Canaccord target $10.00!!!
Travelbyus.com (TBU : TSE : $4.08 / TVB : Frankfurt : E$2.95) Jamie
Spreng (514) 844-3790
Recommendation: SPEC BUY
Web site address: www.travelbyus.com
12-month target price: C$10.00
52-week price range: C$5.55-0.05
Shares O/S: fully diluted 79.4M
Weekly trading volume: 2,161K
Market capitalization: C$324M
Acquisition
Travelbyus.com announced that it has entered into a letter of intent
to acquire US-based Cruise & Vacation Shoppes of America Ltd. ("Cruise
Shoppes"). Cruise Shoppes is a nationwide cruise and leisure sales
organization with annual gross bookings in excess of US$300M annually.
Of that amount, the company generated approximately US$50M in sales
online. Combined with Travelbyus.com's wholly owned cruise division,
Galaxsea Cruises, the company will be one of the larger cruise
distribution groups in North America.
Commissions on cruises are one of the more profitable travel products.
Commissions typically run at 10%, excluding overrides, versus 5% or
less for airline tickets. The industry is expecting strong growth in
the cruise segment and cruise operators are gearing up to provide
increased fleets. Size is also a factor as commissions and overrides
in the travel industry are based on volume. The combined entities,
Galaxsea Cruises and Cruise Shoppes, should put Travelbyus.com in the
position of receiving the maximum commission and override rates given
in the industry. Increased distribution allows Travelbyus.com to
become more aggressive in terms of negotiating proprietary product and
assuming inventory risk should the company decide to do so.
Internet Launch
The company also launched its main site (www.travelbyus.com) this past
Friday. Initial interest was substantial as the site recorded
approximately 149,000 page views on the first day. The site itself
has a clean design and is comprehensive in its scope, although a
number of content sections are not functional at the present time,
such as the video gallery and My Travel Vault. We expect to see
additional content in place on the site each week and management
indicated that its target for having all the content and functionality
in place is the end of March.
Now that the Internet site is live and management is clearly
continuing to pursue strategic acquisitions, we are raising our target
price to $10.00/share. This target price implies a P/S multiple of
10.6X this year's revenue, which is somewhat below its comparables
such as Preview Travel and Expedia that trade at between 13.0-16.0X
P/S.
(Voluntary Disclosure: Position- Long)
Travelbyus.com (TBU : TSE : $4.08 / TVB : Frankfurt : E$2.95) Jamie
Spreng (514) 844-3790
Recommendation: SPEC BUY
Web site address: www.travelbyus.com
12-month target price: C$10.00
52-week price range: C$5.55-0.05
Shares O/S: fully diluted 79.4M
Weekly trading volume: 2,161K
Market capitalization: C$324M
Acquisition
Travelbyus.com announced that it has entered into a letter of intent
to acquire US-based Cruise & Vacation Shoppes of America Ltd. ("Cruise
Shoppes"). Cruise Shoppes is a nationwide cruise and leisure sales
organization with annual gross bookings in excess of US$300M annually.
Of that amount, the company generated approximately US$50M in sales
online. Combined with Travelbyus.com's wholly owned cruise division,
Galaxsea Cruises, the company will be one of the larger cruise
distribution groups in North America.
Commissions on cruises are one of the more profitable travel products.
Commissions typically run at 10%, excluding overrides, versus 5% or
less for airline tickets. The industry is expecting strong growth in
the cruise segment and cruise operators are gearing up to provide
increased fleets. Size is also a factor as commissions and overrides
in the travel industry are based on volume. The combined entities,
Galaxsea Cruises and Cruise Shoppes, should put Travelbyus.com in the
position of receiving the maximum commission and override rates given
in the industry. Increased distribution allows Travelbyus.com to
become more aggressive in terms of negotiating proprietary product and
assuming inventory risk should the company decide to do so.
Internet Launch
The company also launched its main site (www.travelbyus.com) this past
Friday. Initial interest was substantial as the site recorded
approximately 149,000 page views on the first day. The site itself
has a clean design and is comprehensive in its scope, although a
number of content sections are not functional at the present time,
such as the video gallery and My Travel Vault. We expect to see
additional content in place on the site each week and management
indicated that its target for having all the content and functionality
in place is the end of March.
Now that the Internet site is live and management is clearly
continuing to pursue strategic acquisitions, we are raising our target
price to $10.00/share. This target price implies a P/S multiple of
10.6X this year's revenue, which is somewhat below its comparables
such as Preview Travel and Expedia that trade at between 13.0-16.0X
P/S.
(Voluntary Disclosure: Position- Long)
