Demerger from Web Travel Group
WJL, one of our newer investments, recently completed a demerger from Web Travel Group (ASX: WEB). Previously, both operated under the Webjet banner for many years. WJL is essentially the consumer-facing division, familiar to many Australians as the Webjet website, offering services for searching and booking for flights, hotels, hire cars etc.
For many, WJL will be considered the poor cousin of the demerger as it is smaller in every respect, arguably ex-growth and operates a business model that some would believe is outdated. However, history has shown us that often the poor cousin spin-offs can provide significant positive shareholder outcomes over the long-term, (as shown in the table. – below)
From our perspective, a number of factors attracted us to WJL:
– Market Leading Position – Despite competition from large multinationals attempting to gain share in the Australian OTA (online travel agency) market, Webjet has maintained a stable market share, holding the number one position in both Australia and New Zealand. Its high brand recognition means many customers go straight to webjet.com.au rather than through paid search engines, helping Webjet maintain strong margins.
Capacity to Invest – With around $100 million of available cash, WJL has significant capacity to invest in organic growth initiatives. Coupled with the renewed focus described below, in our view this should allow WJL to pursue these organic growth initiatives with a sense of urgency. We also expect WJL to explore complementary acquisitions over time.
– Renewed Focus – As part of the original Webjet group, WJL had to compete with the B2B business for resources, management attention and strategic focus. Now, as a standalone entity, WJL can allocate resources exclusively towards its own growth, which should in theory provide a renewed focus with a clear and concise strategic direction.
– Large Addressable Market – The OTA leisure market in Australia alone is substantial, and while WJL currently generates the majority of its earnings through airline ticket sales, the opportunity to sell higher margin adjacent products such as car rental, accommodation and other services is significant from both a revenue and earnings perspective.
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Permainan terbaik saat ini hanya satu di Indonesia yaitu pasti menyediakan return on Investment terbesar
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