In morning trade the Webjet Limited (ASX: WEB) share price has rocketed higher following the release of its half year results.
At the time of writing the online travel agent's shares are up 19% to $13.50. At one point the company's shares were 28% higher at $14.59.
What happened in the first half?
For the six months ended December 31, Webjet delivered a 29% increase in total transaction value (TTV) to $1.9 billion, a 33% lift in revenue to $175.3 million, and a 42% jump in EBITDA to $58 million.
Half year net profit after tax rose 59% to $31.8 million or 48% on a per share basis to 31.5 cents. The Webjet board declared an 8.5 cents per share fully franked interim dividend, which was up from 8 cents in the prior corresponding period.
What were the drivers of the result?
The key driver of this strong result was the company's WebBeds segment. From its continuing operations booking growth increased 50%, TTV rose 65%, and EBITDA surged 136% higher to $30.1 million. Whilst some of this growth came from acquisitions, organic TTV growth was 21% and organic EBITDA growth was 24%.
Pleasingly, management believes "there are considerable global growth opportunities for WebBeds, particularly in the Asia-Pacific region."
Supporting this growth were the Webjet OTA and Online Republic segments. Although TTV growth in both segments was reasonably subdued, they both contributed to the company's EBITDA growth.
The Webjet OTA business posted a 7% increase in TTV, a 12% lift in revenue, and an 11% jump in EBITDA to $28.5 million. Whereas the Online Republic business saw its TTV decline 5%, revenue rise 8%, and EBITDA increase 14% to $6.9 million.
Webjet's managing director, John Guscic, was deservedly pleased with the result.
He said: "This was another outstanding result for our business. Our WebBeds business continues to consolidate its position as the #2 global B2B player and is now delivering significant EBITDA growth."
Before adding: "Following the acquisitions of JacTravel and more recently Destinations of the World, our increased global size and scale means we have been able to shift our focus from growing market share to pursuing more profitable growth. As a result, we saw increased TTV and EBITDA margins in all regions. The Webjet OTA continues to gain share despite a slowing domestic flights market and our strategy to focus on profitable bookings in Online Republic saw improved TTV and EBITDA margins."
Outlook.
No changes were made to the company's guidance. Management has reconfirmed its guidance and advised that it remains on track to deliver at least $120 million EBITDA (excluding one-offs associated with the acquisition of Destinations of the World).
Should you invest?
With Corporate Travel Management Ltd (ASX: CTD), Flight Centre Travel Group Ltd (ASX: FLT), Helloworld Travel Ltd (ASX: HLO), and Webjet shares all trading on the local market, investors have a lot of options in the travel booking industry.
I believe Webjet is the best of the group and feel this strong result demonstrates why, especially at the current share price. With its shares changing hands at ~25x estimated full year earnings, I think they are good value based on its current growth profile.
