Tui slips despite positive update and plan to sell specialist divisions

Discussion in 'Market News' started by Lily, May 11, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
    Likes Received:
    Travel group to sell adventure and education operations, after Hotelbeds disposal

    Tui is continuing to dispose of unwanted parts of its business by announcing the sale of the travel group’s specialist adventure and education operations.

    The move follows last month’s announcement of the €1.2bn sale of its Hotelbeds business, and forms part of its restructuring in the wake of 2014’s merger of London-listed Tui Travel and parent group Tui AG. The group also plans to sell its near 12% stake in shipping group Hapag-Lloyd.

    Having recently announced the disposal of its Hotelbeds division for €1.2bn the group has today announced its intentions to dispose of its Specialist Group, which made a profit of €56m last year. Net debt at the period end was €1.5bn, which broadly marks the seasons low point for cash flow and is effectively covered by the disposal of the Hotelbeds and the likely proceeds from the Specialist Division.

    The current trading backdrop, interim performance and outlook are encouraging. We would expect to maintain our 2016 pretax profit estimate of €1,019m ( earnings per share €1.14) – pre any adjustment for the Hotelbeds disposal. The stock trades on a 2016 PE of 12 times. However, back-out Hotelbeds, cruises and hotels and the core tour operator trades on a mid-single digit. Obvious concerns remain over the ability to cover the shortfall of demand to Turkey but the rating looks highly attractive.

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