Webjet Limited

WEB Details
· Better than expected guidance: Webjet Limited (ASX: WEB) stock surged over 4.6% on November 09, 2016 as the group reported a better than estimated guidance. The group reported that their B2C bookings momentum is outperforming the market by greater than four times driven by domestic as well as international bookings. B2B Bookings growth rates for Lots of Hotels as well as Sunhotels businesses surpassed more than 10 times as compared to their respective markets. Webjet is also boosting its capital position by selling their Zuji businesses in Hong Kong and Singapore to Reckon Holdings Limited and Sharp Focus Pacific Limited, which are Uriel Aviation Holding Limited’s, a Hong Kong based travel technology firm, subsidiaries. The group is raising over $56 million. Despite this, the group is strengthening their Asian presence via B2B hotels and launching a new start-up which would strengthen their B2B division, FIT Ruums this month. For fiscal year of 2017, the group expects EBITDA to be $78 million wherein $60 million EBITDA is from continuing businesses - Webjet, Online Republic, Lot of Hotels and Sunhotels (including the Thomas Cook alliance). The group will have $26 million as gain from Zuji sale. On the other hand, WEB stock rallied over 67.6% this year (as of November 08, 2016) placing them at a higher P/E.

· Recommendation: We give an “Expensive” recommendation at the current price of – $ 9.75

Aurizon Holdings Ltd

AZJ Details
· Higher valuations: Aurizon Holdings Ltd (ASX: AZJ) stock rose over 1.7% on November 09, 2016. The group recently reported September Quarter of 2016 rail volumes as expected. With regard to their coal division, the group expects 200?212mt for FY2017. During September Quarter of 2016, volumes fell 3% to 51.2mt against the same period of last year. However, the group won a long term agreement with AGL Macquarie starting from July 2017 till December 2025 for haulage to the Bayswater and Liddell Power Stations in the Hunter Valley, representing volumes of 8.7mtpa.  Aurizon even got a two year contract with Wollongong Coal in Southern NSW for haulage from the Wongawilli mine, with up to 0.8mtpa expiring August 2018. But, the September Quarter of 2016 volumes fell 0.9mt from same period of last year for Iron ore segment, impacted by declining volumes from a major customer, as expected. On the other hand, AZJ stock is trading at an unreasonable P/E while the stock fell over 7.2% (as of November 08, 2016) in the last three months. We believe the negative momentum in the stock would continue in the coming months.

· Recommendation: We give an “Expensive” recommendation on the stock at the current price of - $ 4.86



Aurizon Holdings  September quarter performance (Source: Company Reports)

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