The Webjet Limited (ASX: WEB) share price is under the spotlight after the ASX travel share revealed a big recovery in the first six months of FY23.
Webjet has just reported its result for the six months to 30 September.
HY23 result
Here are some of the highlights from the report:
- Number of bookings rose 137% year on year to 3.4 million (101% of pre-pandemic levels)
- Total transaction value (TTV) rose 223% to $2.1 billion (90% of pre-pandemic levels)
- Revenue rose 217% to $175.7 million (77% of pre-pandemic levels)
- Underlying EBITDA (EBITDA explained) rose 69% to $72.5 million
- Underlying net profit of $32 million (compared to a $29.2 million loss in HY22)
- Statutory net profit of $4 million (compared to a $60 million loss in HY22)
Generating a bottom line net profit has returned, while revenue is rapidly recovering to pre-pandemic levels. These are really good signs for the long-term of the business and the Webjet share price.
One of the main things to note is that Webjet’s cost base is “16% lower” than pre-pandemic levels. In other words, it’s coming out of COVID-19 as a more efficient and profitable business – once it’s back to 100% of pre-pandemic revenue, it could make a lot more money.
WebBeds managed to achieve an EBITDA margin of more than 55%, ahead of pre-COVID times. WebBeds is “on track to exceed pre-pandemic profitability for FY23.” The Webjet online travel agent market share of flights is up 57% since the pandemic began.
With its return to cash flow generation – it made $168 million of cash from operations – it has repaid $86 million of term debt and returned to normal debt (covenant) testing six months ahead of schedule. However, no dividend was declared.
Outlook for the Webjet share price and profitability
The company said that it’s on track to exceed pre-pandemic profitability in FY23, with the second half EBITDA expected to exceed pre-COVID levels by at least $10 million.
Management revealed that FY23 third quarter bookings and TTV are currently tracking more than 30% ahead of pre-pandemic levels. This is a very promising sign, considering the business is now more effective on the cost side of things.
Webjet said that “demand for travel is strong and restoration of airline capacity will be the driver of pre-pandemic profitability for the Webjet OTA business.”
I think that Webjet is a very promising ASX travel share and I believe that the market is underestimating how much Webjet’s earnings can jump over the next year or two. I think it’s at a good price for a long-term buy and hold strategy. But, there are also other ASX growth shares that could do well.
