Webjet Group Limited

ASX:WJL

Webjet Group Limited

ASX:WJL
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$0.895 (+1.1%)
Last close price
#330
Rank
2
Held by
4
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Pinned straw:
ApplePark
Added 4 months ago

$369 million market cap. $118 million in cash.

Management planning to buy back shares and start paying a dividend this FY.

Currently BGH Capital and Helloworld Travel, are still stalking the company. But I don't think anyones taking Helloworld seriously and the Webjet board rejected the first offer from BGH at $0.80. No new offer since April and the share price has held above the offer since. The bid caused the board to delay announcing a share buy back initiative.

Really comes down to the last dot point. IF trading remains flat, I think the stock is undervalued (P/E 17.7 underlying NPAT) for a capital light, market leader and increasing overseas travel + a unique mix and match technology offering. I'm waiting to see how much of that cash they think they need to hold on to versus how much is used to buy back shares. International travel from Australia is up year on year.

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I prefer the growth prospects of Web Travel and may look to sell Webjet (WJL) for Web Travel.

Disc - held IRL from the demerger.

ApplePark
Added 3 months ago

BGH Capital increased their holding a couple % points in Webjet Group.

Some background, because I wanted to understand where BGH were coming from. In 2020, they bought a 55% stake in TripADeal, joining the founders.

AFR, ' If Tripadeal, which made a $4.4 million net profit in 2018-19, was valued at anything like the 15 to 25 times earnings multiples at which listed competitors such as Flight Centre and Webjet traded before the pandemic, then BGH's 55 per cent stake could represent a $30 million to $50 million investment.'

They sold a 51% stake in TripADeal in 2022 to Qantas for $110m. June 2024 Qantas bought the remaining 49% for $211m. At the time, they expected bookings (TTV) of $450m for the year. Company valued at $431m June last year. Webjet did $1.3B in bookings or TTV in FY25. Now I'm not saying at all that Webjet is worth what ever the multiple that Qantas paid for TripADeal, but I do think its undervalued and BGH has a track record in the space.

Adding to my SM portfolio. Still holding IRL. Short term catalyst is another offer from BGH.

9
ApplePark
Added 2 weeks ago

Well, since this post, they have provided an update to the market and lowered guidance. They've now also received another take over offer, this one at 90c.

I sold my demerger holding after they updated guidance. My thinking was:

  • I've been burnt multiple times this year alone by holding on after a company first announces a downgrade.
  • Tiny $1k holding, opportunity cost, no near term positive operating momentum if they're downgrading revenue and bookings.
  • I was wanting to see some positive traction / evidence before adding more money.
  • Even post another takeover offer, I'd still have sold. Again, burnt before by offers not going through (e.g. Ramsay *shivers*), limited upside. You either get 90c or the offer falls through and what, bounces between 70-80c again?
  • I dislike the distraction of further major shareholder and management battling for control. Theres also been questions raised about the CEOs actual experience and whether or not they've been truthful about their resume.


I still like the business and will watch it because it could become too cheap. I will sell my SM position, again opportunity cost and chance of being taken off the ASX at 90c anyway.

13
ApplePark
Added 3 months ago

Follow up,

Share buy-back of up to $25 million and looking to use available franking credits for special dividends above the target pay out ratio for dividends of 40-60% of underlying NPAT.

Also announced the acquisition of an online business travel company called Locomote for $17 million. Speed to market versus in-house build was quoted as the reason to acquire.

I think I will continue to hold. I like the acquisition to chase growth and is well aligned to the core business. I think the cash generation is strong, that with support a ok dividend plus increasing EPS with the share buy-back.

For the P/E multiple to go up, I think the market might wait until management show they can execute and achieve profitable growth because right now, they're literally saying earnings will be flat.

ChatGPT:

Metric FY26 Forecast Notes

Underlying NPAT ~$19.8 m MarketScreener analysts

Dividend @ 40% payout ~$7.9 m Equals ~$0.0201/share

Dividend @ 60% payout ~$11.9 m Equals ~$0.0303/share

Estimated yield @ $0.92 2.2%–3.3%

9