Webjet Limited

1H18 cash flow to be negative: Webjet Limited’s (ASX: WEB) stock has risen 3.7% on December 20, 2017 with some positive sentiments building for the stock, while the company is on track to deliver $3 billion TTV and expects $80 million EBITDA for FY18. The company in FY17 had achieved TTV of $1.95 billion and EBITDA of $51.0 million for the continuing operations. FY18 EBITDA will include one-off JacTravel acquisition costs of $1.2 million, the impact of $1.7 million Netflix tax (GST on inbound intangible supplies made by overseas supplier to Australian Consumers) in relation to Online Republic and additional $2.7 million costs associated with Thomas Cook. Moreover, the pro forma JacTravel EBITDA contribution for July and August 2017 is of $9 million. If WEB had owned the business from July 2017, then FY18 pro forma EBITDA guidance would have been $89 million. The acquisition of JacTravel in September 2017, along with impact of standard 1H seasonality for B2B business will result in a negative 1H18 cash flow.  However, it is expected that 2H18 cash flow will be positive. Additionally, WEB’s 3-year B2C growth target is that the bookings will grow more than 3 times the underlying market growth rate. Further, the 3-year B2B growth target is that the bookings will grow more than 5 times the underlying market growth rate in each market. Meanwhile, WEB is trading at slightly high levels, and we would review the stock at a later date for any buying opportunity.
 

Sydney Airport

Decent Sydney Airport Traffic Performance: Sydney Airport (ASX: SYD) in November has posted 7.1% growth in the international passengers and 3.1% growth in the domestic passengers compared with the prior corresponding period (pcp). The total number of passengers grew 4.5% compared with the prior corresponding period. The international segment grew due to a strong 4.6% increase in seat capacity and 1.7 percentage point increase in load factors. The domestic segment also grew due to a strong performance from both seat capacity and load factors. Moreover, Chinese, Indian, South Korean, American and German, which are SYD’s top five foreign growth nationalities, have all contributed to strong growth, with a combined double-digit growth in visitation compared to November 2017. Additionally, in December, SYD has welcomed China Airlines’ new A350-900 double daily product from Taipei. The new product is expected to add approximately 200,000 seats annually and boost an estimated additional $48 million in annual visitor expenditure for NSW. Further, in December, SYD has welcomed the commencement of Qantas’ new direct Sydney-Osaka service, which is a new route for the airport. The three-weekly service will operate on an Airbus A330 aircraft, and will add 92,000 seats annually. Despite the update, the stock edged lower on December 20, 2017, and still trades at a very high level looking “Expensive” at the current price of $7.38
 

Sydney Airport Traffic Performance November 2017 (Source: Company Reports)

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