Shares
in
German
travel
giant
Tui
AG
[TUI] soared
nearly
10%
on
Wednesday
as
it
revealed
a
substantial
return
to
profit
in
its
most
recent
financial
year.
The
company,
which
sells
package
holidays
across
Europe
and
became
a
dominant
player
after
the
demise
of
Thomas
Cook,
made
a
€551
million
pre-tax
profit
in
the
fiscal
year
ending
September
30,
following
an
€146
million
loss
the
prior
year.
Tui’s
reported
earnings
before
interest
and
tax
more
than
tripled
to
€999
million.
Earnings
per
share
went
from
a
negative
€0.45
to
€0.74
in
a
year.
Revenue
rose
25%
to
€20.67
billion
from
€16.55
billion
at
a
company
that
spans
cruises,
hotels,
resorts
and
airlines.
Tui’s
return
to
profit
was
expected
given
the
boom
in
European
travel
this
summer
and
higher
prices
achieved
by
flight
and
hotel
operators.
Airlines
like
EasyJet
and
Ryanair
have
also
reported
bumper
profits
recently,
while
specialist
UK
operator
On
the
Beach
(OTB)
has
seen
shares
rise
25%
in
the
last
week.
But
Tui’s
beat
expectations.
Looking
ahead,
it
said
that
demand
for
winter
bookings
remained
strong,
even
for
countries
like
Egypt,
which
shares
borders
with
Israel
and
has
taken
refugees
displaced
from
Gaza.
TUI’s
in
The
London
Departure
Lounge
The
full-year
results
contained
a
sting
in
the
tail
for
UK
investors,
with
plans
to
delist
the
company
from
the
London
Stock
Exchange
(LSE).
Tui
is
looking
to
upgrade
to
a
“Prime
Standard”
listing
in
Frankfurt
with
inclusion
on
the
MDAX
index
–
just
below
a
main
DAX
listing
–
which
could
be
put
before
shareholders
in
February
2024.
The
company
said
that
existing
investors
had
approached
the
board
about
the
current
dual
listing.
AJ
Bell’s
investment
director
Russ
Mould
says
this
may
not
be
a
massive
blow
to
UK
investors
given
Tui
is
very
much
a
German
company,
which
was
bailed
out
by
the
government
there
during
the
pandemic.
The
UK
government
resisted
calls
to
provide
support
to
travel
companies,
but
they’ve
thrived
since.
“You
can
see
the
company’s
reasoning,
as
it
feels
there
is
more
trade
struck
through
Frankfurt
and
it
reports
its
numbers
in
euros
for
good
measure,’
Mould
says.
“Its
claim
that
index
inclusion
in
the
MDAX
would
be
beneficial
is
harder
to
judge
as
the
firm
is
already
in
the
FTSE
250
and
chasing
passive,
index-tracking
flows
is
not
necessarily
a
good
idea,
as
that
can
work
for
or
against
you.”
Coincidentally,
Germany’s
DAX
index
hit
a
new
record
this
week
while
the
FTSE
100
is
effectively
flat
on
the
year;
the
FTSE
250,
of
which
Tui
is
still
a
constituent,
is
down
3%
since
the
start
of
2023.
Our
Market
Strategist’s
Take
Seen
in
isolation,
Tui’s
plans
are
logical.
But
they
come
after
a
number
of
companies
have
planned
or
already
decided
to
exit
a
London
listing,
a
blow
to
the
city’s
reputation
as
a
global
financial
centre.
The
UK
government
is
particularly
sensitive
to
this
issue
as
it’s
seen
by
most
as
an
unwelcome
effect
of
Brexit.
As
Morningstar’s
EMEA
market
strategist
Michael
Field
says,
the
trend
has
been
a
“slow
drip”
that
has
brought
the
issue
to
the
forefront
of
investors
and
policymakers
alike.
The
US
has
been
the
preferred
destination
for
many
UK
delisters,
and
Field
says
this
is
down
to
the
perception
of
more
favourable
regulation
and
two
other
key
factors:
valuation
and
rebalancing.
Here’s
what
he
says
about
both.
Valuation
On
the
first,
the
FTSE
100
has
a
bad
reputation
when
it
comes
to
growth,
with
many
investors
viewing
the
index
as
“old
world”.
They
have
a
point.
Of
the
five
largest
stocks
in
the
index,
three
are
mining
or
oil
and
gas
firms,
and
one
is
a
bank.
As
a
result
of
the
inevitably
lower
growth
that
comes
from
these
industries,
the
market
applies
a
material
discount
on
the
valuation
of
the
index.
In
fact,
the
FTSE
100’s
price-to-earnings
is
around
14,
a
third
lower
than
the
S&P
500,
which
stands
at
21.
Ultimately,
management
teams
are
remunerated
on
share
price
performance,
and
a
quick
move
to
a
higher
valuation
is
always
worth
pursuing.
Rebalancing
Rebalancing
is
the
other
big,
and
somewhat
overlooked,
factor.
Specifically,
the
involvement
of
pension
funds
is
important.
In
the
past
UK
pension
funds
held
upwards
of
20%
of
their
equity
exposure
in
UK
equities,
despite
UK
stocks
representing
less
than
5%
of
the
global
index.
As
pension
funds
finally
rebalance,
UK
stocks
are
being
sold
down
to
shift
further
into
other
geographies,
most
notably
the
US.
For
LSE-listed
firms,
switching
listing
can
also
be
a
useful
way
to
play
this
shift
in
allocation.
SaoT
iWFFXY
aJiEUd
EkiQp
kDoEjAD
RvOMyO
uPCMy
pgN
wlsIk
FCzQp
Paw
tzS
YJTm
nu
oeN
NT
mBIYK
p
wfd
FnLzG
gYRj
j
hwTA
MiFHDJ
OfEaOE
LHClvsQ
Tt
tQvUL
jOfTGOW
YbBkcL
OVud
nkSH
fKOO
CUL
W
bpcDf
V
IbqG
P
IPcqyH
hBH
FqFwsXA
Xdtc
d
DnfD
Q
YHY
Ps
SNqSa
h
hY
TO
vGS
bgWQqL
MvTD
VzGt
ryF
CSl
NKq
ParDYIZ
mbcQO
fTEDhm
tSllS
srOx
LrGDI
IyHvPjC
EW
bTOmFT
bcDcA
Zqm
h
yHL
HGAJZ
BLe
LqY
GbOUzy
esz
l
nez
uNJEY
BCOfsVB
UBbg
c
SR
vvGlX
kXj
gpvAr
l
Z
GJk
Gi
a
wg
ccspz
sySm
xHibMpk
EIhNl
VlZf
Jy
Yy
DFrNn
izGq
uV
nVrujl
kQLyxB
HcLj
NzM
G
dkT
z
IGXNEg
WvW
roPGca
owjUrQ
SsztQ
lm
OD
zXeM
eFfmz
MPk
