The Webjet Limited (ASX: WEB) share price has flown 28% higher in early trade in response to its half year report to December 2018.
Webjet is a digital travel business spanning both global consumer markets (‘B2C’) and wholesale markets (‘B2B’). It was established in 1998 and now claims to be the leading online travel agency (OTA) in Australia and New Zealand. Webjet says it was the world’s first to use ‘Travel Services Aggregator’ technology and is now leading the industry in blockchain innovation.
Here’s Why Webjet Shares Are 28% Higher
Webjet reported that it grew revenue by 33% to $175.3 million, supported by 29% growth of total transaction value (TTV) to $1.87 billion.
Total EBITDA grew by 30% to $51.8 million (click here to learn what EBITDA means), the company said that including the DOTW acquisition but excluding one-offs the EBITDA margin improved by 201 basis points, or 2.01%, to 33.1%.
The travel company said that this result saw WebBeds emerge as the company’s largest business unit as measured by EBITDA with its EBITDA more than doubling, it is now the market leader in Africa and the Middle East. On a like for like basis, excluding acquisitions, WebBed EBITDA grew by 24%.
Webjet said there was growth in the key European and Middle East markets. According to management, the DOTW integration is tracking ahead of plan.
Webjet’s net profit grew by 37% to $25.2 million and earnings per share (EPS) went up by 26% to 20.7 cents.
Webjet also said that its underlying cash conversion was 95%, reflecting improved working capital management.
Webjet declared an interim fully franked dividend of 8.5 cents per share, which represents growth of 6.25% compared to the dividend payment a year ago.
Webjet Management Comments
Webjet Managing Director John Guscic said: “This was another outstanding result for our business…Following the acquisitions of JacTravel and more recently DOTW, our increased global size and sacle means we have been able to shift our focus from growing market share to pursuing more profitable growth.”
Is Webjet a buy?
Investors certainly thought so with the share price 28% higher! Webjet said it is on-track to generate EBITDA of at least $120 million excluding one-offs.
This was clearly a great result by the travel business and suggests there could be more profit growth to come, particularly with profit margin improvement.
I think Webjet could continue to be a solid performer for a while and is an attractive growth share (as I mentioned here). But, one worry I have is how defensive its earnings actually are in a global downturn. That’s why the shares in the free report below could be better choices with their proven long term growth.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).