Webjet Limited and Ainsworth Game Technology – Will these be the superstars of tomorrow as well?
Sep 22, 2015 | Team Kalkine
Webjet Limited
Outstanding transactional value Performance:
Webjet Limited (ASX: WEB) delivered an outstanding overall transactional value (TTV) which rose by 31% year over year (yoy) to $1.26 billion for the fiscal year of 2015. Webjet improved its Bookings by 17% yoy. Particularly, the domestic bookings and international bookings rose by 17% and 35% respectively. The group’s international transactions accounted 34% of overall TTV and 12% of bookings. Zuji’s business delivered a better performance during the second half, post the pressure during the first half. Accordingly, the revenue improved by 21% yoy (i.e., $20.5 million increase), while underlying EBITDA (adjusted for $1.4 million gain on sale in Webjet Marketing USA, $1.1 million costs related to SunHotels acquisitions and $1.9 million impact on SunHotels due to fx) surged 41% yoy to $30.9 million driven by core as well as B2B division via Lots of Hotels as well as SunHotels. However, the higher effective tax rate of 24.5% in FY15 (as compared to 9.3% in FY14) posed pressure on profit after tax which fell by 8.5% yoy during the period.
Clear online travel agency market leader (Source: Company Reports)
Stock Performance:
The shares of Webjet Limited rallied over 35.2% over the last three months as well as delivered a year to date returns of 44.4% (as of Sep 11), despite the broader index S&P/ASX 200 pressure over the last few months. The group continues to be the number one online travel agency brand in Australia. WEB is also pursuing growth opportunities in the B2B division and is planning to invest further $3 million in the existing B2B business during FY16, to develop new Lots of Hotels US operations and enhance directly contracted inventory offering inside the SunHotels business. The group also continued to deliver solid TTV growth, wherein SunHotels delivered experienced TTV growth > 10% against prior corresponding period during July and August 2016 year to date. For B2C, Webjet TTV is growing at more than 15%, while the Zuji TTV is growing at more than 20%. For B2B, Lots of Hotels TTV is showing strong growth and has already delivered more than 80% in July and August 2016 year to date. Management is also pursuing acquisition opportunities to expand its Asia and America regions. WEB also has a decent annual dividend yield of 3.2%. We remain bullish on the stock despite its strong rally this year, given its positive outlook and accordingly recommend a “BUY” on Webjet at the current price of $4.21.
WEB Daily Chart (Source: Thomson Reuters)
Ainsworth Game Technology Limited
New Product launches coupled with core business momentum to drive growth:
Ainsworth Game Technology Limited (ASX: AGI) reported a 14% yoy rise in audited profit after tax of $70.4 million for the fiscal year of 2015, despite 1% yoy decline in revenues (to $240.6 million). This increase was partly driven by the positive foreign currency gains of $25.6 million ($17.9 million after tax) during the period on the back of falling Australian dollar. But overall revenues were impacted by the declining domestic business due to mounting competition and shifting customer purchasing patterns. On the other hand, the group’s international revenues surged 46% yoy to $147.6 million, and accordingly improved the segment’s share in overall revenues to 61% in FY15 from 41% in FY14. North America’s growing market share coupled with new markets contribution led to 42% yoy revenue rise to $82.8 million during the period. Moreover, AGI’s machines within the Americas on participation, rental and/or lease rose by 32% to 2,627 machines during FY15 against prior corresponding period. A560SL release with game brands like Sweet Zone and Whopper Reels performed better than expected. Accordingly, AGI delivered an earnings per share (EPS) increase by 16% yoy to 22 cents per share during the period. The group reported a final dividend of $0.05 per ordinary share, leading to the full year dividends of $0.10 per ordinary share. The Company has been able to secure new gaming licenses (such as licenses across Oklahoma and West Cape) and tribal licenses (such as licenses across Kansas and Oregon) based on few commercial opportunities.
Growing international performance (Source: Company Reports)
Stock Performance:
AGI management commented that its product launches like A600™ coupled with strong organic sales would drive its profits in next fiscal year. The group estimates ongoing growth from Americas region in the coming periods while the group’s new facility opening in 2016 at Las Vegas might also offer support in future. AGI estimates that its August release A600™ would drive its domestic business during FY16. The group’s shares generated a year to date returns of around 17.3% this year (as of Sep 21), despite broader index S&P/ASX 200 pressure. The stock is also trading at a relatively cheaper P/E of 12.5x, and has a decent dividend yield of 3.6%. We maintain our positive stance on the stock and reiterate our “BUY” recommendation on AGI at the current stock price of $2.69.
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