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Webjet (ASX:WEB) FY19 Report – Will The Share Price Soar?

The Webjet Limited (ASX: WEB) share price will be under watch this morning after handing in its FY19 result.

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 What Webjet Reported In FY19

The travel business reported that its total transaction value (TTV) increased by 27% to $3.8 billion, helping revenue grow by 26% to $366.4 million.

Webjet’s EBITDA (click here to learn what EBITDA means) rose by an impressive 43% to $124.6 million. After the acquisitions of JacTravel and Destinations of the World (DOTW), WebBeds is now the largest business across bookings, TTV and EBITDA. WebBeds TTV was up 59% to $2.2 billion, and EBITDA was up 148% to $67.3 million. WebBeds organic EBITDA growth was 30%.

DOTW was integrated into the WebBeds regional structure in six weeks, ahead of schedule, bringing forward the cost synergies ahead of plan.

In a sign of Webjet’s growing operational leverage due to its online business model, the EBITDA profit margin increased by 3.98% to 34%.

Statutory profit rose by 45% to $60.3 million and statutory profit/earnings per share rose by 30% to 47 cents. According to CommSec and Bloomberg, the market was estimating net profit would be $60.3 million, so the estimate was spot on.

Webjet Dividend

The Webjet Board decided to increase the dividend full year dividend by 10% to 22 cents per share after the impressive year, with the final dividend being 13.5 cents per share.

Webjet Management Comments

Discussing WebBeds, Webjet Managing Director John Guscic said: “We continue to see significant opportunities for profitable growth across all regions. We are the #2 global player and yet still have less than 4% market share of the global B2B hotels market. As well as driving organic growth, we remain on the lookout for attractive acquisition opportunities to supplement our existing businesses.

As we continue to gain scale in all markets, by FY22 we believe we can deliver an “8/4/4″ profitability target in the WebBeds business – 8% revenue/TTV and 4% costs/TTV to deliver 4% EBITDA/TTV. This equates to a 50% EBITDA margin target. We expect costs to continue to grow at a lower rate than revenue driven by the optimisation of technology platforms and the ongoing impact of Rezchain, our industry leading blockchain solution.”

Is The Webjet Share Price A Buy?

The travel company said the first six weeks have shown a strong start to FY20. Management seem very confident of continuing strong growth.

Based on the report just released, it’s valued at under 30 times earnings with more growth ahead. With how expensive other growth shares on the ASX are, I think Webjet could be a candidate to beat the market’s returns over the next three to four years, particularly with its global growth ambitions.

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