The Helloworld Ltd (ASX: HLO) share price has been a big mover in morning trade after the travel company released its half-year results.
In morning trade its shares are 6.5% higher at $4.15.
Key takeaways from the release include:
- Total transaction value (TTV) was $2,661.9 million, an increase of $55.9 million or 2.1%.
- Revenue increased 23.2% to $171.2 million.
- Earnings before interest, tax, depreciation, and amortisation (EBITDA) increased 270.3% to $30.1 million.
- Net profit after tax was $12.9 million, compared to a loss of $1.7 million in the prior corresponding period.
- Diluted earnings per share were 11.3 cents.
- Fully franked 6 cents per share dividend, payable March 20 2017.
- Reconfirmed FY 2017 guidance of EBITDA between $47 million and $51 million.
According to the release Helloworld's TTV was down due to lower airfare prices, with domestic airfares falling 4% and international airfares down 12% during the half.
But thanks to TTV margin improvements and increasing ticketing volumes the company was able to more than offset the decline, resulting in impressive revenue growth of 23.2%.
The acquisition of AOT Group was also a key reason why revenue grew strongly in its Wholesale/Inbound segment. Thanks to a strong contribution from AOT, revenue in the segment almost doubled to $69 million.
Pleasingly management revealed that initiatives between Helloworld and AOT wholesale brands delivered improved margins and reduced costs.
But the company's Travel Management segment was the highlight in my opinion. During the half TTV and revenue grew 6.2% and 10.7%, respectively.
The segment's strong performance was driven largely by new business from the Northern Territory government and PricewaterhouseCoopers,
Is it a buy?
After today's jump in its share price its shares are changing hands at approximately 20x trailing earnings.
Whilst I think the result was a solid one, I think its shares are fully priced now and offer limited upside potential.
In light of this I see far more value in rivals Webjet Limited (ASX: WEB) and Flight Centre Travel Group Ltd (ASX: FLT) at present and would favour an investment in them ahead of Helloworld.