WTF - Wotif.com Holdings

[scsl]

Since closing 66% above the IPO price in its debut in early June, Wotif.com's sp has continued to rise. Today's close of $4.33 means that investors who were lucky enough to get some shares in the float are up 117% - in just 6 months!

As the leading provider of online accommodation booking services in Australasia, the per annum total online accommodation sales in Australia figure is very important for Wotif – which takes a commission on the value of the accommodation booked. The calendar year 2005 value was A$789 million, with the compound annual growth rate at 42%. I think there is no reason why high growth won’t continue in this sector. The following is from their 2006 annual report:

Wotif.com believes that the online channel will continue to experience strong growth by attracting customers away from traditional sales channels. It is considered that the convenience, product range, transparency and value provided by the online channel are driving a structural change in consumer behaviour in the sector.

Furthermore, online penetration in Australia stands at 8.5% of total accommodation turnover, compared with (separate) estimates of 22% and 28% for the United States, which suggests that Australians have been slower to embrace such online facilities.

I think Wotif must at least maintain or improve its market dominant position (36% of the Australian accommodation online-booking market) to ensure competitors do not gain negotiating power with regards to inventory. Also, competitors have already mimicked Wotif’s superior site layout. So if Wotif is complacent, they could lose market share – which is why focus on brand recognition will be vital for the company.

I'm interested in others' experiences and thoughts on this company. Who’s been accumulating? Is Wotif to pricey at the moment? Thoughts on organic growth, entering new markets?

Cheers,
scsl

 

[michael_selway]

Re: WTF - Wotif.com

Since closing 66% above the IPO price in its debut in early June, Wotif.com's sp has continued to rise. Today's close of $4.33 means that investors who were lucky enough to get some shares in the float are up 117% - in just 6 months!

As the leading provider of online accommodation booking services in Australasia, the per annum total online accommodation sales in Australia figure is very important for Wotif – which takes a commission on the value of the accommodation booked. The calendar year 2005 value was A$789 million, with the compound annual growth rate at 42%. I think there is no reason why high growth won’t continue in this sector. The following is from their 2006 annual report:

Wotif.com believes that the online channel will continue to experience strong growth by attracting customers away from traditional sales channels. It is considered that the convenience, product range, transparency and value provided by the online channel are driving a structural change in consumer behaviour in the sector.

Furthermore, online penetration in Australia stands at 8.5% of total accommodation turnover, compared with (separate) estimates of 22% and 28% for the United States, which suggests that Australians have been slower to embrace such online facilities.

I think Wotif must at least maintain or improve its market dominant position (36% of the Australian accommodation online-booking market) to ensure competitors do not gain negotiating power with regards to inventory. Also, competitors have already mimicked Wotif’s superior site layout. So if Wotif is complacent, they could lose market share – which is why focus on brand recognition will be vital for the company.

I'm interested in others' experiences and thoughts on this company. Who’s been accumulating? Is Wotif to pricey at the moment? Thoughts on organic growth, entering new markets?

Cheers,
scsl

its not bad, high PE but good growth forecast though

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 8.1 10.7 13.9 16.8
DPS 7.1 9.3 12.5 14.3

EPS(c) PE Growth
Year Ending 30-06-07 10.7 39.4 31.6%
Year Ending 30-06-08 13.9 30.4 29.9%

thx

MS

 

[Julia]

Re: WTF - Wotif.com

Hello SCSL:

I've been watching this company. If it didn't have such a low dividend, I'd definitely be buying.

Julia

 

[scsl]

Re: WTF - Wotif.com

Hello SCSL:

I've been watching this company. If it didn't have such a low dividend, I'd definitely be buying.

Julia

Julia, I understand that a low dividend may put investors off buying its shares, but isn't this expected of a company that recently raised capital by way of an IPO? Ie what I'm trying to say is that wouldn't it make sense for Wotif to retain as much of its earnings as possible to finance any expansion plans they might have (hence raising capital in the first place)?

Also, (assuming profit growth and increase in sp) wouldn't the sp appreciation of high growth companies like Wotif and Seek more than compensate for the low dividend? For example, I have held HFA since its float and although the recent dividend of 1.5 cents was nothing to smile about, I've been more than satisfied with how it is performing. I'd rather HFA focus and spend their capital on growth rather than trying to please its shareholders with 'nice' dividends.

 

[mit]

Re: WTF - Wotif.com

I bought in on a technical basis. Also I noted that there were far more bids than offers in the order queue, which I think is a very good sign. As the price as risen there are now more offers as there are people taking profits.

Michael

 

[michael_selway]

Re: WTF - Wotif.com

Hello SCSL:

I've been watching this company. If it didn't have such a low dividend, I'd definitely be buying.

Julia

Hi Julia

It has a low dividend because it has a high PE, because it actually has a high payout ratio.

thx

MS

 

[LifeisShort]

Re: WTF - Wotif.com

Its not a small company. Market cap of 867 million. Is that justifiable for a interenet company? Probably, maybe.....A billion dollar market cap is around the corner which makes you think......how much growth is WTF going to achieve over the years......when you think about it WTF does accomodation/holiday bookings over the net.....yes its diversified internationally and it has a point of difference

 

[Julia]

Re: WTF - Wotif.com

I don't much care about the reasons for a low dividend. There are other companies out there which are doing as well as Wotif but which pay a good dividend. I live off my dividend income so I'm going to view this aspect as more important than others may.

