Kelsian: Profiting from boats and buses

Kelsian (ASX:KLS) has a portfolio of passenger transport assets and tourism assets. They were previously known as SeaLink Travel Group. Today they own fleets of buses and ferries in different locations in Australia, Singapore and the UK and recently acquired bus operations in the Channel Islands. Their portfolio includes about 4,000 buses and 113 boats.
The nature of the business is that they have long-term service contracts that are usually government backed. This enables a predictable revenue base. They are also able to pass on increases in fuel costs, wages and general inflation under the terms of most of the contracts which protects margins and reduces variability of bottom line profits.
Revenue is diversified across business units and geographies, however Australian buses are the dominant contributor as outlined in the charts below.

Source: Kelsian Group Limited, FY23 Half Year Results Investor Presentation, 23/2/23
As would be expected, the pandemic marked a difficult period for Kelsian as people’s movements were greatly restricted. The impact was less pronounced for operations under government contracts, as despite the lower patronage, they still received payment to keep the routes operating. The impact was harder felt...