FTSE 250 movers: Tui surges on profits outlook; Paragon in favour

(Sharecast News) - FTSE 250: 18,657.10, +0.92%

Travel giant Tui said it would ask shareholders to approve a move of its stock market listing to Frankfurt from London as it also forecast a 25% rise in operating profit this year after 2023 earnings more than doubled on the back of strong demand.

Tui said it had been recently approached by certain shareholders over whether its current listing structure was "optimal and advantageous" and if an inclusion on Frankfurt's MDAX would be beneficial.

"This is against the background, that in the period since the completion of the merger with Tui Travel and, more significantly in the past four years, the ownership of Tui AG's shares and the liquidity on the exchanges has evolved significantly with a notable liquidity migration from UK to Germany," the company said.

"In light of the views expressed by shareholders and any further feedback from shareholders, the executive board is currently considering, if an upgrade to a Prime Standard listing in Frankfurt with MDAX inclusion and a delisting from the London Stock Exchange would be in the best interest of shareholders."

Tui said potential advantages of a move were "centralisation of liquidity, providing a clearer investment profile under a single listing, potential benefits to European Union airline ownership and control requirements, potentially enhancing TUI AG's equity profile with an expected prominent position in the MDAX50 and creating efficiencies as well as reducing costs".

Shareholders will be asked to vote on the issue at the company's annual meeting on February 13. Under the UK listing rules, a delisting will require shareholder approval of at least a 75% majority of the votes cast.

PROFITS SURGE ON STRONG DEMAND

Tui posted underlying operating profit of €977m for the year to September 30, up €568m on revenue which came in at €20.7bn. The company forecast a 10% rise in sales this year.

"Our strategic initiatives to increase value and the current booking trend lead us to expect a further improvement in 2024," chief executive Sebastian Ebel said on Wednesday. However, the company cautioned that its guidance was set against the backdrop of "current macroeconomic and geopolitical uncertainties, particularly in the Middle East".

AJ Bell investment director Russ Mould said that, unlike some recent departures from the UK stock market, "Tui may not be massively missed".

Recent departures to hit London's reputation as a major financial centre include, building materials group CRH, which in March said it was moving its primary listing to the US, after the UK-based plumbing equipment supplier Ferguson (formerly known as Wolseley), which did the same last year.

Cambridge-based chip designer Arm also turned its back on the UK's in favour of a huge floatation on the Nasdaq in New York.

"Partly thanks to the pandemic, its share performance has been turbulent to say the least and its operational track record has been far from flawless too. The company is on an upwards trajectory though - announcing an impressive increase in earnings as it demonstrated some pricing power and managed to trim its still onerous debt pile," Mould said.

"There is obvious logic to the move given Tui is very much a German business which even received a bailout from the country's government during Covid. It will be interesting to see how investors vote in February - with the required 75% approval a high bar to clear."

Shares in Paragon Banking surged on Wednesday after the company delivered a 25% jump in annual profits and announced another £50m share buyback following a stronger-than-expected full-year performance.

The stock was up 13.2% at 556p by 0834 GMT.

The company, one of the UK's largest mortgages, savings and business finance providers, said adjusted underlying pre-tax profit totalled £277.6m in the 12 months to 30 September, up from £221.4m the year before.

This was well ahead of the consensus estimate of £257m as a result of a better-than-forecast performance on income and impairments, with costs in line with expectations.

The underlying cost-to-income ratio improved to 36.6%, down from 39.4% the year before, while the net interest margin increased to 3.09% from 2.69%.

Statutory pre-tax profit was actually down 52% at £199.9m due to the unwinding on non-cash accounting fair value gains reported last year.

Total new lending was down at £3.01bn, from £3.21bn the year before, with both mortgage lending and commercial landing both falling. The company ended the year with a common equity tier-1 capital ratio of 15.5%, down from 16.3% but still well above minimum requirements.

The company declared a final dividend of 26.4p, bringing the total dividend for the year to 37.4p, up 30.8% on last year.

After returning £100m via share buybacks in the financial year, the company announced a further £50m buyback for the current year - double what analysts at Shore Capital were expecting - owing to a stronger-than-expected capital position.

"Whilst the external environment remains dynamic with high interest rates and inflation, the group remains well placed to continue supporting its customers in its chosen specialist markets," said chief executive Nigel Terrington.

"The strength of the business model and through-the-cycle experience of the management team provides strong foundations to capitalise on opportunities and continue to deliver strong returns for shareholders."

Redde Northgate boosted its full-year outlook on Wednesday, following a solid first half.

The mobility business, which specialises in commercial vehicles, reported revenues of £911.3m in the six months to 31 October, a 30.9% jump, while earnings before interest and tax rose 1.6% at £113.3m.

Pre-tax profits eased 4.4% to £97.4m, on higher finance costs.

On an underlying basis, which strips out vehicle sales revenues and exceptional items, revenues rose 16.9% to £733.8m while pre-tax profits jumped 18.3% at £99.1m.

Martin Ward, chief executive, said the first half had been a "strong" trading period, boosted by new contract wins.

He continued: "With a strong prospect pipeline, and a large proportion of our revenues underpinned by multi-year service contracts, we see the quality of earnings being a standout feature of the business.

"The board is confident on the outlook for the second half and now expects to be delivering earnings modestly ahead of market consensus on a full-year basis."

Redde Northgate - which last month was rumoured to be considering a £1.4bn takeover offer for bicycle and car parts retailer Halfords Group - has around 130,000 vehicles in its fleet in the UK and Spain, 1% lower than April 2023.

FTSE 250 - Risers

TUI AG Reg Shs (DI) (TUI) 576.50p 12.60%

Paragon Banking Group (PAG) 528.50p 7.64% Redde Northgate (REDD) 380.00p 5.70% OSB Group (OSB) 396.40p 5.43% Ashmore Group (ASHM) 195.70p 4.10% 4Imprint Group (FOUR) 4,680.00p 4.00% Abrdn (ABDN) 173.55p 3.61% Lancashire Holdings Limited (LRE) 648.50p 3.26% Carnival (CCL) 1,203.00p 3.17% Baltic Classifieds Group (BCG) 214.00p 3.13%

FTSE 250 - Fallers

Discoverie Group (DSCV) 668.00p -4.98% Ceres Power Holdings (CWR) 172.50p -4.43% Bakkavor Group (BAKK) 81.00p -4.26% Indivior (INDV) 1,213.00p -3.04% Diversified Energy Company (DEC) 1,308.80p -2.21% FDM Group (Holdings) (FDM) 389.00p -2.02% Computacenter (CCC) 2,640.00p -1.71% Future (FUTR) 781.50p -1.70% Moonpig Group (MOON) 156.50p -1.32% AJ Bell (AJB) 259.00p -1.15%