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Sealink Travel Group Ltd: Up 79% since October 2013

Ferry and cruise operator Sealink Travel Group Ltd (ASX: SLK) has had a sparkling six months since listing on the ASX back in October last year.

The company’s shares are up 79% since October 2013, while the S&P/ ASX 200 Index (Index: ^AXJO) (ASX:XJO) is up a measly 3.9%. And more gains could be on the way, as the company adds another fast ferry to its Sydney Harbour Captain Cook Cruises fleet.

Sealink announced today that has commissioned a fourth new ferry for Sydney Harbour, thanks to increased demand. The company recently signed new contracts with Harbour City Ferries, the Biennale Festival and the temporary Convention Centre, and needed extra capacity.

Sealink says the new ferry offers fast, comfortable service for up to 200 passengers, and has the flexibility to operate as far up river as Parramatta and all the way out to Manly. It will cost Sealink $2.7 million, and is expected to join the fleet in Sydney in November this year.

The first fast ferry was delivered in November 2013, with two due for delivery in May and June this year.

With a virtual monopoly ferry service to Kangaroo Island in South Australia, and its Captain Cook Cruises on Sydney Harbour as well as various other operations, Sealink could benefit enormously from an influx of overseas and even domestic tourists.

And it probably won’t matter too much where the Australian dollar is trading either. A lower dollar will likely see more international arrivals, offsetting those Aussies heading overseas, while a higher Australian dollar could see us spending more holidays domestically, as overseas visitors decline.

Still, Flight Centre Travel Group Ltd (ASX: FLT) has repeatedly noted that the exchange rate has very little influence on how and where Australians travel. And if Sealink is seeing an increase in demand for its services, it could mean that international tourism numbers are growing.

Sealink should also benefit, once Crown Resorts Ltd (ASX: CWN) VIP casino and six-star hotel at Barangaroo is complete. The resort is expected to appeal to a growing Asian middle class and high roller gamblers, offering competition with Echo Entertainment Group Ltd’s (ASX: EGP) The Star casino and hotel complex.

Foolish takeaway

Already up 79%, Sealink no longer appears cheap, with a prospective P/E ratio of around 20 times. The time to get on board was way back in October 2013, as we suggested in this article. But if the company can generate higher levels of growth from its upgraded fleet, then it may well be worthwhile adding to your watchlist.

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Motley Fool writer/analyst Mike King owns shares in Flight Centre. You can follow Mike on Twitter @TMFKinga

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