What: Shares of online travel group Webjet Limited (ASX: WEB) have soared 20 cents or 6.9% higher today following an outstanding 195% rise in full-year earnings to $19.1 million. Meanwhile, earnings before interest, tax, depreciation and amortisation (EBITDA) of $23.3 million also came in well above its previous guidance of $21.5 million.
So What: Although Webjet's core business experienced "essentially flat results" – which was in line with the general domestic travel market – a strong performance from its Zuji business helped propel net profit almost three times higher in the year ending June 30.
Zuji, which is the leading online travel agency in Hong Kong and Singapore, experienced an $8 million turnaround for the year and contributed around $2 million in earnings for the 2014 financial year. Better yet, it is expected to continue increasing earnings over the coming 12 months. Meanwhile, Webjet's Lots of Hotels (LOH) business also continued to grow strongly, reporting $0.5 million EBITDA in the second half.
Here are some of the highlights from the report:
- Total revenues were $98.6 million, up 31.9% compared to the previous year
- Total transaction value (TTV) up 9.4% to $967 million
- TTV revenue margin at 10.2%, compared to 8.5% last year (an increase of 20%)
- Final dividend of 7.25 cents (total dividend for FY14 at 13.5 cents per share)
- Cash balance of $51.8 million as at 30 June 2014
Now What: With more than $50 million in cash, Webjet is in an excellent position to continue acquiring businesses to solidify its position in the market. Chief executive John Guscic said: "Our objective is to be a global B2B (business-to-business) player and to be a global B2B player we need a presence in Asia and we need a presence in the Americas…. We have a number of ways to get there but the most obvious is to do other tuck-in style acquisitions not dissimilar to Sun Hotels".
While such acquisitions will likely take place over the coming two to three years, investors can look forward to earnings guidance for the current year at its annual general meeting on November 26.
Should you buy Webjet today?
Based on today's price, Webjet is looking like a very compelling buy. Not only does it offer substantial growth prospects, but also a remarkable 4.4% fully franked dividend yield.
