Discreet mid-term forecast and planned recap despite surprising FY22

Despite the consensus-breaking FY22 results and encouraging FY23 outlook, TUI’s mid-term ambitions look prudent compared to the market expectations. The share reaction was further negatively impacted by the dilution effect from the €1.6-1.8bn rights issue plan, which was set to support the exposure reduction to the German state rescue measures. We expect a decrease in the consensus and our target price.

A recap planned to support the WSF repayment agreement

TUI has reached agreement with the German WSF to fully repay the pandemic-related stabilization measures with a €479m nominal value of c.€730m and the price could increase to as much as €957m, subject to market conditions. A rights issue of €1.6-1.8bn (c.50-60% of TUI’s current market cap) is planned for early 2023 to support the WSF repayment, following the implementation of a capital reduction. The recap will also be used to partially redeem the remaining KfW credit lines of €2.1bn.

Uncertainties cloud the summer trading outcome

Despite a promising summer outlook, TUI’s trading update did not convince the market due to a high level of uncertainties related to airport chaos, geopolitics and inflation, etc. The financial guidance remains vague for the same reason and its balance sheet still needs meaningful strengthening. We expect a downgrade in the FY22 consensus but no major changes to our current estimates.

Summer is finally here (soon)

The market cheered TUI’s consensus-beating H1 results, improving the net debt position and accompanied by upbeat FY guidance. The favourable market conditions and the group’s strong pricing power should support sparkling summer trading and allow for a further strengthening of the balance sheet, although the only-limited fuel hedging could neutralize part of this expected vitality.

Mixed summer outlook

TUI’s Q1 results missed the consensus again while its liquidity and net debt positions remained comfortable. The current trading of summer bookings is mixed as the average prices remain buoyant but the booking volumes have slowed. Regardless, the target of summer bookings volume is maintained, due to later booking profiles and rising consumer confidence. The group’s plan to repay part of the state aid and to reach 90% of its permanent cost reduction by FY22 should be considered as positive.

Wait and...continue to wait

TUI’s FY21 results came in below consensus and no meaningful short-term catalysts were seen. The group may have to trim further its winter schedule due to the new Omicron variant, which has already weighed on recent bookings. The summer 2022 bookings seem encouraging but visibility remains limited in effect.

Taps investors for €1.1bn

TUI launched a €1.1bn share placing to reduce financial interest expenses and improve its debt profile. The recapitalisation is necessary, which should not surprise the market, and will supportively strengthen TUI’s vulnerable balance sheet. Due to a larger-than-expected dilution effect, we will have a lower target price after integrating this capital increase.

Summer hopes are still for sale

TUI’s Q3 results update was encouraging, due to a meaningful business restoration, improved cash generation and promising summer outlook, despite a narrowed Q4 capacity schedule. However, a plan of the critical balance sheet repairment is still missing.

Narrowed FY revenue forecast despite summer hopes

TUI’s H1 results release frustrated the market today, due to its downward-adjusted FY revenue guidance and mediocre cash burn rate, despite the prospect of a bright summer recovery. Consensus might go down.

Not convinced by TUI’s sparkling summer hopes

TUI delivered a weak Q1 as expected, with an unexpectedly improved cash burn rate, but the latter should be considered as a one-off item since no improvement has been included in the guidance. The group’s current liquidity position should be adequate at least until the summer, while its heavy leverage is a concern instead. It continues betting on a summer recovery, whereas we still consider the near-term market conditions as highly uncertain.

Enough cash to burn before the hopefully rosy summer arrives

TUI’s FY20 results disappointed the market, with a further trimmed business assumption for FY21. It doesn’t expect a return to profitable growth until FY22.

TUI reaches an additional financing package of €1.8bn

The additional financing package would allow TUI to last until next summer, when a constructive business resumption is expected to be seen.

LIBERUM: hVIVO plc* - Update exceeds expectations

Top Picks for 2023 - 2022 review and outlook for 2023

On 10 January last year, we set out our ten top stock picks for 2022, in what turned out to be a very poor twelve months for global equities, due to war, accelerating inflation, political instability and recession fears. Between 7 January 2022 and 31 December 2022, the AIM All-Share Index declined 30.0%, whilst the average performance of our ten top picks was -24.7%, a modest relative outperformance. In this note we discuss the performance of our 2022 top picks, equities trends in 2022, and our

QuotedData’s Real Estate Monthly Roundup – January 2023

Performance - 2022 ended with another difficult month for property companies as the sector continues to get to grips with the impact of higher interest rates. There were several funds that performed well during December, however, with secondary shopping centre landlord Capital & Regional top of the pile. For a second month on the trot Home REIT saw its share price tank after it came under attack from a short seller in November. Valuation moves - It was a mixed bag for valuations, with six-month

SHORE CAPITAL - Sureserve Group+ (SUR, House Stock at 91p)

This Week's AIM Highlights 20th January 2023

Cenkos: Bidstack Group Plc -- Termination of Coverage

Cenkos Securities plc has terminated coverage on Bidstack Group Plc. Our previous recommendation (BUY) and forecasts can no longer be relied upon. Please contact Cenkos for further information.

SHORE CAPITAL - Sureserve Group ^ (SUR) - House Stock at 85p

City of London Investments (CLIG LN) - Six-month trading update

CLIG’s half-year pre close trading update reveals $9.15bn of Funds Under Management (FUM): up in 2Q, but down 1% since 30 June. CLIG’s run-rate profit remains at levels reported in the 1Q IMS; the interim DPS remains at 11p.

Hybridan Small Cap Feast - 17 Jan 23

17 January 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment object

Hybridan Small Cap Feast - 25 Jan 23

25 January 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment object

Morning Note – 20 January 2023

Hybridan Small Cap Feast - 23 Jan 23

23 January 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment object

Feedback on CMD

Franchise Brands held a well-attended CMD yesterday which highlighted the group's strategy, the robust performance of its two key operating divisions (B2B and Filta International), and how the application of technology and effective marketing are driving growth.

Morning Note – 24 January 2023

WHI Support Services Sector Comment: Challenges and opportunities

Bleak expectations for the UK economy in 2023 anticipate underperformance against other G7 countries based on factors such as (a) the UK's higher than average mortgage rate sensitivity and (b) relative exposure to high gas and energy prices. Some measure of political / economic stability has returned, though this arguably remains a brittle quality, given the scope for dissent within the Conservative party and the unpredictable impacts of industrial action, among a range of factors. All of this s