SeaLink Travel Group Limited (ASX: SLK) had 2018 as a key year of investment and sales have also been on an uptrend. SLK acquired 100% of the Queensland based resort, tourism and marine business formed owned by Cosmos in March 2018. This acquisition will expand SLK’s geographical base as well as lead to creation of the opportunities for further expansion. The group is also making investment in technology for enhancing online sales. With key catalysts in place, the group is expected to improve its FY19 NPAT result.

Higher fuel costs due to higher world oil prices had a negative effect on the result: SLK posted 17.8% fall in the statutory net profit after tax up to $19.6m in FY18 from $23.8m in FY17. Lower profits were primarily associated with the one-off start-up costs of the two new ferry services of $0.3m and the one-off acquisitions expenses of $2m relating to the Fraser Island business. 5.9% fall in underlying EBITDA for the period ended on June 30, 2018 was recorded at $46.5 million. Company has maintained its final dividend at 8.0 cents per share this financial year. Contribution from the Fraser Island business was an EBIT loss of $1.0m for the three months since acquisition.

New acquisitions and Services under long term strategy:SLK continues to pursue its long-term strategy of growth by new acquisitions and seeking new opportunities to grow the business with new routes and services. Focus is on providing new services and routes in Sydney, Darwin and South east Queensland. Company is exploring new organic tourism growth opportunities across other markets.

Assuming average seasonal and current business conditions to remain consistent, the group expects that new acquisitions will improve the overall position of the Company.

Technically,the scrip has retraced the September month’s bearish trend, forming higher high with rejection on the downside and trading near the high made during the September month indicates for further upside potential. Relative strength index (RSI) and Moving average convergence and divergence indicator (MACD) consolidating in positive territory indicate that scrip might show slight dip if it fails to breach the levels of $4.32 made during the September month. At current juncture the scrip looks good to hold and watch the key levels to cross.

The market cap of SLK was recorded at $435.29m, with P/E of 22.28x as on November 06, 2018. At current juncture, the scrip is trading at the price levels of $4.22. New acquisitions under the long-term strategy along with lower profits on account of oil prices and rejection towards the downside, as per technical charts, exhibits a “Hold” scenario at the current price levels of $4.22.
 

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