Julia

 

[scsl]

Re: WTF - Wotif.com

It has a low dividend because it has a high PE, because it actually has a high payout ratio.

MS, WTF's high P/E ratio and thus 'big' sp may mean a low dividend yield but I'm not sure what you mean in the second bit. From my understanding, doesn't a high dividend payout ratio mean a higher dividend amount, relative to the dividend received under a low payout ratio?

 

[Julia]

Re: WTF - Wotif.com

MS, WTF's high P/E ratio and thus 'big' sp may mean a low dividend yield but I'm not sure what you mean in the second bit. From my understanding, doesn't a high dividend payout ratio mean a higher dividend amount, relative to the dividend received under a low payout ratio?

That's what I would have thought also.

Julia

 

[stoxclimber]

Re: WTF - Wotif.com

He was giving a round about way of saying that they pay out a large amount of earnings - its just that its a low % div yield because the PE is so high.


And these comments about dividends e.g. Julia are irrational. You live off your dividends? There's a really easy way to get a dividend - sell shares! And you get the money in 3 days...

Don't thank me, thank finance theory!

If you have some issue about seperation of your trading capital and your income, I point out that it is irrational.

 

[michael_selway]

Re: WTF - Wotif.com

He was giving a round about way of saying that they pay out a large amount of earnings - its just that its a low % div yield because the PE is so high.

Yep, they have a high dividend payout ratio

However the current "dividend yield" is low because the current SP is very high (relative to earnings i.e. PE ratio)

thx

MS

 

[scsl]

Re: WTF - Wotif.com

Up 5.2% today! It's now risen more than 10% in 9 trading days.

The market depth on Commsec shows a serious lack of sellers. Will this continue?

WTF has really surprised me... I thought that after touching $4.40 intraday on Monday, that investors would begin to take profits and take the sp down to about $4.00.

 

[michael_selway]

Re: WTF - Wotif.com

Up 5.2% today! It's now risen more than 10% in 9 trading days.

The market depth on Commsec shows a serious lack of sellers. Will this continue?

WTF has really surprised me... I thought that after touching $4.40 intraday on Monday, that investors would begin to take profits and take the sp down to about $4.00.

thing is PE wise its nearly 50 atm, why is it so high?

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 8.1 10.7 13.9 16.8
DPS 7.1 9.3 12.5 14.3

thx

MS

 

[scsl]

Re: WTF - Wotif.com

thing is PE wise its nearly 50 atm, why is it so high?

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 8.1 10.7 13.9 16.8
DPS 7.1 9.3 12.5 14.3

thx

MS

Fast growing companies trade at a premium to the overall market in terms of P/E ratio. They 'deserve' to trade at higher multiples as earnings growth is expected to be relatively higher.

WTF's P/E of about 49 is not outrageous when compared to similar companies such as realestate.com.au (P/E 48), Seek (40), Webjet (41).

Up another 3% today. Definately overbought.

 

[LifeisShort]

Re: WTF - Wotif.com

Very nice announcement today. Reassures everyone of the growth potential for the company. Keep it coming

 

[Duckman#72]

Re: WTF - Wotif.com

Just makes you wonder about the Brokers.

I was lucky enought to grab a parcel in the inital placement and had been considering selling about 2 months ago after Ords put a sell recommendation on them(when they had reached $4).

Great week and a half for them.

Lucky I learned my lesson 18 months ago. My broker from Ords told me not to purchase a particular stock for my superfund - on the basis that the stock was "too cyclical" for a superfund.

The stock?.................Zfx. And the price? ................$2.30

Duckman

 

[scsl]

Re: WTF - Wotif.com

Has settled to trade between $4.25 and $4.31 this week, with the price everyday finishing at or near the high of the day (except Thursday). The candle graph below shows that the upward trend ever since the IPO is still intact.

 

[Julia]

Re: WTF - Wotif.com

He was giving a round about way of saying that they pay out a large amount of earnings - its just that its a low % div yield because the PE is so high.


And these comments about dividends e.g. Julia are irrational. You live off your dividends? There's a really easy way to get a dividend - sell shares! And you get the money in 3 days...

Don't thank me, thank finance theory!

If you have some issue about seperation of your trading capital and your income, I point out that it is irrational.

I've just caught up with this thread.

Stoxclimber, I really don't feel the need to justify how I manage my finances to you. I'm perfectly aware of the options, thanks. How I choose to derive my income is frankly none of your business.

Julia

 

[scsl]

Re: WTF - Wotif.com

After spending a month in a tight trading range of $4.22-4.30, WTF has suprisingly broken out to the downside - but then again, nothing should be seen as safe in a market pullback. It fell 19 cents (4.5%) on pretty light volume - I've always been curious, a break upwards on light volume may turn out to be a false break-out, but can someone explain what it possibly means when a stock is 'beaten down' on light volume such as WTF? And what can we expect in the short term?

Buying opportunity? IMO, definately. It's heading towards oversold territory, with the the RSI at 37.6. The P/E's still high but I'd say it's worth buying/accumulating at these levels for the reasons that I've previously posted.