Sealink’s perfect timing means smooth sailing for post-COVID tourism

Sealink’s perfect timing means smooth sailing for post-COVID tourism

Date of Report: 19 October 2021
ASX: SLK

Price A$7.46

52 Week Range: A$5.67 - A$10.64

Market Cap: A$1.61b

Sector: Transportation

Every second week we invite a leading fund manager to present at The Insider: Meet the Fund Manager. Nick Guidera from Eley Griffiths Group selected Sealink as one of his 3 favourite stocks as the company reaps the rewards of a perfectly timed acquisition.

September 1, 2021

 June 18, 2021

The Insider: Meet the Fund Manager sessions are a great way to hear directly from leading fund managers. They share their approach to investing, favourite companies and their market view for the year ahead.

The Insider: Meet the CEO sessions feature a selection of company leaders who provide a succinct overview of big things their companies are doing. 

With borders getting ready to open up, and people beginning to move around again, the stay-at-home COVID cycle seems to be coming to an end. 

Although the recovery of tourism and travel may be bumpy for some, a perfectly timed acquisition means it is smooth sailing ahead for Sealink (ASX: SLK), Australia’s largest and most experienced multi-modal transport and tourism operator.

In 2019, Sealink acquired Transit Systems, one of Australia’s largest private bus lines.

Sealink went from a maritime tourism business to a diversified transport provider backed by non-discretionary government contracts.

“The risk profile of it when it was a pure maritime tourism business has been eliminated,” Mr Guidera said.

Today, 91% of Sealink’s annualised revenue is contracted or non-discretionary contracts, meaning the business has a baked-in market share of more than 50% of bus services in Western Australia and South Australia.

Now that Sealink has completed its first year as a diversified business, revenue and profits are up 88% and 152%, respectively.

With borders set to open, Sealink’s government-backed tourism assets are well-positioned to follow the same growth trajectory. 

“One of the core strengths of this business is its ability to generate immense operating cash flow. Even despite COVID, a lot of that cash is poured back into the business to improve the asset base,” Sealink CEO Clint Feuerherdt said.

Many of Sealink’s island routes do not have competition. That means the company has the opportunity to bring tourists to the destination on a Sealink vessel, transport them across the island on a Sealink bus, then put them in Sealink-owned accommodation. 

“We think the markets are only just appreciating the transport opportunity and the resilience of these earnings over time,” Mr Guidera said.

Click here to view more videos from Nick Guidera’s ‘Meet the Fund Manager’ session, or click here to view the full ‘ The Insider: Meet the CEOs’.

The CEOs of all the companies chosen as Fund Manager favourite stocks are invited to present at our Meet the CEO series. Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets position.

Any advice contained within this presentation is general advice and does not consider your personal circumstance, you should consider whether it’s appropriate for you.

The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss.

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Michael GoldbergManaging Director and Portfolio ManagerCollins St Asset Management

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The CEOs of all the companies chosen as Fund Manager favourite stocks are invited to present at our Meet the CEO series. Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets position.
Any advice contained within this presentation is general advice and does not consider your personal circumstance, you should consider whether it’s appropriate for you.
The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss.