Tui...a share to buy17 Jan 2019 19:05
TUI
TUI is one of the world’s leading tourism businesses, with 1,600 travel agencies, 150 aircraft, over 300 hotels and 20 cruise liners.
Since merging with Thomson in 2014, management has pivoted towards a more vertically- integrated business model with control over all aspects of the customer holiday experience.
As more than 90 per cent of TUI’s fleet is leased, it can quickly rationalise it in a downturn. Between September 2016 and September 2019 it expects to open 14 new hotels annually and add three ships to the fleet.
Package holidays continue to be affected by the relentless expansion of budget airlines. While we don’t expect this to reverse any time soon, there are still good growth opportunities for TUI.
In December, it published full year results to September 2018, with annual earnings growth of over 10 per cent for the fourth consecutive year post-merger.
This strong performance in a tough environment (where Thomas Cook has issued a profit warning) demonstrates TUI’s successful transformation into an integrated holiday provider.
Despite this, shares are trading on just 9.2x 2019 expected earnings, a deep discount to its historical price earnings ratio (P/E).