The Webjet Limited (ASX: WEB) share price has been in the doldrums for the past year as the online travel business rides out a number of problems.
These include the collapse of its business-to-business (B2B) partner Thomas Cook in the UK and a warning over local leisure travel conditions from Flight Centre Travel Group Ltd (ASX: FLT).
Throw in the protests in Hong Kong hitting travel numbers at a key Asian thoroughfare and it's been a tough run.
All these problems are arguably short-term in nature, but perhaps the market is correct to mark down the shares in response.
However, its CEO, John Guscic, and a number of insiders appear to think the stock is cheap today.
The CEO bought 35,00 shares on market on September 24/25 for an average price around $11.30 per share. He then added to his already large stake with another 26,500 shares on October 1 at an average price around $10.69 per share.
That's around $680,000 cash recently invested into shares at levels higher than today. You could say the CEO has been backing up the truck.
I do like to follow this kind of insider buying where a credible manager is adding on-market to an already significant holding.
An example of heavy insider buying and a rising share price recently is Dicker Data Ltd (ASX: DDR). Nobody really buys shares expecting the price to fall. But of course, even insiders can make mistakes.
Probably fuelling the CEO's optimism is the blockbuster rise of Webjet's B2B operations globally.
Webjet's B2B business serves as a a digital middle-man to allow tour operators or agents to make block bookings of hotel rooms at discounts to publicly advertised rates. In Asia overseas travel in groups is still popular as it's more economical and has other security advantages for example.
Source: Webjet presentation, October 24, 2019.
Above you can see the strong organic total transaction value growth Webjet has generated at its APAC B2B business.
It's forecasting over a $1 billion of TTV by FY 2023 and will probably lift EBITDA margins.
Should you buy?
Webjet does have some risks in its consumer-facing business, but generally has a strong track record of growth under a steady management team well aligned to shareholders.
As such I'd happily buy more shares today, but only hold it as a small part of a balanced investment portfolio.
Elsewhere travel agent Helloworld Ltd (ASX: HLO) has upgraded its earnings forecasts today. This may prove a fillip to Webjet investors.
