News Shorts: a2 milk, Webjet, McGrath
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The great a2 Milk rally continued- despite global dairy prices falling to their lowest level since March, but the country’s biggest online travel agency Webjet saw its shares punished for what analysts claimed was a disappointing guidance figure for the full financial year.
Webjet shares took a pounding yesterday, falling nearly 14% at one stage after the company provided 2017-18 earnings guidance investors and analysts didn’t much like.
The annual meeting yesterday was told the company expects cash flow for be negative in the current first half of the 217-18 year (the December half) owing to the one-off acquisition cost of buying European travel business JacTravel.
Webjet is the largest online travel agency in Australasia and announced the acquisition of JacTravel in August for an enterprise value of 200 million pounds around $330 million, its biggest ever deal.
The online travel agent also said it expects annual earnings before interest, tax, depreciation and amortisation (EBITDA) of about $80 million, which was below analysts’ estimates - which may be why the shares were sold off.
They ended down more than 10% at $ because overly optimistic analysts at an EBITDA forecast of around $93 million.
Webjet’s guidance suggests a 57% increase on last financial year’s EBITDA of $50 million from continuing operations. But these comparisons are complicated thanks to a number of divestments and acquisitions by Webjet last year.
For a2 milk, another 6% bounce in the shares on top of previous gains, continues the dramatic rise so far this year.
The shares rose more than 6% to yet another all time high of $7.93 yesterday before ending the day a cent lower, which was an all time record closing price.
That was after the upgrade at Tuesday’s AGM with news of a 69% jump in revenue for the first four months of the new financial year.
The company’s shares are up 75% since August alone and 288% for the year to date.
The latest Global Dairy Trade auction on Wednesday morning saw a 3.4% slide in the index price to an 8 month low of $US2,970 a tonne, with 5% plus falls in the price of butter and a 2.7% drop in the price of whole milk powder.
And McGrath, the struggling Sydney based real estate agency yesterday admitted that it had looked at taking itself private in the wake of a big drop in the share price off the back of weak trading figures.
Chair Cass O”Connor told the AGM in Sydney“I note recent commentary on the status of the company as a listed entity.”
“We have reviewed a number of options for shareholders, but have nothing to disclose at this time,” shareholders were told.
That was the only remotely positive news for shareholders in the company who have now faced three earnings downgrades since it listed in December 2015.
The shares rose 1.6% to 55 cents, but are still down 34% for the year so far.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.