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Outlook remains sunny for On The Beach

A focus on advertising spending appears to have paid off for the online travel agent
May 16, 2017

Online travel agent On The Beach Group (OTB) may have reined in its spending on online marketing to 40.5 per cent of revenue in the reported period, from 46.3 per cent in last year's first half, but previous efforts to get its name out there appear to have paid off. The number of unique visitors on the website increased by 9.5 per cent to 27.5m, while branded and free traffic soared to 56.7 per cent of overall visits.

IC TIP: Buy at 376p

Not included in this set of results is the recent acquisition of fellow travel website Sunshine.co.uk for £12m, three-quarters of which will be paid on completion and the remainder in December. Management estimated that the acquisition would add 200,000 customers to its 1.2m (in FY2016), and assured shareholders that the purchase would not affect its ability to pay dividends.

Holiday prices were flat year-on-year as cheaper flights due to an oversupply of seats to popular Western Mediterranean destinations were offset by higher hotel prices, a function of weaker sterling and sector inflation. Some destinations such as Turkey and Tunisia proved less popular as the terrorist threat put off travellers.

Analysts at Numis expect pre-tax profits of £27.5m with EPS of 17.6p in the year to September 2017, compared with £21.2m and 13p in FY2016.

ON THE BEACH (OTB)
ORD PRICE:376pMARKET VALUE:£ 490m
TOUCH:364-376p12-MONTH HIGH:394pLOW: 175p
DIVIDEND YIELD:0.8%PE RATIO:31
NET ASSET VALUE:67p*NET DEBT:3%

Half-year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201635.57.35.0nil
201738.19.96.10.9
% change+7+34+22-

Ex-div: 2 Jun

Payment: 30 Jun