Ferry operator and tourism services business Sealink Travel Group Ltd (ASX: SLK) has cruised more than 5% higher today to sell for a record high of $2.45 on the back of ballooning revenues and profits.
Net profit of $4.7 million for the first half of financial year 2015 was up 15% on the prior corresponding period's (pcp) normalised net profit, while revenues of $57.2 million also grew 9.1% over the pcp.
Like Sydney Airport Limited (ASX: SYD) it goes without saying that the business is heavily leveraged to tourism.
Therefore the tumbling dollar would appear a tailwind in encouraging overseas tourists to visit Australia, while the natives may be inclined to holiday at home.
Although, perhaps the ferry operator's strongest tailwind is its falling fuel bill thanks to the jaw-dropping decline in global fuel prices. Unsurprisingly the group has forecast second half profits to come in stronger, with declining fuel costs a major positive.
The group's main revenue earner is South Australia's Kangaroo Island ferry, which saw revenues of $26.5 million for the half year.
Revenues are also generated by operating the Captain Cook cruises on Sydney Harbour, and ferries in Queensland and The Northern Territory. It recently announced the acquisition of two more passenger vessels to operate on Sydney Harbour.
It's no secret that tourism is a future 'super sector' of the Australian economy, especially relative to the likely sluggish performance of other areas. I wrote back in November that the business looked good value selling for $1.80 and the stock has soared higher since then.
Selling for $2.37 the business now trades on around 20x what could roughly expected to be full year earnings given today's result and the company's guidance.
It also declared a fully franked interim dividend of 3.8 cents per share payable on 15 April, 2015. Again this would suggest an estimated forward yield of more than 3% assuming the full-year dividend is marginally higher.
The stock is probably around fair value now and obviously carries considerable risks, but remains one for the watchlist given a decent outlook.
