities was reported at $15.7 million, as compared to an outflow of $10.2 million in prior corresponding period.


Financial Summary (Source: Company Reports)

The company added a total of 10 new vendors in 2018 and 1H19, that contributed an incremental revenue of $18.8 million in 1H19. Sales in Australia and New Zealand witnessed a growth of 17.8% and 36.1%, respectively.

Outlook: In 2H19, key growth areas will revolve around the increasing demand for As-a-Service procurement, hybrid IT infrastructure and Edge computing. In the next 12 months, the company expects to see decent growth in its device and PC sales. As per the guidance provided, pre-tax operating profit for FY19 is expected to be $51.4 million.

Stock Recommendation: Over a period of 1 year, the stock of the company generated an excellent return of 125.32% and is currently trading close to its 52-week high level of $7.850. During the first half, the company maintained strong growth across all business units. In addition, the company continued to add new vendors to its platform and increased the breadth of products offered by existing vendors. The company has an EV/EBITDA multiple of 18.4x, which is higher than the industry median of 4.9x. Considering the high returns on stock and valuation, we are of the view that majority of the positive factors have been discounted at the current market price. Hence, we give an “Expensive” recommendation on the stock at the current market price of $7.250, up 3.129% on 09 September 2019.

 
DDR Daily Technical Chart (Source: Thomson Reuters)

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