SeaLink Travel Group Limited, solid base of diversified businesses

Team Veye | 27 Feb 2021 ASX - SLK
SeaLink Travel Group Limited, solid base of diversified businesses

SeaLink Travel Group Limited (ASX: SLK)

Demonstrates resilience and delivers strong result in the first half of FY21

SeaLink Travel Group Limited (ASX: SLK) 24 February 2021 reported its interim FY2021 financial results for the half-year ended 31 December 2020.

Key highlights include:

  • Demonstrated resilience as an integrated, multi-modal transport business during an extended period of unprecedented external disruptions
  • Record revenue of $570.8 million, up 329.5% on previous corresponding half-year FY20, following the transformational acquisition of the Transit Systems Group, completed in January 2020
  • Underlying Net Profit After Tax and before Amortisation of $48.1 million, up 231.9% on prior year

(Chart source: TradingView)

  • Ongoing strengthening and enhancement of earnings with contract renewals and new contract awards during the period
  • Good demand from the domestic tourism sector despite COVID-19 lock downs and travel uncertainty
  • Approximately 91% of Group revenue is now either contracted or non-discretionary commuter transport revenue, providing “essential” transport services
  • Delivered strong gross operating cash flow
  • COVID-19 impacts well managed
  • Balance sheet strength offers resilience and creates optionality
  • Increased fully franked interim dividend to 7.0 cents per share

As borders opened and restrictions eased, strong demand from interstate markets was received in most parts of the tourism portfolio, with new bookings increasing almost immediately, complementing the already strong intrastate demand.

The Company remained focussed on building a geographically diverse portfolio of contracted essential services and leveraging the strong market position it had in Australia serving the large number of iconic island destinations it operates to. (Data Source – Company Reports)


Veye’s Take

SeaLink continues to be focused on growing its contract portfolio through organic bidding opportunities, complemented by growth through acquisition. SeaLink is constantly seeking to maximise its organic revenue growth and profitability from its existing businesses, including the addition of new contracts, routes and products. SeaLink also has an ongoing focus and commitment to margin enhancement initiatives, via pricing strategies as well as cost savings and efficiency gains. The stock is making a "Higher High" formation on the charts. It is well supported by strong positive divergence on RSI. MACD positive crossover indicates further upside potential. ADX at 31 further indicates strong trend strength. The stock is cruising comfortably on both short-term and long term charts. It can have the potential of giving very good returns in the near to medium term. “Buy” was given to “SeaLink Travel Group Limited” at the price of $4.47 on 21 August 2020 and at $5.01 on 11 September 2020. It has already grown by more than 92% in a little over six months and more than 71% in less than six months respectively. Veye maintains a "Hold" on “SeaLink Travel Group Limited” at the current price of $8.60


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