Tui considers leaving London as revenue soars

Tui (TUI) shares climbed by more than 10 per cent after the flight and package holiday company revealed it is considering delisting from the London Stock Exchange to pursue a simplified structure under a single German listing. This wouldn't be an unreasonable move, given there has been "a notable liquidity migration from [the] UK to Germany" for trading in the company's shares, and Tui could benefit from the European Union single market rules. 

The listing news took the headlines, but the underlying annual performance was solid, with revenue exceeding pre-pandemic levels as the company enjoyed a year free of Covid-19 travel restrictions. Top-line growth was driven by both higher prices and volumes, with customer numbers up 13 per cent to 19mn. 

Underlying operating profit doubled to €977mn (£837mn), with management flagging significant growth for cruises and strong performances across other categories such as hotels and resorts in the fourth quarter. 

Some tasty forecasts also helped sentiment on results day. For 2024, guidance is for a revenue uplift of at least 10 per cent and underlying cash profit growth of at least a quarter. The winter bookings pipeline is up 11 per cent on last year despite the impact of slowing bookings in Egypt due to the troubles in the Middle East. 

Elsewhere, net debt fell by 39 per cent to €2.1bn after a rights issue earlier in the year. The net leverage ratio was down from 2.8 times to 1.2 times year on year to take it under the pre-pandemic position. 

The shares trade hands at five times forward consensus earnings, according to FactSet, a nice discount to the five-year average of 13 times. Hold. 

Last IC view: Hold, 351p, 13 Aug 2020