Webjet (WEB) shares rose, then fell yesterday as investors were slow to realise the importance of comments in an investor day briefing made prior to the annual meeting held later in the morning.
The shares were up 0.3% in early trading, a bit less than the stronger start in the wider market after investors were told the domestic leisure travel market would remain flat for the rest of this financial year.
In the investor presentation ahead of its AGM in Melbourne, the online travel company forecast pre-tax earnings of $27 million for this financial year, compared with $23.3 million in 2013-14.
The latest forecast includes $1 million in costs from the acquisition of SunHotels in Europe.
Webjet’s brands include Zuji travel operations in Australia, Hong Kong and Singapore.
The company said the Australian domestic travel market, where it generates the bulk of its earnings, continued to be flat in the first months of the new financial year, and it expects it to remain the case for the second half.
Despite a flat domestic leisure market, the company said flight bookings in recent months had increased by more than 10% compared with the same period last year.
The shares started weakening after the details of the briefing started percolating through the market, and then they were reported to the AGM.
The company’s share price fell 4% to $3.01 before recovering to close down 1.2% at $3.10.
WEB YTD – Flight market flat for Webjet
Webjet said it expects Zuji to break even in this financial year, as the Hong Kong business experienced a difficult trading environment, which would affect sales and margins.
And that’s why the shares were sold off yesterday because Zuji produced $2 million in earnings before interest tax and depreciation in 2013-14 and actually staged an $8 million turnaround in that year.
If it is going to have a flat year, the company’s after tax earnings could be line ball with 2013-14’s $19.1 million