Despite Sealink releasing mostly positive results, its share price is sliding.
The post Sealink (ASX:SLK) share price falls 6% despite $37.8 million profit appeared first on The Motley Fool Australia. –
Right now, the Sealink share price is 5.33% lower than its previous close. The company’s shares are swapping hands for $9.49 apiece.
Sealink share price slumps despite 377% increase on profit
Here’s how the tourism and transport company performed in FY21:
$1.17 billion of revenue – 88% more than the company reported for FY20
Net profit after tax of $37.8 million, up 377% on that of FY20
Earnings before tax, interest, depreciation, and amortisation (EBITDA) of $161 million – 58% higher than that of FY20
9 cent fully franked final dividend, bringing the total FY21 dividends to 16 cents per share
Sealink received $11.9 million from JobKeeper in FY21. It also got similar support from employee-focused schemes in Singapore and London.
Approximately 90% of Sealink’s FY21 revenue came from contracts with governments or blue-chip corporate counterparts.
The company ended the period with $103.4 million in cash and $19.4 million of borrowings.
What happened in FY21 for Sealink?
FY21 was a big one for Sealink and its share price. The company’s contract portfolio expanded in all 3 operating divisions.
It retained its Singapore Bulim bus contract and was awarded the contract for SembawangYishun.
It also commenced the up to 15-year contract to operate Brisbane’s CityCat, CityHopper, and Cross River ferry network.
Sealink renewed 3 significant bus contracts in Adelaide and added Adelaide’s Outer North bus services contract. It also commenced the operation of the newly-franchised Adelaide tram contract as part of a joint venture.
Additionally, the company renewed key strategic marine contracts in Townsville and Darwin, and also acquired Western Australia’s Go West Tours. Sealink believes Go West Tours may allow it to realise opportunities in the mining and resources sector.
Sealink states its zero emissions and demand-responsive transport through battery electric and hydrogen-powered buses is market-leading. A two-year electric bus pilot in a single New South Wales region was completed in June 2021. The pilot resulted in the NSW Government purchasing another 10 electric busses.
FY21 wasn’t all good though. There’s plenty of bad news that might be affecting the Sealink share price today.
COVID-19 impacts on the domestic and interstate travel markets challenged Sealink’s marine and tourism operations in FY21. However, domestic demand was strong when COVID-19 restrictions weren’t in place.
Government contracted bus services weren’t badly affected by COVID-19. Though, revenue from chartering and advertising fell. The company said extra bus services to accommodate social distancing offset some of the losses.
Sealink’s London segment faced dire challenges over FY21. The company retained 3 Transport for London routes and acquired 1 from a competitor. However, it lost 4 of its London routes.
What did management say?
Sealink’s CEO Clint Feuerherdt commented on the results driving the company’s share price lower today:
SeaLink has demonstrated the resilience of its operations and quality of its contracted earnings base in the face of an unprecedented global disruption. We have delivered on our objectives in a safe and responsible manner whilst positioning the Group to capitalise on opportunities as they present.
Whilst the Marine & Tourism division is exposed to the turmoil that the COVID-19 pandemic inflicts, SeaLink is well positioned to capture the heightened level of domestic travel demand, providing marine transport, holiday and general tourism product to very unique island destinations around the country.
I am very pleased with the way we anticipated, navigated, and repositioned to finish this year with a strong balance sheet that supports our growth strategy.
What’s next for Sealink?
Here’s what might drive the Sealink share price in FY22:
Sealink has placed Australia’s first order for 2 hydrogen fuel cell buses.
It has also placed an order for 31 battery electric buses, which will bring Sydney’s electric bus fleet to 55 in FY22.
Sealink is continuing to explore the possibility of installing solar systems on 6 Adelaide bus depots, as well as partnering with the South Australian Government to deploy hydrogen fuel cell buses in Adelaide.
The company is currently working at Joondalup Bus Depot to bring electric busses to Perth.
Finally, Sealink is continuing to lobby for competitive tendering for public bus transport in Queensland, Tasmania and the Australian Capital Territory. It is also looking to potentially expand its public transport footprint into the USA.
Sealink share price snapshot
Despite today’s fall, the Sealink share price has gained 42% year to date. It is also 111% higher than it was this time last year.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.
The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.