Webjet Limited

 
A tremendous rise in TTV: Webjet Limited (ASX: WEB) had lately disclosed about the appointment of Mr. Zi Mtenje as the Company Secretary of the Company as on the 24th of January 2019. Going forth for the FY19, the company will be focussing upon the growth opportunity in the Packages segment & also will concentrate on the continued improvement in the improve its ancillary offerings. The company is targeting bookings growth rates of more than five times the underlying market for B2B.


WEB’s financial highlights (Source: Company Reports)
 
For FY 2018, the company reported a surge in total transaction value from continuing operations, which is a key parameter for the aviation industry by 54% on the pcp and reached ~3 Bn. This was on account of the fact that the flights bookings continued to grow at more than three times the market. EBITDA saw a rise of 71% from FY17 to reach at $87.40 million in FY 18 depicting the increased scale in the Webjet OTA and improved profitability in WebBeds. On the financial metrics front, the company is having a cash conversion for the FY18 (OCF/EBITDA) @ 159% vis-à-vis 92% for FY17, depicting good quality earnings performance. Moreover, the stock has provided a decent ROE of 12.60% for FY18.
 
Meanwhile, the stock price has gained by 7.33% in the past one month as on 6 February 2019. Considering the tremendous rise in TTV, better quality earnings and decent ROE performance the stock is gaining traction from the market participants. However, we presume that at the current level, the price has discounted all the positive catalyst. Hence, we have watch stance on the stock at the current market price of $12.42 (Up 4.722% as on 7 February 2019).
 

CSL Limited

 Decent FY19 outlook: The CSL Limited (ASX: CSL) reported the successful completion of AFLURIA QIV program as well as it has gained Improvements in FLUCELVAX manufacturing output in FY18. The company expects that there would be continued demand for plasma and recombinant products. It expects the margin expansion to happen from the plasma product mix shift, speciality and recombinant products growth & conclusion of HELIXATE supply. The company expects ~30 to 35 centre openings in FY19. Moreover, the CAPEX is supposed to be in the range of ~$1.2 - $1.3 billion & R&D expense is expected to rise by ~$150 - $200 million for FY19.

CSL’s Financial Highlights (Source: Company Reports)
 
For FY 2018 the company registered operating revenue of US$ 7,717 million, up by 11% on a YoY basis in constant currency terms. This growth was predominantly derived from the Seasonal influenza vaccine sales in the US. On the financial metrics front, the company has reported EBITDA margins of 36.10% for the FY18 up from 29.70% reported in FY17. Also, the firm delivered a stellar ROE performance of 47.70% vis-a-vis the industry median of 13.40% for the industry.
 
Meanwhile, the stock price has risen by a marginal 0.97% in the past three months as on 6 February 2019. Thus, considering the improving product mix, robust EBITDA margins, higher than industry returns to shareholders, decent outlook for FY19, we advise to have a ‘wait and watch’ strategy on the stock at the current market price of $192.60 and wait for a few more trading sessions to get the better levels for entry.
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Baby Bunting Group Ltd
 

Strong FY 2019 guidance and prospects of gaining an enhanced market share: Baby Bunting Group Ltd. (ASX: BBN) has disclosed that it will release its results for the half-year ended 30 December 2018 on Friday, 15 February 2019. The firm released its FY2019 guidance stating that it expects EBITDA to be in the range of $25-27 Mn which would result in a growth of 34-45% on Y-O-Y basis. The gross margins are expected to rise by more than 34% in the FY2019. This guidance is heavily based on the assumption that the firm will be able to capture & capitalise on a large proportion of market share which is created by the exit of its competitors. For FY2018, the company’s total sales were $303.1 Mn exhibiting a growth of 9% on a YoY basis and a growth in the gross profits of 5.9%, stood at $100.9 Mn.
 
On the financial metrics front, the company is trading at a TTM EV/sales multiple of 0.80x while the leisure product industry median stood 1.1x. Thus, the company seems to be trading at attractive price juncture at these levels. Also, the company is utilising its assets much better than the industry to generate revenues for it, which evident from better than industry Asset turnover ratio of 2.17x as compared to the industry median of 1.14x.

BBN’s margin performance over the years (Source: Company Reports)
 
Meanwhile, the stock price has fallen by 3.20% over the past three months as on February 6, 2019 and is trading at the higher level. Hence, considering the strong FY 2019 guidance, prospects of gaining an enhanced market share due to the exit of its competitors, lower than industry EV/Sales multiple and better utilization of assets, we maintain our “Speculative Buy” recommendation on the stock at the current market price of $2.15 (up 1.415% on 7 February 2019).
 

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