Aye aye captain, ferry operator and tourism business Sealink Travel Group Ltd (ASX: SLK) today lifted 4% after posting a profit of $9.6 million on operating revenues of $111.3 million for the financial year ending June 30 2015. The profit and revenue were up 29.6% and 7.2% respectively over the prior year.
The group declared a final fully franked dividend of 4 cents per share, up 8% over the prior year.
Tailwinds
The group operates the Captain Cook cruise ferries on Sydney Harbour, alongside commuter ferries and the tourism-focused Kangaroo Island ferry in South Australia. In total it has 26 operating vessels that also operate in the Northern Territory and Queensland.
The seafarer saw earnings growth heavily outpace revenue growth in part thanks to its falling diesel bill as this is a key cost in operating its fleet of diesel guzzling ferries. Lower world oil prices look set to remain over the medium term and this should continue to support the business into the current financial year.
Outlook
Another strong tailwind for this business in the year ahead looks to be the falling Australian dollar as this will encourage international tourists to visit, while Australians are more likely to holiday at home. Moreover, the group's tourism packages and services will be effectively far cheaper for almost all international tourists.
This of course provides the opportunity to extract higher margins from an international tourism sector that has a positive growth outlook in itself over the medium term.
The group says it is well positioned to report growth in underlying profit in the year ahead and with the wind at its back it's no surprise the stock is up around 40% over the last year.
The market has now caught onto the outlook however, with the stock on around 20x trailing earnings with a 3.1% yield when selling for $2.50.
The group sold for $1.80 when I first flagged it as an attractive opportunity back in November 2014, but looks fully valued for now, although over the long term its leverage to the tourism sector makes it one for the watch list.
