TUI, Troilus Gold, Lufthansa - The golden summer of travel!

TUI - What is the winter strategy?

Europe's largest tour operator, TUI, has adapted its marketing strategy to the circumstances. Complete freedom of choice is now offered for travel combinations. The Company shows itself to be more flexible than ever before. At TUI, every type of traveler can find the right vacation to suit their taste. Courteous service, best quality, high guest satisfaction, and ecological sensible acting can be read as headlines. It reads like a luxury travel guide!

So what does this mean for the Group's figures after the conciliatory summer? The many travel catch-up bookings must now be in the books, but now the next Corona wave threatens with travel warnings for popular destinations. The recently extended restrictions on Mallorca, Israel, Portugal and the Netherlands make many key destinations less attractive again. TUI Cruises must now cancel several trips of the cruise ship "Mein Schiff 4". This means canceling everything again that was already booked as revenue, but the costs for the hired crew will remain.

Investors ask themselves: How will it be possible to do business in winter under these conditions when the flu virus season begins? The price of the TUI share already speaks a clear language: a strong increase from March to July by 50%, then a turn down again to the starting point. Analysts are also increasingly negative: DZ has left its rating at "sell" with a fair value of EUR 2.60 after the figures for the third fiscal quarter. The overall situation at the travel group has eased somewhat due to a significant increase in bookings compared to the previous year, wrote analyst Herbert Sturm in a recent study. However, the negative equity ratio and net debt are cause for concern.

The chart situation of the TUI share is beginning to look highly critical. Should it fall below EUR 3.50, a crash to EUR 2.70 is imminent. The share is still only suitable for speculators.

Troilus Gold - Latest drill results from Quebec

Canada has not yet fully opened its doors for tourism, but in March 2022 it is expected to do so again. Quite worthwhile would be a visit to the drilling operations at Troilus Gold in Quebec. Here you will come across an interesting precious metal project, the former Troilus Mine, which the Canadian Troilus Gold Corp. has owned since 2017. The historic property is located northeast of the Val-d'Or district and produced 2 million ounces of gold and nearly 70,000 tons of copper between 1996 and 2010. The new Company is currently preparing to build on its historic successes - with great success.

That is because August 2021 will see new assay results from the Southwest Zone as part of the ongoing exploration and infill drilling program. The Southwest Zone is located approximately 2.5 km southwest of the former mine and the primary mineral corridor and has emerged as one of the key mineral growth targets on the Troilus property since initial drilling in late 2019. Highlights of the current evaluation include grades ranging from 3.58 to 27.43 g/t over drill intercepts between 15 and 1 meter. This drilling follows on seamlessly from the success in April, indicating a possible extension of this high-grade trend south of the open pit. Further results with up to 65 meters below the PEA open pit model provide grades from 1.10 to 32.41 g/t in length intervals from 13 to 1 meter.

The results presented from the Southwest Zone are exceptional and extend the mineralization in a direction not previously reviewed. These are among the strongest intercepts ever drilled at Troilus and illustrate the excellent growth potential in this zone and the extent of the larger Troilus trend. In total, holes totaling approximately 43,800 meters have been drilled on the Southwest Zone. They define a homogeneous ore body geologically similar to the main Z87 Zone and extend over a strike length of approximately 1.5 km. An excellent area for a new mine.

Troilus shares immediately reacted positively to the news, working their way back up to CAD 0.86. With a current share count of 195 million, the market capitalization is CAD 167 million. In our opinion, the overall well-rounded Troilus story continues and is worth an investment.

Lufthansa - The state is on the retreat again

Back to the travel business once again - how is Deutsche Lufthansa doing? We last targeted the stock at around EUR 10 after entering a first major correction from the March high of over EUR 13. However, in recent weeks, the crane line has again been valued significantly lower by the stock market - the reason: The government is reducing its exposure and taking its profits with it.

Barely 14 months after its investment in Lufthansa, the German government is selling its first block of shares. In the coming weeks, the Economic Stabilization Fund (WSF) intends to reduce its shareholding in the MDAX-listed Group by a maximum of one quarter to up to 15%. That will bring to the market up to 29.9 million Lufthansa securities, which the German government had acquired in the summer of 2020 for the nominal value of EUR 2.56 each in order to stabilize Lufthansa during the Corona Crisis.

Good handling by the Ministry of Finance, as Lufthansa shares are currently trading for just under EUR 9, meaning a significant increase in value can be realized for the federal government. The direct investment in the Company had amounted to 20% of the shares and, with a nominal value of EUR 300 million, was the smaller part of the German government aid of up to EUR 6 billion. Added to this was a KfW loan that had already been repaid and government aid from Austria, Switzerland, and Belgium so that Lufthansa ultimately had EUR 9 billion at its disposal.

The German government justified its step with the positive development of the Company. According to its supervisory board chairman Karl-Ludwig Kley, without the aid, Lufthansa would have had to file for insolvency in the summer of 2020. The stake reduction presumably comes simultaneously as a renewed need for capital to launch out of the crisis altogether. The significant dilution of existing shareholders naturally leads to falling share prices. None of this sounds particularly encouraging: the share price/book value is a factor of 4 due to the high level of debt, and the equity ratio has dropped to 3.5%. At present, Lufthansa is probably just another stock on the watch list for better times.

The travel industry remains very speculative and is likely still dependent on state aid. The break-even zone at TUI and Lufthansa is seemingly still 2-3 years away, as the cost base of the groups can only fall slowly in a socially responsible manner. At Troilus Gold, things could soon take off because the property is a clear premium object.