- Shore Capital highlights potential
- Expansion on the cards in Europe
- Profit and net ticket sales have risen sharply
Although shares in ticketing platform Trainline (TRN) are down 10% year-to-date it has broadly benefited as UK travel experiences a boom once again post-pandemic.
Back in May Trainline reported a 72% rise in net ticket sales of £4.3 billion for the year ending 28 February 2023.
Operating profit came in £28 million, from a £10 million operating loss in the prior year.
A series of rail strikes didn’t even stop the ticketing platform last year as UK and international customers helped drive up revenue to £327 million year-on-year, a rise of 74%.
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EUROPE EXPANSION
Analysts at Shore Capital believe that Trainline is definitely ‘on the right tracks’ particularly with its ambitions to expand into Europe.
Trainline currently has customers in over 40 countries through both business to consumer and business to business channels, and the platform receives circa 117 million visits a month.
In a recent research note, the broker said: ‘Beyond the ongoing recovery from the pandemic, we see further market share gain opportunities through leveraging the group’s extensive coverage and increased digital penetration within the UK market, and through industry liberalisation and growing carrier competition within Europe.
‘We forecast over 20% earnings growth over the coming years, and on 11x EV/EBITDA FY24F, the valuation does not reflect Trainline’s scale, dominant position and building opportunity, in our view.’
GROWING MARKET SHARE
Shore Capital expects Trainline’s UK market share to continue to grow from the current 30% due to consumers’ moving towards digital ticketing.
Online ticket sales currently represent circa 53% of the UK total addressable market (TAM) – and Trainline has a 60% off the UK online market.
There a few issues Trainline might face in the future highlighted by Shore Capital. This includes competition risk as consumers look to directly book with carriers rather than through a platform and save on fees.
Ongoing industrial action in the UK and France might impact upon Trainline. In the UK last there were 30 strike days between June 2022 and March 2023, which had a gross sales impact per strike day of £5-£6 million.
Finally, a change in working patterns in the near/medium term post-pandemic as more workers work remotely and commute less.
‘We are still to see normalised conditions across the European and UK markets, and therefore there is still an element of unknown regarding what companies’ attitudes will be in respect of business travel, as well as the commuter market,’ adds Shore Capital.
