Sunday, June 18, 2006

WTF for Wotif

The market clearly believes that (ASX:WTF) is worth more than AU$650mm. Boggling results for a company with a projected profit of A$15.7, margins of only 11% (10% commission plus booking fee), only one language, dominance in only one market and a growth strategy hinging on the Asian and South American markets. Don't get me wrong I love these guys. Graeme, Robbie, Andrew et al are smart and established online travel in Australia. I have no doubt or question their profitability but I do question their growth plans and their multiple. Asia will be much harder to crack than they think. Travel currently own Japan and ctrip, eLong and others are making China their own (well mainly but more posts on that later). As Bloomerg point out they are trading at multples well in-excess of online businesses with stronger margins and greater geographic penetration such as Expedia. Mixing acronyms and float codes - WTF WTF.

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