The company will undertake a fully underwritten 1-for-6.25 entitlement offer to raise $72m and a $17m share placement to the vendors of Online Republic, which specialises in online car rental, motor home and cruises.
UBS notes Webjet has been disciplined to date in allocating capital, with little in the way of M&A since mid 2014. While the company has a small footprint in cruises this is an attractive market with passenger volumes rising 10-15% in Australasia in 2015, the broker observes.
UBS retains a Buy rating and raises the target to $6.85 from $6.40.
Target price is $6.84.Current Price is $6.31. Difference: $0.53 – (brackets indicate current price is over target). If WEB meets the UBS target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).