WEB - Webjet

[upside_umop]

Cheers Percy. Interesting...

Online travel firm Webjet tipped to be on the Fairfax radar
Michael Bennet From: The Australian September 18, 2010

FAIRFAX Media has hinted it's on the lookout for acquisitions, according to analysts who tip a possible bid for online travel company Webjet.
They say Weject will complement its existing web-based assets.

Analysts at Citi told clients yesterday that Fairfax management had expressed a renewed interest in potential acquisitions at a recent presentation to its sales traders, with online transaction-based businesses high on the list.

Fairfax, which was set to release a much anticipated review of its business next month, wanted to leverage the brands and existing traffic from websites of mastheads The Age and The Sydney Morning Herald to new businesses, Citi said.

"Webjet meets all the requirements outlined by management in our view . . . with scope to leverage its accommodation site Stayz.com.au and the web traffic through the main websites," analyst Justin Diddams said. Fairfax owns a plethora of online businesses through its digital arm, including MyCareer, RSVP and Domain, and the paid-for website of The Australian Financial Review.

Mr Diddams said any additions to its stable would probably be restricted to small to mid-size players due to the company's credit constraints.

With a market value of about $189 million, Webjet fits this requirement.

For full-year 2011, Webjet has forecast a 15 per cent rise in net profit after tax from to $12.1m, on earnings before interest, tax, depreciation and amortisation of $15.7m.

Citi said suitors would have to pay 20 times earnings for online assets with structural growth. The bank also noted that 16 per cent of Webjet was held by its management and board.

Webjet closed 3.8 per cent higher at $2.45.

At that price, Mr Diddams said, the acquisition would be earnings neutral for Fairfax in year one and marginally profitable in year two

[drworm]

I took a position a few months ago around the $2 mark.

Webjet has some terrific fundamentals. 9 years of consecutive EPS growth, didn't even take a backward step during the GFC. During that period, they've also outperformed the rest of the travel industry every single year. Terrific returns for investors.

In this crowded web travel industry, Webjet has continued to outperform in Australia and NZ. In my opinion, it's not the technology or even product that gives Webjet an edge - it's the brand. In Australia anyway, Webjet is known as THE flight search engine. I think much of the population will find it difficult to name another.

If Fairfax wants to take a stab, I'm happy for them. Though it would be alot more value to a company like Flight Centre.

[upside_umop]

They caught my eye when I was reading through a investment magazine - that was a couple of months old. They were tipping it at 1.70ish with PE around 13 times. I had remembered looking at it before but it was priced too expensive....but earnings had since caught up. Then when I looked, they were 2.10ish...and bought shortly afterwards before they got away too much more.

I find it interesting management are predicting only 15% growth. That would be the lowest growth since profitability occurred in 05. I'm not sure where they are getting 15% from, as only recently they weren't providing guidance. FLT was providing guidance of 15% growth if I remember rightly.

There is plenty of scope to grow this business...but like anything, it could get too expensive. Priced on a forward PE of 20 would imply a price of around $3.15. I don't think a PE of 20 would get it though....and could easily blow out to PE of 25, circa $4 on some substantial takeover rumours. Not huge upside, but relatively safe..

[Corporate]

upside...you need to clear your inbox. I tried to send you a message this morning with a heads up on a stock you might be interested in for a BESBS play

[Anna Naum]

Heah Corp, I am happy to listen

[percy]

Heah Corp, I am happy to listen

Me Too.In fact I am holding myself at the ready.!!

[upside_umop]

upside...you need to clear your inbox. I tried to send you a message this morning with a heads up on a stock you might be interested in for a BESBS play

Hey mate, yeah it was full around a week ago but cleared a few to make space...? Try now, I've cleared the lot.

[Corporate]

Hey mate, yeah it was full around a week ago but cleared a few to make space...? Try now, I've cleared the lot.

Sweet I've sent you a PM. I haven't done nearly enough research yet.

Anna / Percy I'll let you know once I've had a chance to do a bit more research.

Cheers,

C

[percy]

Criterion , has done another article in the australian this morning www.theaustralian.com.au/business.

[upside_umop]

Interesting Percy, cheers.

Considering this is virtually straight to the bottom line (average same size transaction and very marginal increase in costs for sales) and combined with the lag effect of the strong AUD, then it would seem they will get the 15% target growth EPS for the year. Markets always like upgrades, although its P.E. is quite rich on the historical side.

What do you think their chances are with the US?