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Trainline still facing uncertain future

The independent rail is still in limbo due to pandemic-linked disruption
November 3, 2021

 

  • Narrowing operating loss
  • e-ticketing benefits grow 

Shares in Trainline (TRN) slumped in the wake of the ticketing platform’s half year results, in which strong sales were overshadowed by government plans to create a state-owned ticket retailer. 

Net ticket sales almost tripled in the first half of the year in response to the lifting of Covid-19 travel restrictions, and Trainline – which saw revenue crash during the first UK lockdown – has narrowed its operating loss from £43m to £9m. The company said it took advantage of increased online demand, boosting its performance marketing to tap into the "staycation bump", which generated a sharp rebound in new users. It added that e-tickets were increasingly available to use on trains which was likely to drive up customer numbers. 

Despite its post-lockdown optimism, however, Trainline is far from on-track. Loss per share narrowed from the corresponding period in 2020, but net debt remains high at almost £170m. Even more worrying is the spectre of Great British Railways (GBR), a project announced by the Department for Transport in May 2021. Under the government’s proposals, GBR could become a dangerous rival to Trainline, selling tickets via a website and an app, though the company also pointed out that "should the UK Government decide to use a tech partner to host their online retailing platform, we are well placed to meet their requirement".

Trainline stressed that there is no firm timetable for the project, and that it will take some years to roll out. However, the white paper casts a shadow over Trainline’s future business model and is likely to spook investors. Uncertainties abound. Sell. 

Last IC view: Sell, 436p, 07 May 2021

TRAINLINE (TRN)   
ORD PRICE:303pMARKET VALUE:£1.45bn 
TOUCH:301-303.2p12-MONTH HIGH:537pLOW: 250p
DIVIDEND YIELD:NILPE RATIO:NA
NET ASSET VALUE:56.5pNET DEBT:60.5%
Half-year to 31 AugustTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
202031.0-44.7-8.09nil 
202177.7-10.3-1.76nil 
% change+151---
Ex-div:-   
Payment:-   
*Includes intangible assets of £494m, or 103p a share.