Web Travel Group Limited

ASX:WEB

Web Travel Group Limited

ASX:WEB
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$4.63 (+1.8%)
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#104
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4
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Reports (7) My Report Forum Investors
Forum Topics WEB WEB Massacre!

Pinned straw:
NewbieHK
Last edited 2 months ago

Some fund managers with big holdings on WEB kissing goodbye performance fees, with today’s 30% drop.

I can’t help, but think that today’s updated news was delayed to push through the demerger?

Note: Holder, so also suffering. Ouch!

UlladullaDave
Added 2 months ago

I think the bit that matters here is the evolution of the TTV margin messaging by WEB.

At the FY24 results the said to expect mid-7% margins down from 8.2% for FY24, which was down from 8.4% in FY23...

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Then at the AGM, they said temporary factors were pushing TTV margins down because of excess hotel inventory and some market distortions from the Olympics.

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Yesterday's announcement actually downgraded both the short term and the long term margin expectations. The expected 7% margins for 1H25 were downgraded to 6.4%, and the company dropped in expectations of mid-6% longer term TTV margins. 101696ed24b93e66a5926426710ac511b5d5e4.png


Importantly I think, the lower margin going forward is being driven by a change in business mix and geography – ie it's structural not cyclical. But until yesterday they had been saying it was mostly temporary factors and margins would revert. Throw in a very rich price and I guess you get yesterday's big drop.

17
Arizona
Added 2 months ago

@NewbieHK Wow. Is this an over reaction do you think?

I have been watching vaguely for some time, but I haven't kept up with any details around the demerger.

8
NewbieHK
Added 2 months ago

Was priced at a premium for growth. We know how the market reacts to any slowing down or in this case going backwards.

WEB was sold as the golden goose part of the business. With the de-merger a necessity to really allow this part to grow.

Then this update…

Not terrible, not great, doesn’t look good (optics).

At this moment shorter having a field day and yelling from the roof top “I told you so”.

When the dust settles they get a chance to get things back on track.

Is a 30% drop an over reaction - probably. However, at the premium price it was trading probably not.

13
Arizona
Added 2 months ago

As you say the news wasn't too bad.

However I guess there is a bit going on there under the surface.

People are keen to see what the landscape looks like once the demerger is in the rear view mirror.

Thanks @NewbieHK

9
Strawman
Added 2 months ago

Wow, what a massive drop! 30% down is not what you'd expect for a near $2.5b business, especially when the news (at face value) doesn't seem especially dire.

Afterall, TTV grew by 26 for the first half!

I think you're right in your diagnosis though @NewbieHK , this was priced a little aggressively and some of the longer term growth potential seems less certain given the margin pressures and changing incentive agreements (which,as I understand it, involve rebates or discounts to key customers). That was a little vague, but I think it suggests they are securing more TTV by giving counterparties a better deal, potentially indicating declining pricing power..?

15
GazD
Added 2 months ago

@NewbieHK i think this is an overreaction from my basic understanding of what I believe to be a high quality business. That said I’ve take. A tiny bite and will evaluate further before making a decision to hold longer or build on position

11
occy
Added 2 months ago

I definitely agree this is a high quality business. I was a long term holder but ended up selling post covid when despite the lower share price, the value of the company was greater than pre-covid due to the ridiculous increase of the amount of shares issued due to cap raisings. That really freaked me out and I couldn't justify holding with so many questions around travel moving forward. With this significant drop and travel restrictions more or less now a memory, time to run some numbers as there could be some real value now for a great business.

12