3 Consumer Discretionary Stocks - WEB, JIN, LOV

  • Apr 06, 2019 AEDT
  • Team Kalkine
3 Consumer Discretionary Stocks - WEB, JIN, LOV

Webjet Limited (ASX: WEB)

Webjet Limited (ASX: WEB) is a digital travel business spanning both global consumer markets through business-to-consumer and wholesale markets through business-to-business. B2C travel services operate Webjet (OTA consumer brand) and other complementary travel products. B2B travel business provides a wide range of hotel inventory operating in Europe, Middle East, Africa, North America and Asia under Lots of Hotels, Sunhotels, FIT Ruums, JacTravel brands.

On the financial front, the company delivered excellent numbers in FY18 across all the segments. In FY18, TTV (total transaction value) went up by 54% (Y-o-Y) to $ 3,012 million. Revenue grew 54% and net profit grew 30%, depicts strong numbers posted by WEB in FY18.

WEB has maintained excellence in terms of numbers and recorded strong results for H1 FY19. TTV growth up 29% to $1.9 billion, revenue growth up 33% to $175.3 million, PAT growth up 59% to $31.8 million, shows the outperformance of the company in H1 FY19. Management expects significant opportunities for WebBeds, particularly in the Asia Pacific region. WEB has set a target of “8/5/3” and is very close to achieving it.

Webjet reconfirms guidance for FY19 to deliver EBITDA at $120 million.

The stock has witnessed a substantial gain in the last one year appreciating 50.50%, with major gains coming in the last three months at 50.14%. At CMP of $ 15.15 on 5th April 2019, the annual dividend yield for the stock comes at 1.3%, with a market capitalisation at ~$2.13 billion. WEB announced a fully franked interim dividend of 8.5 cents per share which will be paid on April 18, 2019.

Jumbo Interactive Limited (ASX: JIN)

Jumbo Interactive Limited (ASX: JIN) is an operator of www.ozlotteries.com, a popular website in Australia under Tabcorp. JIN gained popularity in 2000 after selling its first lottery ticket on the Internet due to the convenience factor. JIN came up with a lottery app for the iPhone and with this, mobile lotteries came in fashion. JIN kept on coming with the innovative features like Lotto Party, so on and so forth.

S&P Dow Jones Indices announced its quarterly rebalance of the S&P/ASX Indices and was added JIN to S&P/ASX 300 Index, at the open of trading on March 18, 2019.

The company performed exceedingly well in H1 FY19, where all the parameters recorded a strong growth to match the FY19 guidance. Growth in TTV up 66% to $147.9 million (pcp $ 89.1 million) was largely driven by customer engagement and more jackpots. Revenues and net profit before tax also posted strong growth up 57.9% to $30.5 million (pcp $19.3 million) and up 136.2% to $18.2 million (pcp $ 7.7 million).

Based on the H1 FY19 numbers and expected large jackpot activity in the second half of FY19, the management expects TTV growth at ~62% vs FY18 with the higher top line and bottom line. The average large jackpot value is likely to be ~$34.1 million in H2 FY19 as compared to $37.4 million in H1 FY19. At CMP of $15.520 on 5th April 2019, the stock is trading at PE multiple of 46.5x.

Lovisa Holdings Limited (ASX: LOV)

Lovisa Holdings Limited (ASX: LOV) is engaged in the business of directional jewellery trading from 326 stores in 15 countries.

In 1H FY19, total global sales revenue saw a healthy growth of 12.3% on account of an accelerated rollout of stores. The growth of 13% in gross profits to $107.08 million for the same period reflected the robust margins, which came in at 81% backed by the benefits of currency tailwinds and well managed promotional activities. Top line growth in Australia/NZ markets is not so exciting due to the adverse impact of generally softer trading conditions combined with the higher store sales over recent years. The store network increased to 366 at the end of H1 FY19, a net increase of 40 stores with 51 new stores opened and 11 stores closed as part of an ongoing store network optimization process.

LOV will open net 40 stores in the second half of FY19, continuing its global rollout strategy. LOV expects to accelerate in US and French markets with the rollout of new stores.

Looking at the one-year performance, the stock has given a negative return of 3.51%, whereas three months performance witnessed a strong appreciation in price with gains at 59.40%. At CMP of $ 9.06 on 5th April 2019, the stock is trading at PE multiple of 26.1x with an annual dividend yield at 3.53%.


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