ASX:WEB
Web Travel Group Ltd
Investment Summary
The fund managers believe that Web Travel Group Ltd has shown potential for significant growth, despite experiencing recent volatility in its share price. Early on, they noted a 25% rise in share price after a strategic investment and optimistic EBITDA guidance, which reflects better-than-expected performance. In their opinion, the proposed demerger of its B2B and B2C divisions is likely to unlock value, as the B2B segment could command a higher market multiple. However, following disappointing results, fund managers acknowledged an aggressive 45% decline in share price, attributing it in part to emotional selling. As the market adjusts, they see potential for recovery supported by improving conditions in the travel sector and an upcoming competitor IPO that may renew investor interest. Moving forward, fund managers expect Web Travel Group to achieve its 50% EBITDA margin target, given its plans for considerable growth in Total Transaction Value. In their view, the current pricing may not reflect these long-term growth prospects.
Commentary From The Managers
Endeavor Asset Management
31 Jan 2025
$5.11
- Global B2B travel business Web Travel Group (WEB) has shown a positive growth trend, with an increase of +11.3% in January.
- Improved performance attributed to a resilient international travel market and healthy trends reported by overseas peers, especially in Europe.
- Stable booking trends observed in the USA, which was previously expected to decline year-over-year.
- Endeavor Asset Management recently increased its position in early January, recognizing early signs of improving market conditions.
- Expectations for ongoing trends indicate confidence in WEB achieving its target of 50% segment EBITDA margin.
- Upcoming IPO of the second largest web beds competitor in Spain may generate increased interest in WEB.
- This competitor is expected to list at multiples similar to WEB, despite WEB's faster growth, better margins, and no debt.
Blackwattle Investment Partners
31 Dec 2024
$4.59
- WEB Travel Group experienced a decline of -10.9% in December due to a consolidation of previous gains.
- Blackwattle Investment Partners initiated a position after a downgrade in the near-term earnings outlook in October.
- The stock price fell 50% from July highs following a positive strategy day led by CEO John Gusic.
- Gusic outlined ambitious growth plans, aiming to increase Total Transaction Value (TTV) from $4bn this year to $10bn by 2030.
- Near-term trading softness raised market doubts about the sustainability of management's long-term targets.
- However, Gusic reaffirmed these targets during the interim result announcement in November.
- Despite uncertainties, there appears to be limited value incorporated in the current share price, trading at 17x FY26 EPS.
- Gusic’s strong track record instills confidence that he deserves the benefit of the doubt regarding these long-term goals.
Blackwattle Investment Partners
30 Nov 2024
$5.04
- WEB Travel Group is a newly formed hotel distribution pure-play following the demerger from the company’s online travel agency assets in September.
- The demerger allows management and the market to concentrate on significant opportunities within the hotel business.
- Blackwattle Investment Partners initiated a position post a downgrade to the near-term earnings outlook in October.
- The share price fell 50% from July highs after rallying following a strategy day in March.
- CEO John Gusic presented long-term plans aiming to grow Total Transaction Value (TTV) from $4bn this year to $10bn by 2030.
- Market concerns arose after the soft performance outlined in October challenged the viability of management’s long-term targets.
- In the company’s November interim results, Gusic reaffirmed his commitment to these long-term targets.
- Stock trading at 17x FY26 EPS suggests investors may have a low-risk opportunity.
- Given Gusic’s strong track record, the likelihood of achieving these targets may be better than perceived.
Endeavor Asset Management
31 Oct 2024
$4.03
- Endeavor Asset Management acknowledges a significant decline in Web Travel Group’s share price, dropping by 45%.
- The fund manager notes that this sell-off was partly justified due to the company’s previous commentary on ‘one-offs’.
- Despite the decline, Endeavor Asset Management sees potential for recovery, attributing part of the sell-off to emotional trading and lost trust.
- As a result of reset expectations for the business, Endeavor Asset Management has begun to slowly increase its position in the company.
Endeavor Asset Management
31 Oct 2024
$4.03
- Web Travel Group (WEB) significantly impacted the Balanced Equities Portfolio's October performance with a 45% drop in share price.
- Endeavor Asset Management noted that an aggressive sell-off was partially justified due to the company referencing 'one-offs' that had longer-term effects.
- Despite the decline, the firm observed elements of emotional selling and loss of trust contributing to the share price fall.
- In response, Endeavor Asset Management began to gradually increase its position as expectations for the business reset.
Endeavor Asset Management
31 May 2024
$8.83
- Endeavor Asset Management recognizes Webjet's share price increase of 7.3% in May following their FY24 results, which were in line with company guidance.
- A key development is the proposed dmerger of the B2B (WebBeds) and B2C (Webjet OTA) divisions, expected to unlock latent value.
- The current multiple does not reflect the higher valuation potential of the B2B division.
- Recent direct B2B competitor IPOs provide valuable benchmarks for the WebBeds business.
- Existing competitor comparisons exist for the OTA business, enhancing valuation accuracy.
- Anticipated positive updates at the AGM in August regarding WebBeds bookings and TTV growth.
- FY25 YTD trading is tracking at +35% YoY compared to the company's prior guidance of +25% YoY.
Endeavor Asset Management
31 Mar 2024
$8.58
- Endeavor Asset Management added Webjet to the portfolio at $7.1/sh.
- Webjet closed the month up 25%, marking it as a top contributor to performance.
- The investment decision followed a pullback in share price due to noise in the reporting season.
- Management outlined several catalysts for growth during the investor day.
- FY24 EBITDA guidance was upgraded to above $180m-$190m, reflecting better performance than market fears.
- Initiatives to consolidate the B2B market and leverage acquisitions in the Americas are boosting margins.
- Management revised FY25 B2B guidance 6% above consensus, indicating substantial uplift in WEB Group EBITDA.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.