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The key date for the likes of TUI will be the position at the start of the Southern European holiday season which kicks off at the start of May and peaks in June to September. If enough UK adults have been jabbed by then it is highly likely that the likes of Spain are going to allow holidays to take place as tourist constitutes approx. 40% of the economy there and having lost the 2020 season tourist resorts are in a bad situation economically. The government is currently giving out mixed messages at when all Uk adults will have been offered a vaccination. Various people over the weekend saying dates from June to September. The government was avoiding saying exactly when as it would reveal just how much vaccine the UK has purchased and delivery dates. NB - TUI relies on as many (if not more ) tourists from the likes of Germany for its business so success will also depend on the European vaccination programme.
Or rather 403.2p!
Closing price today was £403.20
50% of the gain is not as good as 100% of the gain...
I'm now 30% up on Thursday last week's position. Funny really - I held some TUI shares at the start of the pandemic which I had bought in September 2019 when I fancied TUI's chances following the Thomas Cook demise. Paid £9.66 a share and took a massive hit when the virus arrived. I then bought through the whole of the original lockdown (and after) to lower my average cost on the hope all of this would get rectified if a vaccine was invented. I also assumed that the German government would provide state aid to keep TUI afloat in all circumstances (unlike the UK govt!). Looks like my punt paid off! Still holding as the share price should rise further when vaccine kicks in, virus numbers fall and holidays start again. The Summer 2021 holiday season looks like it has a strong possibility of happening, at least for UK citizens. Not sure about the French though given their very slow pace of vaccination...
Sorry - meant 'now baked in'. Typo.
Sorry - to be clear and strictly accurate by 'dilution' I was actually referring to the fall in the share price to the Theoretical Ex Rights Price (TERP). This is what happened last Friday and is not 'baked in'. Excepting some normal commercial change/news to the business the share price should now no longer be moved/influenced by the rights issue.
Dilution happens when shares go ex-rights (i.e. last Friday for TUI) - not when the rights are exercised and shares issued. This is the case with all corporate rights issues - always has been - always will be. Anyone who thinks differently does not understand the mechanics of the market.
The value of my TUI holdings (full paid share plus the rights) is now up 24% on where it was last Thursday, when the closing price was circa £5 a share, before the dilution which took place last Friday. I guess that makes the equivalent 'old' pre-diluted share price about £6.20. I've going to exercise the rights and hold because (1) - the vaccine does work and by the middle of next month everyone at right of getting very ill or dieing from Covid will have been vaccinated - well in time for the Summer holiday season and (2) from all the evidence I have seen there is both a massive pent up demand for holidays and sufficient capital amongst the paying public to fund them (partly including the money they did not spend on last summer's holidays, but also including all the money people did not spend down the pub, on clothes and hardware, on a new car etc over the past 10 months due to shop closures). Whilst I don't think the financial position of TUI is going to be as good as it was pre-March 2020 going forward due to higher debt levels I still see a very significant potential upside in the share price.
This is Rolls Royce all over again with a big gain. I'm quids in on both of these rights issues!
Anyone holding both shares and rights purchased earlier than Friday last week is up about 20% over the closing price on Thursday 7 January which was about £5.00! Happy days...
Masaimara - yes - you can sell your rights now for the full £2.58. The person buying them will pay you £2.58 per right and then pay an extra 96p to exercise them i.e. the full share price. NB in reality I think you will find that the rights price is marginally below the figure of £2.58 giving the purchaser a potential profit opportunity on exercise. It also allows the purchase to speculate on the TUI share price movement without having to cough up so much cash.
HeresHopin - yes you are correct. The price of a 'Right' to buy a tup share is the current TUI share price less the 96p that has to be paid to exercise the right and buy that share. In effect the price or value or the Right is the expected gain to be realised when the share is purchased. As I write the current TUI share price is £3.57. If you take this price less the 96p payable to exercise the right and buy the 'discount' shares you get a value for the right of £2.61 (or thereabouts). If you wait and but the shares for 96p and then sell at a price of say £3.57 you will get a profit of £2.61 per share. Conversely just sell the rights now and get £2.61 per share right now if you want to.
RNS on new funding package just released. SP has just bounced back up?
RNS on new funding package of €1.8bn just released...