The Webjet Limited (ASX: WEB) share price closed at $14.50 yesterday, up a sweet 36.9% since the new year. The company has had great success in scaling its B2B segment which was reflected in its HY earnings call on February 21.
Should you still buy Webjet shares?
Webjet is both a business-to-consumer and business-to-business digital travel agency. It enables users to compare and combine flights, accommodation, packaged holiday deals, insurance and hire cars domestically and internationally.
Investors had their eyes peeled on the performance of Webjet's B2B channel, WebBeds. This is Webjet's accommodation booking platform that connects travel agents and tour companies with hotel operators. Bookings in this segment were up 50% and time to value by 65%. Furthermore, future growth sentiments remain high particularly for the Asia-Pacific region.
Overall, WebBeds grew its EBITDA by 135.2% to $30.1 million in just 6 months. It is now the largest component of Webjet's business operations and drives half the group's EBITDA. Webjet itself amassed a whopping 42% growth in EBITDA to $58 million and now holds the second largest market share in the B2B travel industry.
Webjet has delivered attractive investor returns to date that have been driven primarily by product success. However, it has also benefitted lucratively from its acquisitions of JacTravel, which wholesales hotel rooms and group tours, and Destinations of the World, a B2B accommodation wholesaler. This has acutely supported the company in shifting its focus towards becoming more profitable in existing segments.
Being 100% digital, Webjet is making huge waves in the travel industry. In contrast, competitors like Flight Centre Travel Group Ltd (ASX: FLT), which relies on a brick-and-mortar model, announced a drop in net profit after tax of 16.9% to $85 million.
Foolish Takeaway
Webjet is operating on a 36.4x P/E multiple which is not cheap. However, I'm bullish on tech companies and at this point, Webjet still fits my personal investment mandate. The company grew its net profit after tax by 61% to $38.3 million. It's profitable and scaling fast with no alarming growth barriers.
Would I still buy the stock despite the recent 30% jump in the Webjet share price? Short answer – yes. The future is digital and higher GDP per capita's have led to greater expenditure being directed towards travel and experiences than ever before. Though the ASX does have alternatives in the travel industry like Helloworld Travel Ltd (ASX: HLO) and Corporate Travel Management Ltd (ASX: CTD), I'm betting on Webjet as being the winner of this category.
