WEB 0.75% $4.03 web travel group limited

Webjet $4 party, page-169

  1. 23 Posts.
    lightbulb Created with Sketch. 8
    Can we talk numbers for a second? Lot of rubbish being thrown around like $16 price targets...

    FY19 Net income = $60.2mil
    Shares outstanding = 339mil

    So if we do get back to FY19 net income levels, that'll be about an EPS of 18c with our current shares outstanding. At our current price of ~$4, we're currently trading at approx 22x pre COVID-19 earnings levels. A $16 price target would imply prices at 89x FY19 earnings. Sound a bit rich?

    And yes, there will be no doubt be pent up demand from lockdown, but IATA, which is effectively the peak body for all things aviation, is forecasting only a return to FY19 flight volumes by the end of FY22 (https://www.iata.org/en/iata-repository/publications/economic-reports/covid-19-outlook-for-air-travel-in-the-next-5-years/). And this is on the more optimistic end of the spectrum of what I have seen - IATA is likely to have a positive bias given it represents the airlines. Broker notes I've come across from Jefferies and Goldman (among others) have implied returns to FY19 volumes by as late as FY23-FY24 (moreso for international rather than domestic volumes).

    Obviously, Webbeds is a huge part of Webjet's business, but as we all know - hotels are quite closely linked to flight travel, so would be a reasonably good proxy for Webjet's business activity.

    There's still a lot of uncertainty in this business - lot of ducks need to line up for price to appreciate much further. Current price seems fair (not cheap) IMO. I think there's better risk reward plays elsewhere,




 
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$4.03
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1 5648 $4.03
 

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