Stock Research: Wotif.com (WTF)

http://finance.google.com/finance?q=ASX:WTF

Share price: $3.10
Market cap: $645m
Shares out: 208m
Net cash as at Dec 2007: $108m (less travel.com.au $44m and Asia Web Direct $17m acquisitions = ~$50m)
Trade and other payables as at December 2007: $138m, including $44m for travel.com.au
2008 P/E -> 19 (EPS ~16.5 cents)
2008 forecast dividend -> 15 cents or 4.8%
2009 forecast P/E -> 14 (EPS 22 cents), or 33% growth. Too optimistic?
2009 forecast dividend -> 19 cents or 6.1%

Comments:

Positive

- Dominant Australian online hotel room booking channel for the wotif.com.au brand.
- Asia Web Direct gives them access to that fast growing region.
- High operating margins.
- Negative cash cycle (receives cash on sale, pays hotels later)
- Some recent director buying.
- Fair value based on 2009 forecast P/E and dividend yield.

Negative

- Overpaid for travel.com (~20 to 25 times earnings)
- Integration risks with acquisitions.
- Increasing and focusing on offline marketing spend. Word of mouth growth presumably slowing, although marketing has the potential to further boost growth rates.
- Facing economic headwinds in Australia.
- Increased competition (what impact?)

Verdict

- Wait for 2008 full results, checking net cash position and integration of acquisitions.
- Shares may have further to fall, as 2009 forecasts may be optimistic coupled with economic headwinds.
- Trailing P/E of 15 = share price of $2.50, or ~20% less than today's share price.
- Forward P/E of 15 on more conservative 2009 EPS of 19.5 cents = share price of $2.90 cents, or 6.5% less than today's price.

Full year results due 27th August 2008

June 2008

FY2008 NPAT forecast(23/6/08): $34.5m vs $26.4m (+30%)
Therefore H2 2008 NAPT: $17.4m vs $14.5m (+20%)
P/E -> 18.7
PSR -> ~7.5 (~$85m annual revenue)

February 2008

Acquire Asia Web Direct for $34.2m -> $17.1m cash & 3.6m shares ($4.75 per share)
Annual EBITDA: ~$2.3m -> P/E on purchase price of 15
http://www.asx.com.au/asxpdf/20080204/pdf/3178y4v9kkyn04.pdf

Half Year ended 31st December 2007

H1 2008 TTV: $310m vs $251m
H1 2008 revenue: $41m vs $31m (+32%)
HI 2008 NPAT: $17.1m vs $11.9m (+ 44%)
Net profit margin: 41.4%
H1 Dividend: 6 cents vs 5 cents
H1 EPS: 8.3 cents vs 5.7 cents (+46%)
User sessions: 3.2m per month vs 2.5m (+28%)
Room nights sold: 2.2m (+22%)
Room rates: $144 vs $137 (+5%)
http://www.asx.com.au/asxpdf/20080220/pdf/317k0gnqzfhf6b.pdf

November 2007

Announced acquisition of travel.com.au (TVL) for $50m, trumping Webjet's offer.

In the 6 months to December 2007, TVL...

TTV: $68m
Revenues: $7.5m
EBITDA: $0.8m