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On The Beach grows profits

The beach holiday booking platform is less exposed to trouble in the travel market
November 30, 2018

A hot summer caused chaos for travel companies as Brits decided against last-minute getaways. And while On The Beach (OTB) wasn't completely immune to this issue, the structure of its business helped insulate it from the problem. The company operates a holiday booking platform – rather than owning the large, physical assets such as airplanes – so there's little need to discount or write off unsold trips. And even though chief executive Simon Cooper admits the heatwave "suppressed demand", the group still managed to deliver a 24 per cent increase in annual operating profit to £26.1m.

IC TIP: Buy at 412p

Following the acquisition of Classic Collection Holidays, which completed in August, the group now has access to a "business to business" channel whereby "thousands" of travel agents can use its booking platform. It’s estimated that 5m beach holidays are booked via this offline channel each year, although a new booking portal platform tailored specifically to travel agents will be launched in early 2019.

Analysts at Numis expect pre-tax profits of £39.3m during the year to September, giving EPS of 24.1p, compared with £33.6m and 21.2p in FY2019.

ON THE BEACH (OTB)   
ORD PRICE:412pMARKET VALUE:£540m
TOUCH:412-412.5p12-MONTH HIGH:650pLOW:  384p
DIVIDEND YIELD:0.8%PE RATIO:25
NET ASSET VALUE:90p*NET CASH:£47.3m†
Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201445.8-4.8-7.9nil
201563.1-2.0-5.8nil
201671.317.011.02.2
201783.621.113.82.8
201810426.116.53.3
% change+25+24+20+18
Ex-div:10 Jan   
Payment:14 Feb   
*Includes intangible assets of £88.1m, or 67p a share  †Excludes £38.4m trust account